Blackstone Minerals continues global expansion with Canadian nickel acquisition

Blackstone Minerals (ASX: BSX) has continued its international expansion strategy with a move to acquire a major Canadian nickel mining opportunity while at the same time identifying a potential supplier to its refinery in Vietnam.

Best known for its Ta Khoa nickel refinery project in Vietnam and its Asian battery minerals plans, Blackstone has now entered into an option agreement with CaNickel Mining over the Wabowden nickel project in Manitoba.

Under the agreement, the Australian firm has been provided with a 12-month period and exclusive right to acquire the project.

Option agreement flexibility

Under the option agreement, Blackstone has agreed to make a cash payment of $1.3 million and can exercise the option to acquire 100% of Wabowden by making up to four staged payments.

These payments include a cash payment of $22.3 million (less the option payment) and $11.2 million in Blackstone shares upon closing.

A further $11.3 million in cash must be paid 18 months following the closing date, $17 million in cash is then payable upon Wabowden achieving fully permitted status, while $28 million in cash will be payable upon Wabowden achieving commercial production.

The companies have also agreed to an option period which provides Blackstone time to further evaluate and consider various development options for Wabowden.

Blackstone will also use this time to optimise its funding to complete the acquisition, including joint venture (JV) partnerships, government funding, as well as strategic royalty, debt and equity funding alternatives.

Considerable operational leverage

Blackstone managing director Scott Williamson said the company was attracted by the acquisition option structure and terms which provide it with considerable operational leverage and value as well by as the project’s size.

“Wabowden is one of the most advanced nickel sulphide projects in North America today and is highly complementary to our plans for the Ta Khoa refinery in Vietnam, making it a transformative and compelling growth opportunity for Blackstone,” Mr Williamson said.

“With a resource of 1.3 million tonnes of contained nickel, Wabowden would substantially increase our global mineral resource and could secure all the feed required for the Ta Khoa refinery, removing our dependency on sourcing third-party feedstock.”

“It could also establish a key central point of operations in Manitoba for Blackstone to potentially consolidate its existing nickel interests in Manitoba, as well as other nickel assets in the region.”

Green nickel plans

Mr Williamson said the project also fits with Blackstone’s “green” nickel ideals.

“The project has access to 100% renewable power and aligns with our goals to produce green nickel, meaning that Wabowden ticks all the boxes that are important to our goals and the project would be complementary to the strategy we are executing,” he said.

“Wabowden’s location in Manitoba also could secure a nickel feedstock that is compliant with the United States’ Inflation Reduction Act (IRA), which is also attractive as demand for battery-grade nickel continues to increase.”

“Blackstone’s strategy is to progress a much larger scale operation better suited to the large-scale resource and by changing mining methods and leverage existing infrastructure develop a potentially globally significant nickel mine capable of completely filling the nickel concentrate requirements at Ta Khoa.”

Refinery feedstock a key question

While Blackstone has made a number of nickel discoveries in Vietnam, it says securing long-term low carbon IRA-compliant nickel feed for the Ta Khoa refinery has been a key question from potential partners in the project.

“This option agreement provides greater certainty over the nickel feed sourcing strategy for Ta Khoa, which is an important factor in the selection of a JV partner.”

Blackstone is no stranger to Manitoba, as it currently holds strategic investments in Corazon Mining (ASX: CZN) and the Lynn Lake nickel-copper project, along with TSXV-listed Flying Nickel (TSX-V: FLYN) and the Minago nickel project.