Pancontinental bets on nickel-cobalt project in Ontario beating Congo sources
Layton Croft gets the difficulties of developing a massive mining project in a frontier jurisdiction. He held key positions in the development of the massive Oyu Tolgoi copper mine in Mongolia, which billionaire mining investor Robert Friedland sold to Rio Tinto. The project only saw the light of day after years of complex talks with the Mongolian government over taxes.
Since leaving Mongolia, Croft has watched how Friedland’s mining company Ivanhoe Mines has been developing a huge copper deposit in the Democratic Republic of Congo (DRC). The government of Joseph Kabila earlier this year announced an unexpected tax rise that shook investors in Ivanhoe and of other companies working in the African nation to develop the world’s largest cobalt reserves.
While Croft has watched from afar, he does so with particular interest as Chief Executive Officer of Pancontinental Gold Corporation (TSXV: PUC), the developer of a nickel-cobalt-copper project in Ontario province. Croft knows better than most that jurisdiction is critically important to the success of a new mine. Pancontinental’s most recent project, McBride, sits 25 kilometers to the south of the town of Bancroft, close to power lines and a railroad that could be used to transport nickel ore to the long-established smelting complex of Sudbury.
Long Lac Minerals Corp. was planning to bring McBridge into production in the 1970s, carrying out a resource estimate of 5.1 million tons of nickel bearing ore at the site. Of that resource, a North Zone holds 3.9 million metric tons of ore containing 0.82% nickel, 0.054% cobalt and 0.25% copper. The South Zone has 1.2 million tons grading 0.3% nickel, 0.03% cobalt and 0.14% copper. Long Lac was preparing to develop a mine before the death of a key senior executive halted its development. The company didn’t place a value on the cobalt mineral content in the ore back in the 1970s, because it was a much less strategic metal back then, Croft said.
“The company was going to mine it in 1971 but the CEO of the company passed away,” he said. “It’s a mineable asset, and that’s when cobalt was nothing.”
The cobalt resource at McBride “is about $USD690M in contained metal value in the ground based on current prices today…” he said. Cobalt prices reached over $40 a pound in March, the highest value since 2008, as investors began to fear that the new taxes announced in the DRC will discourage mining companies from developing the African country’s vast cobalt resources.
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The bullish scenario for nickel, the McBride deposit’s main money earner, may be even stronger. About 58% of lithium-ion batteries will contain nickel in 2025, compared with only 39% in 2016, according to the Nickel Institute. Tesla CEO Elon Musk famously quipped that lithium-ion batteries should be renamed nickel-graphite batteries because of the proportions of each mineral contained in the battery.
Derek McBride, a renowned geologist who spent decades exploring this deposit, will hold the role of chief geologist. Pancontinental entered into an agreement with McBride’s privately-held Hastings Highlands Resources Limited earlier this year to earn up to 76% interest in the project. Pancontinental holds Montcalm, a similar project in Ontario with a nickel, cobalt and copper geology, and a gold project in the southeastern U.S. that might be divested to focus on the Canadian properties.
Croft is hopeful that resource estimates can be improved at McBride through utilizing technology that wasn’t around in the 1970s. The company plans to carry out a modern airborne gravity test and electromagnetic (VTEM) geophysical surveys, besides starting a new drilling program this year. He’s optimistic that the results will show that its far better to be sat on a McBride in Ontario than a cobalt hoard in the DRC.
Matt Craze has covered commodity markets for more than 20 years, working as a researcher at CRU International, and for over 10 years as a ... <Read more about Matt Craze>