Teck considers options at Montcalm nickel deposit

In light of the current strength in nickel prices, Teck Corp. (TSE) is considering several options for its Montcalm Twp., nickel-copper deposit located 35 miles northwest of Timmins, Ont. Hosting reserves of 4.2 million tons grading 1.4% nickel and 0.75% copper per ton, the deposit is one of the largest undeveloped nickel resources in Canada.

“We are taking a peek at it,” John May, president of Teck Explorations, a wholly-owned affiliate of Teck Corp., told The Northern Miner. Following the discovery of the deposit in 1976, work completed provided enough information about reserves, grade and metallurgy to satisfy the requirements of a feasibility study.

“Our engineering people are reviewing the data. From a technical standpoint, no more work is required.” The feasibility study recommended placing the property into production. However, prevailing weak commodity prices stalled development.

May also noted that Teck is considering selling its interest. “Conversations are going on,” May said, but added that Teck has no time frame for concluding a sale. A Japanese company, Domik Exploration, holds an equal interest in the deposit with Teck and Metall Mining Corp (TSE).

“I’m not sure this is the time to be rushing to bring a new nickel project on stream,” Robert Morgan, vice-president finance at Metall Mining told The Northern Miner. He did concede that Metall has yet to review the technical data during this period of booming nickel prices. In March, spot nickel prices on the London Metals Exchange have soared to a record high of $10.84(US) per lb.

At a price of $10 per lb of nickel, and $1 copper, the deposit has a gross in situ value exceeding $370 (C) per ton. At $2.70(US) per lb nickel, the gross value per ton of rock falls to a respectable $114.

Assuming mining and milling costs of less than $40 per ton, the deposit would still provide a reasonable margin for smelting charges, transportation and all the other costs associated with processing and smelting nickel.

However, concerns as to just how long such strong prices will continue are putting the damper on any rush to build new mines. Construction lead times at Montcalm could likely exceed one and a half years — and few experts are forecasting nickel prices that far into the future.