Valuation Commentary: Québec Nickel Corp. (CSE: QNI) (OTCQB: QNICF) (Frankfurt: 71B) is a Canadian-based mineral exploration company focused on advancing its 100%-owned Ducros Ni-Cu-PGE Property in Québec, located in the prolific Abitibi Greenstone belt. The Abitibi region is world renown for world-class gold-copper deposits, however QNI has what is rapidly developing as one of Canada's most exciting nickel sulphide plays, increasingly described in mining circles as a "big unicorn" for the fact it is an outlier with grades ~4 - 5 times what is found in the region for nickel, but also spectacular elevated copper, cobalt, platinum, palladium, and gold (PGE stands for Platinum Group Elements).
Québec Nickel Corp. was formed in 2020 to specifically tackle Ducros, its maiden 20,000 m multi-phase drill program began in Q1-2022. The Fortin Sill Ni-Cu-PGE deposit is rapidly developing, starts at surface and appears amenable to a high-grade open pit scenario. There is currently 2 drill rigs active on the Fortin Sill Ni-Cu-PGE Zone completing the planned 20,000 m, to date the company has reported on 29 holes, and has numerous core assays pending at the lab to report near-term. Besides its main focus of ongoing continuity drilling at the Fortin Sill deposit, the company is juxtaposing exploration, also looking at targets that are highly prospective for new discovery in other areas of the property (e.g. its Ducros Ultramafic Sill Complex has recently received over 3,650 metres in 10 holes spanning 800 m across the interpreted north-south strike of the regional geological trend (assays are pending)).
QNI currently has a nominal market cap of ~C$15M (~71.9 million shares [see Nov. 24, 2022 news announcing new financing] trading near ~C$0.20). ~80% of the shares are institutionally held, and the company is fully financed to accomplish all key objectives for 2022. The share price of QNI appears poised for upside revaluation as continued news flow occurs, and as the significance of what Québec Nickel Corp. possesses is better appreciated by the market.
The geological team leadership, directors, and board of advisors are an impressive who's-who of nickel expertise with career accomplishments across the spectrum from nickel exploration & discovery, development, and major production (see CV's at the bottom of this article). Gary DeSchutter, M.Sc., P.Geo., is Vice-President of Exploration for Québec Nickel Corp., he started his career with Falconbridge and transitioned to Anglo American for 6 years as part of their global nickel generation team. Gary joined Québec Nickel in February-2022 -- in-short, he picked Québec Nickel because he knows nickel and was attracted by the anomalous Nickel-Copper-Platinum Group Element (PGE) occurrences and elephant-size potential at Ducros.
Québec Nickel Corp. appears on a trajectory with serious potential to yield an impressive first-pass Ni-Cu-PGE resource on its Fortin Sill Zone after its 2023 drill program -- one look at the recent drill results at the Fortin Sill Zone of the Ducros NI-Cu-PGE Property and it is apparent that the methodical approach of step-outs and following the continuity drilling is paying off...
Figure 1. (above) Fortin Sill Zone Step-out Drilling hole 28 & 29. These step-outs are ~25 m SE from holes 9, 10, & 11 at the original showing; the geological team is already building a voluminous body of quality material. -- Image source: Company Q3-2022 Presentation, related news release: August 30, 2022 "Québec Nickel Corp Intersects 1.85% Ni, 1.65% Cu and 3.27 g/t Pt-Pd-Au Over 8.43 Metres In Step-out Drilling At The Fortin Sill Zone, Ducros Project, Abitibi, Québec". Seen in the image above are stellar grades (nearly 5% Ni-Cu and 6 g/t Pt-Pd-Au -- these are probably the best grades combined of Ni-Cu + PGEs + Gold in the history of the Abiti region). In image of core seen above you can see the foliation of sulphides with multiple events going on (good for the formation of nickel deposits), the material is running ~35% - 40% sulphides.
[Footnotes: Reported assay intervals seen in image are sample length weighted, the true width of mineralized intervals is not known due to insufficient information, 3E = Pt+Pd+Au]
Recent news headlines from Québec Nickel Corp.:
● November 24, 2022 -- "Québec Nickel Corp. Announces Offering Of Up To $10 Million"
● October 19, 2022 -- "Québec Nickel Corp Drills Possible Extension Of The Fortin Sill Zone At Depth"
● October 12, 2022 -- "Québec Nickel Corp. Adds Third Drill at Its Ducros Ni-Cu-PGE Project, Abitibi Québec"
Below is an overview of the project and why investors seeking exposure to nickel as a commodity should consider establishing a long position in Québec Nickel Corp.
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Québec Nickel Corp. Presents Exceptional Opportunity
Nickel is a hot commodity: Nickel is a key component of most lithium ion batteries, enabling more energy density. With EV demand on the rise so is the demand for nickel. The trend has been for increased nickel content in EV batteries as energy density is further optimized by various manufacturers; ~20 kg to 50 kg of Ni is in a typical EV battery, depending on make. There is a shortage of the type of high-grade nickel that’s needed for EV batteries. Russia has traditionally been a source for a lot of this nickel, however it is now considered black-market. There is a lack of western-world domestic sources of nickel. To quote Elon Musk on July 22, 2020 “Any mining companies out there, please mine more nickel ... Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way.” Currently stainless steel production accounts for the majority (~85% - 90%) of nickel used globally, however demand from battery production is expected to increase steadily. Not all nickel can go into batteries, it has to be clean ‘class-1’, dirty laterite nickel from Indonesia, Australia, Philippines, and Brazil generally does not meet the grade – the purest nickel comes from sulphides (such as that which Québec Nickel Corp. has at Ducros). Trying to upgrade low-grade laterites involves extremely energy-intensive processes such as pressure acid leaching which results in an environmentally destructive CO2 footprint ~20 times more than that can be achieved from sulphide sourced nickel.
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Location -- Mining friendly jurisdiction with exceptional infrastructure.
Figure 2. (above) Location map -- Located in the eastern Abitibi Greenstone Belt, northeast of Val-d'Or Québec. The Abitibi Greenstone Belt is ~700 km long and home to numerous Cu-Au producers. The Timmins area has had several past nickel producers.
● 100% QNI-owned – 280 map designated mineral claims totaling >15,000 hectares.
● There are 2 small airports ~15 minute drive either side of the property, N & S.
Synopsis/opinion -- where this appears headed: On the side of the road, in mining-friendly Québec, with power and rail (possibly sending to Sudbury) -- Québec Nickel Corp. has, assuming continued exploration success, the ingredients to potentially become one of the lowest cost nickel concentrate producers. Drilling to date has indicated near-surface, high grade and bulk tonnage potential at the Fortin Sill target with significant upside potential as the Fortin Sill trend is +1 km in strike length. There is also similar potential at the other targets at the Ducros project.
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Background/Property acquisition: The project originated from what was originally known about an outcrop that has since become the Fortin Sill discovery zone. The showing had been known since the 70s and 80s; the outcrop returned anomalous chip samples from prospectors, and the prospectors made a deal with Golden Valley Mines which was a Glenn Mullan company. Back in 2008 Glenn Mullan drilled two holes in the area of the showing and came back with ~20 m of ~.3 Ni, ~.4 Cu + Platinum and Gold. That was 2008 and the market went south resulting in the project laying dormant for the next ~13 years. The now CEO of Québec Nickel Corp., David Patterson, recognising the coming demand for nickel and potential of the anomalous land package, contacted Glenn in 2020 and made a deal; essentially for a 9.9% equity position once public plus a 1.5% NSR -- they struck a deal and the company was created.
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Claims Map - Property Geology and Exploration Zones/Targets
Figure 3. (above) Claims Map - Property Geology and Exploration Zones/Targets. The image above has been annotated / augmented (inset & description on right) by Mining MarketWatch Journal. The Fortin Sill deposit Zone is the anchor, where a deposit of significance is being advanced, working/expanding from the known to the unknown with great success. Then off to the west of Fortin at the Ducros Sill, back in 1987, there was a series of 5 holes drilled by operators looking for elements other than nickel, records indicate they hit the right rock types; they hit dunite rock from from top to bottom, also ultramafics were intersected -- important ingredients for what QNI is looking for. They were not targeting geophysical anomalies as QNI is doing now. Also note that this sits next to a sulphur resource that was drilled off in the late 50s (Note: sulphur is an important ingredient for creating a nickel deposit). The purple squiggly lines are what the Québec Goverment has interpreted to be the right rock types (ultramafic intrusive rocks). Note that ultramafic sills and dykes all intrude into the light blue package of sulphide bearing meta-sediments -- again more encouraging ingredients to bake in a Ni-Cu-PGE deposit. Québec Nickel Corp. will be the first to put a drill hole into areas that are highly prospective for discovery.
Aside: A common asked question is "Who owns the land ~1 km to the north of QNI's Fortin Sill Deposit Zone?" That ground is owned by Mosaic Minerals, which recently did a deal with Fokus, and above them is Osisko as part of their Windfall land package. Testimony to success that Québec Nickel Corp. is having, the neighbours are attempting to emulate it and are actively drilling just off the highway near QNI's borderline -- although there is a learning curve as the temptation is to drill the iron formation since it lights up bright on geophysics drowning out everything else (in-fact, a few of QNI's first holes were sunk into the iron formation to essentially eliminate it going forward).
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VTEMTM Airborne Geophysics & Geology
Figure 4. (above) VTEMTM Airborne Geophysics & Geology, with inset of channel dug at striped expression of outcrop at Fortin Sill Ni-Cu-PGE deposit zone. In addition to geophysics completed earier in 2022 the VP of Exploration Exploration, Gary DeSchutter, also recently had high-resolution magnetics flown from drones in key areas to zoom-in and see micro structures in incredible detail. The geological team has in-depth magnetic imagery overlaying the geology with in-house lines representing its guess of large faults and structures; essentially translating to "X marks the spot" in some cases. Numerous high-quality coincident electromagnetic-magnetic anomalies have been identified throughout the project. 2-D and 3-D inversion modelling of the VTEMTM and magnetic data are now being used to guide the drilling program.
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Advancing the Fortin Sill Ni-Cu-PGE deposit zone -- building quality 3-dimensional volume of material
NOTE: Now consider that step-outs 28 & 29 (not shown above) are ~25 m away to the SE (from holes 9, 10, & 11 at the original outcrop), the geological team is already building a 3-dimensional volume of material.
Figure 7. (above) Section at Fortin Sill Ni-Cu-PGE zone at outcrop looking ~NW. The colour red represents over 1% combined Ni-Cu. Holes 9 is Québec Nickel's confirmation hole stemming from the 2008 (historical) hole that Glenn had done at the outcrop; the geological team simply continued and drilled a hole ~45° and tilted the head and drilled two more holes (hole 10 & 11) on the expression of the stripped outcrop, yielding quality results of higher and higher grades.
Table 2. (above) Summary of assay results returned from selected holes completed at the Fortin Sill Zone -- Table sourced from October 12, 2022 news release entitled "Québec Nickel Corp Adds Third Drill At Its Ducros Ni-Cu-PGE Project, Abitibi Québec"
Figure 8. (above) -- Drill section showing the locations of selected holes completed at the Fortin Sill Ni-Cu-PGE Zone in relation to historical hole GCF-08-07 and the Fortin Sill Zone discovery outcrop.
Figure 9 a. (above) -- Plan map showing the locations of selected drill holes completed at the Fortin Sill Zone in relation to the Fortin Sill discovery outcrop. Assay results for holes QDG-22-30 through QDG-22-33 are pending. The location of hole QGD-22-28 has been moved approximately two (2) metres to the SE from its actual collar location for illustrative purposes. Image sourced from Oct. 12/22 news release.
Assays pending on extension at depth
Figure 9 b. & c. (above) Plan map and drill section showing the locations of selected holes completed at the Fortin Sill Ni-Cu-PGE Zone. from October 19, 2022 news release "Québec Nickel Corp Drills Possible Extension Of The Fortin Sill Zone At Depth"; "The abundance, composition and texture of the sulphides in this portion of QDG-22-38 appear very similar to the mineralization encountered in hole QDG-22-09 earlier this year" ... "As previously reported, assay results from hole QDG-22-09 returned a 31 metres-wide intercept averaging 0.37% Ni, 0.40% Cu and 0.55 g/t Pt-Pd-Au that includes higher grade sub-intervals of 0.44% Ni, 0.51% Cu and 0.69 g/t Pt-Pd-Au over 18.50 and 0.55% Ni, 0.86% Cu and 0.86 g/t Pt-Pd-Au over 5.0 metres" ... "The sulphide-bearing ultramafic unit encountered in QDG-22-38 occurs approximately 60 metres below and 50 metres to the southwest of the currently known extents of the Fortin Sill Ni-Cu-PGE Zone".
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2022 Drill Program Highlights at Fortin Sill Zone (presented in order progress occurred):
Figure 10c. (above) -- A 0.50 m sample of semimassive to net texture sulphides from QDG-22-09: contains 1.31 % Ni, 0.38 % Cu, 413 ppm Co and 2.12 g/t Pt-Pd-Au.
Table 3. (above) Grades for the above 0.50 m sample from QDG-22-09.
Follow-Up Continuity Drilling: (click
here for related June 6, 2022 release)
29.0 metres @ 0.36% Ni, 0.41% Cu, 167 ppm Co, 0.95 g/t Pt-Pd-Au, including high-grade subintervals:
● 4. 0 m @ 0.90% Ni, 1.01% Cu, 324 ppm Co
and 2.39 g/t Pt-Pd-Au
32.67 metres @ 0.33% Ni, 0.32% Cu, 170 ppm Co
and 0.57 g/t Pt-Pd-Au, including a high-grade
Fortin Sill Zone Step-out Drilling: (click here for related August 30, 2022 release)
Hole QDG-22-28 cored through a 29.90 metre interval averaging 0.30% Ni, 0.31% Cu, 167 ppm Co, and 0.45 g/t Pt-Pd-Au which includes a higher-grade subinterval containing 0.46% Ni, 0.64% Cu, 209 ppm Co and 0.72 g/t Pt-Pd-Au over 3.24 metres.
QDG-22-29Hole QDG-22-29 intersected a 11.80 metre interval containing 1.44% Ni, 1.49% Cu, 461 ppm Co and 2.79 g/t Pt-Pd-Au which includes a higher-grade subinterval assaying 1.85% Ni, 1.65% Cu (3.50% Ni + Cu), 576 ppm Co and 3.27 g/t Pt-Pd-Au over 8.43 metres.
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Fortin Sill Zone Discovery Outcrop Channel Sampling:
Figure 11. (above) Results from 2022 channel sampling program at the Fortin Sill discovery outcrop. Channel sample assay results were draped on a georeferenced Fortin Sill discovery outcrop drone image (oblique view looking 345° Az and down 30°).
Also seen in the image is Table 4. (above) -- Summary of assay results from the Fortin Sill discovery outcrop channel sampling program completed [Reported assay intervals are sample length weighted]. When Québec Nickel first acquired the project the team stripped as much as it could, exposing the full expression of the outcrop -- essentially the whole outcrop is mineralized.
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Other Noteworthy Target Areas
Figure 12 (above) -- Plan map of Québec Nickel’s Ducros property (red outline) showing the merged total field VTEMTM and drone magnetic data sets overlain on top of Québec Government geology. 2023 drilling target areas are indicated by dashed outlines. Drill targets comprise coincident geophysical anomalies (VTEM conductive features +/- magnetic highs responses +/- gravity features).
Ducros Sill Complex