Initial metallurgical results are in for Canada Nickel Co. Inc.'s (CNC:TSX.V;CNIKF:OTCMKTS) Reid property northwest of Timmins, Ontario, and they are "impressive" and "very promising," reported Research Capital Corp. analyst Adam Schatzker in a March 15 research note. In other news, the mining explorer's acquisition of the Texmont property, south of Timmins, just closed.
Also important for investors, Canada Nickel offers the potential for significant returns. Currently, with its stock trading at about CA$1.49 per share and Research Capital having a target price on it of CA$3.25, the projected return is about 118%.
Methodology and Grades
For the metallurgical testing, a high-grade, well-serpentinized sample was used, "which likely biases the results to the upside," noted Schatzker. The same flow sheet design used for testing material from the Crawford project was employed, and only open-cycle tests were performed. Crawford is Canada Nickel's flagship project, located to the north of Timmins and to the northeast of Reid.
The Reid sample returned these head grades: 0.35% nickel, 0.1% sulfur, and 6.2% iron, Schatzker relayed. When compared to drill results, as no resource estimate exists yet, the nickel grade seems higher than the average.
Recoveries: Reid v. Crawford
The recent testing showed that Reid's metallurgy, as determined so far, is similar to that of Crawford, Schatzker concluded.
Specifically, metal recoveries from the Reid sample were 63% nickel, 0% cobalt, 31% iron, and 12% chrome. These compare to results from Crawford of 62% nickel, 70% cobalt, 45% iron, and 21% chrome.
The nickel concentrate produced from the Reid sample was "very high grade," containing 46% nickel and 0.27% cobalt.
"[Canada Nickel] noted that more than half of the nickel concentrate produced graded 60%, which is exceptionally high and was determined using more than 120 open cycle tests," Schatzker wrote.
In Crawford's nickel concentrate, there was only nickel at grades of 35% and 12%.
As for the iron concentrate, Reid's contained 55% iron and 3% chrome versus Crawford's, showing 54% iron and 4.5% chrome.
More Work To Be Done
Canada Nickel intends to confirm these metallurgical results on the Reid sample using locked cycle testing, Schatzker wrote.
Also, the company will likely test, at some point, different samples of mineralized material from Reid as well to better understand the metallurgy of the entire deposit.
'Defining a Nickel Camp'
Schatzker highlighted that Canada Nickel is proving Reid to be "a very large deposit," potentially even bigger than Crawford.
This "reinforces our view that [the company] is defining a nickel camp that may have resources to sustain many, many decades of nickel, iron, chrome, and cobalt production in the future," the analyst wrote.
He added, "We think it is these characteristics that recently attracted Anglo American (market cap of US$45 billion) as a strategic 9.9% equity holder of Canada Nickel."
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