What a time to be in the nickel business.
The silver-coloured industrial metal found itself in the midst of an unprecedented whirlwind earlier in March after a historic short squeeze in London caused a temporary trading suspension thanks to a price gap of more than $8,000 between the LME and rival Shanghai Futures Exchange.
It was a scene that would have been almost unthinkable five years ago, as nickel prices floundered amidst waning demand for stainless steel. But its emergence as an essential component of electric vehicle batteries has thrust the metal into the spotlight, and investors are eager to get a piece of the action.
READ: Nickel trading suspended on LME
Now is the time for nickel explorers to shine. After all, it’s not every day that Tesla CEO Elon Musk publicly pleads for new sources of North American nickel.
James Sykes, CEO of new Canadian battery metal company Metal Energy Corp, told Proactive the attention is largely positive.
“A lot of the potential that exists here is because we’ve got a CEO like Elon Musk coming out and saying, we will buy North American nickel. You guys find it, we'll buy it from you, we'll get contracts for you guys,” Sykes said. “That's a huge driver in itself.”
Metal Energy is in a great position to benefit from Musk’s plea for North American nickel. The company has two highly prospective projects in Canada: the Manibridge past-producing mine in Manitoba, and the Strange project in Ontario.
Manibridge produced nearly 1.3 million tonnes at 2.5% nickel plus 0.3% copper byproduct, which Sykes termed “very exciting stuff.” A bonus: there is still a considerable amount of nickel still left in the ground, at very shallow depths. The team has conceptualized Manibridge as a bulk tonnage operation, however, it will take some drill metres to prove that theory.
Manibridge is nestled in Manitoba’s Thompson nickel belt, a prolific district but one that is often overshadowed on a national level by better-known nickel districts like Sudbury in Ontario and Newfoundland’s Voisey’s Bay. Thompson itself is nearly a 100-kilometre-long trend with an impressive six billion pounds of nickel mined in the past, making it the fifth-largest nickel district in the world.
READ: Metal Energy starts drilling on its flagship high-grade nickel Manibridge project in Manitoba
What excites Sykes, in particular, is the geology. The Thompson belt is home to high tenure, sulfide, nickel deposits – not laterite, which is what comes out of Indonesia and the Philippines and other nickel-producing regions. Nickel sulphide is the only material that can achieve 99.99% purity, whereas laterite can produce 99% at best. Importantly, sulphide is the stuff that is needed for battery manufacturers.
“That's the beauty of Thompson nickel belt – it's all the right type of nickel,” Sykes said. “It's high grade, there's a lot of it, and I believe the area's underexplored.”
Not surprisingly, Sykes and the rest of the Metal Energy team are eager to drill the project to better understand what’s there. Sykes told Proactive that the company wants the 2022 program to be “as broad as possible” to test several targets and start developing a geological model.
The team is planning to drill 3,000 metres in nine holes. The program will test at depth near, and beneath, the old mine workings.
“There are some areas within the envelope that just don't have mineralization, so we're trying to connect the dots to prove that there is far more nickel there than anybody has conceived,” Sykes said.
Metal Energy is working to get permitted for a 10,000 metre drill program in the summer, Sykes said. The group has around $7 million in the bank as of March 2022. While much of that budget will go towards Manibridge, there is another project in Ontario that is proving to be quite interesting.
DEEP DIVE: Metal Energy has two nickel and battery metal exploration projects, Manibridge and Strange, in politically stable jurisdictions in Canada
The Strange project is located around 60 kilometers southwest of the city of Thunder Bay, and Metal Energy believes there is the possibility for a significant nickel sulphide opportunity, based on preliminary exploration.
There is a large-scale, significant magnetic anomaly between 600 to 700 metres below-surface that coincides with the base of a mid-continental rift. According to Metal Energy, the size and strength of the magnetic anomaly suggest the system is permissive of a district-scale nickel deposit. With road access and drilling permits in place, Metal Energy has staked 11,000 hectares of prospective land.
Sykes sees huge potential at Strange as well. “There are some pretty encouraging geophysical targets that suggest mafic intrusives flowed along sedimentary layers; the right geologic circumstances for massive nickel deposits.”
Sykes, a dyed-in-the-wool explorationist, explained that many rift-style sedimentary deposits could be present on the project. Even more encouraging, Metal Energy was alerted to the project by ex-Inco geologists who specialized in the area.
“If we can prove that the right geological features are present, then it's game on,” Sykes said.
The Metal Energy CEO is new to the nickel game, but his track record of discovery speaks for itself. As the head of uranium-focused junior Baselode Energy, the team made a discovery on its first drill program in Saskatchewan’s Athabasca Basin. (Sykes is still helming Baselode.) Similar to nickel’s price trajectory, at the time, Sykes and Baselode were ahead of the curve by making the discovery just as uranium prices were bouncing back. Meanwhile, Metal Energy’s backers led by Stephen Stewart and the Ore Group, saw the looming nickel demand and wanted to get into the space with the right person to run the project.
Sykes didn’t need much convincing. “It was a perfect scenario; a strong technical team led by Charles Beaudry – a phenomenal geologist, the financial expertise of Stephen and the Ore Group, and the right project, being Manibridge” the CEO said.
“If Manibridge does not become a mine, I’ll be in shock and awe. It has everything going for it. It just needs to be drilled,” Skyes concluded.
Contact Angela at angela@proactiveinvestors.com
Follow her on Twitter @AHarmantas