By Peter Kennedy
Giga Metals Corp. [GIGA-TSXV; HNCKF-OTCQB; BRR2-FSE] shares continued to advance on Monday September 14 as investors respond to media reports that the company is in talks with Tesla Motors Ltd. [TSLA-NASDAQ] about the development of a British Columbia mine that could supply nickel for electric vehicle batteries.
The shares advanced 6.7% or 11 cents Monday to $1.76 in heaving trading volume of 11.4 million, defying speculation that the share value would drop if there was no significant news today to support the 184% jump on September 11, 2020.
Gigaâ€™s flagship asset is its 100%-owned Turnagain Project in north-central B.C. The company says it ranks among the largest sulphide nickel deposits in the world, and could cost under $1 billion to develop (The estimate excludes the cost of hydro-electric power).
According to an estimate released in September 2019, the project contains a measured and indicated resource of 5.2 billion pounds of nickel and 312 million pounds of cobalt. On top of that is an inferred resource of 5.5 billion pounds of nickel and 327 million pounds of cobalt.
Nickel and cobalt are used in cathodes of two of the three dominant battery chemistries used in the production electric vehicles such as Chevy Bolt and Tesla. But Giga is hoping to gain a leg up on its competitors by developing a mine that is both carbon-neutral and capable of supplying ethically sourced nickel and cobalt in a politically stable jurisdiction.
Giga said recent metallurgical work indicates a clean concentrate grading 18-22% nickel and 1.0-1.2% cobalt is achievable using proven simple and reliable processing technology.
â€œIt is evident that interest in sustainable and carbon neutral nickel production is driving renewed interests in deposits such as Turnagain as the world will need significant nickel to meet future EV (electric vehicle) demand,â€ said Giga Metals President Martin Vydra in a press release on September 11, 2020. â€œTurnagain is one of a handful of deposits that could meet this future demand.â€™â€™
While Vydra said â€œno material announcement is forthcoming,â€ Â the statement did not prevent Giga shares from jumping 184.5% or $1.07 on Sept. 11 to $1.65. The shares are currently trading in a 52-week range of $1.68 and 13 cents.
On the same day, Conic Metals Corp. [NKL-TSXV], a battery metals investment firm, which holds a 6% stake in Giga Metals, saw its share price jump 28% or $0.07 to 32 cents on volume of 4.3 million. The shares trade in a 52-week range of 48 cents and 12 cents.
In a report, Reuters News Service said that alongside its goal to reduce pollution from driving, Tesla is also striving to reduce its own carbon footprint.
â€œTesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way,â€ said Tesla CEO Elon Musk during a speech in July, 2020.
In a response to those comments, Giga said Canada has several very large, low-grade, open-pittable sulphide nickel deposits that are waiting to be developed. One of them is the Turnagain deposit, which is located 70 km east of the community of Dease Lake in northern B.C.
Access from Dease Lake involves a 20-minute flight by helicopter or a road trip of about 100 km.
Giga has said metallurgical tests have shown that it can create a clean concentrate that can be upgraded to high purity Class One nickel for use in lithium ion batteries. It said cobalt produced at Turnagain for use in battery production, would also add to the long-term viability of the resource.
In a project update back in February, 2020, the company said it had decided to suspend a PEA to allow it to focus on metallurgical test work.
The company said it had previously been updating the PEA to establish the relative value of the Turnagain deposit in comparison to peer groups of large undeveloped sulphide deposits and undeveloped, high cost HPAL (High Pressure Acid Leach) laterite projects. Both are expected to compete for development dollars to supply the looming demand for battery materials such as nickel and cobalt.