Nickel Creek Platinum shares drop as prefeasibility puts Shaw project capex at $1.7B

Nickel Creek Platinum (TSX: NCP; US-OTC: NCPCF) shares fell by 16.7% to 2.5¢ each on Friday after the company released a prefeasibility study giving its Nickel Shaw project in southwest Yukon pre-production capital costs of about $1.7 billion. The junior’s market cap stands at $11.6 million.  

The report for the nickel-copper-cobalt-PGM project puts Nickel Shaw’s total capital costs at $2.3 billion, its after-tax net present value (NPV), at a 5% discount rate at $143 million, and after-tax internal rate of return (IRR) at 5.8%.

The open-pit project could produce 614.3 million lb. nickel and 281.5 million lb. copper over a 19.1-year life, according to the study released on Thursday.

Those numbers assume commodity prices of US$11.00 per lb. of nickel, US$4.00 per lb. copper, US$2,100 per oz. palladium, US$1,000 per oz. platinum, US$23 per lb. cobalt, and US$1,800 per oz. gold.

Nickel Creek CEO Stuart Harshaw said the study marks a milestone in showcasing the opportunity of Nickel Shaw in the electric vehicle battery market.

“The sensitivity to energy costs illustrates how working with the different levels of government can lead to a significant improvement in value, especially when combined with the previously announced intention of the federal government to provide a tax incentive for critical mineral projects such as Nickel Shaw,” he said. “Moving forward, our focus will be to continue to add value to the project through work on identified key economic areas of opportunity and continued mineral exploration success while advancing towards a feasibility study.”

The report estimates a construction period of three years for project, located 320 km northwest of Whitehorse on the Alaska Highway. All-in sustaining costs are pegged at $638 million.

The Toronto-based company added that the after-tax NPV for Nickel Shaw could increase by $324 million to $467 million if it pays 11¢ per kilowatt hour from the Yukon grid. The NPV could also rise to $336 million if a federal tax incentive for critical mineral projects is enacted. The 2023 budget proposed introducing a 30% refundable tax credit for investments in clean technologies.

Payable production for the mine’s other metals is estimated at 21.5 million lb. cobalt, 626,500 oz. platinum, 743,400 oz. palladium and 174,400 oz. gold.

Operating costs are pegged at $30.22 per million milled tonnes and mill throughput at 45,000 tonnes per day.

In terms of processing, the study envisions ore being trucked from the open pit to a primary crusher located beside the pit and conveyed out of the valley to a concentrator. From there, ore would be fed into a conventional nickel-copper-PGM flotation concentrator designed to produce a bulk concentrate, or split into concentrates of nickel and copper, depending on costs.

Average annual bulk concentrate production over the mine life is estimated at 103,100 dry tonnes, 95,000 dry tonnes of nickel concentrate and 19,600 dry tonnes of copper concentrate.  

Follows 31% resource boost

The prefeasibility study comes almost three months after the company published an updated resource for Nickel Shaw that increased measured and indicated resources by 31%.  

The measured resource rose to 122.4 million tonnes and the indicated to 314.3 million tonnes, with grades estimated at 0.26% nickel, 0.13% copper, 0.01% cobalt, 0.23 gram palladium per tonne, 0.22 gram platinum and 0.04 gram gold.  

Contained metal amounts total 2.47 billion lb. nickel, 1.28 billion lb. copper, 137 million lb. cobalt, 3.29 million oz. palladium, 3.14 million oz. platinum and 545,000 oz. gold.  

The resource updated a 2018 technical report estimating Nickel Shaw hosted measured and indicated resources of 323.4 million tonnes grading 0.26% nickel, 0.16% copper and 0.015% cobalt, 0.25 gram per tonne platinum, 0.25 gram palladium and 0.04 gram gold. Contained metal was 1.8 billion lb. nickel, 1.1 billion lb. copper, 107 million lb. cobalt, 2.6 million oz. platinum, 2.6 million oz. palladium and 480,000 oz. gold. 

Nickel Creek shares were down 16.7% to 2¢ on Friday afternoon in Toronto, touching their 52-week floor of the same price and valuing the company at $11.6 million. Its 52-week high is 8¢.