Canada Nickel releases positive PEA for Ontario project

Canada Nickel Company Inc. [CNC-TSXV] on Monday May 25 said a PEA confirmed robust economics for its 100%-owned Crawford nickel-cobalt sulphide project in the Timmins-Cochrane area, northern Ontario.

The announcement comes after Canada Nickel recently entered a non-binding MOU with Glencore Canada Corp. to examine the potential use of Glencore’s Kidd concentrator and metallurgical site in Timmins for treatment and processing of material mined from the Crawford Project. Crawford is 40 km north of Glencore’s operations.

Canada Nickel said the PEA demonstrates the potential to develop a phased conventional nickel sulphide concentrator, producing nickel concentrates and magnetite concentrates. The operation is designed to have an open pit mine with a plant potential of 120,000 tonnes/day.

The company said it is immediately advancing the project to a feasibility study expected to be completed by mid-2022.

On Monday, Canada Nickel shares eased 2.3% or $0.08 to $3.34 on volume of 367,130. The shares are trading in a 52-week range of $4.54 and 78 cents.

In a press release in October, 2020, Canada Nickel said the measured and indicated resource at Crawford had increased by 9% from an earlier estimate to 657 million tonnes at 0.26% nickel (1.7 million tonnes of nickel). It said total inferred resources increased by 121% from a previous estimate to 646 million tonnes at 0.24% nickel (1.6 million tonnes of nickel).

“The PEA, utilizing just a fraction of our resource potential, demonstrates that we expect to be one of the largest nickel sulphide operations globally, producing 1.9 billion pounds of nickel over a 25-year period with net cash costs of just over $1/lb,” said Canada Nickel Chairman Mark Selby.

“Our current focus on the stainless steel market allows us to fully utilize the substantial by-product value four the contained iron and chrome, placing us on the lower end of the cost curve,” he said.

“The PEA is a milestone that enables a whole range of key activities as we aggressively advance the project towards production by the middle part of the decade.”

The Crawford PEA foresees average nickel production of 75 million lbs (34,000 tonnes) with peak period annual average of 93 million lbs (42,000 tonnes). It also envisages significant iron and chrome by-products of 860,000 tonnes/year and 59,000 tonnes/year, respectively.

Life-of-mine production is forecast to be 25 years with 842,000 tonnes of nickel, 21 million tonnes of iron and 1.5 million tonnes of chrome valued at $24 billion using long-term price assumptions.

According to the PEA, the project will generate annual earnings before interest tax, depreciation and amortization (EBITDA) of $439 million and free cash flow of $274 million.