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The opaque nickel play in Nunavik

November 11, 2012

Nunavik (northern-most Quebec) is getting its second major nickel mine. Just don’t try the company’s website to try and find out more about it.

A pattern has recently emerged in northern Canadian resource plays. Canadian junior resource exploration company finds an attractive property. It engages with local populations, usually Inuit or First Nations, to gain a ‘societal license’ to develop the project. Obtain environmental and other permits. Lacking capital, the company turns to foreign, often Chinese investors, for capital investment financing.

The case in point is the Nunavik Nickel project by proponent Canadian Royalties. The Nunavik Nickel mine, located 20 kilometres south of Xstrata’s Raglan nickel mine in northernmost Quebec. This past summer, crews completed the frame of the mill, and equipment will be put in over the winter months. Pre-stripping of the pit, where the nickel ore will be extracted, has begun. Rock removed from this pit will be used to dam the mine’s tailings pond.

Nunavik Nickel expects to employ about 500 workers, who will fill roughly 250 positions on alternating shifts. Inuit will fill about 73 positions by 2015 per a training plan the company has in place with the Inuit.

Canadian Royalties expects the mine to produce 4,500 metric tons (MT) of ore a day, or about 1.6 million MT a year. To put that in context, Raglan produces 1.3 million MT of ore a year. The company plans to have summer shipping in place next year, with ore leaving the site “virtually year round” starting in 2014.

The project’s reserves stand at 10,721,000 MT grading 0.97 percent nickel, 1.13 percent copper, 0.05 percent cobalt, 0.10 g/t gold, 0.45 g/t platinum and 1.86 g/t palladium.

In January 2010, China’s Jilin Jien Nickel Industry Company successfully acquired Canadian Royalties with a $192-million all-cash takeover offer. Jilin Jien is a huge Chinese corporate entity with total assets of RMB14.374 billion yuan and nearly 10,000 employees, the headquarters of the company occupies areas of 4.5 million square meters.

Commentary

The Canadian Royalties website is basically blank, ‘under development’. No helpful information whatsoever. This is not a normal practice in North America, particularly for investor owned companies. It sets a bad example for Chinese companies operating in North America to share no information publicly about its mining project. This is a major mine going into northern Quebec and the company need to be transparent about the project.

Sources

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