The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
AEM CEO returns to Nikolai to outline more than 2 billion lb of nickel for the batteries powering America's energy transition North of 60 Mining News – September 1, 2023
Alaska Energy Metals is carrying out a drill program focused on establishing an inaugural resource at the Eureka, a large zone of nickel-copper-PGM mineralization on the Nikolai project.
Alaska Energy Metals Nikolai project claims outlined in orange, and KoBold Metals' adjacent roperties outlined in purple.
From left to right: Data Mine North journalist A.J. Roan, KWW Geoscience & Exploration Senior Geologist Kevin Wells, and Alaska Energy Metals CEO Greg Beischer at the site of the discovery hole on the Canwell block of claims at Nikolai.
Heavily mineralized core from a depth of around 240 meters in hole EZ-23-005 drilled this year at the Eureka zone on Alaska Energy Metals' Nikolia nickel-copper-cobalt-PGM project.
Click on image for larger Eureka zone drill map.
NIKOLAI, ALASKA – Alaska Energy Metals Corp. President and CEO Greg Beischer has returned to finish what he started when he first landed in Alaska as a young geologist for INCO Ltd. in 1995 – outline a world-class nickel deposit at Nikolai, a project that lies on the northern margins of an energy metals enriched geological terrane that arcs across the 49th State.
"Alaska Energy Metals is positioning itself to supply domestic markets with a source of critical and strategic metals," Beischer said when AEM made its debut earlier this year. "Located in the USA, we intend to help North America transition to electrical power for vehicles and other rechargeable battery powered products."
A lot has changed since Beischer broke the first nickel-rich massive sulfide sample off an outcrop at Nikolai – INCO was absorbed by Brazilian mining company Vale, the Nikolai project was picked up by a junior that carried forward exploration, and the nickel and associated energy metals found at Nikolai have become exponentially more critical due to the rocketing demands of a world transitioning to clean energy.
"The demand for nickel and cobalt for electric vehicle battery manufacture has been growing rapidly and is projected to increase significantly," said Beischer.
What has not changed is Nikolai lies at the heart of the Wrangellia Terrane, which happens to be one of the best places in the world to look for nickel deposits enriched with copper, cobalt, and platinum group metals. This is why an AI-powered global search for energy transition metals led KoBold Metals to this same area of Alaska.
While KoBold and its exploration of a property immediately north of AEM's Nikolai has the backing of Microsoft's Bill Gates, Amazon's Jeff Bezos, and Alibaba's Jack Ma, Alaska Energy Metals has a nearly 30-year head start and the most advanced nickel deposit in the emerging eastern Alaska nickel district.
This lead was solidified with the recent purchase of a database from more than $30 million of exploration carried out since 1995 at Nikolai.
"This additional information will significantly accelerate our work," said Beischer.
This accelerated program is already underway, with drills cutting through thick zones of disseminated nickel sulfides at Eureka, a large nickel-mineralized body that runs for at least nine miles across the Nikolai property.
The Nikolai area of eastern Alaska first lit up on INCO's radar during a global search for nickel deposits during the 1990s.
"The global nickel targeting team had identified this Nikolai project area as having a lot of geological and geochemical similarities to the Norilsk area of Russia, where there is the largest accumulation of massive sulfide nickel deposits in the world," Beischer explained during an interview with Geraldo Del Real.
Excited about the prospect of discovering a Norilsk-style nickel deposit in the United States, INCO sent Beischer to Alaska to carry out discovery-level exploration of this area lying on the very northern boundary of the Wrangellia Composite Terrane, an island arc that crashed into Alaska millions of years ago that gave rise to the Alaska Range and is considered prime hunting ground for the type of nickel deposits the global mining company was seeking.
It did not take long for Beischer and his geological team, which included the late Bill Ellis, to discover an outcrop of the high-grade massive sulfide nickel INCO had hoped to find.
One hole drilled near this outcrop on the Canwell block of claims at Nikolai cut 5.2 meters averaging 0.71% nickel, 0.54% copper, 0.017% cobalt, 0.75 grams per metric ton platinum, and 0.85% palladium.
The excitement from this tangible evidence of a Norilsk-style nickel deposit at Nikolai continued to build as electromagnetic geophysical surveys lit up several large conductors about 15 miles to the southwest.
These conductive zones, which happened to coincide with equally intriguing geochemical anomalies, led to the first holes drilled into what is now known as the Eureka zone.
The core pulled out of these holes, however, was not the eureka moment Beischer and INCO had hoped for. Instead of the metallic look of massive sulfides, the core pulled out of the Eureka zone was black with speckles of disseminated sulfides that averaged around 0.4% nickel-equivalent, which includes the value of copper, cobalt, gold, and PGMs also encountered.
Despite the fact that this core ran these types of grades for widths of 130 to 270 meters and the geological, geophysical, and geochemical evidence all indicated that this thick zone of disseminated massive sulfides ran for miles across the property, the nickel grades were not high enough to support a mine during the 1990s.
"At the time, that was not going to be economic, but things are completely different now," Beischer explained.
What makes an enormous body of bulk-tonnage-grade disseminated nickel sulfides that also happens to carry cobalt, copper, and PGMs so much more valuable now than in 1997?
The short answer is a global transition to low-carbon energy and transportation.
Nickel and cobalt are key ingredients in the lithium-ion batteries powering electric vehicles and storing renewable energy; PGMs are catalysts being used to split hydrogen atoms from water to create a clean fuel for the 21st century, and a massive amount of new copper is needed to wire a world that is trading in pipelines for powerlines.
The total demand for nickel, cobalt, and lithium is expected to be 23 times higher in 2035 than it was in 2021, and the demand for copper will double over the same span, according to a recent study completed by S&P Global analysts.
The Inflation Reduction Act signed into law about a year ago, is driving enormous demand for clean energy metals in the U.S. but also puts restraints on where those materials can be sourced and still be eligible for the billions of dollars of federal incentives and tax credits available under the act.
S&P Global Vice Chairman Daniel Yergin says the "Inflation Reduction Act is indeed transformative on the demand side. However, challenges remain in securing supply of critical minerals needed to meet growing demand and achieve its goal of accelerating the energy transition."
Securing enough nickel for EV batteries and clean energy storage that meets IRA sourcing requirements is expected to be particularly challenging for the U.S.
S&P analysts could not find enough nickel supply in the U.S. and all its free trade agreement countries to meet the increased demand powered by the energy transition and further fueled by the IRA – even if all the nickel that was mined and refined in FTA countries was exported to the U.S.
During 2022, nearly 75% of the world's nickel was mined in China, Indonesia, New Caledonia, Philippines, and Russia – none of which have free trade agreements with the U.S.
As a result, more than 40% of U.S. nickel imports came from non-FTA countries last year, including 11% from Russia.
Even if the U.S. could make a major shift in its nickel supply chains, the S&P study forecasts that America's demand for nickel that meets IRA sourcing requirements will surpass the total supply available in FTA countries before this decade ends, and the supply gap continues to grow out to 2035.
"Unless there is a significant change in investment, there will not be enough nickel production in FTA countries to meet US domestic sourcing requirements for energy-transition-related technologies, let alone other end-market demand or demand in other FTA countries," S&P Global penned in its report.
S&P Global also found that meeting IRA sourcing requirements for cobalt will also likely be a challenge in a global market where the Democratic Republic of Congo (DRC) accounts for 68% of global mined supply and roughly 70% of the world's cobalt refining happens in China.
U.S. copper demand is also severely outpacing supply.
In its best-case scenario, S&P Global estimates that annual production from global mines will be 1.6 million metric tons (3.5 billion pounds) short of meeting copper demands in 2035. In its most pessimistic view, this copper shortage is a staggering 9.9 million metric tons (21.8 billion lb), according to a report published by the commodities research firm last year.
"The challenge is that if current trends continue ... there's a huge gap," Yergin said upon the release of the copper analysis. "And it's important to recognize that now, not in 2035."
Like the other energy transition metals, the growing gap between copper supply and demand is putting the U.S. in a position where it must compete with other countries with its own energy transition ambitions for an inadequate supply of copper.
"As copper demand increases globally, trade rivalries will intensify – especially if capacity additions cannot keep up with demand," S&P Global penned in its new IRA impact report.
When it comes to the metals critical to meeting America's net-zero carbon emissions goals, PGMs are high on the U.S. Department of Energy list.
The reason for this is that PGMs are used as catalysts for producing green hydrogen to decarbonize steelmaking and other industrial processes in the U.S., which account for 23% of the nation's greenhouse gas emissions.
"To meet the nation's goal of net-zero carbon emissions by 2050, decarbonization of these energy and emissions intensive processes will be crucial," DOE penned in its recently completed Critical Materials Assessment. "PGM catalysts, and the green hydrogen produced with them, can enable dramatic emissions reductions in these hard-to-decarbonize industrial sectors."
Platinum metals, however, are very rare and roughly 98% of the world's known reserves are found in South Africa (90%) and Russia (8%).
DOE says the U.S. needs to invest in domestic sources of these rare critical metals in order to "secure the supply chains for these clean energy technologies, as well as green hydrogen and chemical manufacturing."
The nickel-rich disseminated sulfides carrying appreciable quantities of cobalt, copper, and PGMs that are found in abundance in the Eureka zone is a seemingly ideal recipe to help meet America's energy metal needs. This is why Beischer has returned to the Nikolai project after nearly three decades.
"Historical drilling at Nikolai indicates potential for a very large, low-grade, polymetallic deposit dominated by nickel sulfide mineralization," he said.
How large are we talking?
It is estimated that a roughly 2,500-meter core section of the much larger Eureka zone hosts somewhere between 475 million to 630 million metric tons of disseminated sulfides with 2.1 billion to 2.8 billion pounds of nickel, 697 million to 925 million lb of copper, 189 million to 250 million lb of cobalt, 825,000 to 1.1 million ounces of platinum, and 1.8 million to 2.4 million oz of palladium.
While there has not been an industry-compliant resource calculated for this Eureka zone core, Alaska Energy Metals is less than 20 holes away from having the drill density to do so, and maybe another 15 more to extend the core deposit by another 1,200 meters.
In fact, the company expects that even before all the assays are received from its inaugural drill program, it will be able to have an initial resource calculated for two smaller areas at either end of the extended 2,700-meter-long core zone.
The reason Alaska Energy Metals is able to pull together a significant initial resource so quickly is that during the roughly 25-year-span between Beischer's departure and return to Nikolai, another exploration company that carried forward INCO's work completed roughly 10,000 meters of drilling on the property, including significant drilling across the length of the Eureka zone.
This drilling completed by Pure Nickel Inc. confirmed that Eureka is indeed a thick zone of disseminated sulfide mineralization with remarkably consistent nickel, copper, cobalt, and PGM grades.
Highlights from Pure Nickel drilling carried out between 2007 and 2014 include:
• 224.6 meters averaging 0.23% nickel, 0.06% copper, 0.017% cobalt, 39 parts per billion platinum, and 81 ppb palladium.
• 319.7 meters averaging 0.25% nickel, 0.09% copper, 0.018% cobalt, 54 ppb platinum, and 117 ppb palladium.
• 205.2 meters averaging 0.24% nickel, 0.09% copper, 0.017% cobalt, 61 ppb platinum, and 122 ppb palladium.
These holes were drilled across a more than 2,500-meter span of the Eureka zone.
Alaska Energy Metals not only has the advantage of the historical Pure Nickel drilling but also owns a complete dataset that represents more than C$30 million (US$22 million) of exploration that extends all the way back to when Beischer first led INCO exploration on the property.
AEM got its hands on this incredibly valuable set of well-maintained and organized exploration information from privately held Alaska Critical Metals for C$1.05 million and 2 million AEM shares valued at another C$1 million.
The dataset includes drill logs and assay data from all holes historically drilled across the wider Nikolai area; data from eight types of airborne and ground geophysical surveys carried out over the property; lidar survey; and thousands of soil and rock samples.
AEM estimates that it would cost roughly C$40 million (US$29 million) and several years of exploration to replicate the geological, geophysical, and geochemical data it purchased.
"A strong return on investment will be realized almost immediately from this data purchase. Thousands of metres of drilling are represented, including holes in the Eureka Zone exploration target area," said Beischer. "The geophysical surveys will be invaluable for guiding our drill programs toward higher-grade zones of mineralization."
In combination with an extensive exploration program already underway at Nikolai, the recently purchased dataset is expected to provide enough geological information for an inaugural resource estimate to be calculated later this year. It is anticipated that this initial resource will be expanded once all the assays from this year's drilling are received.
The maiden Eureka resource is expected to be calculated around two clusters of historical holes about 2,200 meters apart. The second, slated to be completed early next year, will include results from a drill program currently in progress that involves systematic step-out holes designed to significantly expand the defined mineralization in the area of the southeastern cluster.
While a definitive measure of the success of this year's drill program at Nikolai will not be known until the assays from drilling begin rolling in, the core from the first five holes looks promising.
So far, these holes are cutting through three distinct layers of disseminated sulfides that make up the roughly 275-meter-thick Eureka zone.
While seeing flecks of sulfides distributed throughout the core is not a guarantee that the assays will return wide intercepts of nickel, copper, cobalt, and PGMs, the consistency of mineralization tapped by the holes historically drilled in this area and across the wider Eureka zone offers some indications.
If the assay's from AEM's drilling confirm the same consistent grades, then the company will be well on its way to building a large deposit that offers the U.S. a domestic source of the nickel, cobalt, copper, and PGMs needed to build the clean energy future.
While outlining a multi-billion-pound bulk tonnage nickel deposit at the Eureka zone could be a gamechanger for AEM, Beischer has not given up on discovering the high-grade massive sulfide mineralization he was sent to Alaska to find nearly three decades ago.
This search is made somewhat easier by another major change that has happened since the AEM CEO first explored Nikolai.
Whether it is a sign of Anthropocene climate change that the clean energy transition is trying to slow, or a continuation of global warming that has been going on since the peak of the last ice age, receding glaciers are revealing new geology that has never before been seen by man around the high-grade nickel outcrops found on the Canwell block of claims.
This year, AEM geologists are prospecting and sampling this area in hopes of finding mineable-sized accumulations of high-grade energy metals. The company is also carrying out geophysical surveys that could light up nickel-rich massive sulfide targets to test with drilling in 2024.
The company also postulates that higher-grade mineralization may lie at the base of the Eureka zone, where heavy metals may have accumulated during fractionation and crystallization of the ultramafic intrusions responsible for the large body of disseminated sulfides.
The drilling needed to test this higher-grade nickel hypothesis comes with the added benefit of achieving AEM's primary objective at Nikolai – building a world-class deposit of a suite of metals critical to America's transition to EVs charged with clean energy.
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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