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Agnico Eagle Mines (NYSE:AEM) announced a strategic investment of C$23.1 (US$17) million in Canada Nickel Company (TSXV:CNC).
The Toronto-based company acquired 19.6 million units for C$1.18 per unit.
The investment grants Agnico a 12% non-diluted equity interest in Canada Nickel, or 15.6% on a partially diluted basis. The total proceeds from the unit offering reached C$34.7 million. Each unit comprises one flow-through share and 0.35 of one flow-through share purchase warrant.
Canada Nickel Co. engages in nickel, cobalt and sulfide projects with a focus on low-risk, well-established markets. Its flagship project, the Crawford nickel sulfide deposit in Ontario, boasts the world’s second-largest nickel resources, totaling 2.46 billion tons at 0.24% nickel.
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Agnico sees this investment as an early-stage opportunity aligned with its two-year focus on evaluating critical minerals opportunities in the Abitibi region. The investment aims to establish a presence in the emerging nickel belt and monitor both the project's progress and relevant emerging technologies.
This move follows Anglo American’s (LSE: AAL) $C44.3 million investment in Canada Nickel last winter, highlighting the growing interest in the critical minerals sector. Agnico Eagle’s investment not only secures a minority stake but also provides the right to maintain its stake in future financings and nominate a board member.
The nickel market faced significant challenges in 2023. While iron ore and gold climbed to fresh highs, nickel stood out as the worst performer among the metals. On the London Metal Exchange, it lost 45%, posting the worst performance since 2008.
Global economic headwinds and uncertainties over China’s growth outlook have contributed to the downward pressure. ING reported that the top producer, Indonesia, caused the supply to grow while the demand remained stagnant.
The data indicates that the investors remain positioned against nickel, with net-short positions reaching six-month highs.
Image: Unsplash
