Transcript: Canada Nickel (CNC) - Dramatically Improved Recovery Costs for PEA

March 8 2021, 12:50 GMT

Canada Nickel

  • TSX-V: CNC
  • Shares Outstanding: 80.6M
  • Share price C$3.32 (08.03.2021)
  • Market Cap: C$267.5M

Interview with Mark Selby, CEO of Canada Nickel (TSX-V: CNC). Canada Nickel is advancing the next generation of high quality, high potential nickel-cobalt projects to deliver the metals needed to power the electric vehicle revolution and feed the high growth stainless steel market.

The Company possesses industry-leading nickel expertise and is focused on low-risk well-established mining jurisdictions.

Matthew Gordon: I appreciate you taking the call, because just hot off the press, seen this announcement, you must be super pleased.

Mark Selby: Anytime you can have this kind of breakthrough in your mineral processing, particularly for a deposit where this is so important, the technical walk is we're changing the grind size by 20%. But what it really means for investors is, we're able to get effectively 15% more throughput and spend 15% less on energy/tonne of rock with this change, and so 15% more throughput means 15% more Nickel for effectively the same amount of capacity. That will add a large additional amount of NPV and IRR and again with the PEA, we'd like to get it done as soon as possible but extending it to incorporate this kind of major shift is important. Because these are the numbers that we're going to live with from now until the Feasibility Study is ready. So as much as I can say, we look at we're going to have a massively larger resource that's going to go into the Feasibility Study and these numbers are going to get even bigger. At the end of the day these PEA numbers are going to be the numbers that we're going to talk to financers and partners and so forth between now and year in 2020. So extending that 30 days seems like a pretty no brainer trade off. 

Matthew Gordon: So, off the back of that we're going to be able to get an idea of there cannot I know you're avoiding steadily avoiding what it could mean, in terms of dollar terms. But the PEA is the first indication of what that could mean and given this as a volume bulk play, we should expect something meaningful? 

Mark Selby: Again, just take, you know, the Dumont Feasibility Study in chapter 24, is what we're doing our PEA on, and that's a 75,000t/day starting plant, 15% on top of that that's 10,000t /day, that's almost 4Mt extra ore a year, multiply that by recovery and a great factor, 10Mlbs plus a Nickel more per year. So, that's a pretty meaningful, additional free cash flow, which goes right on the top in terms of overall project economics so we're very excited.  

Matthew Gordon: Here's the potential negative, people are saying, hey, it's delayed, it's been extended by another 30 days. We understand why, but you did the same thing, because you were doing a deal with with Glencore on the plant to reduce your CAPEX, there's always reasons to refine things, but at what point you put the flag in the sand and go, come on, we're off? 

Mark Selby: This is the last one. I'm not expecting another sort of massive breakthrough, again Glencore, the chances to start up closer to US$100M versus a 1Bn, again, every project finance person that we've talked to since that says, yes this is great, this fundamentally changes the economics of this project relative to the other universal projects that's out here. Again, this is a pretty massive breakthrough step to remind people for Dumont we spent probably more money than we've already spent taking where we've got two already with Crawford, just on the metallurgy and they stopped at 150 microns and we were already 20% beyond that in terms of primary grind, because we just tweaked the reagent suite a little bit. So, I'm not expecting another breakthrough between here and the end of April. So, end of April, May 1, you and I will be having a conversation talking about the results of the PEA.  

Matthew Gordon: But the question is it makes me think, you can refine things going forward, you’ll save costs, etc but there will still be some big moments. So, the drill bit one hopes as you try and understand what it is, they've got the extent of what you've got, though.

Mark Selby: For sure no, because the key thing here is, we have engineered a processing unit. We engineered that grinding unit at Dumont, and we're using that primary grind unit to use for this project. First Quantum does this with their Copper projects, they have sort of a grinding circuit that they use in multiple projects. So, we sort of adapted that approach here. We've got a grinding configuration that we're going to use and the huge upside from here is again, we've had a whole pile of additional drilling announcements, we'll have a big resource upgrade by the time that Feasibility Study comes through. What it means is okay, do we go from 1 unit to 2 unit 5 years sooner, do we go from 2 units to 4 units or 5 units in total? Because we've got that amount of material available. So, those again will be very dramatic increases but as you said, though, that'll come after we've done the resource update. 

Matthew Gordon: I think shareholders are happy, share price looking good and I'm going to talk to you about in our weekly Nickel show in the club about what's happening with the Nickel price at the moment. So, no real surprise to us, because we've been talking about it for weeks, but we got to just examine that a little bit more. 

Mark Selby: In the last 48 hours, the price of Nickels has dropped to $1, again, felt it was a little ahead of itself and we've talked about that but again, it's something I've been saying since 2018 and you go to our Nickel decks that we've got in our series of investor presentations. There was never going to be any serious class 1, class 2 distinction, you can take Nickel units out of NPI and move them into the battery market by making that so the big announcement was Tsingshan signed a deal with two Chinese refiners, who said they're going to deliver 100,000t of Nickel starting in October 2021. At the end of the day, there's no net increase in supply, they're moving units from the Nickel big iron side to the battery side and if anything, this, I think, will drive a nail in the coffin of HPAL projects, globally, like the world's largest Nickel and Stainless-Steel producer who's basically got giant piles of Limonite sitting around. They figured out that, hey, wait a minute, you know what, I really want to deliver Nickel units into the battery sector, I can just make a pretty cheap change to my plant and then just drive Nickel units that way. So why should I spend $4Bn on something that might not work?  

Matthew Gordon: HPAL beware but we're going to get into the details and some of the data in the Crux Investor private member's club shortly. Well done today, we'll see you soon.

Mark Selby: See you soon. Thanks, Matthew.

 To find out more, go to Canada Nickel's Website.

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