Premium Nickel: Nickel/Copper in Botswana

Premium Nickel

How do you find a potentially multi-billion dollar nickel/copper/cobalt/platinum group opportunity? Well, paying attention to liquidations is a place to start.

Until mid-August Premium Nickel Resources Ltd. (PNRL.V) was putting together the pieces of a potentially multi-billion dollar nickel-copper-cobalt-platinum group elements operation in Botswana. Two deposits, three former mines, a mountain of data and a plan to bring these assets up to 43-101 standards. But I had to ask Keith Morrison, CEO of PNRL how this potential base metal bonanza came into being.

This was a distress sale. “Nine mines shared the same smelter,” said Morrison. “The 1960’s smelter was taken offline in 2015 requiring significant investment in care and maintenance. The government funded a US$95M refurbishment but the smelter would not restart. The government did not want to continue funding and decided to put the assets up for sale.”

“That sale process required that any potential buyer take the mines and the smelter as a package,” said Morrison. “this package included a material remediation liability. The sale process produced no bids, and the companies were placed into formal liquidation in 2017.”

Arno Brand, of Gratomic fame, had been looking for a base metal project in Southern Africa. He and his associates knew the territory. Arno had been born in Namibia which is right next door to Botswana. He was familiar with the outline of the liquidation of the mines. Working with investors Sheldon Inwentash and John Chisholm, a private company was formed to look into acquiring some of the assets. Three of the mines were interesting as stand-alone operations.

As this was happening, Morrison was running North American Nickel (NAN). Morrison had forty years experience in the resource industry and has served continuously on Public and Private company Boards of Directors since 1986. He was approached by Premium Nickel and agreed to provide support from NAN including technical, management and governance resources. This close relationship between the companies created the synergy that culminated in the recently completed amalgamation. North American Nickel raised 10.1 million dollars in contemplation of the reverse takeover transaction.

Prior to that transaction, which was completed this summer, the technical team at NAN/PNR looked at the remaining resources at the three deposits. “They worked deep into the data,” said Morrison. There was a mountain of historical data to interpret from the mining operations and from exploration work at the sites of interest.

Morrison and Brand began doing site visits in 2019 and began to develop a local, Batswana team.

These are all “brownfield” projects with South African Mineral Resource Committee (SAMREC) compliant Mineral Resources in situ.  

The Selkirk project, located 28 kilometres south-east of the town of Francistown was a nickel-copper-cobalt-platinum group elements underground mine which was developed from 1989 to 2002. Subsequent operators did exploration work and modelling to determine the feasibility of running the mine as an open pit operation. PNRL summarized this work and the results of assays on core which had been drilled previously in an August 30th press release.

In that release, Morrison states, “The Company's current strategy would be to justify, with further data, the redevelopment of the Selkirk deposit as an open pit mine using modern technologies to produce high-grade and full-value concentrates for direct export or further local beneficiation not requiring local smelting.”

With that as the goal, PNRL is looking to bring the data and drilling into compliance with 43-101 standards with the objective of doing a compliant Preliminary Economic Assessment of Selkirk’s potential.

Selkirk’s numbers are likely to be substantially better than they were under the previous production regime because, with an onsite plant, PNRL will be able to produce high grade, full value concentrates where the value of the cobalt, platinum, palladium and gold, as well as the nickel and copper are recovered. Previously, these very valuable metals were not fully included.

Bringing the Selkirk mine back into profitable production would be major news for any junior resource company, but as Morrison points out, the opportunity at the Selebi project, with two separate mines (Selebi and Selebi North) is bigger.

“The historical models indicate 11 million tons of remaining material at Selebi,” said Morrison. “We expect that we can double that and increase the grades.”

The Selebi shaft produced 26.6 million tonnes (Mt) grading 0.58% Ni and 1.03% Cu from 1980 to 2016. The Selebi North shaft produced 13.9 Mt grading 0.74% Ni and 0.66% Cu from 1990 to 2016. Both shafts are intact and dry. Their hoists are in working order. They only ceased production because the Phikwe processing facility failed in 2016.

With the infrastructure in place at both shafts, PNRL’s focus is on bringing the in situ resources up to 43-101 standards – which will involve drilling as well as re-analysis of existing data. The objective being a 43-101 Resource followed by a PEA.

The opportunity is tremendous. Sirius Resources, an Australian company in development on a similar nickel project was  sold in 2015 during a US$5.lb nickel market for $1.8 billion (Aus) dollar .

“We have a 500 million dollar headstart,” said Morrison. “We have excellent existing infrastructure at both projects, a workforce eager to come back to work and a plan to redevelop the mines with priority on minimizing environmental impacts using new technologies, less water, less power.”

Coming out of the gate, Premium Nickel (PNRL.V) is trading at $1.46 for a market cap of 166.3 million.

I do not currently hold shares however, as life returns to the markets, Premium Nickel looks to be “on sale”.  Potentially it will control billions of dollars worth of very in demand nickel, copper, cobalt and platinum group metals in a mining friendly jurisdiction. Money in the bank and infrastructure in place mean that PNRL.V is very likely to be re-rated as a near producer in the next few months as it completes it 43-101 compliance.

_____

[Disclaimer: This is not investment advice. I am not an investment professional. I am down about 30% at the moment. I will write about companies that I hold. I will disclose any holdings. Do your own due diligence. Do it hard. Call the CEO.

I currently do not own shares in PNRL.V.

Premium Nickel is a client.]