Nickel Creek rethinks Nickel Shaw in Yukon

DAWSON, YUKON — Nickel Creek Platinum (TSX: NCP; US-OTC: NCPCF) is wrapping up a new round of metallurgical testing at its Nickel Shaw polymetallic project near Destruction Bay, Yukon, 317 km northwest of Whitehorse, and says it will announce the results by the end of July. The company will then package the study into a preliminary economic assessment it aims to table this fall.

“Any previous technical reports that were done have now been thrown out the window and we advise not to look at them,” Nickel Creek vice-president of corporate development Graeme Jennings says in an interview with The Northern Miner on a sunny day in Dawson, Yukon. He sits next to Heather White, the company’s chief operating officer, in a big tent at a conference held by the Yukon Mining Alliance.

“These will be the first real economics coming out on this project,” he adds.

The company ran more than 8,800 lb. of samples through a mini pilot plant to determine how to separate a bulk nickel-copper concentrate into two concentrates in what Jennings calls a “basically feasibility level of metallurgy testing.”

“It’s a straightforward open pit,” Jennings says. “So if we can de-risk the metallurgy to a near feasibility degree, I believe that will significantly de-risk the overall company.”

Although Nickel Creek’s deposit has been around for a long time — and was mined briefly by Hudbay Minerals (TSX: HBM; NYSE: HBM) in the 1970s — the company redid its technical work last year, including its first-phase metallurgy, where it proved it could produce a bulk concentrate. It says that while it could ship the concentrate as-is to a smelter, it could improve the project’s economics by first separating the concentrate.

The gravel roads that run through the Nickel Shaw project accessed via the all-weather Alaska Highway. Photo by Matthew Keevil.

The process would require a couple more flotation tanks, but no new technology or significant capital expenses.

“You just take your bulk con, you refloat it and clean it, add some reagents, aerate it, and you can separate it into two products,” White says. “There’s no other tailings stream, so you’re talking about very little volume.”

“It’s tricky to find out the right chemistry,” Jennings follows.

“But for that little bit of extra capital,” White adds, “you get huge upside on your payables for your copper.”

White joined the company in August 2017, bringing more than 20 years of nickel-business experience with her, after being involved with companies such as Vale Canada and NovaGold Resources (TSX: NG; NYSE-AM: NG). While previous management had targeted the project’s platinum group metals (PGMs), according to Jennings it was White who came in and said, “This is a nickel project.”

He adds that when nickel prices were lower, targeting platinum made more sense. But spot nickel prices have risen over the last year. A pound of nickel in June 2017 cost little more than US$4. The price now hovers close to US$7 per pound.

“With the electric vehicle revolution occurring and the demand for nickel, copper, and cobalt as urbanization commodities, the timing is right for this project,” Jennings says. “The key is that all that growth in the nickel segment has to come from high-quality, battery-grade nickel projects.”

There are two types of nickel projects: laterites and sulphides. Laterites, found in hot climates, are typically inappropriate for producing battery-grade nickel. They yield large amounts of a low-grade concentrate. But Nickel Shaw is a sulphide project.

“Sulphide projects are simple,” Jennings says. “You take the rock, put it through a flotation and you have battery-grade nickel. That demand growth, all of that has to come from primarily sulphide mines and sulphide projects, like ourselves.”

Looking northwest at Nickel Creek Platinum’s Nickel Shaw (formerly Wellgreen) nickel-copper-PGM project 317 km northwest of Whitehorse in southwestern Yukon. Credit: Nickel Creek Platinum.

On a top-line revenue basis, Nickel Shaw is 55% tied to nickel, 15% to copper, 20% to PGMs and 10% to cobalt. Those numbers are contingent on metal prices, however. For example, Jennings says he calculated the cobalt revenue using a US$23 per lb. long-term cobalt price. Now it’s around US$35 per pound.

As of a June 2017 resource estimate, Nickel Shaw contains 326 million measured and indicated tonnes grading 0.26% nickel, 0.14% copper, 0.24 gram platinum per tonne, 0.24 gram palladium, 0.04 gram gold and 150 parts per million cobalt for 2.08 billion lb. nickel, 1.09 million lb. copper, 2.69 million oz. platinum, 2.84 million oz. palladium, 470,000 oz. gold and 121 million lb. cobalt. The project also has substantial inferred resources.

Nickel Creek can access the 2.1 km strike length deposit using a 14 km, all-season access road that runs off the Alaska Highway. The Yukon government maintains the access road, which it originally built for placer miners. White says there are “two or three” placer miners still active in the area.

The project is 30 km from the nearest airport, and a three-hour drive from Whitehorse. It’s also a 4.5-hour drive from Alaska’s Haines port, and a 5.5-hour drive from Alaska’s more developed Skagway port.

“The upside to Skagway is there’s an existing port there, and facilities,” White says. “It would need to be upgraded, but there’s no infrastructure at Haines.”

White says Nickel Creek would need help from Alaska or other miners in the area to make Haines a suitable port.

“If we all band together, I think there’s a great opportunity to make Haines into something,” she says.

She adds that for the time being Skagway is the more realistic option to put in a study. The company is also exploring other transportation options, like trucking concentrate to Fort Nelson, B.C., and railing it across Canada to Sudbury.

Nickel Creek has $6 million in cash. It is carrying out geophysical surveys this year at Nickel Shaw, saying it didn’t want to do a big exploration program until it had the metallurgy “tied down.”

Shares of Nickel Creek are trading at 20¢ within a 52-week range of 18¢ to 35¢. The company has a $52-million market capitalization. Its biggest shareholder, Electrum Strategic Opportunities, owns 26% of the company.

“Electrum’s original interest was in a platinum-palladium project in North America,” Jennings says. “85% of the world’s PGM production comes from just South Africa and Russia, so it has that strategic element.”