Canada Nickel Company (TSXV: CNC) this morning finally released its much-anticipated preliminary economic assessment for its flagship Crawford Nickel project in Ontario. The project reportedly has an after tax net present value of $1.2 billion at an 8% discount, representing an after-tax internal rate of return at $7.75 per pound of nickel.
The PEA outlines a scenario for an open pit mine to be developed, with a plant capable of processing 120,000 tonnes per day. The report as a result outlines first quartile net cash cost of $1.09 per pound, and net all in sustaining costs of $1.94 per pound of nickel. The result, is projected annual EBITDA of $439 million and annual free cash flow of $274 million.
Notably, the company expects to fully utilize not only the nickel in the ground, but the contained iron and chrome as well which brings overall costs per pound to a lower level. Iron production is expected to amount to 860,000 tonnes per annum, while chrome amounts to 59,000 tonnes per annum. Nickel production comparatively is estimated at 34,000 tonnes per year, with peak production estimated at 42,000 tonnes per year.
Over the life of the mine, 842,000 tonnes of nickel are expected to be produced, along with 21 million tonnes of iron and 1.5 million tonnes of chrome, with pricing based on “long term price assumptions.” Notably, the report is based on a nickel price of $7.75 per pound, despite nickel currently trading at $7.71 per pound, along with iron pricing of $290 a tonne (currently at $208.20), and chromium pricing of $1.04 per pound.
The project is now to immediately advance to the feasibility stage, with a feasibility report scheduled to be released in mid 2022.
Canada Nickel last traded at $3.42 on the TSX Venture.
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