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Giga Metals’ PFS for Turnagain opens scope for strategic investment

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Exciting news out of Canadian-listed Giga Metals [TSXV:GIGA] last week as the company announced the results of a PFS for its Turnagain nickel-cobalt project in British Columbia. Turnagain is owned by the Hard Creek Nickel joint venture, which is 15% owned by Mitsubishi Corp.

Results out from the PFS were very interesting, with annual production averaging 37,288 t/y Ni+Co in concentrate over the nominal full operating rate period (Y3 – 28), based on a 30-year project life with an extremely low strip ratio of 0.4 tonnes waste per tonne ore.

Pre-tax IRR and NPV is 11.1% and USD 717 million (7% discount rate), and post-tax IRR and NPV is 11.4% and USD 574 million at a long-term nickel price of $9.75/lb, with 78% payability for nickel in concentrate.

CEO Mark Jarvis, who was in London recently, and met with The Armchair Trader, said the PFS would allow Giga Metals to advance discussions with potential strategic investors, at a time when projects like this are rare as hen’s teeth in North America. Jarvis said the success of the extensive geometallurgical studies conducted by Blue Coast Research gives him confidence in the metallurgical response of the entire deposit.

Key role in the future of the nickel industry

Mitsubishi itself was also very positive about the new PFS, saying that they see a nickel project like Turnagain with low carbon intensity in a stable jurisdiction playing a key role in the future of the nickel industry, in particular for the battery industry.

The PFS demonstrates a long-life, large-scale project that will deliver high-grade nickel sulphide concentrate with no significant deleterious impurities, into commercially proven processes such as pyrometallurgical smelters or hydrometallurgical refining using pressure oxidation facilities.

Nickel concentrate is expected to be in greater demand for production of nickel products such as mixed hydroxide precipitate, mixed sulphide precipitate, high nickel content smelter matte or other forms of Class I products.

MHP and Class I nickel demand is growing for the electric vehicle (EV) market, particularly materials sourced in a socially and environmentally responsible manner.

The Turnagain deposit has a very low strip ratio, averaging 0.23 over the first 10 years of mine life and 0.41 life-of-mine. This includes 53 Mt of Inferred Resources which are classified as waste. This low strip ratio reduces mine size, operating and capital costs, and associated environmental impacts. Waste rock and low-grade stockpile ore will be placed in dedicated facilities located near the mine.

Giga Metals well positioned for a large acquisition deal

Giga Metals is known to be well positioned for a large acquisition deal, including potentially some lucrative off-take deals from the OEM space. Jarvis, who has been involved in the project since 2004, reckons the stock is massively under-priced when evaluated against historic nickel prices. It would probably be in the interests of a large buyer to move on the company sooner rather than later at this stock price. Jarvis himself reckons it represents a prime asset for a large player in the copper space.

The Mitsubisi involvement is also critical for the attractiveness of the project, as it comes in the wake of some very stringent analysis of the project via SRK.

The Turnagain project will have very low carbon emissions while producing nickel in concentrate for conversion to electric vehicle batteries or Class 1 nickel through existing or new processing techniques. EV manufacturers have expressed keen interest in clean, responsibly sourced battery metals. Tetra Tech has designed the project to minimise GHG emissions, using trolley-assist haul trucks and autonomous operation to reduce GHG emissions.

Inadvertently, the low carbon nature of the overall project is also translating into tax credits, which represents a further boon in terms of income for the miner.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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