Talon Metals Corp. [TLO-TSX] said Thursday February 4 that it has completed an updated preliminary economic assessment (PEA) for its Tamarack nickel-copper-cobalt project in Minnesota. Talon can acquire a 60% interest in the property comprising the Tamarack North Project and Tamarack South Project, covering 31,000 acres of private land and state leases.
Talon kicked off its first drill program as operator of the project in 2020 after taking over operatorship from Kennecott Exploration Co. (part of the Rio Tinto Plc [RIO-NYSE] group) in 2019.
To earn a 51% interest in the project Talon must spend US$10 million on exploration and development and pay US$11 million in cash and US$1.5 million worth of shares to Rio Tinto.
To increase its interest to 60%, the company must complete a feasibility study and pay Rio Tinto another US$10 million. As soon as Talon owns 60%, Rio Tinto must then fund its 40% stake or dilute. The mining major has no back-in rights.
Talon said the PEA demonstrates that the Tamarack Project can produce nickel sulphates for the electric vehicle market, nickel concentrates to be used for refined nickel powders also for the electric vehicle market, or nickel concentrates for the traditional stainless-steel market.
The company said all three scenarios have robust economics. The PEA foresees a nine-year operation where up to 118,000 tonnes of nickel and as much as 70,700 tonnes of copper would be recovered.
The after-tax net present value of the nickel sulphate scenario stands at US$569 million, the company said. The NPV for the nickel power scenario stands at US$567 million, and US$520 million for the nickel concentrate scenario.
The total estimated capital cost for each of the nickel power scenario or the nickel concentrate scenarios is US$394.99 million of which US$315.80 million is the initial cost during the first three years, including the first production year.
The total estimated capital cost of the nickel sulphate scenario is US$646.44 million, of which US$552.61 million is the initial cost required during the first three years, including the first production year.
The average operating cost for the nine-year mine life is US$48.15/tonne of mill feed in the nickel powder scenario, US$75.99 per tonne of mill feed in the nickel sulphate scenario and US$56.54/tonne of mill feed in the nickel concentrate scenario.