Interview with Mark Selby, CEO of Canada Nickel

Our previous interview: https://www.cruxinvestor.com/posts/ca...

Recording date: 21st September 2024

Canada Nickel Company is making significant strides in advancing its Crawford nickel sulfide project, positioning itself as a potential key player in the North American nickel market. The company has recently secured substantial funding commitments and strategic partnerships, marking a crucial step towards realizing its ambitions in the Timmins nickel district of Ontario, Canada.

CEO Mark Selby recently outlined the company's progress in securing a comprehensive financing package for the Crawford project. Canada Nickel has obtained commitments for nearly US$900 million in debt financing, including a US$500 million letter of intent from Export Development Canada (EDC) and a CAD$500 million commitment from another financial institution. EDC's involvement as the mandated lead arranger for a larger debt facility is particularly significant, potentially unlocking access to a total debt package of US$1.5 billion.

On the equity side, Canada Nickel is targeting approximately US$1 billion in financing. A substantial portion of this is expected to come from Canadian government support in the form of refundable tax credits, amounting to over US$600 million. These credits are tied to critical minerals development and carbon capture and storage initiatives, aligning with Canada's strategic priorities in these sectors.

The company has also secured a strategic partnership with Samsung, involving a US$100 million option agreement. This deal would grant Samsung 10% of the project in exchange for 30% of the offtake, demonstrating industry confidence in Crawford's potential.

With these commitments in place, Canada Nickel is now focused on securing the remaining US$300-400 million in equity financing. The company is working with Scotiabank and Deutsche Bank to identify potential strategic partners or offtake agreements that could provide upfront funding.

The significant government support for the Crawford project underscores the strategic importance of domestic nickel production in North America. As Selby noted, "This is a once-in-a-generation opportunity to take advantage of the large flows of government money that are coming into the space that allow you as a retail investor to get a bunch of free leverage from the government to be able to build a project that's going to last, in the case of Crawford, at least 40 years."

The demand outlook for nickel remains strong, particularly from the electric vehicle and energy storage sectors. Selby emphasized that "the market needs 10 Crawfords to be able to satisfy that demand," highlighting the scale of the opportunity.

For investors, Canada Nickel offers exposure to a strategic asset in a stable jurisdiction, backed by substantial government support and aligned with long-term market trends. The company's innovative financing approach, combining government incentives, debt facilities, and strategic investments, could serve as a model for future critical mineral projects. However, investors should be aware of potential risks, including execution challenges inherent in large-scale mining projects, short-term nickel price volatility, and the need to secure remaining equity financing.

Canada Nickel is working towards a construction decision for the Crawford project by mid-2025, aiming to have the majority of its financing package in place by the end of the current year. As the global push for electrification and energy transition continues, projects like Crawford are likely to play an increasingly important role in securing supply chains for critical minerals, potentially offering significant long-term value for investors.

View Canada Nickel's company profile: https://www.cruxinvestor.com/companie...

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