Nickel-Cobalt Project After-Tax NPV Increases 96% To US$569 Million
Talon Metals Corp. (TSX: TLO) has completed an updated Preliminary Economic Assessment (PEA) for the Tamarack Nickel-Copper Cobalt Project in Minnesota, USA.
Talon currently has the right to acquire up to a 60% ownership interest in the Tamarack Nickel Project, which it believes is well placed to supply the growing electric vehicle (EV) market.
The February 2021 PEA provides economics for three considered scenarios:
- nickel sulphates used for the electric vehicle (EV) market (Nickel Sulphate Scenario);
- nickel concentrates used to produce refined nickel powders for the electric vehicle (EV) market (Nickel Powder Scenario); and
- nickel concentrates used for the traditional stainless steel market (Nickel Concentrate Scenario);
- The repective After-tax NPV’s are
- US$569 million (after-tax IRR of 31.9%) (Nickel Sulphate Scenario);
- US$567 million (after-tax IRR of 48.3%) (Nickel Powder Scenario); and
- US$520 million (after-tax IRR of 45.6%) (Nickel Concentrate Scenario),
using base case metal price assumptions of $8.00/lb nickel and $3.00/lb copper and a discount rate of 7%;
- At incentive metal prices of $9.50/lb nickel and $3.50/lb copper, the after-tax NPV’s increase to:
- US$769 million (after-tax IRR of 38.6%) (Nickel Sulphate Scenario);
- US$744 million (after-tax IRR of 57.7%) (Nickel Powder Scenario); and
- US$695 million (after-tax IRR of 55.1%) (Nickel Concentrate Scenario).
The new economics exclude the company’s recent positive drilling results both within the Tamarack Nickel Project’s current resource area and approximately 350m up-dip to the north-east of the Tamarack Nickel Project’s current resource area.
The updated PEA features low C1 costs and All-in Sustaining Cost (net of by-product revenue) for all three contemplated scenarios, including a C1 Cost of $2.05/lb nickel and an All-in Sustaining Cost of $3.01/lb nickel under the scenario of selling nickel concentrates to the stainless-steel market (Nickel Concentrate Scenario)
Other highlights include:
- Pre-tax payback period ranging from 1.4 to 1.8 years and after-tax payback period ranging from 1.5 to 2.1 years;
- EBITDA margins ranging from 64% to 68%;
- Overall tonnage included in the mine plan has increased by 119% from 4.9 million tonnes to 10.8 million tonnes; and
- Processing rate has increased 80% from 2,000 tonnes per day to 3,600 tonnes per day.
“The 96% increase in the after-tax NPV from US$291 million to US$569 million excludes drilling results announced since September 2020, as these drilling results are either outside of the Tamarack Nickel Project’s resource area and/or assays are still pending,” CEO, Henri van Rooyen, said.
“Our focus continues to be a systematic approach of resource expansion. The Talon team has successfully reduced exploration costs to very low levels, while predicting mineralisation with great accuracy using both borehole and surface electromagnetic surveys (geophysics). Carefully designed drill holes are intercepted with precision.
“The utility of data collected from each drill hole is then maximised through detailed logging procedures, test programmes and continual mine modelling.
“Our end game is producing low cost, Green Nickel during a predicted period of unprecedented nickel shortages, whether it is to supply the electric vehicle (EV) or stainless steel market.”
President, Sean Werger, said the updated PEA, demonstrates strong economics across a number of scenarios, and is a significant milestone for the company.
“Having said that, there is much more to come. Indeed, this is evidenced by the fact that today’s economics exclude the tremendous drilling success we have recently announced both within our current resource area (where we have announced extensions of massive sulphide mineralization) and approximately 1/3 of a km north-east and up-dip of our resource area (where we have announced shallow, sheet-like mineralisation).
“We are pleased to report that we now have three drill rigs running at site, so shareholders should expect plenty of drilling news over the coming days, weeks and months. With approximately C$15.4 million currently in the bank, we are well equipped to progress our strategy of growing the resource further and getting ready for feasibility studies.”
