Power Nickel demonstrates high-purity class 1 nickel deposit in James Bay has “significant commercial potential”

Power Nickel Inc. (TSXV: PNPN | OTCQB: CMETF) took an important step last month by releasing their initial NI 43-101 compliant Mineral Resource Estimate (MRE). Terry Lynch, the firm’s CEO, said they were “extremely pleased with the estimate,” since it demonstrates that the deposit has “significant commercial potential.”

The MRE focused on the comp0any’s Nisk deposit in James Bay, Quebec, and describes a resource that consists of 2.5 million tonnes indicated and 1.4 million tonnes inferred of ~1.25% NiEq. For perspective, these numbers are about 1/3rd smaller than the Tamarack project (a deposit in Minnesota owned by Talon Metals and Rio Tinto – scheduled to go into production in 2026) reported at the same stage in its development.

While the MRE is notable in several respects, a broad takeaway is that it may be the tip of the iceberg. The reason is that nickel sulphate deposits, which constitute the Power Nickel resource, typically exist in pods concentrated in the same geographical area. This means that the Nisk deposit could well be the first of several similar strikes nearby.

This question of additional deposits should be answered quickly, since this month the company will begin infill drilling at the existing resource, and a wider drilling program to verify additional deposits.

The drilling program comes against a backdrop of powerful fundamentals in the nickel market. On the demand side, the nickel content of electric batteries is growing because more nickel means more energy density. Moreover, the nickel market is becoming more stratified, with demand for high-purity class 1 nickel (used in EV batteries) far outstripping demand for lower-quality nickel.

Importantly, class 1 nickel is prevalent in nickel sulphate deposits – which is the basis of Power Nickel’s resource.

On the supply side, the US presently has only one nickel mine in production (the Eagle Mine in northern Michigan), but it’s small and slated to close in 4 years. Otherwise, the US imports virtually all of its nickel consumption. Fortunately, our Canadian friends have numerous large-scale mines in production, and most other large nickel exporters are US-friendly.

But the nickel supply story has grown more nuanced, since there is ever more scrutiny of the nickel refining process. This has become an issue because nickel is refined through an energy intensive process in which ore is heated to an extremely high temperature, mixed with sulphuric acid, and pressurized. These steps create lots of carbon, which isn’t a good look for EV manufacturers.

Hence, major nickel consumers like Tesla are now evaluating producers based upon the environmental impact of their mining process.

It is on this issue where Power Nickel really stands out. Its Nisk deposit is located next door to a Hydro Quebec substation. Hydroelectric power = no carbon emissions = happy customers. This carbon-friendly power source gives Power Nickel an environmental edge that should last for decades.

With all this in mind, Power Nickel looks extremely undervalued relative to peers. It trades at a market cap 4x lower than Tartistan Nickel, which issued a PEA last year roughly comparable to Power Nickel’s. It is 3x cheaper (by market cap) than Class 1 Nickel, which is restarting older producing mines in Ontario. And Power Nickel trades at a tiny fraction of the market cap of Talon Metals, which has partnered with Rio Tinto to bring the Tamarack deposit into production.

In fact, Power Nickel looks very much like the Tamarack project in its earlier stages, and the just-released Resource Estimate is an important step on the road to commercialization. The key takeaways for investors are that the resource has the potential to become much larger, the demand for nickel is expected to increase 20X by 2040, and the company enjoys long-term competitive advantages with respect to the carbon footprint of their refining operations.

Resource Estimate due soon for Power Nickel’s Ni-Cu-Co-PGE Nisk Project

The search for battery metals in safe locations continues as companies see the tremendous demand curve ahead for these metals to supply the electric vehicle (EV) boom.

Today’s company is Power Nickel Inc. (TSXV: PNPN | OTCQB: CMETF), focused on their Canadian NISK project which contains nickel (Ni), copper (Cu), cobalt (Co), and some platinum group elements (PGE). They also have investments that give exposure to gold and copper projects in Canada and Chile, as well as a royalty agreement. Their projects and interests include the following:

  • NISK nickel sulphide Project (option to acquire 80% from Critical Elements Lithium Corp.). Two tenements blocks located near James Bay in Quebec, Canada.
  • Consolidation Gold & Copper (100% ownership with plans to be spun off) who owns 100% interest in the Golden Ivan Project in British Columbia’s Golden Triangle and also owns 100% interest in three projects in Chile. The Company also owns a 3% Copaquire Royalty on a copper-molybdenum deposit in Chile held by Teck Resources.

The NISK nickel sulphide project

The NISK property is composed of two blocks totaling 90 claims covering an area of 45.9 km2. The Property is currently known for its magmatic nickel-copper sulphide deposits. It holds the NISK-1 Ni-Cu-C0-PGE deposit. NISK has four distinct target areas covering over 7 kilometres of strike length.

The Project has a Historical Resource at the NISK-1 deposit from 2009 (usual cautions apply to historical resources) and Power Nickel is currently working towards completing an updated NI 43-101 compliant mineral resource. Based on the Historical Resource, grades were around 1% nickel, 0.53% copper, 0.06% cobalt, 0.91 g/t palladium, 0.29g/t platinum. The NISK-1 main deposit remains open to the East, West and at depth.

Location map of the NISK Property showing details of the Historical Resource

Source: Power Nickel company presentation

Power Nickel states: “Globally nickel sulphide deposits tend to exist as pods or as a string of pearls with each pearl representing a deposit. We believe this is what we have here at NISK and, with our actual understanding of the Nisk litho-structural setting, we expect a well-planned drill program to help expand beyond our first pearl at Nisk Main to hopefully other pearls located in our project land package…” It continues that “Nisk has four distinct target areas covering over 7 Kilometres of strike length. Our focus this round was on the Nisk Main target. Historically, we know globally these types of deposits typically have multiple pods. We are encouraged by what we see on Nisk Main and feel we can continue to build commercial tonnage there but we are also looking forward to exploring Nisk West and the two wildcat targets in subsequent drilling in Q2.”

The Project has road access and is traversed by the Hydro-Québec power line.

Closer location map view showing road access and power line traversing the Nisk-1 Property

Source: Power Nickel website

Power Nickel did announce their own new recent drill results on March 30, 2022, which included: PN21001 12.4 metres 0.82% Ni, 0.36% Cu, 0.09% Co, 0.69g/t Pd, 0.14g/t Pt from 149 m.

Power Nickel’s CEO Terry Lynch, commented: “These results are another positive indication that Nisk is a very exciting Nickel Sulphate discovery. Our objectives in this initial drill program conducted by Power Nickel were to produce enough drilling to allow us to establish a new NI 43101 compliant resource to confirm and replace the historical resource, and to extend the known Nickel mineralization. We believe we have established the latter and expect to be able to deliver a NI 43101 compliant Mineral Resource Estimate in Q2. Further, these results have made us confident enough to commence execution of an additional fully funded 5,000meter drill program which we would expect to start later in Q2 after breakup.”

Closing remarks

While it is still early days for Power Nickel there are several promising signs for their Nisk Project. Quebec Canada is a premier location, there is road and power access, a poly-metalic deposit in sulphide ore exists with nickel, copper, cobalt, palladium, and platinum, there is a Historical Resource (not to be relied upon), and some good recent drill results. The upcoming Nisk Project NI 43101 compliant Mineral Resource Estimate due in Q2, 2022 is the next milestone to watch out for.