Interview with Power Nickel
Interview Power Nickel: "The market has not yet come close to realizing the new potential"
time to read: 11 minutes | The interview was conducted by Nico Popp on September 6th, 2023 in Toronto (CAN).
CEO | Power Nickel
82 Richmond St East Suite 202, M5C 1P1 Toronto (CAN)
+1 416 900-5445
Table of contents:
Collaboration with CVMR
news|financial: "You are working with CVMR Corp. on the feasibility study for your NISK project. What sets your new partner apart, and why are you so excited about the deal?"
"[...] The collaboration with CVMR offers two primary advantages for Power Nickel: We can cover a larger portion of the value chain in the future, and despite the extensive cooperation with all its positive outcomes, we have remained significantly independent. [...]" Terry Lynch, CEO, Power Nickel
CVMR is the best partner we could have imagined. It is a privately held company with extensive experience in nickel processing and operates mining projects or processing facilities in 18 countries worldwide. CVMR is known for producing nickel products of exceptional quality on a global scale. Our NISK project guarantees high-quality raw materials, which are a prerequisite for this. In addition, our project in Canada is located in the middle of a well-developed infrastructure, making it a sought-after partner for many companies. Given CVMR's expertise in nickel processing, they are supporting and financing our feasibility program. The collaboration with CVMR offers two primary advantages for Power Nickel: We can cover a larger portion of the value chain in the future, and despite the extensive cooperation with all its positive outcomes, we have remained significantly independent.
Benefiting from the expertise of a nickel specialist
news|financial: "How exactly will CVMR provide you with technical support?"
Specifically, we are looking at various studies that will provide us with data to incorporate into a feasibility study. We are set up to discover resources not turn them into finished products. That’s an expertise we practically need to partner with as building an internal one would be risky and capital intensive. That is why we like CVMR. The fact is that CVMR has already successfully implemented these steps several times, and thanks to the collaboration, we can focus on our main task: Expanding the resource base and coordinating progress toward our goal of being in production on or before 2030.
Importance of Power Nickel for the New Partners
news|financial: "How big a part does the NISK project play in terms of CVMR's other projects?"
"[...] North America is very much in demand as a raw material region. [...]" Terry Lynch, CEO, Power Nickel
In my personal assessment, NISK has further growth potential and can, therefore, play an important role for CVMR in the future. CVMR currently has projects in USA, Middle East China and Africa. Given the overall geopolitical situation, nickel from Canada, and Quebec in particular, is likely to contribute significantly to diversifying CVMR's sources of raw materials. Currently, our partners are also advancing a rare earth project in Texas. North America is, therefore, very much in demand as a raw material region.
Reduced risk - thanks to CVRM
news|financial: "To what extent can the collaboration help you reduce risks on the way to production?"
CVMR will undoubtedly make a significant contribution in this regard. Even if smaller resource companies manage to raise the necessary capital and hire experienced personnel for mine development, developing a mine on one's own remains a feat. There are technical challenges, regulatory challenges, and last but not least, schedules must be met and contacts made with potential customers. I firmly believe that every dollar we put into our NISK project together with CVMR will bring us as close as possible to our goals. In addition to the concrete support of our new partners and their capital, our shareholders should also consider the confidence CVMR places in Power Nickel. Power Nickel's entire equity story has taken a turn since mid-August - we have turned over a new leaf.
Quebec tax benefits
news|financial: "What is the significance of Flow-Through Financing, and what role does the investment consortium play?"
"[...] Exploration credits and deductions can allow companies like Power Nickel to effectively have half price exploration relative to the rest of the world [...]" Terry Lynch, CEO, Power Nickel
This question relates to another advantage that Power Nickel offers. We are located in Quebec,and in Canada where investors in mining projects receive substantial tax credits. Exploration credits and deductions can allow companies like Power Nickel to effectively have half price exploration relative to the rest of the world and further we can expect upto 55% of any potential new mine we equio and build to have tax credits. Tax credits that can be turned into cash to build and equip the mine. We are leveraging these tax benefits with the recently announced financing. Although the tax benefits are collected by the investors, existing shareholders also benefit: thanks to this structure, we had to issue significantly fewer new shares, which minimizes dilution for existing shareholders. This benefit will come into play again and again in future capital measures, ensuring that Power Nickel can deploy capital more effectively than companies not based in Quebec.
Catalysts for the share price
news|financial: "Why has the market yet to positively price in the CVMR collaboration?"
"[...] Even before our collaboration, Power Nickel was undervalued compared to its peer group. But I am convinced that the best is yet to come. [...]" Terry Lynch, CEO, Power Nickel
Many investors, especially those bound by investment guidelines, want to wait for an official NI 43-101 report before investing. We will deliver this report this fall. Our drilling program, which has recently started, will also likely convince investors. We do not yet know how significantly we will be able to expand our resources, but I am confident that we will provide positive surprises. Power Nickel represents an outstanding nickel project in Quebec, with further exploration potential and the prospect of ultimately being more than just a mine. CVMR is the key to higher margins for us. The market will eventually price in these new opportunities - the recent share price development is already pointing in the right direction. Even before our collaboration, Power Nickel was undervalued compared to its peer group. But I am convinced that the best is yet to come.
Drilling underway since the end of August
news|financial: "You have initiated your drilling program for the fall. Could you tell us about the objectives of the program?"
Our primary goal is to expand the resource base and discover new deposits beyond the existing mineralization. We see great potential with increasing depth, especially in the southeast of our project. To this end, we have undertaken preliminary geophysical work and used completely new methods to target the drilling even more precisely. We also see further potential in other areas of the project. In our view, it is not impossible that we will make discoveries that surpass anything known. The potential is there, and experienced geologists have a good feeling about NISK in addition to the facts at hand. Let's wait and see what the concrete results of the drilling program have to offer.
Drilling program details
news|financial: "How long will your drilling operations continue?"
We began drilling at the end of August and will work until Christmas. In early Q4 we will have a second drilling rig to support our efforts. After the vacations, which usually last two to three weeks, work will resume. A more extended break is only necessary at NISK between the end of April and the beginning of June, apart from the Christmas break.
Nickel and the New Era
news|financial: "Over the past two years, the market has changed. The environment for growth companies has clouded over, but at the same time, critical metals are more in demand than ever. Trends like "near-shoring" did not exist back then. Can you sense that in the response Power Nickel is getting?"
"[...] The sustainability of end products is increasingly measured by the origin of the raw materials. This is where we can score points internationally with NISK. The whole discussion around the security of supply and self-sufficiency comes into play. [...]" Terry Lynch, CEO, Power Nickel
Definitely! The response in recent months culminated in the collaboration we are talking about today, which provides Power Nickel with new opportunities! But first, let me touch on Quebec itself. In addition to the tax benefits for investments in mining companies, the government provides outstanding framework conditions that are unparalleled even within the internationally highly esteemed mining nation of Canada. Specifically, I'm referring to infrastructure such as roads, power lines, and airports. These investments are not just plans or projections – they have already been implemented!
In Quebec the government has ensured indigenous peoples to be partners in successful mining projects. Companies respect their customs and traditions, and local communities benefit economically from new mining projects. The best evidence of this is the mining permits that have been issued in the vicinity of our NISK project in recent years. The strict but fundamentally sound environmental regulations in Canada are also an advantage - for all local residents and other stakeholders as well as for our partners. The sustainability of end products is increasingly measured by the origin of the raw materials. This is where we can score points internationally with NISK. The whole discussion around the security of supply and self-sufficiency comes into play. It is reasonable to assume that Power Nickel has become more attractive in this context compared to many projects from other parts of the world. This was confirmed to me just recently by representatives of family offices I met in New York, who are concerned not only with the security of supply but also with the decarbonization of the world. Nickel is essential for many future technologies. We can supply nickel cleanly, safely and reliably from North America. More and more potential investors are recognizing this.
Nickel deposits worldwide
news|financial: "Your NISK project stands for nickel of exceptionally high quality. Where in the world are these deposits to be found?"
"[...] Nickel Laterite deposits mostly in Indonesia, The Phillipines and Cuba produce the biggest supply of Nickel now. Their challenge is an environmental one. [...]" Terry Lynch, CEO, Power Nickel
Nickel is mined either from sulfides or laterites. Projects that produce low grade Nickel Sulfides are typically characterized by grades of 0.2 to 0.3%, and projects offer an internal rate of return between 10 and 25%. High Grade Nickel sulfide projects, on the other hand, represent grades of 1.0% or more and tend to be significantly more profitable. NISK is a High Grade nickel sulfide project. Typically, nickel sulfide deposits can be found in Canada, Australia, Russia, and USA. Nickel Laterite deposits mostly in Indonesia, The Phillipines and Cuba produce the biggest supply of Nickel now. Their challenge is an environmental one. The deposits are located in sensitive tropical zones and power is typically from coal. So from a CO2 perspective this is dirty nickel. As the world moves to decarbonized economies these CO2 costs will become increasingly import ant provide clean CO2 Nickel like the Nickel we would produce at NISK a considerable advantage. This list already demonstrates why the geopolitical developments of the past years have had an impact on the nickel market.
Review and milestones
news|financial: "It has now been almost two years since we last spoke. Could you briefly review this period and provide an outlook for the coming quarters?"
Operationally, we have made progress during the past two years. Unfortunately, the overall mining markets have declined by over 33%. We held our value, which is an achievement, but given our progress, I think we should have gone up many times over. However, we see some excellent catalysts in the near term that will no doubt prompt the market to revalue Power Nickel.
We will be producing our metallurgical study in September and this was the factor delaying the issuance of NI -43-101
We will be issuing an update on drilling. Its been going well so this is good news for our shareholders.
We will be issuing a Ni 43-101. We expect this resource will show that we have sufficient NIEQ to have a mine. This in our view would be a minimum of 100,000 contained tonnes of NiEQ.
We will be reporting assays on a ongoing basis from the drilling program underway at NISK. We started in Early Auguest so could get expect assays in Mid October and ongoing through into 2024.
We have an announced a spinout of our Copper Cold projects which we would expect to conclude in Q4. These are assets largely ignored by the market but yet have considerable value.
news|financial: "What are your thoughts on the current share price?"
"[...] I think Fall of 2023 will be the best time ever to enter the Power Nickel investment. [...]" Terry Lynch, CEO, Power Nickel
It feels like the share price is two years behind our progress. Power Nickel represents access to a critical raw material that will be essential in the future. The location of our NISK project in Canada, and in Quebec in particular, offers advantages for several reasons. The internationally active nickel specialist CVMR has also recognized this and placed its trust in us. We are convinced of the prospects for Power Nickel and continue to work hard to ensure this outlook is soon reflected in the share price. The undervaluation of the share was already evident before the collaboration with CVMR. However as we described above the near term catalysts in the coming days, weeks and months should provide a further impetus for the market to consider Power Nickel and we believe sharply revalue it to bring it along the value of peer companies where we currently trade at between 5-20% of value. I think Fall of 2023 will be the best time ever to enter the Power Nickel investment.
news|financial: "Thank you very much for talking to us."