Gold'n Futures Mineral Corp. press release
Giga Metals Corporation Announces Results of a Comprehensive Preliminary Economic Assessment ("PEA") for the Production of High-grade Nickel Concentrate from the Turnagain Nickel Deposit
CSE - Canadian National Stock Exchange · Gold · Copper · Rare Earth Elements · Canada
Vancouver, British Columbia--(Newsfile Corp. - October 28, 2020) - Giga Metals Corp. (TSXV: GIGA) ( "Giga Metals" or the "Company") today announced the results of a preliminary economic assessment ("PEA") prepared in accordance with National Instrument 43-101 ("NI 43-101") for the Turnagain Nickel-Cobalt Project ("Turnagain") located 65 km east of Dease Lake in British Columbia, Canada. The PEA is an update of the 2011 PEA confirming the ability of Turnagain to produce high-quality nickel concentrate, such as that needed to make pure nickel products for the electric vehicle (EV) market, in a socially and environmentally responsible manner. The PEA has been prepared by Hatch Ltd, a global engineering company with substantial expertise in the mining sector, with input from Hatch personnel and industry expert consultants including Wood Mackenzie (nickel and cobalt markets, smelter terms), Blue Coast Metallurgy (process design), Knight Piésold (tailings and water management), Kerr Wood Leidal (power supply and costs), and Kirkham Geosystems (resource model and estimates). Giga Metals' primary driver for this update was to deliver a reliable and comprehensive PEA incorporating all project-related components for use for discussion with strategic investors, for targeting improvement opportunities, and to serve as a base for future engineering studies.
Summary
The PEA indicates a long-life, large-scale project. With a projected build capital of US$1.4B (Phase 1) and US$0.5B (Phase 2) including significant investment for a powerline delivering low-cost, clean, low-carbon power from BC Hydro (mainly hydroelectric), the projected capital intensity is US$51,500 per annual tonne nickel at full rates (years 6 to 20).
At full rate (years 6 to 20), the project is expected to deliver 37,149 tonnes per year of nickel in a high-grade nickel concentrate at an operating cost of US$3.20/lb nickel before by-product credits at the plant gate (all production data are metal in produced concentrate), or US$3.04/lb nickel after credits and shipping (in concentrate, delivered CIF Asia port). At metals prices of U.S. $7.50 per pound of nickel and smelter terms of 78% NSR as provided by Wood Mackenzie, Turnagain is expected to have a pre-tax IRR of 6.3%. At the environmental, social, and governance (ESG)-premium pricing1case, the project is expected to have a pre-tax IRR of 9.4%. The base case pricing is based on a relatively conservative EV demand forecast creating a nickel shortfall after 2030 growing to 1.3 Mt/y by 2040. This projected deficit requires more than 35 Turnagain-scale projects to fill.
Based on the resources previously disclosed (Sep 19, 2019) including 1.07 billion tonnes of Measured and Indicated and 1.1 billion tonnes of Inferred (respectively, 5.2 billion pounds and 5.5 billion pounds of nickel content), the project is expected to operate for at least 35 years, producing 1.2 million tonnes of nickel-in-concentrate at an average grade of 18% nickel and 1% cobalt, comparable to the best nickel concentrates currently produced in the world.
At this stage, the PEA does not include valuation of potentially significant opportunities identified such as carbon sequestration from the waste residue (tailings) to be deposited in the Tailings Management Facility (TMF). The Company is actively working on quantifying carbon dioxide (CO2) sequestration rates through independent scientific research currently ongoing at the University of British Columbia by Dr. Greg Dipple. Giga Metals is targeting to minimize the greenhouse gas (GHG) footprint of the Turnagain mine once operational and CO2sequestration by the TMF is expected to help achieve the goal of CO2neutrality in future years.
Turnagain PEA Overview
The PEA was prepared by Hatch Ltd, a global engineering company with substantial expertise in the mining and metals sectors, with input from industry expert consultants including Kirkham Geosystems (resource model and estimates), Blue Coast Metallurgy (process design), Knight Piésold (tailings and water management), Kerr Wood Leidal (power supply and costs), and Wood Mackenzie (nickel and cobalt markets, smelter terms). For more details, see the Qualified Persons section below.
The PEA is preliminary in nature, it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and, as such, there is no certainty that the PEA results will be realized.
Highlights (all currencies are reported in US dollars):
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Notable ESG credentials
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Production of nickel in concentrate at a very low GHG intensity of <2.5 t CO2e/t Ni (base case - diesel haul fleet), with potential reduction to <1 t CO2e/t Ni with the use of electrified haul equipment when it becomes available
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Efficient tailings storage potential in sub-aerial valley impoundment, allowing natural sequestration of CO2through mineral carbonation
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Excellent water balance, operates in a near-neutral water balance for most of the mine life
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Located in well-regulated developed jurisdiction that has adopted First Nations' rights to informed consent into permitting processes
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Production of clean, high-grade nickel sulphide concentrate (18% nickel, 1% cobalt) with no impurities at deleterious levels
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Competitive costing with large greenfield nickel development
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Capital cost for Phase 1 of US$1.4B inclusive of construction and owners costs, comprised of US$1.1B plus power line construction at US$0.3B, with expansion in Year 6 at US$0.5B, taking production to 37 kt/y Ni
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Life-of-mine operating cost at US$2.81/lb Ni delivered to plant gate, net of by-product credits
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Industry standard processing with current smelting and refining charges delivers pre-tax IRR of 6.3% at base case pricing of US$7.50/lb Ni and 9.4% at ESG-premium pricing case of US$8.50/lb Ni
PEA Assumptions and Economic Results
The PEA is based on a set of assumptions and calculated results. The major values are indicated in the table below. Average values are annual or weight-averaged by mill feed or nickel production, as appropriate. All costs are presented in US$. Site operating costs including all direct operating costs and G&A. Net operating costs below are inclusive of transport to port (assumed Asia) and expected net payment for contained cobalt. Construction capital costs include off-site infrastructure (high-voltage power line for connection to existing provincial power supply grid, access road). Sustaining capital costs include allowances for ongoing TMF development, mining equipment, plant capital equipment replacement, closure related costs, and costs for access to the BC Northwest Transmission Line (for clean low-carbon power supply). All costs are estimated using an exchange rate of C$1.30 = US$1.00.
| All parameters annual average except capital and sustaining capital cost | Phase 1 (Y1-5) Average | Phase 2 (Y6-20) Average | Phase 2 (Y21-37) Average | LOM (Y1-37) Average | LOM (Y1-37) Total | | Ore Processed (Mt) | 15.3 | 32.7 | 32.6 | 30.3 | 1,122 | | Nickel Grade (%) | 0.260 | 0.220 | 0.216 | 0.221 | -- | | Nickel Recovery (%) | 57.3 | 51.6 | 46.5 | 49.6 | -- | | Nickel Production (t in concentrate) | 22,754 | 37,149 | 32,821 | 33,215 | 1,228,961 | | Cobalt Production (t in concentrate) | 1,379 | 2,224 | 1,902 | 1,962 | 72,592 | | Nickel Price ($/lb) and Payability | $7.50 / 78% | | | | | | Cobalt Price ($/lb) and Payability | $22.30 / 35% | | | | | | Revenue ($M) | $317 | $517 | $456 | $462 | $17,099 | | Site Operating Cost | | | | | $8,852 | | ($/t ore) | $9.63 | $7.99 | $7.56 | $7.89 | -- | | ($/lb Ni) | $2.93 | $3.20 | $3.41 | $3.27 | -- | | Net Operating Cost ($/lb Ni) | $2.77 | $3.04 | $3.27 | $3.12 | -- | | Capital Cost (construction, $M) | $1,381 | $532 | | | $1,913 | | Sustaining Capital ($M), including closure obligations | $274 | $1,011 | $715* | | $2,000 |
Includes $2.8M in TMF and closure costs in Year 38 Total, not average
Sensitivity Analysis
The economic analysis for the project with a variety of primary sensitivities is shown in the table below. All values are pre-tax, in US$.
| | Parameter Value | NPV (8%, $M) | Pre-tax IRR | | Base Case | | (269) | 6.3% | | ESG Incentive Price | $8.50/lb Ni | 242 | 9.4% | | Phase 1 Capital Costs (+/-20%) | $1,657 / $1,104 | (507) / (31) | 5.2% / 7.8% | | Phase 2 Capital Costs (+/ -20%) | $639 / $426 | (330) / (208) | 6.0% / 6.7% | | Sustaining Capital Costs (+/-20%) | | (379) / (159) | 5.6% / 7.0% | | Site Operating Cost (+/-20%)* | $3.92 / $2.61/lb Ni | (694) / 156 | 3.2 % / 8.9% | | Nickel Payment | 70% / 75% | (663) / (417) | 3.5% /5.3% | | Exchange Rate | $0.70 / $0.80 | 39 / (408) | 8.2% / 5.5% |
*factor applied across all years; LOM value shown for parameter value
Revenues
Revenues are based on a market study completed by Wood Mackenzie (WM). WM forecasts a significant nickel deficit beginning 2029, particularly for Class 1 nickel for EV/ESS battery uses. The total nickel market demand growth is estimated to require 133 kt/y of new supply by 2030 and 1,300 kt/y by 2040. This demand growth requires nickel producers to bring on an additional capacity in the 2030-2040 timeframe greater than three Turnagain projects every year. Following the significant contraction in nickel markets in early 2020, WM has revised their long-term incentive nickel price downwards from US$9.00/lb to US$7.50/lb, while acknowledging that the growing ESG pressures in the EV industry could lead to a higher incentive price of US$8.50/lb to bring on suitable projects.
WM does not forecast cobalt price to move dramatically despite predicted shortfalls; as cobalt is primarily a by-product from nickel and copper production, WM bases their forecast on inflation-adjusted pricing, with a price of US$22.30/lb.
WM has reviewed smelter operations globally and notes seven smelters currently procuring third-party concentrates and shortfalls in concentrate supply beginning 2025 and increasing to 130 kt/y nickel content by 2030. Recommended smelter payment terms for nickel concentrate are 78% of contained nickel and 35% of contained cobalt. The PEA includes a downside sensitivity range below this level. No benefit has been assumed for the high-grade of Turnagain nickel concentrate; at 18% nickel, the concentrate is higher-grade than other commercial nickel concentrates2.
Nickel concentrates with low precious metal and platinum group metal by-product value, similar to Turnagain, have been successfully directly refined to Class 1 nickel by Sherritt Gordon Mines Ltd (now Sherritt International, at Fort Saskatchewan, Alberta, Canada), by Western Mining Corporation (now BHP, at Kwinana, Western Australia), and most recently by Vale at Long Harbour, Newfoundland. Prior work on hydrometallurgical treatment of Turnagain concentrates suggests that the material is amenable to this processing approach as well as the standard smelting and refining assumed for the market study. Hydrometallurgical refining could lead to improved payment terms compared to standard treatment charges from smelting and would allow the recovery of nickel and cobalt in metal or sulphate form, should this process route be pursued by potential customers. No recent PEA level technical and financial analysis has been completed for Turnagain concentrate to determine the economic viability of this alternative.
1The ESG premium case is based on an anticipated premium for nickel produced with low carbon emissions and in accordance with best practices relating to tailings management, environmental regulation and practice, treatment of workers and communities, and governance practices, as desired by customers who are looking to position themselves as sustainable producers. 2Crundwell et al; Extractive Metallurgy of Nickel, Cobalt, and Platinum-Group Metals, Chapter 15; Elsevier; 2011
Operating Cost
The operating cost estimate for the project has been developed by Hatch with specialized input from independent contractors including Knight Piésold (tailings and water management), Kerr Wood Leidal (power), and Blue Coast Metallurgy (reagent consumption). The site operating cost estimate is shown below, in US$/t ore feed with the final values converted to US$/lb nickel production. Concentrate shipping is added on, estimated at US$113/wmt concentrate (wet metric tonne, based on CIF delivery to main port Asia) and cobalt credits subtracted to develop the net operating cost.
| Operating Cost Summary | Phase 1 (Y1-5) | Phase 2 (Y6-20) | Phase 2 (Y21-37) | LoM | | Mining | 3.52 | 2.89 | 2.46 | 2.72 | | Processing and site infrastructure | 4.90 | 4.39 | 4.38 | 4.42 | | G&A | 1.13 | 0.68 | 0.68 | 0.71 | | Electrical supply O&M | 0.08 | 0.04 | 0.04 | 0.04 | | Site operating cost ($/t ore) | 9.63 | 7.99 | 7.56 | 7.89 | | Site operating cost ($/lb Ni) | 2.93 | 3.20 | 3.41 | 3.27 | | Concentrate shipping ($/lb Ni) | 0.31 | 0.31 | 0.31 | 0.31 | | By-product credits ($/lb Ni) | -0.47 | -0.47 | -0.45 | -0.46 | | Net operating cost ($/lb Ni) | 2.77 | 3.04 | 3.27 | 3.12 |
Capital Cost
The capital cost estimate for the project has been developed by Hatch with specialized input from independent contractors including Knight Piésold (tailings and water management) and Kerr Wood Leidal (power line). The cost estimate is shown below. All costs are presented in US$M. The cost estimate is Class 5, with expected accuracy of +50%/-30%.
| Item | Phase 1 | Phase 2 | LoM | | Mine directs | 133 | 45 | 178 | | Process plant directs | 307 | 245 | 551 | | Tailings storage facility directs | 87 | 20 | 107 | | On-site infrastructure directs | 77 | - | 77 | | Indirects | 204 | 104 | 308 | | Contingency | 191 | 99 | 290 | | Owner's cost and EA | 63 | 20 | 83 | | Electrical supply | 278 | - | 278 | | Site access road | 42 | - | 42 | | Total initial/expansion capital | 1,381 | 532 | 1,913 |
Sustaining capital for the project, including ongoing TMF construction (dam lifts), mining equipment, and an allowance for process plant and site infrastructure upgrades is shown below, along with the estimated life of mine closure and reclamation bonding costs. There is currently a tariff supplement applied by BC Hydro for access to the Northwest Transmission Line; per current BC Hydro regulations, a 5-yr payment term is applied for each phase of the project. Giga Metals has been advised that this tariff supplement is under review for possible removal.
| Item | Phase 1 (Y1-5) | Phase 2 (Y6-20) | Phase 2 (Y21-37) | LoM | | Mine | 0 | 348 | 148 | 496 | | Process plant | 31 | 165 | 187 | 384 | | Tailings storage facility | 107 | 377 | 335 | 819 | | On-site infrastructure | 8 | 23 | 26 | 57 | | Electrical supply: Tariff Supplement 37 | 90 | 82 | - | 172 | | Total sustaining capital | 236 | 996 | 697 | 1,928 | | Closure and reclamation | 38 | 15 | 18 | 72 | | Total sustaining capital and closure and reclamation | 274 | 1,011 | 715* | 2,000 |
Includes $2.8M in TMF and closure costs in Year 38
PEA Major Components
Geology and Mineralogy
The Turnagain Project is located in the Turnagain ultramafic complex, which comprises a central core of dunite with bounding units of primarily wehrlite, olivine clinopyroxenite, clinopyroxenite, and hornblendite. The complex is elongate and broadly conformable to the northwesterly-trending regional structural grain. The ultramafic rocks are partially serpentinized on a mineral grain scale, while more intense serpentinization and talc-carbonate alteration occur along faults and restricted zones within the complex. The central part of the ultramafic body is intruded by granodiorite to diorite, and hornblende-plagioclase porphyry dikes and sills.
Showings of semi-massive and massive sulphides have been identified by work to date. These semi-massive and massive zones, plus broad zones of disseminated sulphides, are generally hosted by dunite and wehrlite near the southern and eastern margins of the ultramafic body. Primary sulphide minerals consist of pyrrhotite and pentlandite with minor chalcopyrite. Interstitial and blebby sulphides, with grain sizes ranging from 1 mm to 4 mm, are evident in widespread disseminated zones seen in drill cores.
Minor amounts of fibrous serpentine minerals (i.e. asbestiform minerals) have been detected in many Turnagain samples, consistent with alteration of ultramafic host rocks. This is a common feature for ultramafic-hosted nickel deposits.
Mineral Resource Estimate
As previously released by Giga Metals (Sept 19, 2019), the base case mineral resource estimate for the Turnagain Nickel-Cobalt Project is as follows. This resource estimate has not been updated for the current PEA base case study, which includes revised nickel price and payability values.
Turnagain Nickel-Cobalt Project Mineral Resource Summary1,2,3,4,5
| Resource | Tonnes | Ni Grade | Contained Ni | Co Grade | Contained Co | | Classification | (000 t) | (%) | (000 lb) | (%) | (000 lb) | | Measured | 360,913 | 0.230 | 1,832,440 | 0.014 | 109,803 | | Indicated | 712,406 | 0.215 | 3,373,616 | 0.013 | 202,605 | | Measured and Indicated | 1,073,319 | 0.220 | 5,206,056 | 0.013 | 312,409 | | Inferred4 | 1,142,101 | 0.217 | 5,473,909 | 0.013 | 327,327 |
_(1) All mineral resources have been estimated in accordance with Canadian Institute of Mining and Metallurgy and Petroleum ("CIM") definitions, as required under National Instrument 43-101 ("NI 43-101"). (2) Mineral resources are reported in relation to a conceptual pit shell in order to demonstrate reasonable expectation of eventual economic extraction, as required under NI 43-101; mineralization lying outside of these pit shells is not reported as a mineral resource. Mineral resources are not mineral reserves and do not have demonstrated economic viability. (3) Mineral resources are reported at a cut-off grade of 0.1% Ni. Cut-off grades are based on a price of US $8.50 per pound and a number of operating cost and recovery assumptions, plus a contingency as reported in the December 2011 PEA authored by AMC Consulting. (4) Inferred mineral resources are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. However, it is reasonably expected that the majority of Inferred mineral resources could be upgraded to Indicated. (5) Due to rounding, numbers presented may not add up precisely to the totals provided and percentages my not precisely reflect absolute figures. _
The mineral resources are contained in a large, contiguous, near-surface deposit amenable to large-scale open-pit mining techniques. This mineral resource is based on a database of 362 drill holes totalling 90,635 m of drilling, conducted from 2002 through 2018. The distribution of drill holes is shown in the figure below.
[](https://orders.newsfilecorp.com/files/856/66989_d74db240a41e1a3c_002full.jpg)
To view an enhanced version of this graphic, please visit: https://orders.newsfilecorp.com/files/856/66989_d74db240a41e1a3c_002full.jpg
Source: Kirkham, 2020
Metallurgy
Numerous phases of testing have been conducted on Turnagain samples over the past two decades. Since 2011, work has focused on the production of high-grade nickel sulphide concentrates. The initial work mostly used material drilled from the south end of the Horsetrail zone however more recent work has been conducted on samples from throughout the Horsetrail and Northwest zones which are the focus of the current mine plan.
Comminution
Samples from the Turnagain deposit have undergone extensive small-scale comminution testing including crushing, semi-autogenous grinding (SAG), high-pressure grinding roll (HPGR, via piston press testing), milling (Bond ball and rod), and abrasion. Turnagain material is hard, with a mean Bond Ball Mill Work Index of 19.8 kWh/tonne. The SAG Axb hardness of the 15thpercentile material is 23.0 which indicates Turnagain is highly resistant to SAG milling. This makes HPGR a favorable comminution technology for the project.
Mineralogy