Giga Metals (TSXV: GIGA; US-OTC: HNCKF) has tabled an updated preliminary economic assessment (PEA) on its Turnagain nickel-cobalt project in B.C., 65 km east of Dease Lake.
The early-stage study suggests a two-stage, 37-year open pit operation, producing a high-grade nickel concentrate sold to smelters. According to the press release, this latest assessment confirms “the ability of Turnagain to produce high-quality nickel concentrate, such as that needed to make pure nickel products for the electric vehicle (EV) market, in a socially and environmentally responsible manner.” The nickel developer plans to use the PEA for discussions with strategic investors, to target project improvement opportunities and as a base for future engineering work.
The first, five-year, 15.3-million-tonne-per-year phase would generate an average of 22,754 tonnes nickel in concentrate and 1,379 tonnes cobalt in concentrate each year, at net operating costs of US$2.77 per lb. nickel (to the plant gate, and net of by-product credits). The capital cost estimate is US$1.4 billion.
The second stage would run at 32.8 million tonnes per year, starting in the sixth year, through to year 37. This phase would generate an average of 37,149 tonnes nickel and 2,224 tonnes cobalt in concentrate over the first 15 years of the expanded run rate, at net operating costs of US$3.04 per lb. nickel, with an expansion capital cost of US$532 million.
The resulting base-case early-stage economic analysis, done at US$7.5 per lb. nickel and US$22.3 per lb. cobalt, and assuming smelter payabilities of 78% for nickel and 35% for cobalt, demonstrates modest returns.
This base-case scenario above yields a before-tax internal rate of return of 6.3%. Assuming an ESG premium price of nickel, at US$8.50 per lb., the project before-tax net present value, at an 8% discount rate, increases to US$242 million, with a 9.4% internal rate of return.
One of Turnagain’s advantages in the nickel space appears to be its ability to potentially generate nickel at a low carbon intensity.
The project would use power from the B.C. provincial grid, as the US$1.4-billion capital cost estimate includes investments for a power line to deliver (mainly hydroelectric) power to the project. In the base scenario, with a diesel-powered haul fleet, Turnagain would produce nickel in concentrate at a greenhouse gas intensity of less than 2.5 tonnes of carbon dioxide equivalent per tonne of nickel in concentrate. Assuming an electrified fleet, this would decrease to less than 1 tonne of carbon dioxide-equivalent per tonne nickel in concentrate.
However, the PEA does not account for the potential for carbon sequestration from the resulting ultramafic tailings, which can react with the carbon dioxide in the atmosphere. The company is working with the University of British Columbia to quantify potential sequestration rates.
Giga has identified several opportunities to improve the economics in the study. These include a hydrometallurgical processing study, to investigate the potential for hydrometallurgical refining of the Turnagain concentrates, which could yield improved payment terms. In addition, additional recovery test work could suggest improved recoveries, and engineering trade-off studies could optimize the use of mining equipment.
In September 2019, Giga tabled an updated resource for Turnagain, with 1.1 billion measured and indicated tonnes, at 0.22% nickel and 0.01% cobalt, and inferred resources of 1.1 billion tonnes, also at 0.22% nickel and 0.01% cobalt.