From Mine to Market: Global Approaches to Nickel Extraction

0:08 Good morning, good afternoon, or good evening, depending on where in the world you're signing in from. Just as people are getting into the room, I'll start with my housekeeping and intros. I'm really, really happy today to talk about the global nickel market and extraction methods with Mark Travis, CEO of Giga Metals, and Lyle Tritton, the company's manager of development. Mark, Lyle, how are you both today? Very good, Romeo. Thanks. Excellent. Thanks, Romeo. Awesome. So here's how today's going to work. I'm going to ask Mark and Lyle a few questions. There's a couple of visuals from Lyle that are gonna help guide the discussion, but this really is also an interactive event. So please do ask Mark and Lyle questions at any time during today's event in the chat button on the bottom right of your screen. If it's a really on topic question, I'm gonna try my best to work it right into the conversation. If it's specific to Turnagain or the security generally, we'll try to tackle it at the end. Of course, if for whatever reason we don't get to your question today, I'm going to send the transcript and the contact details to the Giga team afterwards, and they'll be able to get back to you as soon as possible. Last note of housekeeping before we get into the protein, today's event is being recorded and will be available in your inbox probably around early afternoon Eastern time. It should pop right into your inbox. You can feel free to share it at that time. It'll be available both on events.six, but also on our YouTube channel.

1:18 But let me jump right into it. Mark, one of your registrants who may be in the room right now wrote in before the event, a very simple question, which is, when will the price of Nickel go up and why? So I do actually kind of want to start there, which is looking to you for the near and medium term future of the Nickel market. And if you can, if you don't mind, some of the macro factors that are likely to impact it in the upcoming year. Well, first of all, as they say, nothing is harder to predict than the future. And the short term is harder than the medium and the long term, because it's just kind of a drunkard's walk, as the economists say. But the factors that will lead to nickel coming out of the basement where it is right now is largely to do with Indonesia and the Philippines as well.

2:09 But it has to do with the grade. Basically, Nickel isn't hard to find in this laterite, in the surface laterite form. And so they found a lot of Nickel in Indonesia. They have ramped up production so rapidly. I mean, they're they're approaching 60% of world supply. But what happens in every mining jurisdiction is you take the best stuff first. So highest grade, closest to the ocean. So it's a combination of grade and infrastructure challenges. And the grade in Indonesia, they've gone through the good stuff so fast.

2:53 And, you know, in my view, they sort of blown it. They've taken their best stuff and they've brought it on so quickly that they've pressed down the price of Nickel, so they've sold the best stuff cheap. Not the best way to manage your resources in my view. But the grade is dropping. And so as the grade drops, and as the deposits move farther from the ocean and have more logistical challenges, the cost per unit goes up. And as the cost goes up, it just means that the nickel price has to be higher or you're losing money and people won't lose money for long. Current prices, my understanding is that these prices, we're at about 50% of Nickel producers are losing money worldwide.

3:40 And a lot of those are in Indonesia. So, you know, things are slowing down. They're not bringing new projects on as rapidly. And I think that this year there will still be a surplus from what I understand, but not as large as it was last year. And you're going to start to see a bit of tightness here and there this year. I think you'll start to see some upper movement towards the back half of this year. And then long term, there's no doubt. I mean, you need a lot of Nickel. Let me just show you 1 slide up just to talk about.

4:31 OK. This is a chart of consumption of copper is the brown line and nickel is the green line. And it's normalized starting in the year 2000 and going to the year 2023. So this is history. This is not projection. And this is consumption. And as you can see, copper, which everybody loves, has had steady growth. And it's expected to continue having steady growth because it's very useful stuff and it's useful for the energy transition. Nickel has spectacular growth in demand. And so, you know, you can have supply fall behind demand, you can have supply get ahead of demand, but supply can never get ahead of demand for long because this demand growth just keeps going. And so I think we have seen the big event in terms of supply shock.

5:27 We've seen it. We're towards the middle to the end of it. And we will be past it at some point here. I wish I could be more specific about timing, but that's the hard part. I'm just going to stop sharing and take it back. So let's turn it over to Lyle, who's going to be talking about the various processing methods of different deposit types, including the sulphide types that we've got, which have simple processing, and the lateritic nickels, which you have in Indonesia, Papua New Guinea and the Philippines, which range from simple processing for saprolyte to make nickel pig iron, but also very complex processing for high pressure, high temperature acid bleaches, which are expensive, technically risky.

6:30 Anyway, so over to you, Lyle. I do appreciate it. Well, before we get into the kind of details between the laterites and sulfides, I did want to zoom out a little bit and just let folks in the room, so they understand where nickel is currently being produced and how that supply actually works. So how this whole supply chain kind of goes from where it's mined, then processed and refined. It'd be great just to give people an understanding before we get into more of the technical details.

6:56 Sure, and if you could throw up that first slide I have, Romeo, please, that'll guide the discussion a little bit. Yeah, that one will do. So these are the sort of the top nickel producing countries. And when you think about nickel production,

7:15 the data comes out in terms of 2 forms. The most prominent data is nickel mining, but realistically we care more about the nickel refining end of things in a lot of respects. So the top producers in the world are Indonesia, China, Russia, Canada, Australia.

7:33 And what we find, you know, Indonesia, as Mark has said, has become the dominant source right now with over 60%. China's got quite a lot based on mostly imported intermediates, but also their own domestic production. Russia is high up on the list at about 200,000 tons a year of nickel, but there's a strong bias against purchasing Russian nickel in the West right now for obvious reasons, followed by Canada and Australia. And the Australian production is going down by about 60% this year compared to prior years as they've closed a lot of facilities. These older, potentially high grade, but tapped out deposits in Australia just aren't in the money anymore.

8:22 And so when you're losing money on a cash-cost basis, you choose to keep losing money or to close it down. And Most of the Australian production has chosen to close. There's still a couple of facilities that will keep running, but not a lot. The Canadian facilities are in good shape, and reasonably speaking, and are continuing to produce. South Africa will be a producer for a long time, as long as PGM prices hold up, because for them Nickel is a by-product of making Platinum and Palladium, just like it is in Russia.

8:56 The Russian 200,000t a year is mostly coming out of deposits that are very high in copper, platinum and palladium. So they have a lot of byproduct credits and their cost of production for nickel is below 0. Everything else pays for the processing. So, you know, we see globally there's quite a distributed form, but it's really concentrated in about 5 countries, Indonesia, China, Russia, Canada, and Australia.

9:26 I do appreciate that, and I think it's helpful just for people to get a sense of where it actually is all coming from to understand why Canadian projects might matter. And in the same vein, I do think there are pretty significant jurisdictional differences between obviously Indonesia and Canada, but certainly Russia, because the geopolitical angle which you referenced. So I'd love to get just your take, and Mark, you can feel free to jump in here as well, on really what the biggest differences are in political risk and how investors should look at projects in these different regions. Sure, and if you throw up my slide on governance issues there, Romeo, You know, what I look at when I think about, you know, governance and country risk is a broad spectrum of issues.

10:11 It's not just corruption, which is a major issue in some of these countries. And there's public data available on the corruption perceptions index. There's a rule of law index. The economists used to publish country information as did the US State Department, but that might be going away now. But when you amalgamate a variety of these indicators of governance practices around, you know, will the rules be followed? Can you get done what you want done? Do you need to bribe people to do it. What you find is Western Australia,

10:50 Australia in general, Western Europe and Canada shine as the top of the list. Right. We have a very strong rule of law. Once things are approved, permitted and in ongoing, they keep going. And that's very important for investor certainty. You go into Indonesia, South Africa, Brazil, you start to run into risks where the government might make decisions year by year, and we're seeing that right now in Indonesia. Last year, and again this year, the government is deciding on the level of mining permits, and we are expecting that some of the smelters that have been built are going to be underfed. There will not be enough good ore to keep them running at full rates because the government is not approving mining permits on an annualized basis fast enough.

11:45 That presents a very real risk for companies that want to produce, because if your production gets throttled down by government decree, that's problematic. And those are the kinds of issues you run into in these countries. You know, I was involved with the Mbative project in Madagascar.

12:02 You can see it off the coast of Africa there, its governance isn't very good. And we had some struggles with the government of Madagascar wanting to impose conditions of various types after the facility was approved, and it became difficult to manage. You know, you find a way through it, but it's hard. A couple of comments I'd like to add, Lyle.

12:26 You know, 1 is that it becomes more important the local governments and rule of law, the longer your mine life. And so if you've got a truly long mine life and you've got significant investments to build the thing, it'd be nice to know that if you've got a 30-year mine life or a 100-year mine life, that you can feel secure that the government's not going to wake up 1 day and say, oh, by the way, that's mine now. Go away. Thank you very much.

12:55 So, you know, the long term is certainly more important, although I have to say in the short term, the lack of governance is a competitive edge. So for example, in Canada, if we want to build a large project, a large mine of any kind, we've got a very stringent environmental assessment to go through. And it costs money. It takes time. In Indonesia, there's no meaningful, put it this way, there's no meaningful environmental assessment. So you can start building tomorrow. And to me, That is the main competitive edge in the near term that Indonesia has. And, you know, it's kind of ridiculous what's happening there from an environmental perspective.

13:47 And from a human rights perspective as well. It's the Wild West. And it's not even economics. The economics of a large, low-grade sulfide open pit deposit such as ours are comparable to, well, they beat most HPEL projects quite handily, but the Chinese build HPEL, our economics are kind of comparable. And for example, Ramu, which is considered one of the most successful H-PEL projects, which is in Papua New Guinea, it's considered successful, but I think it's in year 15 of production. It still hasn't paid off its capital costs. So, it's not the economics that give Indonesia the competitive edge, at least for battery-bound material.

14:44 It's not economics, it's permitting and it's the ability to get things done quickly. But that ability to get things done quickly comes at a cost. Sure. I do quite like your point about mine life, because it's not really even about just whether the government of right now supports a project. So the institutions of a country over 30 years are, you know, capable of supporting it long term. So that really does impact, I think, jurisdictional risks. I really do appreciate that. Now, I do want to, if possible, and if you don't mind, Lyle, we'll get technical now.

15:18 So for the folks in the room, this is where the truly technical portion kind of begins. I do want to talk about the difference, because I think this affects a lot of things, a lot of how the project eventually works out. If you could talk about just the general ore type differences for nickel between those laterites and sulfides that Mark had mentioned earlier. Sure, and that first slide on processing would help us walk through this. So sulfides and laterites, 2 different forms of ore. We've been processing both of them globally for more than 100 years. There's nothing really new here about how we do it.

15:54 We'll talk about sulphides a bit first, because although that's the smaller part of the market, it's the part that Europeans and Canadians and Americans are more familiar with, because this is what we've been doing, right? We've had nickel mines operating in Canada, nickel sulfide mines, for more than a hundred years. And sulfides are fairly straightforward to process in that wherever your mine is, you can take the ore, grind it up, and process it at the mine site to create a nickel concentrate that's relatively easy to ship for treating at a central location. And so that nickel concentrate might be 10% nickel, it might be 20% nickel. I've seen it as low as 6 or 7 at times, which gets more expensive to ship. But that gets rid of a lot of the ore body and a lot of the waste materials at the mine site, which is where you want to manage that.

16:55 And then those concentrates that you make from the sulfides go on for smelting or pressure oxidation treatment at some centralized location. So in Canada, we have smelters in Sudbury. We had one in Thompson, although it's not currently running. We have a pressure oxidation plant

17:15 in Newfoundland. We've got a pressure oxidation plant here in Fort Saskatchewan that I know well because I used to work there. All these types of technologies can treat these sulphide ores. Laterite ores, on the other hand, are generally not suitable for that kind of mine site upgrading. They're wet, they're earth-like in nature, they're fine, they're not super rocky like a sulfide ore, which is a hard rock. They can be dug up easily, they're on the surface, they're easy to find, we know where they are, there's no hiding them, They look different from the air than do the rocks around them that aren't high nickel. And those go through 2 different treatment methods depending on the type of laterite ore. So the top layer of a laterite ore body, we call it limonite.

18:07 It's a high iron with nickel substituted in the iron matrix, so it's inside the iron mineral. And that means that you have to take the entirety of that ore layer, treat it through high-pressure acid leaching, where you dissolve the entire ore body, re-precipitate everything that you don't want under these high-temperature, high-acid conditions, and then go downstream to make intermediates for further processing. And the technology works, it was started in 1959 in Cuba. It's had a number of iterations over the years, some successful, some not, right? Both economically and technically. It's challenging, you know, titanium lined equipment operating in 250 degrees centigrade with a bunch of acid injection and stuff is challenging to operate. And, you know, companies have been more or less successful in doing that. Very few companies have built more than 1 because their first one has usually been a bad experience.

19:07 The lower layer of these nickel laterite deposits, we call it saprolite, it's a little bit higher nickel grade, not as much iron. It has a lot of silicate minerals, magnesium silicate. But again, the nickel is inside the silicate minerals and it's not suitable for upgrading at the mine site. So you ship that entire layer of the ore body to a smelter and melt it. That takes a lot of energy. Usually that energy is coal fired, and you make an intermediate that then can get used directly for stainless steels, or can be converted into intermediates that can be used for other purposes. So those laterites, typically they're tropical. That's where they occur because of how they're formed. Sulfides, you tend to find them in more of the temperate environments, you know, throughout Canada, BC, Manitoba, Ontario, Quebec, all these hard rock areas of Canada have nickel deposits.

20:04 Yukon, Northwest Territories as well. Russia, very similar. Australia, Brazil have some nickel sulfides, but you don't find very many in the tropics because if they are anywhere near surface, they've been converted by the very nature of the tropic environment to laterites.

20:24 We just have different climactic conditions in the North and the South. So we have different ore bodies. There may be nickel sulfides in the tropical areas that are deep underground, but nobody's found them. So we don't know. I do appreciate that overview, because there were actually a couple of questions that came in on email that were asking for that really specific distinction. So hopefully we tackle them. But if you're in the chat and feel like we didn't get to the precise nature of your question, please do. Please do let me know. Now, I do want to talk about, and we talked about this briefly when Mark was going into the environmental impacts in Indonesia specifically. But I'd love to get a sense of, just from a technical perspective, why do the environmental impacts differ between different ore types in different locations?

21:11 So I'm talking everything from deforestation through to how they transport, just get a good sense of why these different methods matter in different parts of the world. Sure. So it's really a factor of the ore body expression. Is it on the ground, on the surface or underground? And where is it? What kind of climactic and biological environment is it in? The reality is that if you have a surface deposit that is relatively shallow. It's been formed by weathering. So, you know, the lattery deposits tend to be relatively shallow. I've seen them as thick as a hundred meters, but that's pretty rare.

21:58 I've seen them as thin as 2 meters. That's also pretty rare, but 10 to 20 meters deep is kind of the nature of them. And so these are what we call strip mines. They're not really open pit mines. You don't dig a deep pit. They're much more like a coal strip mine. And that means that you have to take up a lot of ground space in the mining. Because these deposits are typically in tropical locations, these are the locations that have the highest levels of biodiversity, the highest levels of biological productivity, so things grow fast. You know, when you visit one of these areas, you'll be very surprised that you don't have deep layers of, you know, rich black soil like we're used to here in the prairies of Canada where I live, because all the organic carbon and nutrients are in the trees. Well, as soon as you take down all that vegetation, you've lost all that nutrient value, and you end up with a mined out deposit, it's pretty hard to reclaim.

23:09 What we see, especially in the island nations, Indonesia, the Philippines, New Caledonia, Papua New Guinea, just the nature of islands as Darwin discovered a couple hundred years ago, is that you get very high levels of species localization. So you will have species that live in 1 specific island and nowhere else in the world. So when you start damaging these environments, you have a much greater risk of impacting biodiversity in an irreversible manner. We had a really good biodiversity program at Mbatave. Madagascar is a very sensitive place. We were identifying unique species of orchids in the forest and removing them and putting them in greenhouses and preserving them for eventual reclamation.

23:57 I wish that practice was followed globally, but it's not. When you look at the sulfide deposits, the surface exposed sulfide deposits like Turnagain tend to be mined as fairly deep pits, so they're more compact on the surface level and they're deeper, so there's an impact there in getting the ore out of the pit. And they tend to be in areas with much worse climactic conditions for life. Northern BC, Russia, northern Ontario, northern Manitoba, not a lot lives there. It's not that these are not important biomes and environmental areas. They are, all of them are, but the species that tend to live there tend to be much more wide ranging.

24:48 Migratory birds, well, they can fly over a deposit and go around it.

24:54 Wolves, moose, deer, all the mammals that we think about in these kinds of forested locations, they're wide ranging species. So the impact of a mine on them tends to be a lot less. They can go elsewhere.

25:09 You know, when you get into the desert parts of Western Australia, where I've worked, You have some unique species, but again, the biological productivity in these areas is so low that there isn't as much of an impact to the local wildlife. When you get into the deep mines, the underground mines, like we have in Sudbury and where you have Russian facilities, not all of them, Some of the Australian facilities are underground mines. You know, the surface disruption is quite limited. And so your impact on the environment is much more limited than it is with a strip mine that tears up very high quantities of area, but doesn't go very deep. No, I really appreciate that extra context. Now, there are lots of people in the chat just dying for me to make you guys talk about politics, and I will.

26:03 But before I get into that, and you guys spooked the board a bit, I do want to get into an overview of processing. I know we've done extraction, but I know that there are some neat visuals that you sent over to talk about how different processing types work and what their environmental impacts are. You know, GHG air pollution, water pollution, etc. So I'll let you get into that now before we get into the politics in the chat. Sure. Pick one for me to start with, Romeo. Perfect. I will say an apology to everybody who's listening in. The version of slides that Romeo has is not the latest version that I made. I will update those after the call. Romeo, they're on a different computer and ask you to send those out to everybody. Perfect. Yeah, we'll do. Right. These ones are good, but they're not complete. So yeah, we'll attach it with the replay video. So any changes, you guys will get it right on the replay.

26:56 Perfect. But I'll throw it up. Why don't we start I mean, to some degree, it's your pick. But why don't we start here since it's up? Let's start with the lateral smelting 1 Because that is the dominant part of the industry today with the rapid growth in Indonesia Has been mostly about smelting saprolytes through the what we call the RKEF rotary kiln electric furnace approach which works very well for making a low-grade nickel-iron alloy that's good for making stainless steel. It is a relatively simple approach.

27:30 Your ore in the tropics is always wet. Saprolite ore is typically about 30% moisture, a little drier in Australia because it's Australia, but in Indonesia and the Philippines, it's typically about 30% moisture. That's what's mined and shipped on barges across

27:48 the archipelago from the remote mine sites to the localized industrial areas where the smelters are, and it's dried. You put some thermal coal into a dryer and burn it along with the saprolyte, and that gets you, or burn the coal and put the hot gas through the dryer to dry the ore up to about 100,120 degrees centigrade before you move on to the really intensive part of the processing. The rotary kiln is where we start the chemical processing for this. And the chemistry that we're doing here is taking nickel from an oxide form, so nickel in the magnesium silicates and in the iron oxides, and converting it into a metallic form. So you need to strip all that oxygen out.

28:34 That's done through a process called reduction, the opposite of oxidation, which we do by heating the material up to very high temperatures and adding a hydrocarbon, either a high quality coal like an anthracite or a petroleum coke, a byproduct of the heavy oil industries. And through the rotary kiln, where you're heating it up to about 1,000 degrees with that thermal coal and throwing in the reduction coal or coke, spinning this through a very long tumbling device, you start to metallize that nickel and the iron. Nickel and iron behave very similarly to each other. That's why they always occur together in nature and why they're hard to separate from each other.

29:20 You come out of the kiln with a partially reduced, still solid feed that then gets dumped into an electric smelter where you pound a lot of electricity through these electrodes that are made from more carbon.

29:35 The electrodes eventually are a part of the reduction mechanism. That carbon continues to reduce the nickel and iron in the ore in order to melt the entire ore body and convert it into 2 physical layers. A slag that is the magnesium silicates from the ore body and any you know calcium carbonate or other things that you've added as flux in order to make the smelter physically work better.

30:05 And then the raw ferronickel or nickel pig iron that comes out the bottom, which is an alloy of nickel and iron. As it comes out of the smelter, it's molten. Then it gets granulated to make and we usually with a water spray to make a solid nickel pig iron that can be then transferred to a stainless steel furnace. Some of the integrated facilities they've built now, they actually transfer molten metal in baskets from 1 facility into the other, which is a little bit of energy savings, but you're moving molten metal around, which always brings a risk with it. So melting that ore body, very energy intensive. All of the new facilities are coal-fired. So we use coal for heat and we use coal for electricity, which gives them a very high carbon dioxide footprint.

30:57 You know, that raw ferronickel or nickel pig iron can be, most of it goes directly to stainless steel. It can be converted into a nickel intermediate that's better for downstream processing to refine purposes. But that's a relatively small component of the overall flow sheet that's used here.

31:18 I appreciate that, Lyle. If there are any questions in the chat, specifically this, I can't see it, but we will grab it just before we jump on to any other topic. Sure. But I did want to jump into... Hold on. Let's get into HPAL, actually, because this one's always interesting. Complicated, obviously, but interesting. Yeah. I have a long history with this technology.

31:41 The feed for the facility I worked at at Sherritt comes from an HPAL facility in Cuba. I worked on design of many of these facilities globally around the world. I spent a year at 1 that, at the one that's operating, still operating in Australia. One of the 3 that were built there. 2 failed and were closed. 1 eventually became commercially successful. So here you're taking that upper layer of the ore body, the wet ore, limonite ore, that's the high iron oxide. Because it's higher up, it's typically wetter. In tropical areas, 40-45% moisture is pretty common. In Australia, higher up means a little drier actually, so it can be 15 to 20% moisture sometimes.

32:27 But again, you're treating that whole ore body. It's a lower grade than the sapolites we put through smelting. Sapolites are typically 1.6 to 2-ish percent nickel. They used to be up to 3 percent nickel and even higher, but those are all gone. You know, as ore bodies around the world are seeing, we're in an era of depletion. So we're moving to lower and lower grade ore bodies. Typically for high pressure acid leaching, that ore body is 1 to 1.4% nickel. 1.2 is pretty common,

33:00 But they can run successfully, commercially viably, down at 1% nickel, as is being done. It's a more economic process in some ways than the smelting process, because although there's a lot of capital investment to do this, the operating costs, once you get it up and running at rate, are pretty reasonable.

33:24 Because if you run this facility, you make intermediate products that you get cobalt byproduct credits, which used to be worth more than they are today. And the overall energy burden is not so high. So the way this works, the high pressure acid leach circuit, you take that wet ore, you slurry it up, screen out the coarse materials, thicken it up, and inject it into the autoclave, high pressure autoclave at about usually 35 to 40% solids. You wanna run this at 250 degrees. It's not viable to just inject all that steam into the autoclave to get it that hot. And so what they do for these facilities is there's usually 2 or 3 stages of steam preheating before you get into the autoclave in order to reduce the amount of steam you're adding to the autoclave. And then there's 2 or 3 stages after the autoclave where you let that slurry back down. If you think about taking the top off a pressure cooker,

34:24 like that, but about a billion times worse, you know, that slurry at 250 degrees needs to get rid of a lot of steam to cool down to the temperatures you want to use in the rest of the process, around 100 degrees centigrade. That's usually done through 2 or 3 stages of pressure let down. That steam that's evolved from those is then recycled back to those preheaters to reduce the overall steam load. That's a great thing, that steam recycle, that is what makes these economic.

34:53 Older facilities typically have fewer stages of recycle, newer facilities sometimes have more, but it's always an economic decision about how much money do we wanna put into the capital of flash tanks and preheaters versus the cost of the steam.

35:09 The same technology is actually used in a caustic instead of an acid environment for making aluminum. When you treat bauxite to make alumina, we do the same recycle of steam process. There, they tend to use 6 to 10 stages of recycle of steam. In the nickel world, we use 2 or 3 for a variety of reasons. Facilities have succeeded or failed on the technologies they use for flashing that slurry down and recycling it. But there's getting to be a pretty good handle now on how to do that successfully. I was at Murren Murren when it wasn't being successful, so fairly familiar with that.

35:55 That slurry that comes out of the autoclave has anywhere from 25 to 60 or 70 grams per liter acid, depending on the chemistry of the ore that you're treating. Everyone is unique. The beauty of mother nature is that every ore body she's given us is different. And so there is no single set of conditions that it works for everything. That acidic solution then needs to be neutralized, usually using limestone, because it's a relatively cheap neutralizing reagent. Of course, limestone is calcium carbonate. So when you use it to neutralize an acid, you make gypsum calcium sulfate and carbon dioxide, which is emitted straight to atmosphere from these neutralization circuits. Once you get the acid level down to what's called a rational level around pH 2 or so, so pH 2 still has some free acid in solution.

36:49 You need to separate the tailings, everything that isn't in solution from the high pressure acid leach, from the solution that you want. So those tailings are generally aluminum sulfate and iron oxide, mostly iron oxide. Most facilities, it's about 90% or 95% of the mass of the incoming ore. Some facilities it's more than 100%, just depending on the chemistry in the autoclaves, which really goes back to the water chemistry that you use, fresh water versus salt water. Separate those tailings through 6 or 7 stages of countercurrent decantation thickeners where you add wash water and then separate the solids out. That gets you a pretty good recovery, you know, 95 to 98 percent recovery of your solution, and then the remaining couple of percent goes to tailings.

37:41 That solution that you want, it's like 5 to 10 gram per liter nickel in solution with a lot of magnesium and manganese and still some iron and aluminum and stuff. Then goes into a metals removal circuit to remove some of that iron and aluminum. Limestone and lime are typically used here. And then a metal recovery circuit where you want to recover your product. So most of that today is mixed hydroxide precipitates using magnesia or caustic soda, which is a liquid sodium hydroxide, where you add that and precipitate the nickel and cobalt as this mixed hydroxide that is, you know, nominally 40% nickel, a couple of percent cobalt, a few percent manganese, a little bit of leftover magnesium often, and about, and you know, it doesn't settle and thicken very well or filter very well.

38:36 So when you ship that, it'll be about 40% moisture. And so you're shipping a lot of water with it to some refining end. The mixed sulfide approach is chemically much more useful because it gives you a much better separation of nickel and cobalt, which you want, from things like manganese and magnesium that you don't want. But it means you gotta play around with hydrogen sulfide, which has its challenges. But mixed sulfide precipitates, such as they make at Moa or in Australia, at Mbatabe in Madagascar, and the plants in the Philippines, is an excellent feed for downstream refining. 55% nickel, 5% cobalt, a lot of very little moisture comes with it. It filters very well.

39:24 But all the stuff that's being built in Indonesia these days is all MHP. So we use a lot of acid in this, 300 kilograms of acid per ton of ore, which works out to about 10 tons of acid per ton of nickel produced. And a similar amount of limestone, about 10 tons of limestone per ton of nickel produced. So you have to supply these facilities with a huge amount of reagents that cost you money and effort to make or get there in order to produce your intermediate at the back end. And that's a challenge for these. Sulfur is a highly volatile chemical, as is sulfuric acid, prices can go up and down quite a lot. And so the economics of these facilities fluctuate quite dramatically based on not what's in their control, how they operate the plant, but what's outside of their control, global market price for acid or sulfur.

40:19 No, that's super helpful. I did wanna quickly get through this. I know there's a bunch of questions in the chat, so I do wanna get to them soon, but I wanna run through this guy first. So if you wanna just talk about sulfide ore processing. Sure, so sulfide ores, because as I described before, we have this step at the mine where we crush and mill and use froth flotation, a technology that's been used for more than 100 years, to make a nickel concentrate. That means that we can now very readily separate the mining and the processing. You can ship laterite ore across the ocean, but at 1% nickel and 40% moisture, it costs you a lot. Shipping nickel concentrate at, for the Turnagain case, 18% nickel is pretty cost-effective. And one of the things that we're seeing in the whole debate about critical minerals right now is what's available where? Well, nickel concentrate from Canada can be shipped anywhere in the world cost effectively.

41:15 Not true, not the same for some of these other materials. That concentrate when it's shipped to a smelter, most of these globally are flash smelters where you inject the concentrate into a high temperature smelter. It's not as hot as the nickel pig iron or ferronickel smelters. Some fluxes are required, some limestone or silica, depending on the exact chemistry of the smelter. Much less electricity than you would use in a ferronickel smelter because you're only melting the concentrate and a bunch of the energy that you're getting is the sulfur in the concentrate is burning to make sulfur dioxide. That's a very exothermic reaction generates a lot of energy. And so your electricity here, use here is quite small in comparison to the oxide smelting processes.

42:05 Like those, you get a slag that is all the silicates and stuff that are coming off the ore, and you get a nickel matte that comes out the bottom, which is typically about 70% nickel. It'll have some of the copper and cobalt values and some sulfur in it still. And that nickel matte is then sent for further refining. You know, there is an approach that I haven't shown here, which is that you can also do this via, treat the concentrates via pressure oxidation. You know, it's a straightforward process, not heavily adopted. There's been 3 facilities built in the world to do this for for nickel concentrates, 2 of them here in Canada. So we know how to do this. And if people have concerns about building new smelters, pressure oxidation plants have a much different environmental profile than smelters.

43:00 Very few gases coming off and very little pollution in that respect. No, certainly, I certainly appreciate that. Now, I do know there's tons of questions in the chat, so I want to jump to at least a bunch of them, there's 1 actually that's just on what we just talked about. So I'll jump straight to that. And that's how can the capital costs of constructing HPAL plants drop in recent years? Why has that taken place? How can that capital cost of constructing HPAL plants, why have they dropped in recent years? So, you know, the way to look at this is, you know, like the Chinese nuclear fleet, nobody builds nuclear facilities better than China right now because they spent 40 years building a complete supply chain of engineering, fabrication, material supply, everything around that. We see nuclear facilities in Europe and North America completely blowing out in cost and schedule because we haven't figured out how to do it here Because we haven't been doing it over and over and over and over again for 40 years.

44:04 What the Chinese have done is they built Ramu in Papua New Guinea, and that was built by, engineered and designed by a company called Enfi, a Chinese state engineering firm, that has then gone on to design the newer facilities in Indonesia. And as they've done this and built facility after facility after facility, they've built up their supply chain for the expensive pieces that go into this, the high pressure acid leach, they're reusing the engineering designs for the autoclaves and the preheaters and the flash tanks. They're not redoing everything. And they've built as well a workforce that they're willing to deploy for years on end to make these projects successful.

44:50 So there's still hundreds of thousands of Chinese expats at Ramu, 12 or 13 years after commissioning, which is not the way we in the West like to think about doing these projects when we do them in these remote locations. We try and get the expat number down and train up the local workforce. But that's challenging. So China has been successful in bringing the cost down by doing repeats. Right. Just do it over and over and over again. The exact same recipe they use for nickel pig iron smelters. I appreciate that. Now, Enguy, the other side, asks in the chat, what's the most challenging aspect of operating AHPAL and why are most operations not currently performing well? Okay. So there are, in my view and experience, 2 main challenges.

45:40 One is the quality of the ore. Every ore body is heterogeneous. It has... In different areas, it has different mineralogy. And the HPL process is very sensitive to that mineralogy. So what you see is that from day to day, from week to week, as you're mining different parts of the ore body, managing the feed of that ore into the autoclave to keep what is a big chemical reactor running smoothly and at the same conditions is really hard. Miners like to deliver tons of ore at a certain grade. They don't like to be constrained by, yes, but the manganese level should be this, and the chrome level should be this, and the magnesium level should be this, and the aluminum level should be this. You can't constrain the mining to 10 different parameters.

46:33 It doesn't give you a cost-effective mine plant. So you mine what you can get at, and you put that into the autoclave, and it tends to be difficult to manage unless you can deliver ore, as is happening in Indonesia, from 25 remote mines by barge and blend it in. That's not the way most of these facilities have been designed. The other aspect is just the maintenance side of things. Running a high-pressure acid-leach autoclave at 250 degrees with titanium lining and high erosion rates on the downstream piping and valves and things is really difficult. And so the maintenance costs on these things are enormous and the uptime has historically been not very good. And that's what's brought down a lot of the facilities like Ambatavie and I've seen it at MOA as well, Anaconda or Mern Mern in Australia.

47:26 You know, these facilities really struggled with keeping them on stream all the time until they build up their full set of maintenance practices, train all the workers and have them there for long periods of time. Employee turnover is a really bad thing at an AFAL facility. Cool. Now, Conscious, only 13 minutes left and There's still quite a bit of material to get into. Mark, I'm going to bring you back in for a couple of the political questions from early in the hour. And then there are a number of pretty specific technical questions that I'll try and rattle out at the end with you, Lyle. Mark, somebody in the chat asked, and this is the T word, so prepare yourself, is how will tariffs in the US potentially affect Canadian Nickel? I was curious your perspective on, obviously there aren't broad-based tariffs right now, just the threat of them. But what's your perspective on how they might impact Canadian Nickel operations?

48:15 Well, I guess my underlying assumption is that the United States is going to do what's good for the United States. And so if you want to have a competitive car industry in the United States, You would be shooting yourself in the foot to up the cost of nickel, rare earths, you know, all of the things that go into making batteries and that go into making cars. I think this threat of steel tariffs is going to have a negative impact on the car industry. So I just don't see it. Certainly not long term. I can see the threats, I can see the negotiation and all that kind of thing. But it's just, you know, if you're going to drive your costs up and make your industry uncompetitive on the world stage, that's not good for the United States and it won't stand.

49:18 And I think I got this actually, Lyle, from talking to you earlier this week. There's also potential, as I understand it, that even if there is a universe where longish or medium term broad based tariffs, Nickel might still be a carve out, but I'll let you speak more to it. Sure. So, you know, when when I look at this, the whole point of tariffs economically is to incent domestic production and create jobs. Right. It hasn't historically worked. Smoot-Hawley in the US didn't work. North Korea as a closed economy doesn't work. I don't think anybody really wants to go that route. But to the extent where you do have domestic production or the potential for domestic production, you can incent that using tariffs on incoming goods. The problem for the United States is they have effectively no nickel production today.

50:11 There's about 15,000 or 17,000 tons a year of nickel in concentrate from the Eagle mine that goes into Ontario to be refined into pure nickel, which can then go back into the States, but would be subject to tariffs. They have a little bit of nickel production as an intermediate in Montana from the Stillwater mine and not much else. So, you know, there's some deposits in Minnesota that might get developed, but they're not going to be anywhere near enough to satisfy the U.S. Demand domestically. You could develop every deposit the U.S. Has. You could do it next year. OK, you can't. But even if you did, the US is going to be short nickel. So they need to buy it from overseas. So the question then is, who are they buying it from and what are those applicable tariffs?

51:00 And if you think that they're going to prefer to buy Russian nickel or Chinese nickel over Canadian and Australian nickel, I think there's a challenge there. Australian nickel is going to be in high demand, but there's going to be a lot less of it than there used to be. Canada makes just as much and is a valued trading partner. So, you know, because the U.S. Cannot satisfy its demands of domestic production, I don't see the tariffs as a real threat on Canadian supply. Great. Thank you. Now, a well-liked comment in the chat that's also echoed later. So I do want to get both of your perspectives on it. What do you both think about the East African Nickel Belt as a potential future source of supply? Whoever wants to start, go for it. Go for it, Lionel. So That would be Kabanga in Tanzania on the border with Burundi.

51:51 You know, frankly, Kabanga is a fantastic deposit. I've done investment analysis on it in the past. It's a great deposit. It's a shame about the location. That's been the thing about Kabanga for the 30 years that it's been known. It's been owned by a bunch of different companies. Nobody has chosen to develop it because it's 1200 or so kilometers from the coast and getting everything done there and getting material out is very challenging. The logistics of operating in the middle of Africa are difficult. Can it be brought forward? Sure, it's possible. There's a South African company looking at that now, LifeZone. Barrick had it, didn't go ahead with it.

52:38 Falconbridge had it at one point, didn't go ahead with it. You put that deposit on the coast, it's a whole different story. It's Voisey's Bay. It's of that kind of quality. It might not be quite as good as Boise's Bay, but it's in a similar vein. It's the best deposit in the world that is unexploited. And again, I think if you put Cobango on the coast, it would have been mined out and finished years ago. Because it's a beautiful deposit. But it's only going to add, say, 30 or 40,000 tons a year nickel at most into the global supply. So even if it is developed, it's like, OK, you know, that's not a very big change to the nickel supply market. It isn't like there are 20 of those deposits sitting there waiting to be developed. There's not.

53:32 Right. Now I do have I got 3 technical ish or more technical questions. I'm going to rattle off if we can try to go through them pretty quickly, because I do have some questions for Mark right at the end, specific to Turnagain. I was a first is tank leaching a viable approach for processing more than a million tons of limonite per annum? So tank leaching for limonite is very, very difficult. The iron oxide mineral that holds the nickel is very resistant to leaching at atmospheric temperature. If you add the right sorts of chemicals, it can be done, but then all that iron is in solution and you have to precipitate it all with neutralization reagents. Nobody's done this for very good reasons. It has not been economically viable to do it.

54:19 Technically, I could design you a circuit, but it just wouldn't make a lot of sense. Nope, appreciate that. Another one is, would annual rainfall of more than a thousand millimeters per annum rule out heap leaching of laminatic ores? Well, heap leaching of laminatic ores is very, very difficult to start with. There's only one facility in the world that's currently doing it because the laminitic ores are very fine. You have to agglomerate them to get a heap that stuff can flow through. And those agglomerates, when you flow the acid through them to dissolve, you have to dissolve the iron to get the nickel. The agglomerates break down and you end up with heap permeability problems. It's a very rare dream that you can do this.

55:06 You can run heap leaches in wet environments. It has been done. It's been done in Africa. You would cover the heaps probably, right? You would cover the ponds potentially. It gives you a real solution management challenge, but technically there's nothing stopping you. OK, no, appreciate that. I mean, the last one in this run is for limonetic and saprolyte ores. Can beneficiation on mine sites be done on the ores to increase the grade before acid leaching and smelting? So yes, for limonites, for some deposits, they have what's called a silica boxwork. There's a lot of silica that is coarse that can be screened out. This is done at the Ravensthorpe facility in Australia. It's proposed for the Vermelho facility in Brazil and for the Ardea Resources Calgary Early Nickel Project in Australia as well.

55:59 When you have the right mineralogy, you can upgrade an ore by rejecting that silica. At Ravensthorpe, after BHP blew their brains out on it and wrote off $3Bn, First Quantum came in and spent a half a billion dollars to revise that mineral processing circuit and make it work. And it does work. They reject about, nominally call it 50% of the ore and throw away a bunch of Nickel in the process. But they upgrade the ore from about a half or 0.6% nickel, uneconomic to process, to a bit over 1 percent. And it does functionally work. But it's a very rare deposit. Typically, only the dry laterites in Australia are suitable for that. Potentially the one in Brazil, which is also a very inline deposit.

56:46 Most of your tropical libanites simply don't have that mineralogy. I certainly appreciate that. And thanks for running through the tech questions, Lyle. I really do appreciate it. One question for Mark from the audience that came in an email in advance is, Someone would be interested to know if you've got any further on reinterpreting the data set after discussions with Steve Beresford, and what additional data would you need to advance the project at this 0, yes. Well, Steve's been through everything and has identified several different types of targets and has recommended exploration. The main data that we need to fine tune where you point the drills will be geophysical in nature. He'd like us to do a gravity survey of the entire ultramafic intrusive, just to understand the geometry of it better.

57:39 And it can also be used in conjunction with our EM data to help reduce the false positives that you get with the EM. And then after that, once we've got a better idea of what we're looking at, there's specific areas that we would do a ground, what's called a loop EM survey, which can see quite deep. Basically, Steve's perception is that this ultramafic intrusive, which has different phases of intrusives coming into it, that the whole thing is basically in place, that it's pointing skyward, if you will. And so all of the plumbing is underneath the sort of, we've got this surface cloud of low-grade disseminated to net textured sulphides.

58:37 And he thinks that there's a high-grade sulphur or, you know, high-grade massive sulphide, a nickel underneath that we should target. He also thinks that in 1 area of the deposit, which we call the attic zone, that area, we've got this near surface, low-grade cloud of copper, platinum and palladium. And he thinks that's a halo above a massive copper sulfide and magnetite deposit at depth that's similar. And in fact, he just says it's remarkably similar to Volkovsky, which is a copper mine in Russia. So he thinks that that's a worthy target of exploration.

59:25 But again, we would want to see some gravity data. We've already reprocessed our MAG, which is quite helpful. And then we do some ground-based deep penetrating EM before we would drill. One last thing just before we jump, because I know we are towards the end of the hour. Mark, I'd love if you had an opportunity to just be a little shameless, because I know there's some giga shareholders in the room, but there's a lot who aren't. I'd love if you just gave a couple of seconds on why now might be an interesting time to take a look at the stock and let them know you'll be at the PDAC coming up soon. Yeah. Well, buy cheap, sell dear. I mean, it's as simple as that. We've got a project that is very sensitive to Nickel prices.

1:00:14 And Currently, as I say, according to Jim Lennon of Aquarium, about 50% of producers at today's prices are losing money. Our project wouldn't be losing money at current prices, but we wouldn't be making much on a cash basis. But as the price of Nickel goes up, as ultimately it has to, to incentivize these larger projects, you know, the economics just improve radically. It's a very fast, you know, I call it the balloon effect of the economics. So we're right on the cusp of economics right now, marginal at these prices. But boy, it just explodes as the prices move higher.

1:01:03 So, you know, I think prices are about as low as they can get, because if they get much lower than, you know, what if 80% of producers are losing money? That just simply can't last. And we've already seen in the last year and a half of low Nickel prices, we've seen quite a few mines just shut down. And so supply starts to erase itself from the market. You know, sooner or later, prices have to turn up. So, you know, you're certainly at the low point here. Awesome. Appreciate that. And just before we jump, why don't you let folks know that you'll be at PDAC coming up soon. I know it's sooner than we all think it's going to be. And it's just a couple of weeks away. Yeah, we'll be there. We'll have a booth.

1:01:51 I can't quote you the booth number as I sit here right now, but we'll be on the list and look us up. We'll be there. I'll be there as well with the team. So happy to talk Nicole more in depth with anybody who wants to stop by. Awesome. Guys, thanks so much for a great conversation. Everybody in the chat, thanks for really interesting questions. A replay will be available later today, but Lyle, Mark, thanks so much. This was great. Thanks, Romeo. Thanks everybody for tuning in. Yeah, thanks everyone. And Romeo, thanks for putting this together. Appreciate it. Not a problem. Have a great morning, everyone. Ciao. ♪♪