Power Nickel (PNPN) - 2023 Plan: Good Resource + Good PEA = Real Value

Power Nickel Inc. is a Canadian exploration and development company focused on the advancement of its Nisk Nickel Sulphide project located in James Bay Canada. The location of the project enables it to take advantage of low-cost, low-carbon hydropower to create a sustainable battery metals operation. The project holds a large land position of approximately 20 km in strike length as well as high-grade intercepts of Copper, Cobalt, Palladium, Platinum and Class 1 Nickel.

The Nisk Nickel Sulphide project holds a Ni 43-101 compliant mineral resource estimate which is based on 2,400 m of exploration drilling completed in December 2021 and implemented a cut-off grade of 0.33% NiEq in the open pit and 0.91% NiEq in the underground resource base. The open pit mineral resource estimate of the project shows 7,800 tons of Nickel Equivalent mineralisation (NiEq) in the indicated category and 700 tons of NiEq in the inferred category. The underground component of the mineral resource estimate of the project consists of 23,200 tons of NiEq in the indicated category and 17,400 tons of NiEq in the inferred category.

Power Nickel Inc. announced on the 22^nd of November 2022, that it had concluded with its previously announced non-brokered private placement. The oversubscribed non-brokered private placement consisted of the issuing of 13.75 million flow-through units of the company at CAD$ 0.20. The non-brokered private placement also included the issuing of 14.25 million non-flow-through units of the company at CAD$ 0.10. The gross proceeds of the private placement amounted to approximately CAD$ 4.19 million, which are intended to be primarily used for exploration initiatives enabling the company to expand its exploration drilling program at the Nisk Nickel Sulphide project from 5,000 m to between 12,500 m and 15,000 m.

Power Nickel Inc. holds the rights to various gold and copper deposits in Canada and Chile. The company has the option to pursue two pathways with the projects, with the first being the spin-out of the assets into a newly listed company. Power Nickel Inc. has in the past investigated and mentioned the creation of a new company, namely Consolidation Gold and Copper, which it would use to transfer its Chilean and Canadian assets to.

Power Nickel Inc. plans to complete the metallurgical studies of the Nisk Nickel Sulphide project in Q2 2023 and also plans to publish an updated mineral resource estimate in Q2. The company believes that the planned mineral resource update will more than likely double or triple the current mineral resource estimate showing the potential economics of the project to the market. Power Nickel Inc. also plans to publish the preliminary economic assessment (PEA) of the Nisk Nickel Sulphide project in the second half of 2023. 

Private Placement

Power Nickel Inc. announced on the 22^nd of November 2022, that it had concluded with its previously announced non-brokered private placement. The oversubscribed non-brokered private placement consisted of the issuing of 13.75 million flow-through units of the company at CAD$ 0.20. The non-brokered private placement also included the issuing of 14.25 million non-flow-through units of the company at CAD$ 0.10. The gross proceeds of the private placement amounted to approximately CAD$ 4.19 million, which are intended to be primarily used for exploration initiatives at the company’s Nisk Nickel Sulphide project. Terry Lynch the CEO of Power Nickel Inc. explains that the rationale behind the non-brokered private placement started in March 2021, after the company intended to raise funds following the publishing of various drilling results from the Nisk Nickel Sulphide project.

“It started really last March when we released the results of our 2022 drill program. they were really good results; they confirmed the historic 43-101 was accurate and that we had a pretty interesting deposit to look at. At that point, nickel was running, so it was a good market, and then the stock sold off - why does that happen? It sold off in Canada because shorts come in and they assume you're going to take financing and they'll bang your stock down.”

The company at this stage decided to rather exercise warrants that originated in previous capital raises, in an attempt to not dilute the company at lower share prices.

“Effectively, what happened at that point is as a company we thought, that's not good. We deserve better. We called our warrants. We had some historic USD$ 0.15 warrants that were eligible. We recalled them. I had the biggest single package of those, everyone wrote a cheque.”

Power Nickel Inc. at the exercising of the warrant from previous raises, was able to create a runway in which it did not need to raise funds. The company commenced with the recent non-brokered private placement in October 2022, after the market and its share price were able to recover.

“We were basically needing to cash out in order to do another exploration program, so we had assumed that with the good news that the stock would have made a move north, then we could have financed it conventionally in the market, at some sort of discount to market, and then go from there. That didn't happen. As opposed to taking financing from the shorts, we basically said, no, we're going to call our warrants, which we did. And we said we'll push forward to the fall and hope for better a market in the fall when we start drilling again.”

The gross proceeds of the completed non-brokered private placement will enable Power Nickel Inc. to expand its planned exploration drilling program at the Nisk Nickel Sulphide project from 5,000 m to between 12,500 m and 15,000 m. The flow-through funds will be implemented towards the exploration expenditures, with the proceeds from the non-flow-through units used to settle an outstanding debenture.

Shareholder Base and possible spin-outs

The shares of Power Nickel Inc. are held through numerous entities, including the Lynch family, Critical Element Lithium Corp. and various hedge funds. Terry Lynch explains that the majority of the company is held by him, his family and the Stern family (a close friend and mentor of Lynch).

“The way to look at the base is that Terry Lynch and the Lynch family own about 20%. The Stern family, who is my friend and mentor in many ways who brought me into this deal 10 years ago he owns about 15%, he and his family. Then Critical Elements, whom we acquired NISK from, they own about 13%, and our board owns about 4%.”

Lynch notes that Critical Elements Lithium Corp. may look to sell its position in the company at a later stage, not due to disbelief in the potential of Power Nickel Inc. but to finance its own endeavours. He however also notes that the company did not sell at historic highs, and as such is not expected to sell its position in the near future.

“Will they sell at some point in time? For sure, because they're an investor, but they know there's a mine that could be developed here and they are going to ride through the valuation on that. I wouldn't see them as short-term traders of the stock. They haven't sold a share, and they had a chance to sell stock when it was in the USD$ 0.30cs and they never did, so they're certainly not selling down here.”

Power Nickel Inc. holds the rights to various gold and copper deposits in Canada and Chile. The company has the option to pursue two pathways with the projects, according to Lynch, with the first being the spin-out of the assets into a newly listed company. Power Nickel Inc. has in the past investigated and mentioned the creation of a new company, namely Consolidation Gold and Copper, which it would use to transfer its Chilean and Canadian assets to. The newly created company would then be owned 100% by Power Nickel Inc. with 20% of the shares of Consolidation Gold and Copper transferred to the existing shareholders of Power Nickel Inc.

“We're going down two pathways: one is the pathway of potentially spinning out a sub that would contain the asset in DC and the other in Chile, into a copper-gold play. We would move that forward on that basis. These are more exploration stage. There's been some work, some amount of money, in Chile quite a lot of money has been spent, but still, more has to be spent in Chile; it is still exploration, that's not a resource.”

The alternative approach to creating value from the company’s Canadian and Chilean projects is through mergers and acquisitions (M&A). Lynch explains that the company may look to have the assets acquired through other entities, whilst retaining a position. Power Nickel Inc. will in such a way be able to continue to create value for its shareholders by retaining exposure to the copper and gold sectors.

“The second pathway is we're also talking about M&A transactions with peers in the area in Chile and in the Golden Triangle, where we would swap our assets for a reconfigured play where we would be big stockholders. We're open to doing those types of models. We're not looking necessarily to sell the thing for cash, that's not where you're going to get value today. You definitely still have to bet on the horse. We believe that the exploration potential in both these plays is significant, but they need capital and a focus.”

Peers and future plans

Power Nickel Inc. plans to complete the metallurgical studies of the Nisk Nickel Sulphide project in Q2 2023. The company will incorporate the exploration drilling conducted at the project up to December 2022, in its planned mineral resource update which it also aims to publish in Q2 2023.

“The metallurgy is being done now and it will be complete in about 4 months. It takes a long time to do metallurgy properly. We expect to get the new resource updated, including all of our drilling that we're drilling up until Christmas, there will be about 10,000 m of drilling added to this resource, and we expect to get that out sometime in Q2 of 2023.”

The company believes that the planned mineral resource update will more than likely double or triple the current mineral resource estimate. The larger mineral resource estimate will be able to show the market the potential economics of the project.

“Our expectation is that the updated resource will more than double the existing one, perhaps even triple it. We think that it will showcase enough that people will be able to look at it and say, this thing is going to be commercial. I would say that the earliest you could do a commercial mine of this nature would be, some have been done at 8 Mt, but most would be 10 Mt and beyond and, obviously, the more tons you have the better. In this market in North America, if that's all you had, you would probably still get developed. We think there's a lot more than that here, but that would be the start.”

Power Nickel Inc. also plans to publish a preliminary economic assessment (PEA) of the Nisk Nickel Sulphide project in the second half of 2023. 

“we're thinking it will be H2 for the PEA. The metallurgical work will be part of it, which is what we're commissioning now, that will be part of the 43-101, but it could be part of the PEA as well. We think it will be further advanced enough to be able to generate some economics, so that would be something we would look to get out in Q4 of 2023.”

To find out more, go to the Power Nickel website