Canada Nickel completes PEA for Crawford nickel project

Just over 20 months after exploration drilling commenced at its Crawford nickel sulphide asset, Canada Nickel Company (TSX: CNC; US-OTC: CNIKF) has completed a preliminary economic assessment for the project, 40 km north of Timmins, Ontario.

The PEA envisioned a conventional open pit mine and mill that will produce both nickel and magnetite concentrates over a mine life of 25 years, and the company is fast-tracking the project directly to a feasibility study, which it expects to complete by the middle of next year.

“These results are just the tip of the iceberg,” says Mark Selby, Canada Nickel’s chairman and CEO. “We’re talking district-scale potential that would make this the largest base metal mine in Canada once it’s ramped up. And we’d be the largest single nickel sulphide mine in the world outside Russia. We’ll be bigger than Voisey’s Bay. This is a pretty significant project.”

Crawford would produce a total of 842,000 tonnes of nickel, 21 million tonnes of iron and 1.5 million tonnes of chrome over its mine life, with average annual production of 75 million lbs of nickel, 860,000 tonnes of iron and 59,000 tonnes of chrome at net all-in sustaining costs of US$1.94 per lb. nickel on a by-product basis.

A concentrator will produce three products: a high-grade concentrate estimated at 35% nickel; a standard grade concentrate estimated at 12% nickel; and a magnetite concentrate estimated at 48% iron and 3% chromium.

The early stage economic study outlined initial capex of US$1.19 billion, an after-tax net present value at an 8% discount rate of US$1.2 billion and an after-tax internal rate of return of 16%. Once in production, annual earnings before interest, taxes, depreciation and amortization (EBITDA) would come in at US$439 million with free cash flow of US$274 million.

Crawford has measured and indicated resources of 653.5 million tonnes grading 0.26% nickel, 0.60% chromium, 6.58% iron, and 0.013% cobalt. Inferred resources stand at 497.2 million tonnes grading 0.24% nickel, 0.61% chromium, 6.74% iron and 0.013% cobalt.

In January, the company signed a non-binding memorandum of understanding (MOU) with Glencore (LSE: GLEN) to assess the potential of using the commodity giant’s Kidd concentrator and metallurgical site in Timmins.

Embedded in the PEA is a downstream processing concept, which sees a third party building a stainless steel plant, likely in Timmins, one that would be fed by Crawford’s high-grade product, according to Selby.

Crawford is located “in one of the best places you could imagine,” he said. “Developing a large base metal project just outside Timmins is a huge plus. The area has a long history of mining operations. The local infrastructure gives us easy access to power — clean, hydroelectric power — plus we’re close to the major end users of stainless steel, in the auto industry, both in the U.S. and in Canada.”

Crawford’s output can feed into the burgeoning electric vehicle battery sector, Selby adds.

As the company commenced exploration work, it also began discussions with three nearby First Nations about the project, resulting in the signing of MOUs with each that show Indigenous support for Crawford.

One reason for this support is the company’s commitment to making the mine a “net zero project” with a considerably reduced carbon footprint.

“We think we can achieve a net zero carbon nickel product and a net zero iron concentrate,” Selby says. “And I think this will hopefully be the start of a zero-carbon cluster in the Timmins area.”

The project will be powered by zero-carbon electricity and use trolley trucks and electric rope shovels as part of its efforts to minimize its carbon footprint through reduced diesel consumption.

“People think we’re going into another supercycle with nickel. And I know from experience that the biggest challenge is always trying to get investors interested in a nickel project. In the past they weren’t keen on the metal and just didn’t invest in it, so they ignored it. But everything’s changed in the last three or four years and now nickel is a favourite base metal. This a project that’s going to be great for northeastern Ontario, great for Canada and great for nickel.”

At presstime, Canada Nickel was trading at $3.11 within a 52-week range of 78¢ and $4.54. The company has just over 85 million common shares outstanding for a market cap of $265 million.