TSX-listed Talon Metals has announced the results of the initial preliminary economic assessment (PEA) that it used as a basis for negotiating the right to acquire up a 60% interest in the Minnesota-based Tamarack project from Rio Tinto.
The initial PEA focuses on the Tamarack North project and illustrates a high after-tax internal rate of return (IRR), low C1 cash costs, low capital intensity and a quick payback.
“In a world of ever decreasing nickel grades and deeper nickel mines, the Tamarack North project initial PEA demonstrates robust economics with pessimistic ($6.75/lb nickel), base case ($8/lb nickel) and incentive pricing ($9.50/lb nickel) after-tax IRR of 28%, 39% and 48%, respectively,” Talon CEO Henri van Rooyen said in a statement.
At the base case pricing, and using a discount of 7%, the net present value of the project is $210-million, with a payback of 2.1 years from the start of production.
The study contemplates a 1 390 t/d operation, producing 23.3-million pounds a year of nickel, or 127.5-million pounds over a seven-year mine life, and 11.1-million pounds a year of copper, or 66.8-million pounds over the life-of-mine.
C1 cash costs are estimated at $2.20/lb of payable nickel.
The initial PEA is preliminary in nature and the company intends publishing an updated PEA, following exploration work and more metallurgical testing to simplify the initial flowsheet with the objective of including the remaining mineral resource estimate in the next iteration of the mine plan.
Talon said it would follow up on nearby high-grade nickel/copper/cobalt intercepts to determine the extent of mineralisation that appeared open in all directions.
The company intends to develop Tamarack as a Class 1 nickel producer, supplying the electric vehicle battery market. Its stock rose 5% to C$0.095 a share on Monday.