Power Nickel (PNPN) - Technical Analysis & Due Diligence

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 is 80%-owned by the company, with Critical Elements Lithium Corp. owning the remaining 20%. 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.

Power Nickel Inc., recently published a Ni 43-101 compliant mineral resource estimate of the Nisk Nickel Sulphide project. The mineral resource estimate was based on 2,400 m of exploration drilling completed in December 2021. The mineral resource estimate implemented a cut-off grade of 0.33% NiEq in the open pit and 0.91% NiEq in the underground resource base.

The targets of the exploration drilling program conducted in December were based on a geological model of the project, created by 3DGeo Solution Inc. Power Nickel Inc. retained the services of 3DGeo Solution Inc. to create a NI 43-101 compliant mineral resource estimate of the project for both the envisioned underground as well as open-pit operation.

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.

Nisk project

The Nisk Nickel Sulphide project is located near James Bay Quebec, Canada and hosts various battery minerals. The project has a land position of approximately 45.9 km2 and a strike length of approximately 20 km which hosts various high-grade copper, cobalt, palladium, platinum and Class-1 Nickel.

The project Is located in a stable mining jurisdiction and is surrounded by various advancing mineral projects. The geology of the project consists mainly of biotite, sillimanite, staurotide and garnet-bearing gneisses and granites, pegmatites, amphibolites and ultramafic intrusive rocks. Historically conducted geophysical surveys have shown the signature and extent of ultramafic intrusions of the project.

The project holds historic drilling data, which has confirmed various ultramafic intrusions. The North of the Lac des Montagnes formation is mainly composed of orthogneisses intruded by granites, while the southern area of this formation is composed principally of paragneisses, also intruded by granites.

Power Nickel Inc. retained the services of 3DGeo Solutions Inc. to create a geological model for the Nisk Nickel Sulphide project. The geological model was implemented towards the identification of targets as well as the execution of a 2,400 m drill program, which was concluded in December 2021 and reported in March 2022.

The drill results of the 2021 drilling program, coupled with various historical geological data were implemented by 3DGeo Solutions Inc. in the completion of a Ni 43-101 compliant mineral resource estimate and technical report. The engineering work related to defining a constraining pit shell and underground mineable shapes was contracted to InnovExplo Inc.

Mineral resource estimate

The mineral resource estimate of the Nisk Nickel Sulphide project is based on the project’s envisioned open pit and underground mining operations. The open-pit mineral resource estimate was constructed using a 0.33% Nickel Equivalent (NiEq) cut-off grade and boats 7,800 tons of NiEq in the indicated and 700 tons of NiEq in the inferred categories.

The underground mineral resource estimate implemented a 0.91% NiEq cut-off grade and consists of 23,200 tons of NiEq in the indicated category and 17,400 tons of NiEq in the inferred category. The total combined mineral resource estimate of both the open-pit and underground resource estimate consists of 31,000 tons of NiEq in the indicated category and 18,100 tons of NiEq in the inferred category.

The geological model of the open-pit mineral resources is confined within a Whittle pit shell, with the underground mineral resources confined within volumes defined using Deswik Shape Optimizer (DS). Kenneth Williamson, the managing director of 3DGeo Solutions Inc. sums up the mineral resource estimate as follows:

“That engineering work has been done by InnovExplo, who took the lead in calculating the different economic perimeters and things like that required to define a whittle pit shell, which is an optimised pit shell, as well as DSO work, which is Deswik Shape Optimizer, for the underground mining method. All this combined together, we’ve ended up with an open pit scenario using a cut-off grade of 0.33% nickel equivalent, having indicated resources there of about 900,000 tons of material that grades at 0.87% nickel equivalent. Then inferred resources in the open pit at just over 1.04% nickel equivalent for 67,000 tons there. And underground, the cut-off grade is triple that number. There, we’re using a cut-off grade of 0.91%, giving us 1.7 million tons of indicated material at 1.37% nickel equivalent, and close to 1.4 million tons of inferred material at 1.3% nickel equivalent.”

The Mineral resource estimate consists of 66 drill holes in total, which includes 59 historical drill holes and 7 recent drill holes which were conducted in the company’s 2021 drilling campaign.

Incorporating historical drilling data

The validation of historical data according to Williamson, was challenging with some historical samples and results reported in various formats, he states:

“The validation process itself was a little tricky. We had to group together different holes based on when they were drilled, by whom, the way they were logged and the way the data was captured. All of this was a tiny bit different from one phase to the other. We’ve separated that out.”

The historical data which could not be validated by the company however was incorporated into the mineral resource estimate if the assay values were consistent with the surrounding assay values obtained from the company’s 2021 program. Williamson explains the rationale as follows:

“Everything is pretty much consistent. It varies but stays within a bracket, …, the official answer would be we couldn’t verify and validate from a lab certificate those numbers. Wherever we’ve drilled around, we get essentially the same thickness and values that were reported in the past. So, who am I to not somehow trust that?”

Planned drilling campaign

The company plans to conduct a phase 2 drilling program at the Nisk Nickel Sulphide project in the coming year, with Terry Lynch, the CEO of Power Nickel Inc. explaining the company’s planned drilling campaign as follows:

“We were planning to start it in July, but then as we got the results in and we got the data in, we realised hey, we have to optimise our drilling better and make use of the intel that we’ve gathered to vector in on what we want to vector in on, be efficient with our cash. Because of course, as a junior, you’ve got only a very small pile of cash, and you’d better spend it wisely or you soon won’t be in business. That’s what we’re doing now. We expect that probably by mid-August”

The phase 2 drill program is envisioned to start from the outer edges of the deposit and work its way into the open pit as well as the underground resource base, Williamson explains the rationale of working inwards at the resource base as follows:

“We now know how to do that and where to put those holes because we have the DSO work. We won’t be redrilling the DSO work; we’ll drill just outside of that trying to expand those stopes from underground and things like that. The same principle applies to the open pit near-surface volume as well. The central portion that is below that lake could become a pit eventually, should we do something with that lake for instance.”

Power Nickel Inc. has secured a drill rig for its planned phase 2 drilling program and plans on continuously sending samples for assay analysis. Lynch explains the company’s envisioned timeline as follows:

“The rig’s available to us, we’re ready to go, so probably by mid-August, we’ll be drilling. And as Ken suggested, we may drill the flanks first and then come back to the middle just from the permitting side of things, but we’ll get that done. So, we would think that we would drill from mid-August through September, probably into early October, and all the while, as we’re drilling, we’ll be shipping to our assayers…”

Future

Power Nickel Inc. plans to implement its NI 43-101 mineral resource estimate towards securing funding in the future, Lynch explains that various potential institutional investors were hesitant to invest without the project possessing a NI 43-101 mineral resource, he states:

“Basically, we always thought getting the official 43-101 was going to be critical for a lot of reasons. I met several funds that just wouldn’t invest until there was an official 43-101, so now we’ll go back and re-engage with them. But right now, we’re like a nano-cap, we’re under CAD$ 10 million as of yesterday. Yet, in my view, with what we’ve got, we should be potentially 10 times that I would say right now. But obviously, we have to get there. You have to walk before you run.”

Power Nickel will continue with its exploration initiatives and aims to delineate 10 million tons of mineralisation at the grades seen to date. Lynch explains the project's potential as follows:

“Yeah, if you get to 10 million tons with this type of grade, this close to the surface where we’re at in this jurisdiction, that’s 100% coming out of the ground in my view. I mean never say never. There are no absolutes in this world, but all sorts of examples of a project like this have been built around the world, and the world’s running out of class 1 nickel close to the surface in safe jurisdictions with community support. So, this is, in my view, definitely happening.”

Lynch also believes that the milestones reached by the project with less than 20,000 m of drilling conducted, shows the potential of the Nisk Nickel Sulphide project, he further states that the company is set on advancing the project rapidly to be able to move the project towards a preliminary economic assessment, pre-feasibility study and feasibility study level:

“You can look at this thing and either you believe in what we’re doing and the execution we’ve shown - the fact that we’re under 20,000 m drilled on this thing, by a lot, and we’ve put that resource together, that’s pretty efficient. Pretty exciting from a mining perspective. And this is dense rock, so we can add tonnes really quickly. We’re pretty bullish about what the future can hold.”

To find out more, go to the Power Nickel website