Blackstone Minerals inks deal to gain strategic exposure to Canadian nickel sulphide project

Blackstone Minerals (ASX: BSX) has gained exposure to a large nickel sulphide project in Canada through a C$2.98 million (A$3.25 million) investment in Flying Nickel Mining Corp, which is a subsidiary of Vancouver-based Silver Elephant Mining Corp.

The strategic deal will give Blackstone a 6.85% interest in the advanced-stage Minago project including district-scale exploration potential and access to infrastructure such as renewable hydropower.

The two companies have agreed to collaborate on the production of upstream and downstream nickel and cobalt concentrates and chemical products, as well as potential offtake agreements and joint ventures to meet demand from the growing electric vehicle battery industry.

All supply, offtake and financing decisions will be made via a steering committee.

Spin-out asset

Blackstone’s investment coincides with Silver Elephant’s plans to position Flying Nickel as a spin-out asset for listing on the Toronto Stock Exchange in the new year.

In addition to its initial cash investment, Blackstone will be issued with 2.12 million warrants converting into common equity in Flying Nickel at C$1 per warrant (A$1.09/warrant), whereby one warrant converts to one share.

Assuming Blackstone decides to convert the warrants into Flying Nickel shares, a further investment of C$2.12 million (A$2.32 million) would result in Blackstone holding approximately 9.5% of Flying Nickel on a fully-diluted basis.

In the event that Flying Nickel does not publicly list its shares within a pre-determined 120-day period, Blackstone’s initial investment will be refunded.

Complementing Ta Khoa

Blackstone managing director Scott Williamson said the Minago project will complement the company’s flagship Ta Khoa nickel-copper-platinum group elements project in Vietnam.

“The known mineral endowment of the Minago asset in combination with the potential of the Ta Khoa district represents enviable scale which is highly sought after by original equipment manufacturers, as well as battery and cathode manufacturers,” he said.

“Large, disseminated nickel sulphide deposits of Minago’s size and grade are difficult to find and higher nickel prices combined with increasing demand for downstream nickel chemical products for the lithium-ion battery industry means they are primed to overcome previous barriers, including access to capital.”

He said the Flying Nickel transaction will give the company an opportunity to collaborate on the development of Minago, and confidence to inject future equity into the asset as it is progressively de-risked.

“Our Ta Khoa refinery [in Vietnam] is a logical home for Minago concentrate,” he said.

“Shipping a high-grade concentrate minimises the carbon footprint and is aligned with [our] commitment to best ESG (environmental, social and governance) practices and becoming a supplier of choice to the electric vehicle battery industry.”

Undeveloped asset

The Minago project is a large undeveloped disseminated nickel sulphide asset poised to attract significant investment from a structural shift in nickel supply and demand driven by the growth of electric vehicle adoption.

The project has a measured and indicated resource of 44.23 million tonnes at 0.74% nickel for 721.6 million pounds nickel, and an inferred resource of 19.55Mt at the same grade for 318.9Mlb nickel.

Prior metallurgical test work by SGS Australia has demonstrated that Minago is able to produce one of the highest nickel concentrate grades in the world (grading more than 20%) using conventional processing technology.