Canada Nickel cuts grades greater than 1% at Texmont

Results from the last 11 holes of Canada Nickel Company’s (TSXV: CNC) winter drill program returned high-grade and near-surface nickel mineralization at its Texmont project in northern Ontario.

Seven of the holes intersected nickel grades greater than 1% and all of the holes cut grades greater than 0.5% at Texmont, 36 km south of Timmins.

Highlights include drill hole TXT23-39, which intersected 3 metres of 2.31% nickel starting from 40.5 metres downhole within 90 metres of 0.34% nickel from 12 metres. Another hole, TXT23-36, returned 3 metres of 2.34% nickel from 93 metres within 96.5 metres of 0.36% nickel starting from 4.5 metres.

The mineralized envelope of the historic Texmont mine. Credit: Canada Nickel Company

Canada Nickel CEO Mark Selby noted that the assay results “reinforce our thesis of near-surface high-grade intervals within thick mineralized sections which support the potential for near-term, smaller scale, open pit production.”

He expects to deliver an initial resource and a preliminary economic assessment (PEA) on the project this year and noted that Texmont’s “near-term production potential is highly complementary to our large-scale Crawford and regional nickel sulphide project potential.”

The Crawford nickel-cobalt sulphide project, just 43 km north of Timmins, will be among the top five nickel sulphide operations globally and one of Canada’s largest base metal mines based on results of a PEA, according to the company’s most recent corporate presentation. Canada Nickel plans to deliver a feasibility study on the 100%-owned project in the second quarter of 2023.

Canada Nickel acquired Texmont in December 2022. A mine and mill on the property operated from July 1971 to December 1972 at a rated mill capacity of 500 tonnes per day. A historic resource for Texmont outlined 3.2 million tonnes grading 0.9% nickel.

The latest batch of assays from the company’s 39-hole winter program indicate a higher-grade core of greater than 1% nickel ranging between two and eight metres thick. That core is encompassed by moderate-high grade mineralization of 0.6-1% nickel between 12 to 25 metres thick and surrounded by lower grade mineralization of 0.25% and higher, with widths of up to 150 metres.

The upcoming resource estimate for Texmont will use 28,884 metres of drilling completed during a previous 2006-2008 drill program and the 9,726 metres in Canada Nickel’s current 2022-2023 program.

The Toronto-based junior’s success in the Timmins camp is gaining attention.

In February, Anglo American (LSE: AAL) acquired a 9.9% stake in the junior (at a price of $1.95 per share for an investment of about $24 million). Under an offtake agreement, Anglo American also has an exclusive right to purchase up to 10% of recoveries of nickel concentrate, iron and chromium contained in magnetite concentrates, and any corresponding carbon credits from the Crawford project.

“Canada Nickel continues to leverage its growing nickel experience in the Timmins area, expanding its nickel target portfolio and outlining a potentially new nickel district anchored on its flagship Crawford project,” Matt O’Keefe, an analyst at Cantor Fitzgerald in Toronto, commented in a research note following news of the Texmont drill results, adding that there is “good potential for Texmont to develop into a small scale, higher-grade open pit operation” that would be “complementary” to Crawford.

Echelon Capital Markets analyst Ryan Walker also weighed in on Texmont’s attributes. “CNC conceptually sees potential for Texmont as an open-pit mine with a potential restart by 2025,” he said in a research note. “Alternatively, the property could provide higher-grade supplemental feed for any eventual production at CNC’s nearly flagship Crawford project.”

Canada Nickel shares traded at $1.25 apiece on Thursday afternoon in Toronto, in a 52-week range of $1.18 and $2.20.

The junior has about 123 million common shares outstanding for a market cap of roughly $159 million.

Cantor Fitzgerald’s Keefe has a buy rating on the company and a one-year target price on the stock of $4.80 per share. Walker of Echelon Partners has a speculative buy rating and a $5.25 per share price target.