Silver Elephant Mining Corp. [ELEF-TSX; SILEF-OTCQX, 1P2N-FSE] said Friday January 21 that it has struck a deal with Victory Nickel Inc. [NI-CSE] to acquire the Minago Nickel Project in Manitoba’s Thompson nickel belt.
Victory Nickel Interim CEO Sean Stokes said the transaction would ultimately eliminate the company’s secured debt, give management the opportunity to restructure its unsecured debt and allow for continued participation in the upside of the Minago Project in terms of nickel and sandstone resources.
The Minago Project contains a sulphide nickel deposit known as the Nose deposit that was advanced to a feasibility level stage as an open pit mine operation in 2009 by Victory Nickel. According to former NI 43-101 compliant resource calculation, it contains a measured resource of 136.4 million lbs nickel and an indicated resource of 484 million lbs nickel. On top of that is an inferred resource of 170.4 millionlbs.
Silver Elephant said it has agreed to acquire the Minago Project from Victory Nickel for US$11.6 million, consisting of a US$6.7 million credit against certain secured debt owed by Victory Nickel to Silver Elephant at closing and US$5 million in Silver Elephant common shares to be issued over a one-year period.
Additionally, Silver Elephant will issue to Victory Nickel $2 million in Silver Elephant common shares should the price of nickel exceed US$10/lb for 30 consecutive business days occurring before December 31, 2023.
At closing, Silver Elephant will also subscribe for 40 million common shares of Victory Nickel at a price of $0.025 for a consideration of $1 million. Closing of the transaction is expected to occur on February 9, 2021.
Silver Elephant shares dropped slightly on the news, falling 1.2% or $0.005 to 41.5 cents on volume of 821,537. The shares trade in a 52-week range of 59 cents and 0.095.
Victory Nickel shares were unchanged at $0.02.
“The Minago acquisition immediately propels Silver Elephant to the forefront of the nickel sulphide mining space to supply much needed Class 1 nickel for long-range, high-intensity, fast charging NMC 811 (80% nickel, 10% manganese, 10% cobalt) cathode standard in lithium batteries to fuel mass electric vehicle (EV) adoption,” said Daniel Oosterman, VP Exploration and Canadian Operations.
He said EV penetration is expected to reach 22 to 30% by 2030 according to a recent research report by Ken Hoffman of Mckinsey & Co. Annual production of 30 million electric vehicles requires over 2.0 billion pounds of Class 1 nickel.