Electric Royalties to acquire 0.5% GRR on Kenbridge

Mar 7, 2023

2023-03-06 11:14 ET – News Release

See News Release (C-ELEC) Electric Royalties Ltd

Mr. Brendan Yurik of Electric Royalties reports

ELECTRIC ROYALTIES TO ACQUIRE 0.5% GROSS REVENUE ROYALTY ON KENBRIDGE NICKEL PROJECT IN ONTARIO, CANADA

Electric Royalties Ltd. has signed a binding letter agreement with Tartisan Nickel Corp. to acquire a 0.5-per-cent gross revenue royalty (GRR) on certain mining claims, mining leases and mineral tenures comprising the wholly owned Kenbridge nickel project in Northwest Ontario, Canada, in exchange for $500,000 cash and 2.5 million common shares of the company. The company will also have the right, for a period of 18 months after closing of the transaction, to acquire a further 0.5-per-cent GRR on the Kenbridge project for $1.75-million cash consideration. In addition, the company will have an option to acquire a 1-per-cent GRR on the mining claims, mining leases and mineral tenures comprising the Kenbridge North nickel project, approximately 2.5 kilometres north of the Kenbridge nickel deposit, for $1-million cash, at any time during a period of 24 months from the date that Tartisan publishes an initial technical report in respect of the Kenbridge North project, which is prepared in accordance with National Instrument 43-101 and which contains an estimate of inferred mineral resources.

The transaction noted herein is subject to completion of due diligence, approval of the TSX Venture Exchange and other customary conditions.

Brendan Yurik, chief executive officer of Electric Royalties, commented: “We’re excited to partner with Tartisan Nickel on advancing the Kenbridge nickel-copper-cobalt project in Ontario. The Kenbridge deposit has been well drilled since discovery and, though never previously mined, has seen extensive underground development by previous owners. Tartisan has recently released a mineral resource estimate and preliminary economic assessment on Kenbridge, which describes a project that could be a profitable underground development.

“We believe there is a lot of optionality and upside to Kenbridge as the exploration potential at depth is exciting. If the deposit’s depth potential is realized, there could be a meaningful extension to the potential life of mine. Furthermore, the Kenbridge deposit could be positioned to quickly commence production once permitted, given its manageable initial capital cost of $133.7-million, existing infrastructure and local mining work force. As a modestly sized underground operation, Kenbridge would have a relatively small environmental footprint which could enable more timely permitting.

“There are very few nickel development projects like Kenbridge that could potentially be brought into production over the next three to five years, so we are thrilled to get exposure to two critical metals — nickel and copper — through this acquisition.”

Kenbridge project highlights:

Located in a politically stable and mining-friendly region (New Gold’s producing Rainy River gold mine is located approximately 80 km to the south), with access to an all-season road;
The project has a 622-metre three-compartment shaft and has never been mined;
Mineral resource estimate completed by P&E Mining Consultants Inc. at a net smelter return cut-off of $100/tonne includes:
- Measured and indicated mineral resources of 3.445 million tonnes at 0.97 per cent nickel (Ni), 0.52 per cent copper (Cu) and 0.013 per cent cobalt (Co), containing 74 million pounds (Mlb) of Ni, 39.1 Mlb of Cu and one Mlb of Co;
- Inferred mineral resources of 1.014 million tonnes at 1.47 per cent Ni, 0.67 per cent Cu and 0.011 per cent Co, containing 32.7 Mlb of Ni, 14.9 Mlb of Cu and 200,000 lb of Co;
Preliminary economic assessment (PEA) forecasts the following:
- Nine-year mine plan based on a 1,500-tonne-per-day underground mining and processing operation. The mine plan mines the potentially extractable tonnage of measured, indicated and inferred mineral resources, which assumes overall dilution of 47 per cent (18 per cent internal dilution from stope designs plus 29 per cent external dilution) and a 94-per-cent mine recovery factor;
- Life-of-mine revenues from net smelter returns of $837-million;
- Life-of-mine operating costs of $292-million;
- After-tax net present value using a 5-per-cent discount rate of $109-million and after-tax internal rate of return of 20 per cent;
Tartisan is progressing environmental baseline studies as part of its permitting and mining approval process toward its plan to commence nickel-copper production in approximately three years;
Tartisan continues to develop positive relationships with the surrounding first nations communities through its first nations consulting partner, Talon Resources and Community Development Inc.

The PEA is considered preliminary in nature, contains numerous assumptions and includes inferred mineral resources that are considered too speculative, geologically, to have the economic considerations applied that would enable them to be classified as mineral reserves. There is no certainty that the results of the PEA (or any update thereto) will be realized. No mineral reserves have been estimated for Kenbridge. Mineral resources are not mineral reserves and do not have demonstrated economic viability. Inferred mineral resources are that part of the mineral resource for which quantity and grade, or quality, are estimated based on limited geologic evidence and sampling, which is sufficient to imply but not verify grade or quality continuity. Inferred mineral resources may not be converted to mineral reserves. It is reasonably expected, though not guaranteed, that most inferred mineral resources could be upgraded to indicated mineral resources with continued exploration.

Kenbridge project overview

The Kenbridge project is located in Northwestern Ontario, approximately 70 km southeast of the city of Kenora and 50 km east of the township of Sioux Narrows by highway. Access to the property is via 23 km of road from Sioux Narrows. The project is located in an area of historical and recent mine development, the most notable of which is New Gold’s Rainy River gold mine.

As of March 2, 2023, the Kenbridge property is covered by patented and unpatented mining claims covering a total area of approximately 41 square km.

Geology

The Kenbridge deposit is an Archean-aged deposit hosted in gabbro and gabbro breccia. Mineralization (pyrrhotite, pentlandite, chalcopyrite plus or minus pyrite) occurs within massive to net-textured and disseminated sulphide zones, primarily in gabbro breccia with smaller amounts in gabbro and talc schist. Nickel grades within the deposit are proportional to the total amount of sulphide, with rare massive sulphide zones exhibiting the highest grades. Mineralization undergoes rapid changes in thickness and grades. At least three subparallel mineralized zones were intersected in drilling and range in thickness from 2.6 to 17.1 metres. Kenbridge is classified as a gabbro-related nickel sulphide deposit.

Exploration

The deposit has been explored by a number of major and junior mining companies since 1936. There have been numerous drill programs and metallurgical programs and, in 1952, a 622 m shaft was installed and two levels developed at 107 m and 152 m below the surface.

Since 1937, 667 surface and underground holes totalling 99,741 m have been completed on the property. These holes defined a zone with surface dimensions of approximately 250 m by 60 m extending approximately 900 m to depth.

Deep drilling suggests further potential of the deposit at depth although this portion of the deposit is not well defined.

Besides the Kenbridge deposit, there are several untested exploration targets on the property, such as the Kenbridge North target that has similar geophysical characteristics to the Kenbridge deposit.

Mining and processing

The PEA describes an underground development scenario and envisages a total of 4.52 million tonnes (Mt) of process plant feed over a nine-year mine life, with an average metal content of 0.81 per cent Ni, 0.40 per cent Cu and 0.01 per cent Co. It is expected to operate at a daily rate of 1,500 tonnes per day, for a nominal production rate of approximately 528,000 tonnes per annum.

The existing shaft extends to a depth of approximately 625 m from surface with 13 shaft stations cut approximately every 46 m. The plan would be to rehabilitate, expand and refit the shaft with a new hoist and head frame to support mining in the upper areas above the shaft bottom, and later hoist material excavated from areas below the extent of the shaft.

Mining areas from below the extent of the shaft will be accessed via a ramp from the lowest shaft station, with material being trucked to the bottom of the shaft for crushing and final hoisting to surface. This method of access was chosen to minimize lead time to mining and maximize scheduling flexibility, in addition to minimizing transportation costs of broken rock.

Xstrata Process Support test results on a bulk concentrate suggest that, at feed grades in line with the current PEA mine plan, a 24 per cent Cu concentrate at 89-per-cent Cu recovery and a 15 per cent Ni concentrate at 80-per-cent Ni recovery could be anticipated.

A conventional crush-grind-float approach has been selected for beneficiation and processing at Kenbridge. Separate nickel and copper concentrates are expected to be produced at site and trucked to smelters in Sudbury (for nickel) and Rouyn (for copper). A portion of the tails would be thickened and used as backfill underground.

Socio-economic, environmental and permitting

Consultation with first nations has been continuing since 2008. An exploration agreement with six local first nations formalizes employment and business opportunities on the project.

Tartisan has retained Knight Piesold Consulting and Blue Heron Environmental to undertake environmental baseline studies in 2022 to support the various permitting and approvals processes for the project.

David Gaunt, PGeo, a qualified person who is not independent of Electric Royalties, has reviewed and approved the technical information in this release.

About Electric Royalties Ltd.

Electric Royalties is a royalty company established to take advantage of the demand for a wide range of commodities (lithium, vanadium, manganese, tin, graphite, cobalt, nickel, zinc and copper) that will benefit from the drive toward electrification of a variety of consumer products: cars, rechargeable batteries, large-scale energy storage, renewable energy generation and other applications.

Electric vehicle sales, battery production capacity and renewable energy generation are slated to increase significantly over the next several years and, with it, the demand for these targeted commodities. This creates a unique opportunity to invest in and acquire royalties over the mines and projects that will supply the materials needed to fuel the electric revolution.

Electric Royalties has a growing portfolio of 21 royalties, including two royalties that currently generate revenue. The company is focused predominantly on acquiring royalties on advanced-stage and operating projects to build a diversified portfolio located in jurisdictions with low geopolitical risk, which offers investors exposure to the clean energy transition via the underlying commodities required to rebuild the global infrastructure over the next several decades toward a decarbonized global economy.

We seek Safe Harbor.

https://tartisannickel.com/