Canada Nickel Co. Inc. CNC-X is raising $20-million from an Ontario First Nation, the largest funding of its kind in the Canadian critical minerals industry and one that could be a model for other small mining companies.
Taykwa Tagamou Nation, a Cree First Nation in the Cochrane District of Northern Ontario, is buying convertible notes in Canada Nickel, which will pay an annual interest rate of 4.75 per cent and can be converted to common shares. The First Nation would own an 8.3-per-cent equity stake in the nickel-development company if the securities were converted.
The deal was announced Monday and first reported by The Globe and Mail on Friday.
Canada Nickel is developing the Crawford nickel-cobalt project near Timmins, Ont., which contains the world’s second-largest reserve of nickel. The Toronto-based company plans to supply the critical mineral to Canada’s nascent electric-vehicle battery industry.
Taykwa Tagamou Nation is also getting a seat on Canada Nickel’s board, giving the community a say in the development of the project as it moves toward production over the next three years. Crawford sits on the traditional territories of the First Nation.
Bruce Archibald, the chief of Taykwa Tagamou Nation, said in an interview that the community made the investment in large part because the project is being developed with the environment top of mind. Nickel mined at Crawford will be earmarked for the EV industry, which should help Canada meet its long-term emission-reduction goals. Canada Nickel also plans to have a massive carbon-capture project on site to minimize the environmental footprint of the mine itself.
“It was intriguing to us, because it’s not only just digging the minerals out of the ground, it’s actually being able to contribute to the environment,” Mr. Archibald said.
Taykwa Tagamou Nation has been working with Canada Nickel since 2019, as Crawford has moved from an early-stage project to one that is nearing mine construction. The First Nation has been in discussions to lead a consortium that would deliver electricity to the project. It is also looking at supplying the mining truck fleet for Crawford. But owning a stake in Canada Nickel was something the community was interested in early on in the process.
“It took a lot of building relationships over the past five years,” Mr. Archibald said.
For an emerging critical-minerals producer such as Canada Nickel, attracting funding from such a key project stakeholder is a big win. Other large-scale Canadian critical-minerals projects, such as the Eagle’s Nest nickel project in the Ring of Fire, in Ontario’s Far North, have not moved nearly as quickly as Crawford, in part because of Indigenous concerns about development that have persisted for decades.
Canada Nickel had raised about $75-million over the past few years in equity investments from Britain’s Anglo American PLC, Canada’s Agnico Eagle Mines Ltd. and Samsung SDI of South Korea. But unlike Taykwa Tagamou Nation, none of the aforementioned investors has earned a board seat.
“Because we value this relationship, and because of the significance of this investment, they’re getting a board seat right out of the gate,” said Mark Selby, the chief executive officer of Canada Nickel, in an interview.
Until recently, it was extremely difficult for Indigenous groups to invest large sums in the capital-intensive Canadian resource industry because of a lack of funding options. Historically, conventional bank loans have not been possible because of Indian Act provisions that restrict the use of on-reserve assets as collateral.
But in the past few years, provincial loan guarantee programs in Ontario, Alberta, Saskatchewan and British Columbia have made such investments feasible. Earlier this year, the federal government also launched its own $5-billion loan-guarantee program for Indigenous communities.
Taykwa Tagamou Nation, however, does not need a loan to make its investment in Canada Nickel. The community has the funds on hand to cover it, Mr. Archibald said.
Canada Nickel is waiting to obtain permits to start building Crawford. Eventually, the company will need to raise almost US$2-billion for construction, with first production targeted for late 2027.