The nickel shortage and growing demand is pushing miners to expand exploration and production. This also comes on the heels of companies like Tesla (NASDAQ:TSLA), that have announced plans to source more nickel for their electric vehicle batteries from environmentally sound projects.

Talon Metals (TSX:TLO) is one of the latest miners to announce expansion plans at their Minnesota-based nickel project. Tesla is a client of Talon’s and the Tamarack nickel-copper-cobalt project is one of the company’s major projects, of which is holds a 51% interest. Rio Tinto (ASX:RIO) holds the remaining 49%.

The Tamarack North and South projects are located in an 18-kilometer stretch of strike length with a significant land position (18 kilometers of strike length) and numerous high-grade intercepts outside the current resource area. The new rigs will be utilized outside of the main resource zone. If Talon chooses, it has an earn-in option to increase its interest to 60%.

The goal is for the firm to make staggered payments worth $22.5 million in cash and shares to partner Rio Tinto, invest $10 million in exploration and development, and complete a feasibility study in order to reach it.

The Supply Race is On

Rising demand from EV companies is driving automakers to secure steady supply of battery metals which include nickel, cobalt, and lithium. While most of the world’s nickel is used in stainless steel production, an increasing amount is being gobbled up by the battery sector as the production of EVs ramps up.

The market for electric vehicles is expected to grow rapidly in coming years, alongside the demand for these metals.

Nickel is beneficial to the development of lithium-ion batteries, which are increasingly being used in automobiles. It allows EVs to charge faster and farther between plug-ins by increasing the energy density of battery packs.

The price of nickel has increased to previously unseen heights in recent months, not surprisingly. In March, the price rose by an unprecedented 250 percent in a day, forcing the London Metal Exchange (LME) to halt trading in the metal.

EV Giants Scramble

Tesla CEO Elon Musk has noted that nickel supply is one of the company’s top concerns because of the amount used in each battery pack. The company is also eying a move into more direct control of raw materials, which would give it more control over its supply chain.

For now, however, miners are benefiting from the electric vehicle boom as they race to increase exploration and production. Talon Metals is just one of the many firms looking to take advantage of the perfect climate for them.

The sanctions against Russia resulting from the invasion of Ukraine have further heightened the need for nickel, which it holds about 17% of global capacity for refined Class 1 nickel, the type used for EVs.

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.
Source: Talon Metals

 

Figure 1: 15.08 meters of mixed and massive sulphide nickel and copper mineralization in 21TK0355 beginning at 202.86 meters depth

Talon Metals Corp. reported that its Minnesota-based Tamarack Nickel-Copper-Cobalt Project is expanding. The company reported 31 new drill holes are located in the CGO West area, approximately 100 meters north-northwest of the Tamarack Nickel Project resource area. The new holes have intercepted nickel-copper mineralization, with assays pending. 

Additional significant drill core intervals reported today (with assays pending) are as follows:

  • Drill hole 21TK0348 intercepted 13.77 meters of mixed and massive nickel and copper mineralization, beginning at 250.24 meters depth;
  • Drill hole 21TK0350 intercepted 13.25 meters of mixed and massive nickel and copper mineralization, beginning at 245.69 meters depth;
  • Drill hole 21TK0354 intercepted 4.22 meters of mixed and massive nickel and copper mineralization, beginning at 198.53 meters depth;
  • Drill hole 21TK0357 intercepted 3.9 meters of mixed and massive nickel and copper mineralization, beginning at 172.44 meters depth;
  • Drill hole 21TK0360 intercepted 14.05 meters of mixed and massive nickel and copper mineralization, beginning at 242.09 meters depth; and
  • Drill hole 21TK0368 intercepted 4.53 meters of mixed and massive nickel and copper mineralization, beginning at 188.6 meters depth.
Source: Talon Metals

Notably, drill hole 21TK0355 intercepted 15.08 meters of mixed and massive nickel-copper mineralization starting at only 202.86 meters depth. With the intercept being deeper than the previously reported large layer of nickel and copper mineralization in the immediate vicinity, it is suspected that another layer of massive mineralization may be present at this location. Investigations of this location will continue in 2022.  

The layer of nickel and copper mineralization lies within the CGO West area, to the southwest and at depth so drilling in 2022 will focus on this area. 

Talon Metals CEO. Henri van Rooyen, said, “Our in-house geology, geophysics and geotechnical teams are going from strength to strength with the drilling program at the Tamarack Nickel Project. While maintaining a zealous focus on safety in a prolonged pandemic, the team is still able to deploy rigs in the right places, set records for meters drilled per day and significantly increase our understanding of the CGO West area.”

Dr. Etienne Dinel, Talon’s Vice President of Geology, has confirmed that the analytical and test procedures used are industry standard operating procedures and methodologies and has reviewed, approved and verified the technical information disclosed, including the sampling, analytical and test data underlying the technical information. 

Figure 2: Plan view geological map of the northern portion of the Tamarack Nickel Project showing drill hole locations with nickel-copper mineralization intervals in the CGO West area

Source: Talon Metals

Figure 3: Section A represents a portion of the CGO West area looking east showing the thick intersections of nickel-copper mineralization

Source: Talon Metals

Figure 4: Section B represents a portion of the CGO West area looking east showing the thick intersections of nickel-copper mineralization

Source: Talon Metals

Talon Metals on a High-Grade Nickel Mission

Talon is a TSX-listed base metals company in a joint venture with Rio Tinto on the high-grade Tamarack Nickel-Copper-Cobalt Project located in central Minnesota.  Talon is focused on expanding its current resource of high-grade nickel mineralization prepared in accordance with NI 43-101; identifying additional high-grade nickel mineralization; and developing responsible processing capacity in the United States.

Talon’s Tesla (NASDAQ:TSLA) Deal

Talon recently entered into an agreement with Tesla Inc (Tesla) for the supply and purchase of nickel concentrate to be produced at the Tamarack Nickel Project. The deal will be execute following a due-diligence period performed by Tesla and negotiations.

Highlights of the agreement include:

  • Tesla has committed to purchase 75,000 metric tonnes (165 million lbs) of nickel in concentrate, representing a portion of the metals projected to be produced from the Tamarack Nickel Project. Tesla also has a preferential right under the agreement to negotiate the purchase of additional nickel concentrate over and above the initial 75,000 metric tonne commitment.
  • The term of the agreement is six years or until a total of 75,000 metric tonnes of nickel in concentrate has been produced and delivered to Tesla.
  • The agreement is conditional upon: (i) Talon earning a 60% interest in the Tamarack Nickel Project; (ii) Talon commencing commercial production at the Tamarack Nickel Project; and (iii) the parties completing negotiations and executing detailed supply terms and conditions.
  • Talon will use commercially reasonable efforts to achieve commercial production on or before 1 January 2026 at the Tamarack Nickel Project, which may be extended by the agreement of the parties for up to 12 months following which Tesla has a right to terminate the agreement and Talon may elect to sell to other parties.
  • Talon and Tesla will work together to optimize nickel concentrate grades and metal recoveries.
  • The purchase price to be paid by Tesla for the nickel in concentrate will be linked to the London Metals Exchange (LME) official cash settlement price for nickel. The parties have also agreed to share in any additional economics derived from by-products extracted from the nickel concentrate, such as iron and cobalt.

Source: Green Car Congress

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.

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