Microcap Canadian explorer Nickel Creek Platinum Corp is looking to possible future federal tax incentives for critical mineral projects and cheap Yukon hydropower to boost the economics of its proposed C$1.7 billion Nickel Shaw multi-metal project after a pre-feasibility study came up with a C$143 million after-tax net present value and 5.8% internal rate of return.
The company, which has a current market value around C$11 million, is proposing a large-scale openpit operation able to produce up to 614.3 million pounds of nickel, 281.5Mlb of copper, 21.5Mlb of cobalt, 626,500oz of platinum, 743,400oz of palladium and 174,400oz of gold over 19 years. Its plan includes a 45,000 tonnes-per-day concentrator outside the valley in which the project is located, 317km north-west of Whitehorse in west Yukon.
Nickel Creek’s PFS envisages a three-year project build, circa-$1.7b of life-of-mine after-tax cash flow and a 12.7-year payback period, without any tax or energy-cost relief, with an average US$11/lb nickel price, copper at US$4/lb, palladium $2100/oz, platinum $1000/oz, cobalt $23/lb, gold $1800/oz and a 0.75:1 CAD:USD exchange rate.
The company said a 2023 federal budget proposal to bring in a 30% refundable investment tax credit (ITC) for certain clean technology manufacturing and processing, and critical mineral extraction and processing, activities could materially impact its project value, but noted no legislation was currently on the table.
“Based on assumptions on the capital that could be eligible for the ITC, if the company was able to utilise the 30% clean ITC, the company estimates that the after-tax NPV for the project at a 5% discount rate would improve from C$143 million to $336 million and the after-tax IRR would improve from 5.8% to 7.2%,” it said.
Nickel Creek’s PFS base case uses C19.4c/kW hour grid rates for hydro power.
“If paying Yukon grid rates of 11c/kWhr the after-tax NPV at a 5% discount rate increases by $324 million to $467 million,” it said.
CEO Stuart Harshaw said the project’s sensitivity to energy costs showed “how working with the different levels of government can lead to a significant improvement in value, especially when combined with the previously announced intention of the Federal government to provide a tax incentive for critical mineral projects such as Nickel Shaw”.
“Moving forward, our focus will be to continue to add value to the project through work on identified key economic areas of opportunity and continued mineral exploration success while advancing towards a feasibility study.”
Nickel Creek also plans to look further at potential carbon tax offsets associated with carbon sequestration in its proposed tailings facility.
“Ultramafic rocks from the project – in the form of tailings and waste rock – are being assessed for their ability to capture and store carbon,” the company said.
“Testwork conducted in 2022 confirmed the presence of brucite, a magnesium-rich mineral known to react quickly with CO2 in air, in a subset of samples. On a mass basis, from the achieved reactivity in the testwork, this may enable maximum sequestration of 2100 CO2 per million tonnes of tailings.”
