Canada Nickel: The Next Nickel Giant

Canada Nickel (TSXV:CNC) is poised to become the next great global giant nickel producer, providing much needed nickel supply to the high growth battery market. Anglo American’s recent 10% investment in the company underscores the value of the resource and the long-term potential of their flagship Crawford Project.

Canada Nickel trades on an enterprise-value to resource (EV/resource) of $249/tonne; a fraction of the value of historical nickel acquisitions which have transacted on average at $4,000/tonne. Additionally, the company trades at 0.2X NAV of $6.07/share (Source: Red Cloud Securities), a 50% discount to small cap peers and far lower than peers in Asia at 1x-3x NAV.

Crawford the Crown Jewel

The Crawford Project is located in Timmins, Ontario; at production Crawford will be the fifth largest nickel sulfide project in the world and is estimated to contain 3.5 million tons of nickel making it the fifth largest from a resource perspective as well.

According to the company’s PEA, Crawford is expected to be a low-cost producer with 1st quartile cash costs and have robust economics with a $1.2 billion after-tax net present value.

Among publicly traded nickel companies, Canada Nickel ranks #1 with the greatest measured and indicated nickel resource (source: Mining Visuals)

In addition to the Crawford project, Canada Nickel’s Textmont project is another exciting nickel resource – exhibiting high grade, near surface mineralization. Recent assay results found 7 of the 11 holes drilled had nickel grades greater than 1%. The resource and preliminary economic analysis will be produced in the 2nd Half of 2023.

Battery Growth Driving Nickel Demand

Over just the last three years, nickel has emerged, along with copper, lithium and cobalt as a metal critical to the world’s ability to meet aggressive emission reduction targets. Electric vehicle and renewable energy storage adoption are accelerating and nickel is a key component in every battery chemistry in-use today.

Nickel projects at scale will be needed in the decade ahead – as battery growth drives demand. In 2021 global nickel demand was 2.8 million tons per year, by 2030 total demand is expected to rise to 5.1 million tons per year.

Currently there is little to no supply growth outside Indonesia/China putting more pressure on other jurisdictions to come up with supply to meet growing future demand for EVs. This provides a unique opportunity for Canada Nickel to become a scalable source of nickel supply with zero carbon potential for both stainless & EV markets in North America and Europe.

Carbon Capture Adds Significant Value

The company also has a very exiting carbon storage technology in development known as “In-Process Tailings Carbonation” (IPT), which has exceeded expectations and could account for 7% of Canada’s carbon capture target. The technology could allow for the company to qualify for tax credits that would fund the entire stock portion of the project. Canada Nickel’s tech can store 7x more carbon than traditional methods and in 1% of the time (7 hours vs 100 days). Furthermore, the IPT carbonation testing was used on rock samples with the same characteristics as Canada Nickel’s main deposit, increasing the probability that their technology will work at scale.

In addition, Canada Nickel has been approached by several large multinational companies who are seeking carbon storage solutions. The growing interest they’ve received from these companies further supports their belief that their carbon sequestration method may be considered as an effective carbon storage approach that would meet Environment and Climate Change Canada requirements.

Nickel Giants are M&A Targets

All signs point to Canada Nickel becoming the next global nickel giant. Anglo American, one of the world’s largest mining companies, took a 10% stake in Canada Nickel earlier this year – a very big vote of confidence for the Crawford Project.

The investment signals a growing appetite among multinational mining companies to increase their exposure to battery-grade nickel as demand for electric vehicles increase. Canada Nickel currently trades on an enterprise-value to resource of $249/tonne – a fraction of the valuation of recent nickel acquisitions which sold for an average of $4,000/tonne. This creates a significant value opportunity for a company producing a metal in high structural demand.