Canada Nickel Company Inc. (CNC-X) chief executive Mark Selby said he sees the potential for a major mining company to buy the firm, after it attracted yet another strategic investment from a global industry player.
The Toronto-based miner announced a US$18.5-million equity financing from Korean electric-car battery maker Samsung SDI Co., Ltd. on Friday.
Canada Nickel is planning to build a massive new open-pit nickel and cobalt mine in the Timmins-Cochrane mining camp in northeastern Ontario. The project, known as Crawford, would eventually supply those battery metals to the electric-vehicle market.
Samsung is the company’s third major strategic investor. Canada Nickel had already attracted funding from British mining giant Anglo American last year, and Canadian gold miner Agnico Eagle Mines Ltd. (AEM-T) in late December.
With a growing list of strategic investors on board, the prospect of a buyout offer from one, or a combination of them, is a possibility, Mr. Selby acknowledged in an interview.
“Most of the existing nickel sulphide deposits that have been around for 10 years or more have all been bought up by a major in one way, shape or form,” he said.
Most recently, Noront Resources Ltd., which was the owner of the Eagle’s Nest nickel project in Ontario’s Ring of Fire district, was acquired by Australian mining giant Wyloo Metals Pty Ltd. in 2022, for more than $600-million.
While junior mining companies have in the past successfully built mines on their own – most notably Sean Roosen’s Osisko Mining Corp., which built the Malartic gold mine in Quebec – investors generally prefer larger companies with mine-building experience to take over before construction.
“We really do think that what we have is potentially the world’s largest nickel sulphide district in Timmins,” Mr. Selby said. “And with all the carbon storage that we’ve got with those deposits, that’s got to be pretty tempting to the majors at some point.”
While Eagle’s Nest is among the highest profile undeveloped nickel projects in North America, Crawford’s stature is growing.
Unlike Eagle’s Nest, which is situated in an extremely remote area of northern Ontario without access to basic infrastructure, the Crawford project is located near roads and the electricity grid. And while a feasibility study conducted in 2012 by Noront projected that Eagle’s Nest’s mine life would be just 11 years if it enters production, Crawford is projected to last for 41 years.
But Eagle’s Nest is a significantly higher-grade deposit. Crawford’s reserve grade is only 0.22-per-cent nickel per ton, compared to 1.68 per cent at Eagle’s Nest.
Canada Nickel is hoping to have permits in place to build Crawford by next year, and plans to start production near the tail end of 2027.
Mr. Selby was formerly an executive with Inco. Ltd, once one of Canada’s biggest nickel producers. In the mid-2000s, Inco was acquired by Vale SA of Brazil.
One of the next significant challenges for him will be raising money to build the mine. The capital cost is projected to be US$2-billion. He said the company is working with Bank of Nova Scotia and Deutsche Bank on the financing.
Samsung will own about 8.7 per cent of Canada Nickel once the deal closes. It is acquiring stock at $1.57 a share, a penny below Thursday’s closing price on the TSX Venture Exchange.
Samsung is a major global supplier of electric-vehicle batteries.
As part of its agreement with Canada Nickel, the Korean company has the option to purchase a 10-per-cent stake in the Crawford mine for $100.5-million. If it did so, Samsung would also have the right to 10 per cent of the nickel and cobalt mined from Crawford over its production life.
Samsung’s investment in Canada Nickel is part of a trend of battery metals end-users taking stakes in mining companies, to secure supplies of raw materials.
Vancouver-based lithium producer Lithium Americas Corp. (LAC-T) landed a US$650-million financing with General Motors Co. last year, to help it develop a major new lithium mine in the United States.
Niall McGee