Ontario is making a significant contribution to Canada’s net-zero target
Mark Selby, president and CEO of Toronto-based Canada Nickel Company, is optimistic that his company’s Crawford project, located 40 km north of Timmins, contains enough recoverable nickel, not to mention cobalt and platinum group metals (PGM), to make a substantial contribution to the global transition from fossil fuels to clean energy.
“The Western world needs large amounts of low-carbon nickel,” says Selby. “We hope Crawford is going to be an important deposit and … make an important contribution to the global electric vehicle market. These big, bulk tonnage ultramafic deposits that can be zero-carbon or negative are exactly what the world needs right now.”
Indeed, nickel, cobalt, and PGM are among the 31 minerals the federal government has deemed critical to Canada’s transition to a low-carbon economy. But Canada Nickel is several years away from putting a mine into production at its Crawford site.
The company completed a preliminary economic assessment in May 2021 and expects to release a full feasibility study by mid-year. Selby says he hopes to complete permitting by mid-2025 and, allowing for 2.5 years of construction, the company be producing by the end of 2027.
Selby got involved with Canada Nickel in the summer of 2019 after leaving Royal Nickel Corporation, now called Karora Resources. “I got a call from a couple of investors who said they had put four holes into this property north of Timmins and they had made a discovery,” he recalls. “With the four holes they had and the geophysical footprint, I knew this could be a very large deposit.”
They formed Canada Nickel, raised $6.5 million privately and went to work. Since then, they have drilled 300 holes, totaling some 150,000 metre, and, they believe have hit something very big. “From a start in September 2019,” says Selby, “the Crawford deposit has become the fifth largest nickel sulphide deposit globally. We think what we have will ultimately end up yielding more nickel than Sudbury.”
Crawford contains some five million tonnes of ore, from which they expect to recover two million tonnes of nickel, but this deposit, which spans 1.5 km2, is only part of the story. Over the past two years, they consummated 27 deals to assemble a land package that covers 42 km2.
“We said Crawford is turning out better than expected so we should look around Timmins to see if there are other Crawfords out there,” Selby says. “We used a specific geophysical template, based on deposits that have a certain amount of magnetite in them, which means they light up when you fly over them. What was amazing was that about 20 different deposits lit up around the Timmins area.”
The company plans to develop an open pit mine at Crawford, a low-grade, high tonnage deposit with a measured and indicated resource of 1.43 billion tonnes of ore at 0.24% nickel. The property is sufficiently promising to have attracted the interest of the British-based multinational Anglo American.
In early February, the two companies announced that Anglo American is investing $24 million for a 9.9% interest in Canada Nickel. According to the media release announcing the deal, Canada Nickel has agreed to an off-take agreement under which Anglo American will have the exclusive right to purchase up to 10% of recovered nickel concentrate as well as iron and chromium found in the magnetite concentrates.
Another interesting wrinkle is a provision allowing Anglo American to purchase any corresponding carbon credits from the Crawford project and they could be significant. As Selby notes, most of the ore is contained in ultramafic rock. “A big plus with these deposits is that when this rock is exposed to air it spontaneously absorbs carbon dioxide,” he says. “If you inject CO2 as it is going through the mill, you can make that process happen much more quickly and pick up a lot more CO2. Our project could be one of the largest carbon storage facilities in Canada.”
Indeed, the company has delayed the release of its feasibility study to mid-year to incorporate the project’s carbon capture and storage potential. Selby estimates that the mill and the tailings facility will be capable of absorbing up to two million tonnes of CO2 annually.
In addition to the Anglo American deal, Scotiabank and Deutsche Bank are acting as equity advisors to arrange project financing. Selby says he has also held talks with South Korean companies that convert nickel into the precursors and the cathodes used in batteries and he has approached global auto manufacturers who are rapidly gearing up to produce battery electric vehicles.
“We are saying if you want this much offtake, you are going to have to provide this much capital to get this project going,” Selby says. “We hope those discussion will yield most of the equity capital we will need.”
In the PEA, the company estimated the capital cost of developing the mine at $1.2 billion, but Selby says they are going to boost that number 50% to $1.8 billion in the feasibility study. He adds that the feasibility study will peg the life of mine at 40 years, up from 25 in the PEA.
The company plans to construct a mill capable of processing up to 120,000 tonnes of ore per day. “We will produce a concentrate that contains nickel as well as cobalt, platinum, and palladium,” Selby says. “We will also produce a magnetite concentrate that contains about 3% chrome on average, which used in the stainless-steel alloy industry.”
In short, Canada Nickel’s Crawford project is an ambitious undertaking that could make a significant contribution to Canada’s net-zero emissions targets. Generation Mining’s Marathon project could make a significant contribution as well and make an important statement to investors, both domestic and foreign.
Meantime, Toronto-based Generation Mining has a more advanced project that will produce copper, another mineral on the country’s critical list, and palladium, which is also on the list but as a PGM.
The company’s Marathon project takes its name from the nearby town, which is located on the trans-Canada Highway about midway between Sault Ste. Marie and Thunder Bay. Marathon, the town, was long known for its pulp and paper industry, although there are several mines in the broader area including Barrick Gold’s celebrated Hemlo property.
Generation completed a feasibility study in 2021, which put the cost of constructing and commissioning a mine at $655 million, although inflation has put upward pressure on that figure, says president and CEO Jamie Levy. Nevertheless, the company has lined up most of the necessary financing.
The project is now before a joint review panel and, Levy says, the company has checked all the proverbial boxes necessary win federal and provincial approval. “This is a clean deposit,” he says. “The mine will have a small footprint. We are not affecting too much wildlife or impacting watersheds. We have signed a community benefit agreement (CBA) with the nearby Biigtigong First Nation, so we have approval from them. We have the consultation records from all 18 First Nations and Metis groups in the area.”
He is optimistic that permitting will be complete this year and construction of the mine can begin in the third quarter of 2023. Construction will take 20 months and, ideally, Generation will produce its first copper concentrates by the end of 2025. “We are a single asset company, so our team is very focused on getting through this,” says Levy.
Generation acquired the property in 2019 from the South African-based Sibanye Stillwater for a mere $6 million. The company has been able to move the project forward as quickly as it has because the previous owners had completed an internal feasibility study. They had also started the environmental assessment process and by 2014 were prepared to go to joint review panel hearings when they pulled the plug.
“We did get it for a song, if you want to call it that, but Sibanye owns 19% of the company and they have been supportive shareholders,” says Levy. “They want to move this project forward.”
Generation is planning to develop an open pit mine that will yield an estimated 120 million tonnes of ore over a 13-year life of mine. And, as the company boasts in its feasibility presentation to investors: “We have got the metals for the green revolution.”
The mine is expected to produce 1.1 billion Ib. of copper, an essential metal in electric vehicles, 4.2 million oz. of palladium, 80% of which is used in the catalytic converters that scrub emissions from internal combustion engines, and 1.4 million oz. of platinum, which can be used in hydrogen fuel cells.
The mine will comprise three pits, which will be developed sequentially, and they will span an area three kilometres long by 500 metres wide. Marathon will employ about 400 full-time when it is operating at capacity. The processing plant will produce an estimated 87,000 tonnes of copper concentrate annually.
“We will be selling that to a smelter, either in Canada, Germany, Sweden, or Finland,” says Levy. “They will do the assays and then pay us for the PGMs they recover, whether its platinum, palladium, or other metals.”
As for financing, Vancouver-based Wheaton Precious Metals, one of the world’s largest streaming companies, has agreed to loan Generation $240 million in return for 100% of any recovered gold and 22% of the platinum that the mine produces. Generation has already drawn down $40 million and will get the balance once construction begins.
Export Development Canada has agreed to advance the company US$200 million, and the company has negotiated indicative terms for an additional $200 million from several banks.
“We are short a little bit and that is money we are looking to raise after we have received some of the key permits and announce some other upcoming news,” says Levy.
“To have this project go ahead can be a as showpiece to demonstrate to the rest of the world that Canada supports mining,” Levy says.
D’Arcy Jenish is an eastern correspondent for CMJ and the author of several books.
Regarding Generation Mining 400 full time jobs for 13 years or longer is definately a good thing for the area.