The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
PEA shows optimizations needed for economic Turnagain mine North of 60 Mining News – October 30, 2020
Boxes of core from the drilling that has outlined 10.7 billion pounds of nickel and 640 million lb of cobalt at the Turnagain project in Northern British Columbia.
Giga Metals Corp. Oct. 28 published a preliminary economic assessment that outlines a mine at its Turnagain project in Northern British Columbia that would produce an average of 33,215 metric tons of nickel and 1,962 metric tons of cobalt annually over a 37-year mine life.
This PEA is based on 1.07 billion metric tons of measured and indicated resource averaging 0.22% (5.21 billion pounds) nickel and 0.13% (312.4 million lb) cobalt; plus 1.14 billion metric tons of inferred resource averaging 0.217% (5.47 billion lb) nickel and 0.013% (327.3 million lb) cobalt.
The cost to build this mine, however, is estimated to be US$1.9 billion, an initial capital investment of US$1.4 billion for phase-1 construction and US$500 million for phase-2 expansion scheduled to begin in the sixth year of operation.
With the goal of developing a carbon-neutral mine to supply nickel and cobalt for the lithium-ion batteries needed for the electric vehicle and renewable energy sectors, the initial development capital for Turnagain includes US$300 million needed for infrastructure to deliver hydropower to the project about 65 kilometers (40 kilometers) east of Dease Lake, BC.
While the PEA confirms the ability of Turnagain to produce high-quality nickel-cobalt concentrate needed for lithium-ion batteries in a socially and environmentally responsible manner, the economics of the operation outlined in the assessment are weak.
At a US$7.50/lb nickel price and smelter terms of 78% NSR, as provided by Wood Mackenzie, the Turnagain mine outlined in the PEA is expected to have a pre-tax net present value (8% discount) deficit of US$269 million and internal rate of return of 6.3%. At US$8.50/lb, the environmental, social, and governance (ESG)-premium pricing case, the project is expected to have a pre-tax NPV (8% discount) of US$242 million and an IRR of 9.4%.
Giga Metals says the base case pricing is based on a relatively conservative EV demand forecast creating a nickel shortfall after 2030, growing to 1.3 million metric tons per year by 2040. This projected deficit requires more than 35 Turnagain-scale projects to fill.
At this stage, the PEA does not include valuation of potential opportunities such as carbon dioxide sequestration in the tailings storage facility for the operation.
Giga is working on quantifying CO2 sequestration rates through independent scientific research currently ongoing at the University of British Columbia by Dr. Greg Dipple. Giga Metals is targeting carbon neutrality for a future mine at Turnagain and sequestering CO2 in the tailings facility is expected to help achieve the goal in future years.
More information about the Turnagain carbon sequestration studies can be read at A potential CO2 absorbing nickel mine in the August 5 edition of Metals Tech News. https://www.metaltechnews.com/story/2020/08/05/mining-tech/a-potential-co2-absorbing-nickel-mine/298.html
Giga says its primary driver for the updated PEA is to deliver a reliable and comprehensive scoping level assessment of the project that includes all project-related components that can be used for discussions with strategic investors, targeting improvement opportunities, and to serve as a base for future engineering studies.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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