Highlights
- $1.2 billion after-tax
NPV8% and 16% after-tax IRR
- First quartile net C1 cash cost of $1.09/lb and net AISC of $1.94/lb of nickel
- Production of 1.9 billion pounds nickel over 25 years
- Annual EBITDA of $439 million and
annual free cash flow of $274
million
- Immediately advancing to feasibility study
(All amounts in US dollars unless otherwise
indicated.)
TORONTO, May 25, 2021 /CNW/ - Canada Nickel Company
Inc. ("Canada Nickel" or the "Company") (TSXV: CNC)
(OTCQB: CNIKF), is pleased to announce that the Preliminary
Economic Assessment ("PEA") has confirmed robust economics showing
an after-tax NPV8% of $1.2
billion and an after-tax IRR of 16% from its wholly owned
flagship Crawford Nickel Sulphide Project ("Crawford") located in
Timmins, Ontario, Canada.
The PEA, prepared by Ausenco Engineering Canada Inc.
("Ausenco") in accordance with National Instrument 43-101 ("NI
43-101"), demonstrates the potential to develop a phased
conventional nickel sulphide concentrator, producing nickel
concentrates and magnetite concentrate. The operation is designed
to have an open pit mine with a plant potential of 120,000 tonnes
per day.
The Company is immediately advancing the project to a
feasibility study, which is expected to be completed by
mid-2022.
"We are focused on delivering the next generation of nickel and
are pleased that this PEA demonstrates the robust economics of our
flagship Crawford project. 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 per pound. Our
current focus on the stainless steel market allows us to fully
utilize the substantial by-product value for the contained iron and
chrome, placing us on the lower end of the cost curve. I am very
proud of our team for delivering these results in just over 20
months since our first drill holes and I look forward to continuing
to unlock the district scale nickel potential of the Timmins region," said Mark Selby, Chairman and CEO of Canada
Nickel.
Mr. Selby further stated, "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.
We are immediately embarking on a feasibility study. We are
calculating our carbon footprint and evaluating Crawford's
potential to deliver NetZero NickelTM, NetZero
CobaltTM and NetZero IronTM. We are
exploring opportunities to deliver the nickel in our concentrates
into the electric vehicle ("EV") market. We have begun our
Environmental and Social Impact Assessment ("ESIA"), and we
continue to work in partnership with Indigenous and local
communities. We intend to implement an extensive and inclusive
stakeholders' consultation process that will allow us to identify
and mitigate the project impacts in order to deliver sustainable
benefits for multiple generations."
Crawford 2021 PEA Highlights
- Robust economics
-
- After-tax, $1.2 billion
NPV8% and 16% IRR at long-term price
assumptions1
- Large scale, low cost, long-life
-
- Annual average nickel production of 75 million pounds (34,000
tonnes) with peak period annual average of 93 million pounds
(42,000 tonnes)
- Significant iron and chrome by-products of 860,000 tonnes per
annum and 59,000 tonnes per annum, respectively
- Life- of-mine net C1 cash cost of $1.09/lb and net AISC of $1.94/lb on a by-product basis (1st
quartile2)
- Life-of-mine production of 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.1
- Significant earnings and free cash flow generation
-
- Annual EBITDA of $439 million and
free cash flow of $274 million.
- Minimization of carbon footprint
-
- Use of autonomous trolley trucks and electric shovels reduce
diesel use by 40%
- Optimization of the carbon sequestration potential of the
tailings and waste rock.
The PEA is preliminary in nature, it includes inferred mineral
resources that are considered too speculative geologically to have
the economic considerations applied to them that would enable them
to be categorized as mineral reserves, and there is no certainty
that the results of the PEA will be realized.
_______________________
|
1
|
Refer to Note on
assumptions below
|
2
|
Source – as per
figure above (Crawford's Net C1 Cash Cost vs 2020 Net C1 Cash Cost
of Global Nickel Operations)
|
Crawford PEA Summary
|
Unit
|
Phase I
Years 1-3.5
|
Phase II
Years 3.5-7
|
Phase III
Years 8-18
|
Life-Of-Mine
Years 1-25
|
Mining &
Milling
|
|
|
|
|
|
|
|
|
|
Mill
Capacity
|
ktpd
|
42.5
|
85
|
120
|
|
|
Ore Mined
|
ktpd
(Mtpa)
|
71
|
(26)
|
95
|
(35)
|
125
|
(46)
|
100
|
(37)
|
Ore Milled
|
ktpd
(Mtpa)
|
40
|
(15)
|
83
|
(30)
|
119
|
(44)
|
100
|
(37)
|
Strip
Ratio
|
|
1.34
|
1.90
|
2.20
|
2.08
|
Grade
|
|
|
|
|
|
|
|
|
|
Nickel
|
%
|
0.32
|
0.26
|
0.25
|
0.25
|
Chromium
|
%
|
0.62
|
0.63
|
0.58
|
0.60
|
Iron
|
%
|
6.02
|
6.46
|
6.58
|
6.51
|
Recovery
|
|
|
|
|
|
|
|
|
|
Nickel
|
%
|
50
|
44
|
39
|
37
|
Chromium
|
%
|
27
|
27
|
27
|
27
|
Iron
|
%
|
38
|
32
|
36
|
36
|
Annual
Production
|
|
|
|
|
|
|
|
|
|
Nickel
|
Mlbs (kt)
pa
|
52
|
(23)
|
77
|
(35)
|
93
|
(42)
|
75
|
(34)
|
Chromium
|
ktpa
|
25
|
52
|
69
|
59
|
Iron
|
ktpa
|
335
|
630
|
1,023
|
860
|
Revenue &
Costs
|
|
|
|
|
|
|
|
|
|
NSR
|
US$/t
milled
|
$31.09
|
$23.93
|
$21.49
|
$20.86
|
|
|
|
|
|
|
|
Mining
|
US$/t
milled
|
$5.25
|
$3.97
|
$4.22
|
$3.84
|
Milling
|
US$/t
milled
|
$4.77
|
$4.54
|
$4.11
|
$4.19
|
G&A
|
US$/t
milled
|
$0.98
|
$0.51
|
$0.38
|
$0.42
|
Total Onsite
Costs
|
US$/t
milled
|
$11.00
|
$9.02
|
$8.71
|
$8.45
|
|
|
|
|
|
|
|
|
|
|
Net C1
|
US$/lb
Ni
|
$1.46
|
$1.32
|
$1.20
|
$1.09
|
Cash Cost
|
US$/t Ni
|
$3,218
|
$2,905
|
$2,640
|
$2,400
|
|
|
|
|
|
|
|
|
|
|
Net AISC
|
US$/lb
Ni
|
$3.09
|
$2.57
|
$1.97
|
$1.94
|
|
US$/t Ni
|
$6,808
|
$5,656
|
$4,335
|
$4,284
|
|
|
|
|
|
|
|
|
|
|
C1 Cash Cost
Before
|
US$/lb
Ni
|
$3.44
|
$3.89
|
$4.47
|
$4.54
|
By-product
Credits
|
US$/t Ni
|
$7,591
|
$8,577
|
$9,857
|
$10,008
|
|
|
|
|
|
|
|
|
|
|
Cash
Flow
|
|
|
|
|
|
|
|
|
|
Annual
EBITDA
|
US$
millions
|
$287
|
$437
|
$538
|
$439
|
Annual Free Cash
Flow
|
US$
millions
|
$39
|
$244
|
$368
|
$274
|
Note on assumptions
- The Company utilized metal price assumptions from third party
sources applying a nickel price of $7.75/lb, a chromium price of $1.04/lb and an iron price of $290 per tonne (based on U.S. benchmark iron
scrap price). In addition, a US$/C$ exchange rate of $0.75 and oil price of US$60/barrel were also applied.
- Further details on production can be found on the Company's
website at www.canadanickel.com
- Revenue & Costs information and Cash Flow data are non-IFRS
measures. Refer to Non-IFRS measures.
Additional Opportunities
There remains significant
potential for additional value to be created at the Crawford
project through a number of identified opportunities, which
include:
- Significant additional exploration potential within the
Crawford project and at the Company's additional properties
including the Company's most recent acquisition at
Bradburn/Dargavel
- Optimization of nickel, iron, chrome recovery and concentrate
grades through additional testwork during feasibility study
stage
- Determination of the carbon capture potential from the carbon
sequestration potential of the Company's tailings and waste rock to
permit the Company to achieve net zero carbon footprint operation
production of NetZero NickelTM, NetZero
CobaltTM and NetZero IronTM products
- Processing of nickel concentrates to capture cobalt, platinum
group metals ("PGM") content through various processing
alternatives for the company's high grade and standard grade
concentrates and deliver nickel and cobalt to EV market
- Capital cost reductions via electricity distribution and fleet
acquisition opportunities through the Company's Memorandum of
Understanding with Taykwa Tagamou First Nation to participate in
the financing of all or a portion of the project's electricity
supply and heavy mining equipment fleet required for Crawford's
operation
- Completion of negotiations to potentially utilize Glencore's
Kidd Creek mill based on the capital and operating costs
successfully determined during the initial phase of work.
Crawford Overview
The Crawford project will be a
conventional open pit mine/mill operation powered by zero-carbon
electricity and utilizing trolley trucks and electric rope shovels
to minimize its carbon footprint through reduced diesel
consumption. The project will produce three products: (1) a
high-grade concentrate estimated at 35% nickel; (2) a standard
grade concentrate estimated at 12% nickel; and (3) a magnetite
concentrate estimated at 48% iron and 3% chromium. All
of the products are assumed to be sold based on the nickel, iron,
and chromium content of the concentrates on terms which provide
sufficient incentive for the construction of a co-located stainless
steel mill using the same RKEF-AOD approach utilized very
successfully in China and
Indonesia. The Company's wholly-owned subsidiary NetZero
Metals Inc. will begin negotiations with potential partners
immediately following the release of the PEA.
The process plant will utilize a conventional milling operation
consisting of crushing, grinding, desliming and flotation
operations consistent with other ultramafic nickel operations. The
process plant will be constructed in three phases. Phase I will
have a steady-state throughput of 42,500 tonnes per day using a
single 36 x 24 foot semi-autonomous grinding mill and a 26.5 x 44
foot ball mill grinding circuit. Phase II will double
throughput starting in year four, by mirroring the first line.
Phase III will raise production to the ultimate rate of 120,000
tonnes per day through the addition of secondary crushing and a
third ball mill and additional downstream capacity.
Location & Infrastructure
The Crawford project
lies within the Abitibi upland physiographic region and has a
typical "Laurentian Shield" landscape. The Crawford project is
located in Crawford and Lucas townships, about 42 kilometres north
of the city of Timmins in the
heart of the prolific Timmins-Cochrane mining camp in Ontario, Canada, and is adjacent to
well-established, major infrastructure associated with over 100
years of regional mining activity. The Crawford project is located
adjacent to a paved highway, a power line with sufficient capacity
for the construction period, with other major power lines and rail
access located nearby.
Mining
The Crawford project is currently comprised of
two separate open pits. The mine production plan includes 37% of
the overall mill feed from inferred resources. Mining will commence
in the Main Zone, which represents approximately 77% of the total
mineralized material. Over 90% of the material mined will be
rock, which will be drilled and blasted before being loaded by 700
tonne class electrically powered hydraulic excavators into 290
tonne autonomous trucks that will use trolley assist on uphill
hauls. The remaining material will be overburden, which will not
require drilling and blasting and will be loaded and hauled with a
mixed fleet including 45 tonne, 90 tonne and 290 tonne trucks.
Mining of the East Zone will commence after the Main Zone is
depleted in year 17 and will continue through year 25. A key
element of the mine plan is the de-coupling of mine production
rates for the Main Zone from that of the plant. This allows for
accelerated output of metal in the early years from higher grade
and recovery material, while lower grade and recovery material is
stockpiled and used to supplement feed from the East Zone in later
years. This strategy also allows tailings produced from the second
half of year 17 onwards to be impounded within the mined-out Main
Zone, significantly reducing the size and associated cost of the
Tailings Storage Facility.
Inclusion of the trolley assist option is a major driver in
reducing greenhouse gas (GHG) emission, noise level, fleet size and
overall project environmental footprint.
Mineral Processing
The concentrator and associated
infrastructure facilities will process run-of-mine or stockpiled
material using a conventional milling process. Unit steps in the
flowsheet include: crushing, semi-autogenous and ball mill
grinding, desliming, nickel flotation as well as magnetic
separation of the flotation tails. The concentrator will produce
three product streams: high grade nickel concentrate (35% nickel),
standard nickel concentrate (12% nickel) and a magnetite
concentrate that contains approximately 48% iron and 3% chromium.
Nickel, iron and chromium are three key alloying metals in the
production of stainless steel, which makes Canada Nickel products
suitable feeds for this market and increases the value of the
product per tonne of nickel due to the stainless steel pricing and
premiums available in the United
States and European markets.
Based on analysis by CRU, utilization of scoping study work
completed by Kingston Process Metallurgy Inc. (KPM) and Steel and
Metals Market Research (SMR), the Company should be able to achieve
91% payability for contained nickel, 71% payability for contained
iron, and 43% payability for contained chromium in its feeds and
provide sufficient incentive for the construction of a local
stainless steel mill which would also produce additional nickel pig
iron products based on the nickel/iron mix of the
feeds.
At this time, the Company is not receiving any value for the
contained cobalt and PGM content in its nickel concentrates as the
Company has chosen a stainless steel path which currently provides
the most value to the Company and can reliably be processed into
conventional products utilizing existing, proven technology.
With rapidly increasing demand from the EV market, we will consider
these processing options if they provide additional value for the
Company's project output. Discussions with various supply
chain participants in the EV supply chain are expected to
accelerate now with the completion of the PEA.
Capital Cost Estimate
US$
millions
|
|
Initial 42.5
ktpd
|
85
ktpd
|
120
ktpd
|
|
Life-Of-Mine
Years 1-25
|
Initial and
Expansion
|
|
|
|
|
|
Mining
|
|
201
|
-
|
-
|
|
201
|
Process
plant
|
|
294
|
294
|
98
|
|
685
|
Site and
services
|
157
|
132
|
4
|
|
293
|
Infrastructure
|
|
149
|
15
|
25
|
|
189
|
Indirects
|
|
108
|
31
|
22
|
|
161
|
Owners'
costs
|
|
29
|
-
|
-
|
|
29
|
Contingency
|
|
250
|
71
|
45
|
|
366
|
|
|
1,188
|
543
|
194
|
|
1,925
|
|
|
Pre-production
|
Phase I
Years 1-3.5
|
Phase II
Years 3.5-7
|
Phase III
Years 8-18
|
Life-Of-Mine
Years 1-25
|
Sustaining and
closure
|
|
|
|
|
|
Mining
|
|
-
|
187
|
195
|
285
|
711
|
Site and
services
|
-
|
34
|
44
|
136
|
214
|
Infrastructure
|
|
-
|
8
|
15
|
91
|
132
|
Closure
|
|
26
|
9
|
-
|
-
|
34
|
|
|
26
|
238
|
254
|
512
|
1,091
|
|
|
|
|
|
|
|
Total
|
|
1,213
|
781
|
448
|
512
|
3,016
|
The total capital estimate includes the direct field cost for
executing the project, the contractor's costs for construction
management, the indirect costs of construction, the owner's
indirect costs associated with design, construction and
commissioning, as well as the cost of the owner-provided mining
fleet and internal costs for preproduction development, including
stockpiled inventory. The capital does not include escalation,
interest, or working capital. Working capital has been included in
the economic analysis.
The PEA is preliminary in nature and as such an average
contingency of 25% was applied to both initial and expansion
capital expenditures.
Operating Cost Estimate
|
Phase I
Years 1-3.5
|
Phase II
Years 3.5-7
|
Phase III
Years 8-18
|
Life-Of-Mine
Years 1-25
|
Operating
costs/tonne milled
|
US$
|
C$
|
US$
|
C$
|
US$
|
C$
|
US$
|
C$
|
Labour
|
2.39
|
3.19
|
1.49
|
1.98
|
1.20
|
1.60
|
1.26
|
1.68
|
Consumables
|
2.49
|
3.31
|
2.36
|
3.14
|
2.30
|
3.07
|
2.25
|
3.00
|
Maintenance
|
1.70
|
2.27
|
1.47
|
1.96
|
1.69
|
2.25
|
1.54
|
2.05
|
Diesel
|
1.02
|
1.36
|
0.78
|
1.04
|
0.78
|
1.04
|
0.72
|
0.96
|
Power
|
2.45
|
3.26
|
2.40
|
3.20
|
2.35
|
3.13
|
2.25
|
3.00
|
Other
|
0.95
|
1.27
|
0.52
|
0.70
|
0.40
|
0.53
|
0.43
|
0.58
|
|
11.00
|
14.66
|
9.02
|
12.02
|
8.72
|
11.62
|
8.45
|
11.27
|
Operating costs were developed using a zero based model
calibrated against the actual results of peer operations. Labour
costs include the benefits of the use of productivity improving
technologies such as autonomous trucks and drills while diesel
costs will be minimized through the use of trolley-assisted
haulage.
Sensitivities
|
|
Delta NPV8% ($
millions)
|
|
Delta IRR
(%)
|
|
Delta Net C1 Cash
Cost ($/lb)
|
Sensitivity
|
|
-
|
+
|
|
-
|
+
|
|
-
|
+
|
Nickel Price
±$1/lb($6.75/lb - $8.75/lb)
|
|
(445)
|
435
|
|
(2.8)
|
2.6
|
|
n.a.
|
n.a.
|
Nickel Price ±10%
($6.98/lb - $8.53/lb)
|
|
(342)
|
341
|
|
(2.1)
|
2.0
|
|
n.a.
|
n.a.
|
Iron Price
±10% ($261/tonne - $319/tonne)
|
(101)
|
101
|
|
(0.6)
|
0.5
|
|
0.26
|
(0.26)
|
Oil Price
±$10/bbl ($50/bbl - $70/bbl)
|
|
20
|
(20)
|
|
0.1
|
(0.1)
|
|
(0.04)
|
0.03
|
Exchange
Rate ±$0.05 ($0.70 - $0.80)
|
|
222
|
(226)
|
|
1.8
|
(1.7)
|
|
(0.29)
|
0.28
|
Nickel Recovery
±10%
|
|
(344)
|
339
|
|
(2.2)
|
2.0
|
|
0.12
|
(0.10)
|
Initial Capex
±10%
|
|
83
|
(84)
|
|
1.1
|
(1.0)
|
|
n.a.
|
n.a.
|
Expansion Capex
±10%
|
|
36
|
(36)
|
|
0.3
|
(0.3)
|
|
n.a.
|
n.a.
|
Operating
Costs ±10%
|
|
101
|
(101)
|
|
0.6
|
(0.6)
|
|
(0.23)
|
0.23
|
Sensitivity analysis does not reflect changes in underlying cost
with changes in metal prices.
Next Steps
With the successful completion of the
Crawford PEA, Canada Nickel is immediately initiating a feasibility
study with a timeline for a mid-year 2022 release. The Company has
started work on its ESIA which is a key step in its permitting
process which the company will aggressively advance alongside the
work on the feasibility study. The Company will also continue
to explore its additional nickel properties in addition to
Crawford.
The technical report in support of the PEA will be filed under
Canada Nickel's profile on SEDAR at www.sedar.com within 45 days of
the date of this press release.
Mineral Resource Estimate
|
|
Tonnage
|
|
Grade
|
|
Contained
Metal
|
|
|
Mt
|
|
%
Ni
|
%
Fe
|
%Cr
|
%
Co
|
%S
|
g/t
Pd
|
g/t
Pt
|
|
kt
Ni
|
Mt
Fe
|
kt
Cr
|
kt
Co
|
koz
Pd
|
koz
Pt
|
Main Higher Grade
Zone
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Measured
|
|
151.7
|
|
0.32%
|
6.25%
|
0.60%
|
0.013%
|
0.20%
|
0.029
|
0.012
|
|
482.2
|
9.5
|
910.2
|
19.9
|
140.6
|
56.7
|
Indicated
|
|
128.6
|
|
0.30%
|
6.37%
|
0.57%
|
0.013%
|
0.16%
|
0.027
|
0.013
|
|
391.8
|
8.2
|
738.1
|
16.5
|
111.1
|
51.7
|
M&I
|
|
280.2
|
|
0.31%
|
6.31%
|
0.59%
|
0.013%
|
0.18%
|
0.028
|
0.012
|
|
873.9
|
17.7
|
1,648.3
|
36.4
|
251.7
|
108.4
|
Inferred
|
|
109.9
|
|
0.29%
|
6.66%
|
0.58%
|
0.013%
|
0.09%
|
0.026
|
0.013
|
|
315.0
|
7.3
|
641.8
|
14.0
|
92.9
|
46.7
|
Main Lower Grade
Zone
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Measured
|
|
62.5
|
|
0.22%
|
6.83%
|
0.61%
|
0.013%
|
0.05%
|
--
|
--
|
|
135.1
|
4.3
|
383.5
|
8.2
|
--
|
--
|
Indicated
|
|
263.2
|
|
0.21%
|
6.90%
|
0.60%
|
0.013%
|
0.04%
|
--
|
--
|
|
557.0
|
18.2
|
1,591.1
|
34.6
|
--
|
--
|
M&I
|
|
325.6
|
|
0.21%
|
6.89%
|
0.61%
|
0.013%
|
0.04%
|
--
|
--
|
|
692.1
|
22.4
|
1,974.6
|
42.9
|
--
|
--
|
Inferred
|
|
210.2
|
|
0.21%
|
6.87%
|
|
0.013%
|
0.06%
|
--
|
--
|
|
444.9
|
14.4
|
1,289.2
|
27.1
|
--
|
--
|
East
Zone
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Measured
|
|
25.8
|
|
0.26%
|
6.03%
|
0.63%
|
0.012%
|
0.04%
|
--
|
--
|
|
67.4
|
1.6
|
161.8
|
3.2
|
--
|
--
|
Indicated
|
|
21.8
|
|
0.26%
|
6.20%
|
0.65%
|
0.013%
|
0.04%
|
--
|
--
|
|
56.2
|
1.4
|
141.6
|
2.7
|
--
|
--
|
M&I
|
|
47.6
|
|
0.26%
|
6.11%
|
0.64%
|
0.013%
|
0.04%
|
--
|
--
|
|
123.6
|
2.9
|
303.4
|
6.0
|
--
|
--
|
Inferred
|
|
177.1
|
|
0.24%
|
6.63%
|
0.63%
|
0.013%
|
0.04%
|
--
|
--
|
|
424.1
|
11.7
|
1,113.3
|
22.7
|
--
|
--
|
Total Crawford
Resources
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M&I
|
|
653.5
|
|
0.26%
|
6.58%
|
0.60%
|
0.013%
|
0.10%
|
0.028
|
0.012
|
|
1,689.8
|
43.0
|
3,926.3
|
85.2
|
251.7
|
108.4
|
Inferred
|
|
497.2
|
|
0.24%
|
6.74%
|
0.61%
|
0.013%
|
0.06%
|
0.026
|
0.013
|
|
1,184.0
|
33.5
|
3,044.3
|
63.9
|
92.9
|
46.7
|
1.
|
The independent
Qualified Person for the Mineral Resource Estimate, as defined by
NI 43-101, is Dr. Scott Jobin-Bevans (P.Geo., APGO #0183), of
Caracle Creek International Consulting Inc. The effective date of
the Mineral Resource Estimate is May 21, 2021.
|
2.
|
These Mineral
Resources are not Mineral Reserves as they do not have demonstrated
economic viability. The quantity and grade of reported
Inferred Resources in this Mineral Resource Estimate are uncertain
in nature and there has been insufficient exploration to
define these Inferred Resources as Indicated or Measured. However,
it is reasonably expected that the majority of Inferred
Mineral Resources could be upgraded to Indicated Mineral Resources
with continued exploration.
|
3.
|
A cut-off grade of
0.15% Ni was used for the low-grade domains (Main and East zones)
and cut-off grades of 0.25% Ni (Main Zone) and 0.21% Ni (East
Zone) were used for the high-grade domains. Cut-offs were
determined on the basis of core assay geostatistics and drill
core lithologies for the deposit, and by comparison to analogous
deposit types.
|
4.
|
Geological and
block models for the Mineral Resource Estimate used data from a
total of 62 surface drill holes (51 in
the Main Zone and 11 in the East Zone), completed by Spruce Ridge Resources (4 holes in 2018) and Noble Mineral Exploration and
Canada Nickel Company (58 holes in 2019-2020). The drill hole
database was validated prior to resource estimation and QA/QC
checks were made using industry-standard control charts for blanks,
core duplicates and commercial certified reference material
inserted into assay batches by Canada Nickel, and by comparison of
umpire assays performed at a second laboratory.
|
5.
|
Estimates have been rounded to two significant figures.
|
6.
|
The mineral
resource estimates have also been revised in the Amended Technical
Report to include a conceptual pit envelope constraint that was
developed using the optimization parameters included in the Amended
Technical Report. Metal prices used (US$) were $7.75/lb nickel,
$15/lb cobalt, $90/tonne magnetite, $1.04/lb chromium, $1,600/oz
Pd, and $800/oz Pt. Different pit slopes were used for each layer
(in degrees): 9.5 in clay, 21.8 in gravel and 45 in rock. Exchange
rate utilized was US$/C$ of $0.75. Mining costs utilized different
values for overburden (clay, gravel), selective mining and bulk
mining ranging from C$1.75 to C$3.15/t mined. Processing costs and
G&A for 100ktpd operation were C$6.18/t. Based on the range of
grade and ratio of sulphur to nickel at Crawford, recovery could be
expected to range from 10% - 60%. It has also been assumed that 30
– 40% of total iron would be recovered to a saleable magnetite
concentrate.
|
7.
|
The Mineral Resource Estimate was prepared following the CIM Estimation of Mineral Resources & Mineral Reserves Best Practice Guidelines (November
29, 2019).
|
MAIN ZONE:
|
8.
|
The geological model as applied to the Mineral Resource Estimate for the Main Zone comprises three mineralized domains hosted
by variably serpentinized ultramafic rocks: a relatively high-grade
core (largely dunite) and two northern and southern lower
grade envelopes (combination of dunite and peridotite). Individual
wireframes were created for each domain.
|
9.
|
The block model
was prepared using Micromine 2020. A 12 m x 12 m x 9 m block model
was created and samples were composited at 4.5 m intervals.
Grade estimation from drill hole data was carried out for Ni, Co,
Fe, Cr, S using the
Ordinary Kriging interpolation method and Pd and Pt
using the Inverse Distance Squared method.
|
10.
|
Grade estimation
was validated by comparison of input and output statistics (Nearest
Neighbour and Inverse Distance Squared
methods), swath plot analysis, and by visual inspection of the assay data, block model, and grade shells in cross-sections.
|
11.
|
Density estimation
was carried out for the mineralized domains using the Ordinary
Kriging interpolation method, on the basis of 3,270 specific
gravity measurements collected during the core logging process,
using the same block model parameters of the grade estimation.
As a reference, the average estimated density value within the
high-grade is
2.64 g/cm3 (t/m3), while low-grade domains of the resource model yielded averages of 2.63 g/cm3 (t/m3) in the north and
2.71 g/cm3 (t/m3) in the south.
|
EAST
ZONE:
|
12.
|
The geological model as applied to the Mineral Resource Estimate for the East Zone comprises three mineralized domains hosted
by variably serpentinized ultramafic rocks: a relatively high-grade
core (largely dunite) and two northern
and southern lower grade envelopes (largely peridotite). Individual wireframes were created for each domain.
|
13.
|
The block model
was prepared using Micromine 2020. A 20 m x 20 m x 15 m block model
was created and samples were composited at 3 m intervals.
Grade estimation from drill hole data was carried out for Ni, Co,
Fe, Cr and S using the
Inverse Distance Squared method.
|
14.
|
Grade estimation
was validated by comparison of input and output statistics (Nearest
Neighbor method), swath plot
analysis, and by visual inspection of the assay data,
block model,
and grade shells in cross-sections.
|
15.
|
An average bulk density value for each mineralized domain was calculated on the basis of 244 specific gravity measurements collected during the core logging process. Blocks within the high-grade were assigned a single bulk density value
of 2.62 g/cm3 (t/m3), while
low-grade domains of the
resource model were assigned single
bulk density values of 2.66
g/cm3 (t/m3) in the north and 2.72 g/cm3 (t/m3) in the south.
|
Conference Call Details
Canada Nickel is hosting a
live Q&A conference call on May 26,
2021 at 10:00 a.m. EDT.
Participants may join the call as follows:
Dialing local Toronto:
+1-416-764-8688
Dialing North American Toll Free: +1-888-390-0546
Dialing International Toll Free: available upon request
Webcast URL:
https://produceredition.webcasts.com/starthere.jsp?ei=1463704&tp_key=c92241d65a
Confirmation #: 10317274
A playback version will be available for one month after the
call at +1-416-764-8677 (local or international) or
North American toll free at +1-888-390-0541 (passcode 317274
#).
About Canada Nickel
Canada Nickel Company Inc. is
advancing the next generation of nickel-cobalt sulphide projects to
deliver nickel and cobalt required to feed the high growth electric
vehicle and stainless steel markets. Canada Nickel Company has
applied in multiple jurisdictions to trademark the terms NetZero
NickelTM, NetZero CobaltTM, NetZero
IronTM and is pursuing the development of processes to
allow the production of net zero carbon nickel, cobalt, and iron
products. Canada Nickel provides investors with leverage to nickel
and cobalt in low political risk jurisdictions. Canada Nickel is
currently anchored by its 100% owned flagship Crawford
Nickel-Cobalt Sulphide Project in the heart of the prolific
Timmins-Cochrane mining camp.
Additional Notes
Qualified Persons and NI 43-101
Compliance
Stephen J. Balch
P.Geo. (ON), VP Exploration of Canada Nickel and a
"qualified person" as such term is defined by National Instrument
43-101, has verified the data disclosed in this news release, and
has otherwise reviewed and approved the technical information in
this news release on behalf of Canada Nickel.
Non-IFRS Measures
The Company has included certain
non-IFRS measures in this press release. The Company believes that
these measures provide investors an improved ability to evaluate
the underlying performance of the project. The non-IFRS measures
are intended to provide additional information and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. These measures do not
have any standardized meaning prescribed under IFRS, and therefore
may not be comparable to other issuers.
Net C1 cash costs are the sum of operating costs (including all
expenses related to stripping), net of by-product credits from
chromium and iron ore per pound of payable nickel. Net AISC (all in
sustaining costs) are C1 cash costs plus royalties plus sustaining
capital per pound of payable nickel. Sustaining and expansion
capital are non-IFRS measures. Sustaining capital is defined as
capital required to maintain operations at existing levels.
Expansion capital is defined as capital expenditures for major
growth projects or enhancement capital for significant
infrastructure improvements at existing operations. Both
measurements are used by management to assess the effectiveness of
investment programs.
NSR (Net Smelter Return) includes gross revenues less refining
costs. EBITDA is earnings before interest, taxes and depreciation,
which comprise NSR less royalties and operating costs and for the
purpose of the economic analysis assume all stripping costs are
expensed. Free cash flow represents operating cash flow less
capital expenditures.
Cautionary Statement Concerning Forward-Looking
Statements
This press release contains certain information
that may constitute "forward-looking information" under applicable
Canadian securities legislation. Forward looking information
includes, but is not limited to, the results of Crawford's PEA,
including statements relating to net present value, future
production, estimates of cash cost, proposed mining plans and
methods, mine life estimates, cash flow forecasts, metal
recoveries, estimates of capital and operating costs, timing for
permitting and environmental assessments, realization of mineral
resource estimates, capital and operating cost estimates, project
and life of mine estimates, ability to obtain permitting by the
time targeted, size and ranking of project upon achieving
production, economic return estimates, the timing and amount of
estimated future production and capital, operating and exploration
expenditures and potential upside and alternatives. Readers should
not place undue reliance on forward-looking statements.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Canada Nickel to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking statements. The PEA
results are estimates only and are based on a number of
assumptions, any of which, if incorrect, could materially change
the projected outcome. There are no assurances that Crawford will
be placed into production. Factors that could affect the outcome
include, among others: the actual results of development
activities; project delays; inability to raise the funds necessary
to complete development; general business, economic, competitive,
political and social uncertainties; future prices of metals or
project costs could differ substantially and make any
commercialization uneconomic; availability of alternative nickel
sources or substitutes; actual nickel recovery; conclusions of
economic evaluations; changes in project parameters as plans
continue to be refined;
accidents, labour disputes, the availability and productivity of
skilled labour and other risks of the mining industry; political
instability, terrorism, insurrection or war; delays in obtaining
governmental approvals, necessary permitting or in the completion
of development or construction activities; mineral resource
estimates relating to Crawford could prove to be inaccurate for any
reason whatsoever; additional but currently unforeseen work may be
required to advance to the feasibility stage; and even if Crawford
goes into production, there is no assurance that operations will be
profitable.
Although Canada Nickel has attempted to identify important
factors that could cause actual actions, events or results to
differ materially from those described in forward-looking
statements, there may be other factors that cause actions, events
or results to differ from those anticipated, estimated or intended.
Forward-looking statements contained herein are made as of the date
of this news release and Canada Nickel disclaims any obligation to
update any forward-looking statements, whether as a result of new
information, future events or results or otherwise, except as
required by applicable securities laws.
PEA Engineering
The PEA was completed by Ausenco, a
global leader in engineering and project management services for
the resource and energy sectors. Ausenco was chosen for the PEA
because of its expertise and experience with similar sized, large
scale base metal projects and proven experience with processing of
ultramafic nickel deposits. Ausenco has successfully designed and
constructed similar sized concentrators such as Mina Justa (16.5 ktpd) for Macobre S.A.C,
Lumwana concentrator (55 ktpd) for Equinox Minerals, the Phu Kham
concentrator (33 ktpd) for PanAust, the GDP3 expansion (30 ktpd
concentrator) of the Gibraltar Mine for Taseko and the $1.75 billion Constancia project for Hudbay
Minerals (80 ktpd concentrator). The PEA team also included Caracle
Creek (resource model, geotechnical), David
Penswick (mine design and financial modeling) and Wood Plc.
(TSF, environmental).
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SOURCE Canada Nickel Company Inc.