Balmoral dials-in nickel at Beaver Creek

Balmoral Resources (TSX:BAR) is betting big on the burgeoning electric vehicle (EV) market to drive nickel demand through the roof in the coming decade.

Henry Lazenby at Beaver Creek
Core samples of the Grasset massive sulphide deposit

Core samples of the Grasset massive sulphide deposit

According to VP of corporate development John Foulkes, the company was until recently focused on finding gold deposits in Quebec's prolific Abitibi greenstone belt, where it controlled the flagship 1, Detour Gold Trend project that hosted the resource-stage Bug and Martiniere West gold deposits.

But it was the accidental discovery of the Grasset nickel-copper-cobalt-PGM deposit, coupled with the fundamentally strengthening demand for Class 1 nickel that prompted the explorer to change tack and focus on nickel instead.

"Following several previous false starts, the EVs are coming. With it comes rising demand for the chemicals used to make lithium-ion batteries, that are ironically dominated by nickel," he told an audience at the recent Precious Metals Summit in Beaver Creek, Colorado.

He sketched a bullish scenario for Class 1 nickel, a high-quality form of the metal suitable for use in batteries.

"Less than 35% of the global market, or about 700,000 tonnes of all nickel produced come from nickel sulphide deposits, making them very desirable since it is the kind of deposit that most readily produces top-quality battery-grade metal."

According to him, EV growth is estimated to grow exponentially in 2022-25. Coupled with the fact that lithium-ion batteries with nickel in their cathode appear to have won the EV ‘battery war', primary and secondary demand for nickel is set to skyrocket from about 50,000t in 2018 to more than 600,000t by 2030.

Standard battery chemistries these days call for the use of nickel-manganese-cobalt, with a 20-48% nickel weighting, while nickel-cobalt-aluminium oxide batteries have a nickel weighting of about 52% and have the best watt-hour (read endurance) rating of all battery chemistries. This is necessary to accelerate broad-scale EV adoption, Foulkes said.

Faced with rising cobalt prices, manufacturers have started cutting the cobalt content of lithium-ion batteries, but according to Foulkes, ‘cobalt thrifting' should be interpreted as ‘nickel weighting'.

"The nickel weighting in those batteries is increasing due to cost and the precarious availability of cobalt. If these realities persist, EV demand will be a significant, to immense new demand stream for nickel," he said.

Despite the growing fundamentals for nickel, prices remain subdued because of a substantial 400,000t cache of above-ground metal stock held in London Metals Exchange warehouses. But levels are falling, adding impetus for new high-quality projects to get off the ground.

Despite a recent price correction, the nickel price has held steady over the past 12 months and currently trades at around US$12.68 per pound. "Nickel is the hottest metal no one is talking about," according to Faulkes.

District-scale growth

So strong is the company's nickel conviction, it has added a third district-scale nickel-focused asset to its portfolio this past week, by staking four new nickel sulphide exploration properties in the Lac Rocher District of Quebec.

"The Rocher Ultramafic (RUM) properties, like the recent Gargoyle project acquisition, combines exciting exploration upside in an area of very limited historic exploration and excellent infrastructure at low cost," he said.

He explained that three of the four ultramafic intrusions hosting the nearby Lac Rocher nickel-copper deposit have never been drilled and the fourth has only been tested by a single hole.

Importantly, the newly staked properties feature several airborne electromagnetic (EM) anomalies from widely spaced, historic government geophysical surveys. These EM anomalies represent potential massive nickel-copper sulphide targets, directly associated with, or close to the magnetic highs marking the ultramafic intrusions, he said.

Historic results on the RUM properties from Victory Nickel had intercepted a massive sulphide interval of 3.2m grading 10.8% nickel, within a broader 61.5m nickel sulphide zone that averaged 1.69%.

Discovered in 1999, Victory's nearby Lac Rocher nickel-copper sulphide deposit currently features a compliant measured and indicated resource of about 800,000t grading 1.12% nickel and 0.68% copper.

Like Balmoral's Grasset nickel deposit, the RUM assets mostly comprise disseminated to net-textured sulphide mineralisation.

"Like Grasset, Lac Rocher did not produce an airborne EM anomaly in historic geophysical data due to the limited volume of higher-grade massive sulphide material. Thus, the presence of numerous EM anomalies on Balmoral's properties may indicate the potential for a larger volume of high-grade nickel-copper mineralisation than observed at Lac Rocher."

Balmoral has contracted Geotech of Aurora, Ontario to conduct a detailed airborne magnetic and electromagnetic survey of the RUM properties next month, using their latest generation versatile time domain electromagnetic system.

The company will then undertake a detailed local mapping and prospecting campaign this fall and follow with ground-based geophysical work during the winter, to lay the groundwork for initial drill testing next year.

Accidental discovery

The company's main Grasset nickel asset entails the Abitibi's only nickel sulphide deposit. It hosts an initial resource estimate of 3.5 million tonnes grading 1.56% nickel, 0.17% copper, 0.03% cobalt, 0.34g/t platinum and 0.84g/t lead. It remains open to depth for further expansion.

Located 65km from Glencore's Matagami zinc-copper mine, the deposit has district-scale exploration potential. The deposit represents very high metal tenor, and exploration has returned intercepts as high as 19% nickel, Foulkes noted.

The 7,500m summer drilling programme continues with the aim of growing the 3.45 million tonne Grasset resource. The campaign was designed to follow-up drill "many" nearby nickel sulphide discoveries in the host Grasset ultramafic complex, and to complete first-pass drilling of new nickel targets.

Meanwhile, drilling also continues on the nearby Martiniere gold project, where three high priority new targets have been identified for drilling. The project hosts an initial resource of more than 590,000 ounces of gold in the indicated category over the upper 350m of the Martiniere West and Bug systems.

"So, you get all this potential for a C$20 million (US$15.5 million) cap company with $5 million in cash. Establishing a portfolio of nickel sulphide exploration and delineation projects, to complement our established nickel resource at Grasset, at a time when the demand for Class 1 nickel sources is increasing in lock step with the expansion of the EV market, will help cement Balmoral's position as a ‘go-to' North American nickel exploration and development opportunity," Foulkes said.

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