Giga Metals Corp. (formerly Hard Creek Metals Corp.) July 11 said it has agreed to sell a 2 percent net smelter return royalty on all future metal production from the Turnagain nickel-cobalt project in north-central British Columbia, to Cobalt 27 Capital Corp. for US$1 million in cash payment and 1.125 million Cobalt 27 shares, valued at US$6.8 million based on the July 11 closing price.
Cobalt 27, a leading electric metals investment vehicle offering exposure to metals integral to key technologies of the electric vehicle and battery energy storage markets, owns 2,982 metric tons of physical cobalt and is acquiring the world’s first producing cobalt-nickel stream on the Ramu nickel-cobalt mine in Papau New Guinea and a cobalt stream on Vale’s Voisey’s Bay mine Labrador.
Cobalt 27 is acquiring the Turnagain nickel-cobalt royalty through its wholly-owned subsidiary, Electric Metals Streaming Corp.
“Giga Metals is pleased to welcome Cobalt 27 as a royalty holder on the Turnagain Project. Cobalt 27’s acquisition of a 2 percent NSR further highlights the Turnagain Project as one of the world’s premier battery metals projects,” said Giga Metals CEO Mark Jarvis.
A resource calculated in 2011 outlines 865 million metric tons of measured and indicated resources at Turnagain averaging 0.21 percent (4 billion pounds) nickel and 0.013 percent (250 million lb) cobalt; plus 976 million metric tons of inferred resource averaging 0.2 (4 billion lb) nickel and 0.013 (280 million lb) cobalt.
Under the terms of agreement, 75 percent of the cash Giga Metals receives from the royalty purchase must be applied toward the work required to advance the Turnagain project to pre-feasibility and for exploration at the northern B.C. cobalt-nickel project.
Giga Metals, which has roughly C$3.8 million of cash prior to the NSR sale, said engineering studies are underway with an objective of producing a pre-feasibility report by the third quarter of 2019.
“Our goal is to have the project shovel-ready by 2021,” said Jarvis.
Toward this goal, the company has begun a 9,600-meter drill program to test several “high impact” exploration targets and provide data to support the pre-feasibility study.
These targets include three unexplained magnetic anomalies that may represent the lower portions and roots of the Turnagain magmatic complex displaced by faulting.
“We are interested in determining whether these unexplained magnetic anomalies represent the roots or feeder conduits to the Turnagain complex,” Jarvis. “Since the feeder zones of intrusive complexes can contain accumulations of massive sulfides, such a discovery at Turnagain could be transformative.”
This year’s program also includes archaeological and wildlife studies.
Extensive metallurgical test work has shown that a simple flow sheet using froth flotation can reliably create a clean concentrate grading 18 percent nickel and 1 percent cobalt, which is a very desirable product that can be upgraded to class one nickel of very high purity for use in lithium ion batteries. The cobalt, considered a byproduct at Turnagain, is another critical element for batteries.
Giga Metals says Turnagain is one of the few projects in a stable jurisdiction that can potentially deliver large quantities of cobalt and nickel to meet the growing needs of the electric vehicle and energy storage markets at a time when many research analysts are projecting there will be shortages in the cobalt and nickel required by battery manufacturers.
“Turnagain’s position as a potential supplier of critical battery metals has been confirmed by recent approaches from Asian battery manufacturers who are focused on obtaining access to cobalt and nickel concentrate from conflict-free jurisdictions,” said Jarvis. “This transaction is transformational for the company and underscores the value of the Turnagain project.”
Within one year of the signing of the NSR Agreement, Cobalt 27 has the right to appoint one member to Giga Metals’ board of directors.