Homeland Nickel Inc (TSXV: SHL) (OTCQB: SRCGF) has what the U.S wants: a big potential domestic source of nickel. Its path to production, though, won’t be easy.
Homeland Nickel owns nine nickel laterite projects in Oregon: Cleopatra, Red Flat, Eight Dollar Mountain, Woodcock Mountain, Josephine Creek, Iron Mountain, Peavine Mountain, Free and Easy, and Rough and Ready. The Cleopatra Property alone contains a historic resource of about 40 million tons of laterite grading 0.93% nickel. This makes it the largest historical undeveloped nickel resource in the continental United States, according to the company.
Meanwhile, the Red Flat Property has a historic resource of 18.8 million tons grading 0.84% nickel. This includes 10.4 million tons of Measured & Indicated Resource grading 0.88% nickel.
The U.S. government has designated nickel as a critical mineral, due to its uses in industries such as defense and renewable energy. Unfortunately for the company, Oregon is one of the most unfriendly mining jurisdictions in North America. There hasn’t been an operating mine in the state for about 40 years.
The mood there could be changing though. According to Homeland Nickel, other companies are developing projects in Oregon that are almost ready for production. They believe the state would want the jobs and taxes mining would create.
Nickel contained in laterite (mostly soil with some rock) is situated near the surface. The mining cost would be much lower than a nickel sulfide deposit. The smelting (heating the concentrate to extract the metal) cost, however, is greater with laterite than sulfide due to the amount of energy needed.
That said, the tailings (waste from the metal extraction process) are cleaner than a sulfide mining operation. This would be a significant selling point in a state such as Oregon.
Homeland Nickel recently announced the signing of a binding offtake agreement with Westwin Elements Inc for an estimated 20,000 tonnes of nickel concentrate per year from the Red Flat Project. Homeland would first need to complete an updated Mineral Resource Estimate and a Preliminary Economic Assessment (PEA). If satisfied with the PEA results, Westwin would pay all the costs of a Bankable Feasibilty Study. Westwin has the only Class-1 nickel refinery in the U.S.
Homeland Nickel believes its projects can generate a 40-to-50-year supply of nickel for the U.S. That’s a prospect politicians would find difficult to ignore. The company currently has a market cap of around C$103 million, based on its recent closing stock price of C$0.44 a share. Thus, there appears to be plenty of upside for investors if the stars align for Homeland Nickel.
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