Latest study values Talon Metals/Rio Tinto nickel-copper joint venture at $569M

An updated preliminary economic assessment of Talon Metals Corp.'s Tamarack nickel-copper-cobalt project in Minnesota estimated an increase in the net present value of the company's proposed nickel sulfate operation to $569 million, based on a 7% discount rate and after taxes.

Talon Metals secured an option in late 2018 to increase its interest in Tamarack, under an option agreement with Rio Tinto unit Kennecott Exploration Co.

A March 2020 update to the PEA defined a net present value of $291 million, increasing from $210 million outlined in the initial PEA completed in November 2018.

The latest preliminary economic assessment outlined a 31.9% internal rate of return and a payback period ranging from 1.8 to 2.1 years in the base case for the nickel sulfate operation. The study used a base case nickel price of $8.00/lb and a base case copper price of $3.00/lb.

Initial capital expenditures increased to an estimated $553 million, from $219 million in the March 2020 update and $174.3 million in the November 2018 study. Total capex is estimated at $646 million including sustaining capital.

Talon Metals said the mine life of the Tamarack operation was estimated at nine years, increasing by one year compared to the previous projection. Life-of-mine production is expected to total 505,000 tonnes of nickel sulfate and 260,000 tonnes of copper concentrate, with all-in sustaining costs of $2.31 per pound of nickel in sulfates.

The analysis also contemplated nickel powder and concentrate operations at Tamarack, generating a net preset value of $567 million for the nickel powder scenario and $520 million for the nickel concentrate scenario, also after taxes and discounted at the same rate.

Talon Metals said it is now also targeting the production of refined nickel powders, refined iron powders, and copper concentrates, flagging further potential changes to mine plans.