Canada Nickel doubles resource at Crawford project in Ontario

Canada Nickel Company (TSXV: CNC; US-OTC: CNIKF) believes that its Crawford project in northern Ontario contains the fifth largest nickel sulphide resource globally, after a new estimate released by the company on July 6 more than doubled the project’s measured and indicated resource estimate.

Its latest measured and indicated resources now total 1.4 billion tonnes grading 0.24% nickel and 6.59% iron for 3.48 million tonnes of contained  nickel and 93.9 million tonnes of iron. Inferred resources add 670.1 million tonnes grading 0.23% nickel and 6.85% iron for 1.55 million tonnes of nickel and 45.9 million tonnes of iron.

The previous resource estimate, released in January 2021, totaled 653 million tonnes grading 0.26% nickel and 6.58% iron for 1.6 million tonnes of contained nickel and 43 million tonnes of iron in the measured and indicated category and 497 million tonnes grading 0.24% nickel and 6.58% iron for 1.1 million tonnes of nickel and 33.5 million tonnes of iron in the inferred category.

“With the larger resource base and in discussions with EV consumers who are looking for large volumes of nickel in North America, we can look at options to further accelerate our expansion plans,” the company’s CEO Mark Selby told The Northern Miner by e-mail.  “It was clear early on with Crawford that we had a significant project and we’ve been advancing it as quickly as possible so that we can be in production by the second half of this decade.” 

“With additional potential from a number of holes still pending assays…we expect the final feasibility study resource to support the upper end of our mine plan target of 1.3 to 1.8 billion tonnes,” he added. “The Crawford feasibility study continues to be on track for completion by year-end.”

Situated within the Timmins mining camp, about 542 km northwest of Ottawa, the project is expected to produce an average of 34,000 tonnes of nickel annually over a 25-year period, according to a 2021 preliminary economic assessment.

At an 8% discount rate, the project would generate a post-tax net present value of US$1.2 billion million and a post-tax internal rate of return of 16%. The capital cost was pegged at US$1.2 billion.

The updated resource incorporated 47 drill holes (22,564 metres) conducted in 2021 and early 2022 and it extended the resource by 500 metres for a total of 2.6 km in strike length, up to 350 metres in width, and more than 650 metres deep, Canada Nickel said.

Canada Nickel spent most of its budget in the first half of the year on its ongoing feasibility study completing the main field geotechnical data gathering and infill drilling programs during that period.

The recent drop in metal prices won’t impact Canada Nickel, Selby said, as the company has already raised all the financing it needs to complete the feasibility study and the funding it requires until next year. “Fundamentally, today’s higher oil prices are helping make the case to accelerate the transition to electric vehicles which will help us in the long run,” Selby said. 

Analysts following the company have described its latest update as positive. 

Matthew O’Keefe from Cantor Fitzgerald, commented in a research note to clients: “CNC remains on track to deliver a feasibility study by the end of the year and the larger resource should contribute to a potentially robust and longer life project, at least off-setting expected inflationary pressures.” 

Pierre Vaillancourt of Haywood Securities noted that he is maintaining a “long-term buy” on the company “for optionality”.

“While this resource is not likely to have much impact on CNC, it is a significant step toward the completion of the feasibility study,” he wrote in a note to clients. “We believe the company could benefit from a technical and financial partner to provide validation and support to the Crawford project.”

Ryan Walker of Echelon Capital Markets is maintaining a “speculative buy” on the company.

“Despite the current headwinds facing base metals, we maintain our longer-term positive view on CNC, which reflects Crawford’s potentially multi-cycle resource base, situation in an historic Canadian mining camp and ample surrounding infrastructure, and very large regional exploration land package,” he pointed out in a research note. “We also highlight the proximity of zero-emission hydroelectric power and potentially low-carbon footprint, positioning it well to supply clean nickel amid a growing ESG-themed investment environment and uncertain future supply fundamentals.”

In addition to the Crawford project, which the company acquired in 2020, Canada Nickel  owns 19 nickel targets near the project.

At press time in Toronto, shares of Canada Nickel Company were trading at $1.55 within a 52-week trading range of $1.41 and $4.01. The company has a total of 112.7 million common shares outstanding for a market cap of $174.8 million.