Samsung SDI buys Canada Nickel stake, right to acquire 10% of Crawford

South Korean battery manufacturer Samsung SDI has become the latest company to invest in Canada Nickel Co. (TSXV: CNC; US-OTC: CNIKF), which is developing the Crawford nickel sulphide project in Ontario’s Timmins-Cochrane mining camp.

Samsung will purchase US$18.5 million worth of Canada Nickel’s common shares at a price of $1.57 per share under a subscription agreement entered Friday. The deal will give Samsung 8.7% of the company’s outstanding shares.

The battery maker will also be granted the right to purchase a 10% equity interest in the Crawford project for US$100.5 million, exercisable upon a final construction decision. This would give Samsung the right to 10% of the nickel-cobalt production from the Crawford project over the life of mine, and the right to an additional 20% of production for 15 years, extendable by mutual agreement.

Shares of Canada Nickel Company gained 3.1% to $1.63 apiece by 12:30 p.m. EDT on the Samsung investment. Its market capitalization rose to $231.6 million accordingly.

Last week, Canada’s largest gold producer Agnico Eagle Mines (TSX: AEM; NYSE: AEM) invested $23.1 million for a 12% stake in the nickel developer. The deals follow a $24-million investment by Anglo American (LSE: AAL) in February that gave the international miner a 9.9% interest in Canada Nickel.

Crawford hosts the world’s second-largest nickel resource, totalling 2.5 billion tonnes at 0.24% nickel for 13.3 billion lb. of contained nickel, according to a feasibility study issued in October. The study pegged the project’s after-tax net present value (8% discount) at US$2.6 billion and internal rate of return at 18.3%.

The proposed open pit operation comes with a big price tag. The feasibility pegged the total capital cost of the two phase project at US$3.5 billion.

Over a 41-year project life, total metal production is calculated at 3.5 billion lb. of nickel, 52.9 million lb. of cobalt, 490,000 oz. of palladium and platinum, 58 million tonnes of iron, and 6.2 million lb. of chromium. First production is targeted for 2027.

The mine would be a net negative contributor to global carbon dioxide (CO₂) emissions, thanks to its ability to geologically sequester 1.5 million tonnes of carbon per year. There will also be room to capture and store 30 million tonnes of carbon from third parties.

“As we advance the Crawford nickel sulphide project, it is critical to form long-term partnerships with companies that truly understand how crucial this production is for electric vehicle supply chains across North America and Europe,” Canada Nickel CEO Mark Selby said in a news release.

“As one of the world’s leading electric vehicle battery manufacturers, Samsung SDI not only understands our vital role in these supply chains, but also believes in Canada Nickel’s vision for responsible, large-scale, net-zero carbon nickel production.”

In an equity research note, Cantor Fitzgerald mining analyst Matt O’Keefe said the latest investment will bring the company’s net cash to $55 million and allow it to advance Crawford through a production decision in mid-2025.

“It also adds a potential off-take and funding partner for the project’s development,” he wrote. “We continue to like Canada Nickel and its Crawford Project for its excellent jurisdiction, positive economics, carbon capture potential and growing base of quality partnership.”

O’Keefe has a buy rating on Canada Nickel and a target price of $3.50. The company’s shares traded as high as $1.73 on the news. Canada Nickel has a market cap of close to $240 million.