As the %Decarbonization and electrification of our world continues to accelerate, %BHPGroup ($BHP), the world’s biggest miner, sees unprecedented demand for nickel on the horizon, predicting nearly a four-fold surge in need for the metal by 2050. As indicated in a corporate presentation by %FathomNickel (CSE: $FNI) (OTCQB: $FNICF) (FSE: 6Q5), %NickelDemand will spike from 2.5 million tonnes (Mt) in 2019 to 9.2 Mt over the forecast period.
Nickel is rarely used in its pure form, but it is instrumental when combined with other metals to produce alloys, such as stainless steel and cast iron, that are superior to any of the component metals individually. In the %ElectricVehicle (EV) space, older lithium-ion (Li-ion) batteries had cathodes that were approximately one-third nickel. New technology to increase density and vehicle range has raised the percentage to at least 60 percent nickel in cathodes.
Calgary-based Fathom further underscores the BHP prediction with data from a Roskill study released by the European Commission’s Joint Research Centre showing a substantial supply imbalance forthcoming. The 2021 study showed supply increasing only 56 percent in the next eight years, while making a base case for demand rising 400 percent at the same time. Without significant changes, including establishing a sizable end-of-life nickel recycling industry, the researchers see a supply deficit forming in 2027 and continuing throughout its 20-year outlook.
As for the European Union, the researchers noted that the dearth of development-ready nickel deposits in the bloc means that nickel will have to be sourced internationally. That’s good news for juggernauts like BHP, %ValeSA (NYSE: $VALE), and %Glencore (LSE: GLEN)(OTCPK: $GLNCY), as well as up-and-comers like Fathom Nickel.
Where Will Manufacturers Look for Nickel? Watch Canada.
In 2021, total world nickel reserves were estimated to be greater than 95 million tonnes by the U.S. Geological Survey. The largest known reserves are in Indonesia (22%), Australia (22%), and Brazil (17%). Canada ranks seventh with an estimated 2 million tonnes of nickel reserves, or about 2 percent of the world’s reserves.
Ottawa is committed to improving its output of nickel and other metals, including cobalt, that are integral to EV manufacturing. Canada’s federal budget will include $1.6 billion investment to execute on a strategy purposed for the accelerated production and processing of critical minerals needed for the EV battery supply chain.
That plays right into the wheelhouse of Fathom and its projects in central Saskatchewan.
A Geologist’s Dream: Alberta Lake and Gochager Lake
The Albert Lake Project consists of a whopping 90,127 hectares of drill-ready exploration lands with over 80,000 hectares currently unexplored. The Albert Lake property is a premier asset that boasts some of the highest-grade nickel ever mined in Canada. It is host to the historic Rottenstone Mine, a high-grade, open pit Nickel (Ni) Sulphide mine that produced an average grade of 3.23% Ni from 1965 to 1969. The high-grade ore also produced 1.83% Copper (Cu) and 9.63 g/t Palladium-Platinum-Gold (Pd‐Pt‐Au).
Historic drilling results suggested a mineral resource for the Rottenstone deposit of approximately 45,400 tonnes grading 2% Ni, 1% Cu, and 5.5 g/t Pt+Pd + rhodium. Post-production drilling has confirmed the deposit remains open along strike; south-southwest of the historic mine. Fathom is in the process of proving out the resource using modern drilling and exploration technology.
The company was sagacious in its acquisition of the project in 2015, building its massive land position and robust exploration data package during a down cycle for Nickel. Fathom funded exploration programs in 2016, 2018, 2021, and 2022, validating that Rottenstone does not exist in isolation and recently identifying a 300+ meter Bay Area Ni mineralization corridor 400-500 meters north-northwest of Rottenstone. Armed with this new info, the company hypothesizes that Rottenstone is part of a much larger magmatic Nickel Sulphide system.
The hypothesis is supported by drill data showing consistent mineralized intervals up to 18.0 meters thick. Drill results have repeatedly impressed and extended the strike, including cuts of 0.62% Ni, 0.29% Cu, and 0.58 g/t (grams per tonne) Pd-Pt across 13.27 meters; 3.54 meters grading 1.09% Ni, 0.42% Cu, 0.07% Co, and 0.75 g/t Pd-Pt+Au; and 1.01 meters at 1.71% Ni, 1.21% Cu, and 20.76 g/t Pd-Pt+Au as part of a larger intersect of 7.47 meters grading 1.06% Ni, 0.88% Cu, 4.36 g/t Pd-Pt+Au.
The mineralization of the historic Rottenstone deposit is unique and contains several notable associated metals. Sample metallurgy also showed favorable metal recoveries of greater than 90% Ni, Cu, Cobalt (Co) and >80% Pd-Pt. PGEs, or Platinum Group Elements, have been talked down owing to diminishing demand for use as catalysts in fossil-fuel-powered cars as they are replaced by EVs. However, the World Platinum Investment Council begs to differ. In October, the WPIC published a note saying it is “just a matter of time” before platinum demand from fuel-cell EVs, which are ramping up in China particularly, will equal today’s automotive usage.
That detail about PGEs should not go overlooked, as every metal coming from Albert Lake is valuable and in demand.
The geological setting of the Alberta Lake Project is in the Trans Hudson Corridor which is host to numerous world-class Nickel mining camps including, Thompson Nickel Belt (operating, over 5 billion pounds of nickel produced since 1959), Lynn Lake, and Raglan Nickel Belt (operating, over 39,000 tonnes Nickel produced in 2020). Broadly speaking, Saskatchewan has tremendous upside as, despite some known large high-grade deposits, the province is relatively under-explored for Nickel, VMS-type, and gold deposits.
The Gochager Lake Project is equally as impressive, although smaller in size at a still formidable 4,696 hectares about 75 kilometers north of the town of La Ronge. The project is home to an estimated 149+ historic drill holes totaling approximately 27,000 meters. It is subject to historical resource estimates in 1968 and 1990. No drilling activity had occurred since 1990 until Fathom recently put a bit in the ground.
In 1968, the resource was estimated at 4.3 million tons at 0.30% Ni and 0.08% Cu. The 1990 estimate reported an orebody with reasonably well-defined limits containing 1.8 million tons at 0.735% Nickel equivalent (NiEq, 1Ni = 3Cu).
The project is characterized by disseminated Ni Cu+Co gabbro hosted mineralization containing notable zones of massive sulphide mineralization not fully delineated within the deposit.
Gochager Lake is a historic Ni-Cu-Co open pit resource with significant exploration upside because the historical data is compelling, but lacked follow-through exploration.
Recent Updates, Everything Stacking Up Very Nicely
On Feb. 28, Fathom released an update on progress at both its projects. For starters, the Q1-2023 drill program at Gochager Lake has been completed. The company can’t say much yet, but it did disclose that both drill holes at Gochager Lake met their target depths and intersected broad zones of disseminated, semi-massive to massive sulphide mineralization. Results expected by mid-April. As noted by Fathom CEO and VP Exploration Ian Fraser, P.Geo, BHEM was an important tool put to use during the program to identify off-hole conductors.
While it awaits drill analysis from Gochager Lake, the company has turned its attention to Albert Lake where it is targeting several priority regions, including the Tremblay-Olson claims. The Tremblay-Olsen claims were essentially locked within the Saskatchewan Mineral Disposition system since 1987 until Fathom was finally able to acquire them in July 2022, adding a valuable piece of the puzzle on trend to the south-southwest of the Rottenstone Mine.
There is good reason management is excited about this acquisition. Historic grab samples at the claims assayed up to 3.11% Ni, 0.91% Cu, 1.01 g/t Pd, and 0.46 g/t Pt. Historic trenches have exposed a lens of mineralized pyroxenite containing up to 40 percent sulphides. So far, the soil geochemistry, the coincident gradient MAG and MAG inversions, VTEM and AirTEM along with the recently completed gravity survey data defines a very favorable exploration target along trend and to the southwest of the historic Rottenstone deposit.
Drilling started on the claims on March 3 and results are expected to be released mid-to-late April.
“Everything is sort of stacking up very, very nicely,” said Fraser in a recent interview with Proactive Investors’ Stephen Gunnion. “It’s sort of a geologist’s dream when you get all the tools aligning. Now we just got to get in there with the drill and find out what’s going on.”
You can bet that investors are watching and listening closely to find out “what’s going on” with two of the most exciting nickel developments in Canada today. And it is being done by a company quietly trading at 8.5 Canadian cents per share for a market capitalization of only CDN$7.0 million.
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