A Brand New Nickel Junior Advancing a High-Grade/Shallow Resource

Report Highlights

• Exploration has identified mineralization over a 6 km strike length. Initial drilling has returned high values of up to 1.07% NiEq (2.26% CuEq) over 28.9 m, mostly at shallow depths (50 to 100 m).  We view nickel grades of 1%+ as high.  
• Management is planning a 2,000 m drill program to potentially expand the mineralized area, as well as metallurgical testing, prior to completing a maiden resource estimate in 2025. 
• Based on our review of all the published data, we are assigning a preliminary speculative estimate of 297 Mlbs NiEq (679 Mlbs CuEq) on Graal, indicating a medium-sized/high-grade resource. 
• BHP (ASX: BHP), First Quantum Minerals (TSX: FM), and Wyloo Metals, are temporarily suspending production at some of their nickel mines in Australia due to a 26% YoY decline in prices, driven by slower global GDP growth, and rising supply. LME inventories are up 82% YoY. We foresee these production shutdowns exerting upward pressure on prices. We estimate nickel will average US$8.75/lb this year vs the current spot price of US$8.20/lb. 
• We maintain a positive outlook on juniors focused on EV metals. Battery/EV manufacturers/miners are actively seeking stable/long-term supply sources. Early this year, Sumitomo Metal Mining (TSE: 5713) acquired a 10% interest in nickel junior FPX Nickel Corp. (TSXV: FPX).
• Upcoming catalysts this year include drilling, and positive sentiment towards juniors focused on EV metals.
• The lack of an NI 43-101 compliant resource estimate may deter investors. However, we believe our preliminary resource estimate in this report should bolster market confidence.

Risks

• Volatility in nickel and copper prices 
• Exploration and development
• No NI 43-101 compliant resource or economic studies
• Access to capital and share dilution
• EIA and permitting 

Price Performance (1-year)

*See the bottom of the report for important disclosures, ratings, and risk definitions. All figures in C$ unless otherwise specified

Graal Project

Location, Accessibility and Infrastructure

COS retains a 100% interest in 110 claims, covering 6,113 hectares.

Location Map

Source: Company

Located north of the Lac St-Jean area in Quebec, adjoining the southeast border of Arianne Phosphate’s (TSXV: DAN/MCAP: $56M) Lac à Paul phosphate project, one of the largest undeveloped phosphate projects in the world

Favorable location and infrastructure, with access to water, and low-cost hydro power 

History and Mineralization 

Nickel can be categorized into class 1 and 2. Class 1 (sulphide ore) is suitable for lithium-ion batteries, while class 2 (ferronickel and nickel pig iron) is used for stainless steel due to iron content and impurities. 

The property was initially explored by Virginia Mines and SOQUEM from 1996 to 2004, resulting in the identification of the MHY and Gravi zones. 

The Discovery zone, situated 2.5 km northwest of the MHY zone, was initially identified through geophysical surveys. Subsequent drilling confirmed high-grade mineralization.

Located 190 km north of the seaport terminal of Grande-Anse (Saguenay)

The property shows promise for hosting class 1 nickel

Mineralized Zones

Source: Company

To date, a total of 96 diamond drill holes (23,673 m) have been completed, returning multiple high-grade nickel, copper, and cobalt values, along with platinum/palladium showings.

Drill Highlights

Source: Company

Exploration has identified mineralization over a 6 km strike length encompassing the MHY and Gravi zones, and numerous high-grade intersections in the Discovery zone

Multiple holes intersected high-grade nickel-copper-cobalt intercepts at shallow depths, implying potential for an open-pittable deposit.

Drill Results – Key Highlights 

MHY Zone

Source: Company

Gravi Zone

Source: Company

Discovery Zone

Source: Company

Past drilling returned values of up to 1.07% NiEq (2.26 CuEq) over 28.9 m, mostly at shallow depths (50 to 100 m)

Grades typically range from 0.60-0.80% Ni, 0.30-0.50% Cu, and 0.10-0.15% Co

 Management has set an initial target tonnage range of 30-60 Mt vs our initial estimate of 19 Mt

We believe there is potential to expand the known mineralized envelope, as most drilling conducted thus far has been shallow, and along the periphery of a large gravity anomaly

Preliminary Speculative Target (FRC Estimate)

Based on our review of all the published data, we are assigning a preliminary speculative estimate of 297 Mlbs NiEq (679 Mlbs CuEq) on the project. 

Source: FRC

As nickel sulphide deposits often form in clusters, we foresee a high likelihood of new discoveries. Management is planning a 2,000 m drill program, targeting the down-dip potential of the MHY and Gravi zones, as well as additional targets.

Management’s Plans

Source: Company

Upcoming catalysts. We anticipate a maiden resource estimate in 2025

Source: Management Information Circular  

Management and board own 11%.  Nord Precious Metals owns 39%

Brief biographies of the management team and board members, as provided by the company, follow:

Frank Basa – President, CEO & Director

Mr. Basa has 40+ years of global experience in gold mining and development as a professional hydrometallurgical engineer with a focus on milling, gravity concentration, flotation, leaching and refining of precious and base metals. He graduated from McGill University with a B.A. in Engineering in 1983. Mr. Basa has served as Chairman, President and Chief Executive Officer of Granada Gold Mine Inc., a company listed on the TSXV, since June 2004. 

Jessie Acton – COO & Director

Mr. Acton has 25+ years of experience primarily in the resource sector. He has advised numerous Canadian companies and holds extensive industry and government connections. His expertise spans corporate policy, DEI, and ESG frameworks, complemented by a successful track record of founding and exiting companies. 

Aurelian Basa – Director

Mr. Basa has spent nearly a decade engaged in the natural resources industry and has travelled extensively in this capacity. Most recently, he secured feed sources for the Re-2Ox Process including high-grade tailings projects, recycled batteries, and battery metal deposits abroad. He manages Resource Active Media, a digital content agency tailored to publicly-traded mining companies. Mr. Basa holds a Bachelor's degree in Geography with a specialization in Planning and the Environment from Concordia University, Montreal, Québec. 

Ronald Goguen, Sr. – Independent Director

Mr. Goguen combined multiple drilling ventures to become Major Drilling Group International Inc., a publicly-traded company that has traded on the Toronto Stock Exchange since 2015. He served as President and Chief Executive Officer until 2000 and during this time was a key driving force in building Major Drilling into one of the largest mineral drilling service companies in the world, with 33 operations in 15 countries. In 2006, Mr. Goguen was appointed Chairman of the Board of Beaver Brook Antimony Mine Inc., and he remained so until bringing the operation into production in 2008. 

Dianne Tookenay – Independent Director

Ms. Tookenay is a band member of Brunswick House First Nation in Ontario and has been a director of Canada Silver Cobalt Works Inc.  since June 15, 2015, and has been a director of Granada Gold Mine Inc., a company listed on the TSXV, since April 2017. She holds a Certificate in Mining Law from Osgoode Hall Law School, York University, a Joint Masters of Public Administration degree from the University of Manitoba, and a Bachelor of Administration degree from Lakehead University. 

Our rating on the company’s management team is 3.6 out of 5.0

Strength of Board

Source: FRC

Financials

Source: FRC / Company

We anticipate a $1-$2M equity financing in the near-term

Source: FRC / Company

Valuation and Rating

The following table compares COS to other high-grade nickel juniors.

High-Grade Ni Projects

Source: FRC / S&P Capital IQ / Various Companies

COS is trading at $0.03/lb NiEq vs the sector average of $0.10/lb, a 74% discount 

Applying $0.10/lb to our preliminary speculative resource estimate for COS, we arrived at a fair value estimate of $0.52/share 

Source: FRC / S&P Capital IQ / Various Companies

Juniors with higher grades generally exhibit a higher EV/lb

We are initiating coverage with a BUY rating, and a fair value estimate of $0.52/share. Upcoming catalysts include drilling, and positive sentiment towards juniors focused on EV metals. As COS is a brand new company, we believe it is currently flying under the radar. The lack of an NI 43-101 compliant resource estimate may deter investors. However, we believe our preliminary resource estimate in this report should bolster market confidence. We anticipate the stock will gradually align with our fair value as investor awareness of the company grows.

Risks

We believe the company is exposed to the following key risks (not exhaustive):

• Volatility in nickel and copper prices 
• Exploration and development
• No NI 43-101 compliant resource or economic studies
• Access to capital and share dilution
• EIA and permitting 

We are assigning a risk rating of 5 (Highly Speculative)