Power Nickel: Nisk and reward of a polymetallic discovery in Canada

Power Nickel (TSX-V:PNPN) CEO Terry Lynch started in mining around the same time as industry giants like Eric Sprott, Rob McEwen, Sean Roosen, and Keith Neumeyer.

Graduating in 1981 from St. Francis Xavier University with a joint honour’s degree in Economics and a Bachelor of Business Administration – it’s fair to say the mining stalwart sees the resources sector through a macroeconomic lens.

When Mining.com.au spoke to Lynch – who at the time was 18,500km away in North American island The Bahamas – the Power Nickel story being disclosed was seemingly a familiar one often heard closer to the base of Mining.com.au in Australia.

Far from sipping cocktails on the island country within the Lucayan Archipelago of the West Indies in the Atlantic Ocean – the CEO was all business although there was talk of a round of golf, weather permitting.

Before hitting 18 holes, Lynch with insight and a level of levity was swinging into details of how the company’s Nisk project containing copper, nickel, platinum, palladium, gold, and silver is emerging as Canada’s breakthrough polymetallic discovery.

“In my opinion there are several key attributes an orebody must have to become a mine. Strengths in one area can make up for weaknesses in another but if you were designing your fantasy deposit it would have strength in all key areas,” he explains to this news service.

“So, let’s list them and see how Nisk shapes up,” the CEO says.

Grade – check! 

“The new mineralised area has had several impressive wide assayed holes in a logical step down step out drilling process highlighted by one of the best intercepts in Canada since Voisey’s Bay,” he reflects.

Last week (4 June), the junior Canadian explorer reported more near-surface, “high-grade” copper, platinum, palladium, gold and silver from the recent winter drilling campaign at Nisk Project.

Drilling of the new Lion discovery – located 5km northeast of the main deposit – returned copper equivalent grades ranging between 2.6% and 17.9%. One hole, PN-24-059, intercepted 17.25m @ 0.66 grams per tonne gold, 27.20g/t silver, 3.33% copper, 2.04g/t palladium, 1.49g/t platinum, and 0.18% nickel.

This includes a higher grade intercept of 5.59m @ 1.91g/t gold, 73.48g/t silver, 9.88% copper, 6.23g/t palladium, 4.56g/t platinum and 0.49% nickel. 

It follows the 21 May results when Power Nickel roared to the market with the high-grade multi-elements assay results for hole PN-24-055 as its winter 2024 drill program ended with 15 successful holes at the Lion discovery. PN-24-055 then returned grades of 15.4m of more than 9.5% copper equivalent. 

At the same time, PN-24-047 returned 8.17% copper, 69.14g/t silver, 8.44g/t platinum, 6.25g/t palladium, 0.57g/t gold, and  0.58% nickel over 14.42m.

Additional assays keep supporting the ongoing progress on the discovery so Power Nickel will continue drilling at Lion in the upcoming summer season, Lynch says. 

“These are big intersections to be that high-grade and we are seeing a pattern here. This intersection is in the high-grade wheelhouse that is plus or minus 100m wide and seems to have a prospective mineralised halo around it of 50m to 75m. With copper and metal prices surging, this is such a great find. We are excited to see how this discovery can grow from here,” the CEO explains.

Tonnage is next on the checklist. 

For Nisk, this is still to be determined but Power Nickel is off to an impressive start. It has a mineralised area that is about 225m wide and 275m deep. The core containing the “super high-grade hits” – like hole 47 – seems to be about 100m in width with a mineable 50-75m halo. 

Typically, in the Archean Shield these shutes will run 8-10X width and they are not typically “onesies”. “So given those observations we think tonnage on this will stack up very nicely,” the CEO says.

Surface is another on the checklist. Mining companies want to move as little rock as possible to gain access to pay dirt. Power Nickel’s deposit starts essentially at surface – “there’s a full tick there”. 

“We get paid to go deeper so that should really help payback,” he adds.

Infrastructure? “Doesn’t get much better,” the CEO says adding, “we’re located off a major Highway Route North and have many established roads running by our drill pads”. 

Across the street is a hydro Québec sub-station. Locationally, the project is just south and east of James Bay outside of the town of Nemaska which has hotels, shops, and stores and a regional airport. 

Community support? “The Québec government has done a fantastic job working with the First Nations – they have made them true partners,” Lynch explains. Tick.

The James Bay Cree is lauded as one of the most business orientated of the First Nations too as they are pro-mining and pro-development while still protecting their culture and environment. Having this type of support is “fantastic in a world that still struggles with approving mining projects”.

Jurisdiction? This is becoming increasingly a key factor. According to the CEO, one need only look at the troubles in Panama and parts of Africa – the sabre rattling in Chile, Peru, and Mexico. 

With this in mind, Canada and Québec specifically are consistently marketed at or near top places to have a mine. In the case of a critical minerals deposit Lynch argues that Québec is the best place in the world. 

Québec is credited for establishing Canada’s heavy industry back in the 18th century, with the emergence of an iron mine at Forges du Saint-Maurice near Trois-Rivières – which remained as a going concern from 1738 to 1883.

The province of Québec was featured in one of the instalments of The May Twenty Four series, which this news service featured as part of the Victoria Day federal holiday on 20 May. 

Another on the checklist is metal mix. It has been consistently shown through the economic cycles that the best mine type for economic returns is polymetallic, Lynch explains. 

While the company expects nickel to be the largest single generator of revenue collectively, the copper, gold, silver, platinum, and palladium could produce more revenue at Nisk overall and be the primary revenue generator if the Lion sone was developed separately. 

“The multiple revenue streams give unique mining finance flexibility and evens out the peaks and troughs of a mine’s economics,” he adds.

Investor catalyst 

Investors and third parties are beginning to show an interest in Nisk. Power Nickel already has several large industry groups in its data room. Discoveries like Nisk are rare and in these current times it stands to reason there may be further considerable industry interest. 

It’s too early to determine how or if any third parties will invest – at this point the company is maintaining an open dialogue with several groups while it advances the exploration. 

A Feasibility Study on the nickel sulfide portion of the project is already underway with privately owned refining group CVMR Group, which in golfing terms is turning out to be an ideal caddy for Power Nickel. They have funded what is at this point a C$5 million investment in the process. 

The initial reports from this process are due to be released in Q2 2024. 

The reason working with CVMR is ideal is that the nickel powder market is a segment Power Nickel is watching. Nickel powders are priced between US$60,000 to $80,000 a tonne versus LME nickel of today in the $18,000 range. 

Refining nickel and indeed other metals is where the money is, the CEO explains. 

“A junior like Power Nickel could not credibly get there but via partnership with CVMR that is on the table. That’s very exciting!”

On 24 April the company completed the acquisition of an additional 30% of the Nisk Project. Power Nickel will continue to fund 100% of expenditures at Nisk until such time as a BFS is presented.

Teeing off with asymmetric investing

The decision to increase its stake is based on a powerful belief Nisk is a company-maker but more importantly could be a country-maker.

Lynch alludes to the world’s only “trillion-dollar mining deposit being Norilsk”. Norilsk Nickel is a Russian nickel and palladium mining and smelting company. Its largest operations are in the Norilsk–Talnakh area near the Yenisei River in the north of Siberia.

“Imagine what it has contributed to Russia,” the CEO ponders. “Wouldn’t it be amazing for Québec and Canada if we could have something approaching this? Now this is the dream mode and we are not there yet. But what we have found is very impressive and this is what the next Norilsk will look like in the discovery process.”

“As an investor I like asymmetric risk. In my view we have shown a very high likelihood this will become a mine

“As an investor I like asymmetric risk. In my view we have shown a very high likelihood this will become a mine. In this case we are trading again in my humble opinion at 10 cents on the dollar to what we have already discovered. So, the upside of growth whether it be doubling what we have found or becoming the next Norilsk that’s all free. That’s asymmetric investing!”

Power Nickel and its relationship and investment agreement with CVMR – a multinational nickel refiner – is evolving. There are now talks about evolving the Feasibility Study into a joint venture that would fund construction, operate the mine, as well as associated infrastructure. 

CVMR also refines iron into iron powders and other metals like PGMs. They are one of the largest manufacturers of nickel powders but also produce nickel wire, anodes, and specialised products. 

Lynch points towards its client list which reads like a ‘who’s who of the Fortune 100 companies’. Yet their largest client is the US Department of Defense with whom CVMR has two joint ventures. 

(An interesting side note – if one has a $100 US bill perhaps being used to bet on the golf course, it was made on a nickel-plate by CVMR using its patented nano powder process that makes counterfeiting all but impossible.)

As a private company, CVMR keeps a low profile but has 4,500 employees and 18 existing refineries, and they are partnering several multi-billion dollar projects in Africa, Asia, and in the US.

“CVMR has the business size and structure combined with our orebody to make this viable,” Lynch explains.

“That’s a pretty compelling position for a junior to be in. How and if that takes place will of course depend on their analysis and of course the further discoveries we make. But the CVMR relationship is certainly an important asset to have.”

North American nickel is different 

According to Lynch, North American nickel is different and worth a lot more than elsewhere. On a chemical level, nickel is of course nickel but in North America it has some advantages.

One aspect is also the Inflation Reduction Act in the US and the critical minerals policies in Canada, providing significant incentives for electric vehicles. These EV subsidies are tied to North American content rules and favours North American mined or processed nickel. 

“If you want to get a full EV credit as an auto manufacturer you need to have North American nickel content thus, the premium is retained. You need look no further than Samsung’s investment in Canada Nickel as actual proof of this,” the CEO says.

“The second point I would make is that in a decarbonising world, North American nickel because of the nature of the deposits, which are largely sulfide versus Indonesia being largely laterite, require a lot less energy to change them into products for batteries.

In addition to requiring less energy per unit of nickel, the make-up of the North American energy grid means most of the energy is green hydro power versus coal fired plants in Indonesia and China. This compounds the North American energy advantage.”

In Power Nickel’s case it has high-grade nickel sulfide. Sulfides convert easier to various products and specifically to components needed for EVs. They use less energy making them more desirable by manufacturers looking to reduce their carbon footprint.

West is the best ‘by a fair way

If not already evident, Lynch is a staunch advocate for mining in Canada and labels it one of the best jurisdictions in the world to operate in.

Canada in general and Québec specifically have a high quality and low CO₂ energy grid. Access to power and green power in particular is increasingly a highly sought after characteristic for mining development.

“I believe both Canada and Australia are best-in-class locations from a rule of law perspective – investors rightly feel safe investing in these countries. Canada’s fiscal incentives in general and Québec specifically I believe are quite unique in the world,” he says. 

“At Power Nickel we have been able to raise money at 2x and sometimes 3x our share price due to the tax benefits we can ascribe to front end investors. This process allows investors from Australia, Europe, Asia, the USA to take advantage of this form of investment.” 

In addition, Power Nickel is exploring various multi-million dollar grants and loan programs available regionally to help with infrastructure development and for metallurgical work and community development.

“we are in best jurisdiction in world to explore and develop a mine”

However, Lynch concedes while “we are in best jurisdiction in world to explore and develop a mine” unfortunately the market for junior development overall in Canada still needs some improvement. 

“This is due in my humble opinion to certain regulatory oversight that allows naked short selling. Essentially giving hedge funds advantages over normal investors creating an unequal investor situation.

I started together with industry giants like Eric Sprott, Rob McEwen, Sean Roosen, Keith Neumeyer, and others an advocacy group called Save Canadian Mining to make politicians wake up and force regulatory change. 

So, while the environment is poor as an investor this is terrific as I believe we are making progress and we will get changes and investors should push their stack in on attractive situations that are there to be found.”

Naked short selling is a notorious trading practice in which a trader sells shares in an asset without first borrowing them or ensuring they could be borrowed. The aim is to profit from a decline in the asset’s price by later buying the shares at a lower cost to cover the short position.

It’s different from traditional short selling, when shares are borrowed before selling them. Short selling — also known as ‘shorting’ or ‘selling short’ — refers to the sale of a security or financial instrument the seller has borrowed. The short seller believes the borrowed security’s price will decline, enabling it to be bought back at a lower price for a profit.

Amid this backdrop, Power Nickel is fortunate in that it has an exceptional deposit, committed long-term shareholders, and is located in Québec while at the same time be able to obtain 2:1 financing. 

But the company, like all juniors, believes its share price is undervalued. However, commodity markets are beginning to rebound.

Commodity markets swinging back

Copper began its rally early in 2024 and by mid-April, months-long highs were reaching its highest point since late-January 2023 when it tipped over US$9,400 ($14,404) per tonne. 

The rally continued until retreating on 20 May as questions over near-term demand were weighed against speculative bets that triggered the broad-based surge in base metals during the past few months. Yet, since bottoming at about US$7,077 per tonne in mid-July 2022, the copper price has surged this year and still, speculative bets have kept prices 25% higher year-to-date.

On 21 May – the same day this news service reported on Power Nickel’s Lion discovery making an enormous roar – Mining.com.au reported the silver price reached an 11-year high after touching $48.36 per ounce. 

Trading Economics noted the 20 May spot price was the highest since January 2013 and was up more than 25% year-to-date. Since the start of 2024, silver has picked up about 32% compared to the 18% gain the US dollar gold witnessed. 

Meanwhile, the global PGMs sector reached more than US$40 billion in size during 2023. The International Market Analysis Research and Consulting Group expects the market to top US$55 billion by 2032, exhibiting a growth rate (CAGR) of 3.5% during 2024-2032.

The global advisory and market research firm says widespread product adoption in the automotive industry is a driving factor of the expansion of the PGMs market, as reported.

While commodity markets are turning so too are heads in the investment community as Power Nickel advances what is emerging as Canada’s next breakthrough polymetals discovery. 

Write to Adam Orlando at Mining.com.au

Images: Power Nickel
Author Image
Written By Adam Orlando
Mining.com.au Editor-in-Chief Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Orlando has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.