Canada Nickel may net US$500M Ottawa loan for giant Crawford project

Canada Nickel (TSXV: CNC; US-OTC: CNIKF) says a Canadian government agency might loan it US$500 million for its Crawford project in northern Ontario, which could become the world’s largest nickel-cobalt sulphide development. Its shares rose.

Export Development Canada (EDC), which finances and offers other help to domestic companies, sent a letter of intent to Canada Nickel in late August, it said on Friday. It would be combined with US$600 million in tax credits expected from Ottawa to help build the $3.5-billion capex project near Timmins over two stages, the company said.

“It marks an important milestone towards securing a full financing package for Crawford,” CEO Mark Selby said in the release. “We continue to make good progress with our financial advisers Deutsche Bank, Scotiabank and Cutfield Freeman to secure the remaining project funding required to begin construction when permits are received, which we expect to be by mid-2025.”

Shares in Canada Nickel climbed 6% on Friday morning in Toronto to $1.05 apiece, valuing the company at $190.3 million. They’ve traded in a 52-week range of 89¢ to $2.24. 

Big backers

Word of the potential EDC loan comes after Agnico Eagle Mines (TSX: AEM; NYSE: AEM), Canada’s largest gold producer, invested $23.1 million for a 12% stake in the nickel developer in January and Anglo American (LSE: AAL) bought 9.9% for $24 million. South Korean battery manufacturer Samsung SDI holds 8.7% and rights to potential offtake agreements after paying US$18.5 million.

Investment bank Cantor Fitzgerald notes how Canada Nickel uses its expertise in the Timmins area to expand a portfolio of nickel targets for a potential district centred on Crawford, which aims to be carbon-neutral.

“While not a guarantee of financing, the letter of intent shows serious interest from the EDC and significant potential support from the federal government,” mining analyst Matt O’Keefe said in a note on Friday. “We continue to like Canada Nickel and its Crawford project for its excellent jurisdiction, positive economics, carbon capture potential and quality partnerships. We maintain our Buy rating and $3.50 share target price.”

Tax credits

The EDC loan may have a term of up to 18 years, according to Canada Nickel. It didn’t mention an interest rate. The tax credits concern government support of critical mineral projects and carbon capture and storage to reduce emissions.

Crawford’s after-tax net present value is US$2.6 billion at an 8% discount rate, with an internal rate of return of 18.3%, according to a feasibility study issued last October.

The project holds 2.5 billion tonnes grading 0.24% nickel for 13.3 billion lb. of contained metal, the feasibility study showed. The mine, expected to start output in 2027, would feed into two proposed plants estimated to cost more than $1 billion that would process nickel and to produce stainless-steel and alloys, Canada Nickel said in February.

Despite long-term forecasts for increasing battery metal demand to meet rising electric vehicle production, prices for nickel and lithium have crashed in the past year, forcing some miners to suspend operations and delay projects.

A previous version of this story incorrectly stated the potential loan and tax credit amounts in Canadian dollars.