Talon Metals Corp (TSE:TLO) (OTCMKTS:TLOFF) (FRA:TAO) has further updated its preliminary economic assessment (PEA) on the Tamarack nickel project in Minnesota, USA, which shows low costs, a high rate of return and quick pay-back.
Tamarack is one of the only undeveloped nickel projects in the US and the latest study looked at the economics for three potential production scenarios. These are: nickel sulphates for the electric vehicle (EV) market; concentrates for refined nickel powders, also for the electric vehicle (EV) market; and nickel concentrates for the traditional stainless steel market. All three showed robust economics.
READ: Talon Metals intersects longest mixed massive sulphide nickel mineralization to date at Tamarack project
Sean Werger, Talon's president, described the new PEA as a "significant milestone".
"Having said that, there is much more to come," he added. 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).
In Mach last year, a PEA for the project put the after-tax net present value (NPV) at US$291 million with an after-tax internal rate of return (IRR) at 36%.
Under the nickel suphate scenario reported on Thursday, that after-tax NPV is lifted to US$569 million (after-tax IRR of 31.9%). For nickel powder, it goes to US$567 million (after-tax IRR of 48.3%) and for the nickel concentrate scenario, it moves to US$520 million (after-tax IRR of 45.6%).
Low costs were seen across all three scenarios, noted Talon, with AISC (all-in sustaining costs (net of by-product revenue) of US$3.01 per pound of nickel under the scenario of selling nickel concentrates to the stainless-steel market.
The pre-tax payback period ranged from 1.4 to 1.8 years and after-tax payback period ranging from 1.5 to 2.1 years, across the scenarios.
The overall tonnage included in the mine plan increased from March last year by 119% from 4.9 million tonnes to 10.8 million tonnes, while the processing rate increased 80% from 2,000 tonnes per day to 3,600 tonnes per day (tpd).
The company noted that it currently had three drill rigs running at site, so shareholders "should expect plenty of 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," it added.
Talon's asset, on which it is in joint venture with Rio Tinto (LON:RIO), comprises the Tamarack North project and the Tamarack South project, which spans a large land position, with 18km of strike length, with numerous high-grade intercepts outside the current resource area.
Talon has an earn-in to acquire up to 60% of the asset.
Contact the author at giles@proactiveinvetstors.com