Disclosure: Giga Metals Corporation has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions.
The analyst’s rating and fair value are one click away. Free FRC account, no credit card.
Already have an account?
Price Performance (1-year)
Turnagain Nickel Project, B.C.
This advanced-stage project, covering 40,069 hectares, is located in northern B.C.
A JV between GIGA (85%) and Mitsubishi Corporation (15%). Located 1,100 km north of Vancouver. Access to deep-water ports
Electricity can be obtained from an existing power grid. Potential for low carbon operations
Mineralization, Resources, and PFS
The project hosts a large, low-grade nickel sulfide deposit.
Resources totaling 13 Blbs Ni, and 0.8 Blbs Co, making it one of the largest undeveloped nickel-cobalt deposits in the world
The 2023 PFS was based on open-pit operations spanning 30 years.
PFS Highlights
Metallurgical tests have shown that froth flotation can produce high-grade Ni and Co concentrates. The PFS returned an AT-NPV7% of US$574M, and an AT-IRR of 11.4%, using US$9.75/lb nickel, US$4.65/lb in cash costs, and US$1.9B in initial CAPEX
The project’s break-even nickel price is US$8.23/lb. We believe the PFS was conservative as it was based on only 34% of resources. Even a small increase in grades can have a substantial positive effect on the NPV and IRR of large nickel projects
In December 2024, the company received a report from Dr. Stephen Beresford, a highly regarded nickel exploration geologist. Dr. Beresford was commissioned by Giga to assess the potential for high-grade mineral targets within the project, and recommend a suitable exploration program. His report identified several promising target types, including:
The report concluded that a comprehensive exploration program incorporating gravity surveys, ground-based electromagnetic surveys, and drilling is necessary to effectively evaluate these targets.
Re-processing of historical magnetic survey data underway. Approximately 95% of M&I resources come from the Horsetail-Northwest-Duffy zones, located north of the Turnagain river
We believe there is potential for resource expansion as several targets have been identified, and more than 80% of the project area remains underexplored
The Turnagain project, with its focus on hydroelectricity, and carbon sequestration, aims for a significantly lower carbon footprint compared to many laterite nickel projects, which often rely on fossil fuels for energy and have higher processing energy demands. Approximately 60% of the world's known nickel resources are found in laterite deposits, while the remaining 40% are in sulfide deposits.
Over the next 12 months, the company plans to pursue an exploration program, targeting high-grade copper and nickel mineralization. To fund this initiative, Giga will need to undertake an equity financing.
Financials
$0.9M in cash at the end of Q3-2024. None of the outstanding options/warrants are in-the-money
FRC Valuation and Rating
Giga is trading at just $0.001/lb (previously $0.002/lb) vs the comparables average of $0.008/lb (previously $0.011/lb), reflecting an 85% discount. Applying $0.008/lb to Giga’s resources, we arrived at a comparables valuation of $0.76/share (previously $1.19/share)
We are not making any material changes to our DCF or real options valuation models
Our weighted average valuation declined from $0.95 to $0.75/share, driven by a lower comparables valuation
We are reiterating our BUY rating, and adjusting our fair value estimate from $0.95 to $0.75/share. While near-term weakness in nickel prices presents a challenge, the long-term fundamentals for nickel remain strong, driven by the growing demand for EVs. We believe that successful exploration, and a potential increase in grades could significantly enhance the project's value.
Risks
Maintaining our risk rating of 5 (Highly Speculative)
We believe the company is exposed to the following key risks (not exhaustive):
