Rio Tinto (ASX, LON, NYSE: RIO)-backed developer Talon Metals (TSX: TLO)(OTC: TLOFF) has dropped plans to build a mill in North Dakota to process ore from its Tamarack nickel-copper-cobalt project in Minnesota, saying instead it will use an existing facility in another state.
Ore from Tamarack will be processed at the company’s Humboldt mill in Michigan, Talon said late Thursday in a statement. Talon acquired Humboldt from Lundin Mining (TSX: LUN) in January along with the producing Eagle nickel-copper mine.
Talon is carrying out a feasibility study to evaluate processing material from Tamarack at Humboldt that should be completed by Dec. 31. It owns 51% of the project, with a right to boost the stake to 60%, while Rio owns the remainder.
“The decision to use an existing processing facility will significantly reduce upfront capex, in our view, and lower the project’s financing requirement,” TD Securities mining analyst Craig Hutchison said in a note. The move could also shorten Tamarack’s development timeline, he added.
DOE award
Leveraging Humboldt’s existing infrastructure, mill and skilled workforce could allow Talon to “further focus on continued exploration efforts and permitting advancement at Tamarack without needing to advance the permitting, engineering and eventual construction of a separate and new facility in a third jurisdiction,” National Bank Financial mining analyst Andrew Dusome said in a separate note.
Talon is now working with the US Department of Energy regarding the future of a $114.8 million award that was tied to the North Dakota facility,
“It is unclear whether some of the proceeds can be used to accommodate processing material at Humboldt,” Hutchison said.
Record result
News of the processing plant decision comes a day after Talon reported the longest sulphide intercept yet drilled at Tamarack. Hole 25TK0562A cut 13.37% nickel, 16.54% copper, 0.10% cobalt, 7.85 grams per tonne palladium, 14.49 grams per tonne platinum and 8.56 grams per tonne gold from 753 metres.
Located about 185 km north of Minneapolis, Tamarack holds 8.56 million indicated tonnes grading 1.73% nickel, 0.92% copper and 0.05% cobalt for contained metal of 326 million lb. nickel, according to a 2022 resource. It also holds 8.46 million inferred tonnes grading 0.83% nickel, 0.55% copper and 0.02% cobalt for contained metal of 154 million lb. nickel.
Construction at Tamarack could start as early as 2029, with production beginning two years later, Talon says. Environmental review and permitting work is already under way.
Experienced workforce
Talon had planned to build the North Dakota facility on a former coal-mining site in Mercer County. The proposed plant was intended to process high-grade nickel and copper ore from Tamarack as well as potentially other North American sources.
Humboldt “gives us the opportunity to build on an existing US processing facility with a proven operational and environmental track record and a highly experienced workforce,” Talon CEO Darby Stacey said in the statement.
“As we evaluate the future development of the Tamarack Project, we see real value in making the best use of infrastructure we already own and maintaining skilled jobs and economic activity in Michigan. It is an opportunity to build upon what is already working while continuing to strengthen our US nickel-copper platform.”
Talon shares fell 2.9% to C$10.88 in Toronto trading Friday, valuing the company at about C$1.8 billion ($1.3 billion). The stock has ranged between C$3.55 and C$11.20 in the past year.
