Talon Metals Corp., Tortola, British Virgin Islands, (TSX: TLO) has completed an updated Preliminary Economic Assessment (the “February 2021 PEA”) in respect of the Tamarack Nickel-Copper Cobalt Project. Talon currently has the right to acquire up to a 60% ownership interest in the Tamarack Nickel Project upon the satisfaction of certain terms and conditions1.
Highlights
- 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”);
- After-tax NPV’s of:
- 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:
- The above-noted economics exclude the Company’s recent positive drilling results both within the Tamarack Nickel Project’s current resource area (see the Company’s press releases dated January 12, 2021 and January 26, 2021) and approximately 350 meters up-dip to the north-east of the Tamarack Nickel Project’s current resource area (i.e., drill results form the area known as CGO East, as discussed in the Company’s press releases dated September 16, 2020 and November 2, 2020).
- Low C1 Costs2 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);
- 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[3] 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. 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 mineralization 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 maximized through detailed logging procedures, test programs and continual mine modelling,” said Henri van Rooyen, CEO of Talon. “Our end game is producing low cost, Green NickelTM during a predicted period of unprecedented nickel shortages, whether it is to supply the electric vehicle (EV) or stainless steel market.”
“Today’s announcement of the updated Preliminary Economic Assessment, which demonstrates strong economics across a number of scenarios, is a significant milestone for our Company”, said Sean Werger, President of Talon. “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 kilometer north-east and up-dip of our resource area (where we have announced shallow, sheet-like mineralization). 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.”
“This updated Preliminary Economic Assessment (PEA) illustrates a high after-tax IRR, low All-in Sustaining Cost, low capital intensity, a modest initial capital investment, and a quick payback. These metrics are the hallmarks of a high quality mining project. The PEA also demonstrates that the Tamarack Nickel Project has the optionality to produce (1) nickel sulphates for the electric vehicle (EV) market; (2) nickel concentrates to be used for refined nickel powders also for the electric vehicle (EV) market; or (3) nickel concentrates for the traditional stainless steel market, and that all three contemplated scenarios have robust economics. None of the three scenarios include a nickel price premium for ESG-sensitive nickel production which we refer to as Green NickelTM“, said Vince Conte, CFO of Talon. “With additional drilling and engineering in 2021, we are aiming to further increase the NPV of the Tamarack Nickel Project.”
About Talon
Talon is a TSX-listed base metals company in a joint venture with Rio Tinto on the high-grade Tamarack Nickel-Copper-Cobalt Project located in Minnesota, USA, which comprises the Tamarack North Project and the Tamarack South Project. Talon has an earn-in to acquire up to 60% of the Tamarack Nickel Project. The Tamarack Nickel Project comprises a large land position (18km of strike length) with numerous high-grade intercepts outside the current resource area. Talon is focused on expanding its current high-grade nickel mineralization resource prepared in accordance with NI 43-101; identifying additional high-grade nickel mineralization; and developing a process to potentially produce nickel sulphates responsibly for batteries for the electric vehicles industry. Talon has a well-qualified exploration and mine management team with extensive experience in project management.
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1 All amounts are presented on a 100% ownership basis and all dollar amounts are expressed in United States dollars unless indicated otherwise.
2 C1 cost includes value of metal claimed by smelter (metal units, treatment charges and refining charges), insurance, losses and transportation costs, less the value of by-products such as copper and cobalt. C1 cost is not an IFRS (International Financial Reporting Standards) measure and, although it is calculated according to accepted industry practice, the C1 cost may not be directly comparable to calculations carried out by other companies.
3 See the technical report entitled “NI 43-101 Technical Report Updated Preliminary Economic Assessment (PEA) of the Tamarack North Project – Tamarack, Minnesota” with an effective date of March 12, 2020 (the “March 2020 PEA”) for comparisons in this news release.
