Power Nickel Ramps Up Quebec Project as Nickel Demand Soars

• Power Nickel is developing a high-grade nickel project in Quebec with strong economics and government support
• Recently raised capital at 4x the market price due to confidence from industry and strategic investors
• 43-101 resource estimate of 8-10 million tonnes expected soon, proving scale and unlocking institutional investment
• Utilizing new exploration techniques to identify additional resource pods with the potential to grow the deposit significantly
• Taking legal action against illegal short-selling and spurring a sector-wide campaign for reform

Quebec Asset Promises Superior Economics

With nickel prices rising amid surging demand for electric vehicle batteries, Toronto-based Power Nickel is rapidly advancing its high-grade Nisk nickel project in Quebec. Having recently raised capital and expanded its resource, the company aims to reach feasibility in 2023 as it works to crack institutional investment and tackle illegal short-selling.

According to CEO Terry Lynch, Nisk holds clear advantages over comparable global nickel projects. "We probably have, in terms of the nickel in the ground per unit of market capital, the most," he said in a recent interview. "If you compare ourselves to the other high-grade nickel sulphide projects around the world, we're trading at between 5 to 20% of their value."

Strategic Location to Keep Costs Low

The Nisk project, located just 20km from a railway line and 90km from the deep sea port of Saguenay, holds premium nickel grades above 1%. With copper, cobalt, gold, platinum and palladium byproducts, Lynch sees tremendous potential. "I expect we could build a phenomenal plant there for $300 million," he said.

Quebec Incentives Set to Fund Half of CAPEX

In fact, Lynch believes nearly half the initial $300 million capital expenditure could come through Quebec’s generous investment tax credits and buyback incentives that Power Nickel has tapped four times previously. The US Defense Department may also support Nisk's development given policy goals to onshore critical mineral supply chains like nickel for EV batteries and renewable energy systems.

Exploration Targeting District-Scale Potential

A clearer picture of Nisk’s potential is set to emerge within months. Lynch says Power Nickel will release an NI 43-101 compliant resource estimate in late 2023 or early 2024 outlining 8-10 million tonnes. The company has focused drilling on one mineralized zone while using novel ambient noise tomography surveying to pinpoint three additional resource pods nearby.

Lynch sees blue-sky potential for significantly more mineralization across the 75-square-kilometer land package. "This will be probably +30 million tonne deposit from 0 to 500m and you know where most of the nickel is found in most of the nickel mines 500m to 2km,” he explained. “We think we have maybe three or four of these [pods]."

Feasibility Study Partners Ensure Efficient Development

To build the mine, Power Nickel has enlisted Prague-based CM Group (CMVR) to conduct feasibility studies and develop a modular processing flow sheet focused on maximizing recoveries and smelter payabilities. Lynch highlights CM Group’s technical expertise across 18 global nickel operations. "Their approach will allow us to get maybe an extra 20% out of our ore body and to get 2.45x to 3x revenue for our product – and that’s not fantasy.”

Recent Financing to Accelerate Progress

Power Nickel’s focus now is demonstrating scale and locking up capital to smooth the path into production. The company recently raised $5.4 million, including a $2.75 million investment from CM Group, to fund additional drilling and the feasibility study.

While dilutive given current market conditions, CEO Lynch says the effective discount was modest considering Quebec’s tax incentives. Just as importantly, the raise brought on key strategic partners now invested in Nisk's success.

Tackling Market Headwinds

Still, persistent headwinds in material equities have worn on Lynch after years of strong operational execution but lagging share price performance. Asked whether Power Nickel might privatize if markets continue undervaluing its assets, he confirmed selling out as an option.

"Frankly speaking, if the market doesn't wake up, we'll end up selling this thing sooner to industry for many times more than where we're at right now,” Lynch asserted. “Because at some point you gotta stop stealing from yourself."

Lynch lays the blame for Power Nickel’s valuation disconnect largely on illegal short selling – a long-running scourge he says has decimated junior mining equities. However, precedent-setting U.S. court rulings have shifted the legal landscape. In September, Power Nickel filed a formal complaint against alleged offenders, aiming to spark regulatory action.

Though costly and time-intensive, similar cases have succeeded in the past. Power Nickel is reaching out to peer companies also affected by predatory short selling in hopes that a wider industry push could compel action by market authorities.

As Lynch marshals resources to defend Power Nickel’s share price with regulators and courts, he remains focused on executive operationally at Nisk and other assets. For investors open to commodities exposure amid surging demand forecasts, the company offers differentiated nickel leverage with ample catalysts over the coming year.

The Investment Thesis for Power Nickel

Key TakeawaysPower Nickel's risk-reward proposition stands apart from junior developer peers trading at comparable valuations. With district-scale resource upside buttressing robust project economics, the company appears primed to re-rate materially over the coming year as systematic de-risking continues. For conviction investors, the current market mispricing signals an opportunity to position ahead of realizing fundamental value.

• Nisk's high nickel grades, strong economics and strategic location could enable robust profitability even if prices retreat
• Quebec incentives meaningfully derisk project, lowering capex and shortening the payback period
• Aggressive exploration program targets Quantum leap in resource size over the coming year
• Recent capital raise and unlocking of institutional investment to fund acceleration
• Partnership with global processing expert and strategic investor de-risks development
• Key milestones on the horizon suggest re-rating potential if execution continues
• Short selling overhang depressing valuation; legal action might lift cloud

Power Nickel presents a differentiated risk-reward equation among junior nickel developers, with tremendous exploration upside and fundamental advantages buttressing the core project. While legal remedies offer speculative additional upside, Nisk alone appears primed to re-rate materially as Power Nickel continues systematic de-risking. Between rising nickel demand forecasts and visible production catalysts, conviction-long investors could capitalize on the market’s chronic undervaluation of this promising story.