Canada Nickel acquires former Texmont nickel mine near Timmins

Canada Nickel Co. (TSXV: CNC; US-OTC: CNIKF) is buying a 100% interest in the past-producing Texmont nickel property, situated between the company’s Deloro and Sothman properties south of Timmins, Ont. 

“The acquisition of the Texmont property provides near-term smaller scale production potential and is highly complementary to our large-scale Crawford and regional nickel sulphide projects, chair and CEO Mark Selby said in a release. 

“We are excited by the potential for leveraging the understanding of the geology at Texmont and additional high-grade areas at Sothman and Bannockburn and applying these learnings to our large regional property package.”

Selby also said a number of investors have expressed interest in financing near-term production.

The Texmont property is located 36 km south of Timmins. It contains an ultramafic body with a target geophysical footprint of 1.2 km along strike and 150 metres side. The historic resource was 3.2 million tonnes grading 0.9% nickel in 1971, the start of production. The mine and a 500-tonne-per-day mill operated until December 1972.

The original Texmont mine targeted narrow nickel mineralization with grades in excess of 1%. Canada Nickel believes this high-grade material is contained within a larger bulk-tonnage deposit that extends to the surface and would support an open pit.

The company has drilled four holes at the former mine, the first three of which intersected sulphide mineralization directly below the overburden. No assays have yet been reported.

To secure the project, Canada Nickel has paid $250,000 in cash and issued a $3.8-million non-interest bearing promissory note due Mar. 14, 2023. The vendor would retain a 2% NSR, half of which can be acquired for $2.5 million. The property has a legacy ownership interest of 15% and 10% net profits interest, however Canada Nickel needs to determine whether these interests are still valid.

Canada Nickel’s flagship Crawford nickel project in northern Ontario is said to contain the fifth-largest nickel sulphide resource in the world. A preliminary economic assessment based on prior resource estimates outlined a US$1.2-billion, 25-year operation that would produce 842,000 tonnes of nickel, plus iron and chrome byproducts of 21 million and 1.5 million tonnes respectively.

In a research note, Echelon Partners mining analyst Ryan Walker said the deal is positive, although the company’s Crawford project is larger.

“We view the potential acquisition as directionally positive as it adds a higher-grade theme to the CNC story and the potential for nearer-term (albeit much smaller quantum versus Crawford) nickel production,” Walker wrote.

On news of the property acquisition, Canada Nickel shares rose as much as 9.6% to $1.72 before closing the day at $1.61. The stock has traded in a 52-week range of $1.18-$4.01 and the company has a market capitalization of $182 million.