Samsung SDI invests in Canada Nickel, has right to buy 10% of Crawford project

Pursuant to a subscription agreement entered Friday, Samsung intends to purchase $18.5 million worth of Canada Nickel’s common shares at C$1.57 per share. Upon closing, Samsung will own approximately 8.7% of the company’s outstanding share capital.

The battery maker will also be granted the right to purchase a 10% equity interest in the Crawford project for $100.5 million, exercisable upon a final construction decision. This would give Samsung the right to 10% of the nickel-cobalt production from the Crawford project over the life of mine, and the right to an additional 20% of production for 15 years, extendable by mutual agreement.

Shares of Canada Nickel Company gained 3.1% to C$1.63 apiece by 12:30 p.m. EDT in Toronto Friday on the Samsung investment. Its market capitalization rose to C$231.6 million ($172.7 million) accordingly.

Crawford is currently host to the world’s second-largest nickel resource, totalling 2.46 billion tonnes at 0.24% nickel for 13.3 billion lb. of contained nickel, according to a feasibility study issued in October, which pegged the project’s after-tax net present value (8% discount) at $2.6 billion and internal rate of return at 18.3%.

The proposed operation will consist of two open pits complemented by an on-site mill, to be completed in two phases to allow for throughput ramp-up, the study showed. Total capital cost for the two phases is estimated at $3.5 billion.

Over a 41-year project life, total metal production is calculated at 3.54 billion lb. of nickel, 52.9 million lb. of cobalt, 490,000 oz. of palladium and platinum, 58 million tonnes of iron, and 6.2 million lb. of chromium. First production is targeted for 2027.

Uniquely, the mine will be a net negative contributor to global carbon dioxide (CO2) emissions, thanks to its ability to geologically sequester 1.5 million tonnes of carbon per year. There will also be room to capture and store 30 million tonnes of carbon from third parties.

“As we advance the Crawford nickel sulphide project, it is critical to form long-term partnerships with companies that truly understand how crucial this production is for electric vehicle supply chains across North America and Europe,” Canada Nickel CEO Mark Selby said in a news release.

“As one of the world’s leading electric vehicle battery manufacturers, Samsung SDI not only understands our vital role in these supply chains, but also believes in Canada Nickel’s vision for responsible, large-scale, net-zero carbon nickel production.”

Samsung is not the only new big investor in Canada Nickel and its Crawford project. Last week, Canada’s largest gold producer Agnico Eagle Mines (TSX: AEM; NYSE: AEM) invested C$23.1 million for a 12% stake in the nickel developer.