Nickel’s Bumpy Ride in 2023 Being Followed by Significant Rebound in 2024

%Nickel prices took a tumble in 2023, mirroring the global economic slowdown. However, a comeback is happening in 2024 that should capture investor attention for the long-term potential of this essential metal. We said this in January and nickel is up 16.5% so far on the year, although it remains down nearly 20% from a year ago, so upside abounds.

Nickel demand is expected to remain robust, driven by its use in stainless steel and, most importantly, rechargeable batteries that power %ElectricVehicles.

While stainless steel currently accounts for the lion's share of nickel consumption, battery demand is projected to surge in the coming decades, ultimately expected to account for 41% of all nickel usage by 2040. The International Energy Agency even sees a net-zero emissions scenario as achievable by 2050, further solidifying the need for more nickel.

But how many more EVs need to be sold? According to the results of thousands of computer simulations run by Chris Hoehne, a climate and transportation expert at the National Renewable Energy Laboratory in Golden, Colorado, 80 percent of all vehicles sold in the next ten years need to be zero emission in order to meet 2050 targets to curb warming.

This is exactly why a concerted effort needs to start today.

The current supply of nickel may not be enough to meet this growing demand. With this in mind, exploration efforts, particularly in North America, become increasingly important. Canada, for example, boasts significant nickel reserves and is poised for a national comeback as it turns around years of declining production.

From 2014-2016, Canada’s nickel production was holding steady around 235,000 metric tons per year. In 2018, production dropped to 176,000 metric tons, the lowest level since 2010, and further slid to just 134,000 metric tons in 2021. A post-COVID rebound is happening (180,000 metric tons estimated for 2023), with plenty more room to grow production for the nickel-rich country.

Fathom Nickel: A Trans-Hudson Corridor Juggernaut

%FathomNickel Inc. (CNSX:$FNI.CN) (OTC:$FNICF) is a Canadian exploration company actively targeting magmatic nickel sulfide discoveries in Saskatchewan's prolific Trans-Hudson Corridor. This corridor is renowned for harboring various critical and precious metals, including nickel, copper, and cobalt. At the same time, the Trans-Hudson, which is home to the famous Homestake Gold Mine in the northern U.S., SSR Mining’s (NASDAQ:SSRM) (TSX:$SSRM.TO) Seabee Gold Mine in Saskatchewan, and Hudbay’s (NYSE:HBM) (TSX:$HBM.TO) Snow Lake along with Alamos Gold’s (NYSE:AGI) (TSX:$AGI.TO) MacLellan Gold Mines in Manitoba, remains widely recognized as significantly underexplored.

Canada is recognized for world-class gold discoveries, including the Abitibi in Ontario and Quebec, the Red Lake District in Ontario, and the Golden Triangle in British Columbia. The sheer scale – stretching from South Dakota in the U.S. to James Bay in Canada – and the already known resources position the Trans-Hudson Corridor with undeniable potential to be Canada’s next high-grade metal district.

Fathom holds two promising exploration projects in the heart of the Trans-Hudson Corridor, Albert Lake (90,000+ hectares) and Gochager Lake (22,000+ hectares). The projects are in close proximity to Foran Mining’s (TSX:FOM.TO) (OTC:FMCXF) McIlvenna Bay deposit, the largest undeveloped VHMS (volcanic-hosted massive sulfide) deposit along the prolific Flin Flon Greenstone Belt (Snow Lake, Seabee, all part of Trans-Hudson Corridor).

Magmatic nickel sulfide (MNS) and VHMS are well known to contain other valuable metals. They are formed differently and found in different types of geological settings (e.g., molten rock vs. underwater volcanic vents rich in sulfur) and have another important differentiating feature: associated metals. For instance, MNS deposits contain copper, cobalt, and platinum group elements (PGEs) like palladium and platinum, alongside nickel.

Recent drilling programs at both %AlbertLake and %GochagerLake yielded positive results for Fathom, with intercepts showing high-grade nickel mineralization and the appropriate associated metals indicative of a MNS deposit. Additionally, Fathom completed geophysical surveys at both locations, further pinpointing areas with strong potential that will be subject to additional exploration and drilling this summer-fall.

Why Gochager Lake is Particularly Interesting

Extensive assays from Gochager Lake confirmed the presence of nickel-copper-cobalt mineralization. Interestingly, cobalt was mostly overlooked historically as it didn’t have the industrial value it does today, particularly as a critical element to rechargeable batteries for EVs where ethical cobalt supply is in high demand.

The data to date aligns with a historic, non-compliant resource estimate for the area, suggesting significant potential for further exploration and development. Historic drilling (1966-1970) defined the Gochager Lake deposit with indicated reserves of 4,262,400 tons grading 0.295% Ni (nickel) and 0.081% Cu (copper) mineable by open pit, with a higher-grade core comprised of approximately 1.8Mt 0.74% NiEq (Ni+Cu). Fathom’s work has expanded this deposit in all directions and has been focused on increasing the grade of this historic deposit.

Moreover, BHEM (borehole electromagnetic) surveys, a technique adept at identifying conductive zones associated with nickel sulfide deposits, have revealed a plethora of untested target areas at Gochager.

The recently completed drill program (~2,000 meters) at Gochager Lake was designed to test continuity of mineralization outside the known boundaries of the historic deposit – both at depth and along strike. It has done just that.

The first four drillholes of the campaign all intersected significant mineralization and semi-massive mineralization has been confirmed to depths of 423 meters (drillhole depth), the deepest known mineralization to date at Gochager Lake.

Drilling was completed in mid-April, with results announced on May 28^th, 2024 showing continued intersects of high-grade mineralization and expansion of the historic Gochager lake deposit in all directions.

Positive Signs for Fathom

Fathom's early repayment of an earn-in agreement for Gochager is a positive sign. This move suggests confidence in the project's future, further bolstered by the original vendor's request for additional company shares in lieu of a portion of the cash payment.

Albert Lake: Following in the Footsteps of a Past Producer

The massive Albert Lake project is undergirded by the historic Rottenstone Mine which produced 26,000 tonnes at 3.28% Ni,1.83% Cu, 9.63 g/t Pd-Pt+Au (3E) during 1965-1969. It cannot be overstated that the production was essentially cherry-picking the easy to grab metal without delving into what even the Rottenstone area truly hosts.

Fathom's extensive drilling program at Albert Lake has yielded positive results, extended known mineralization zones and uncovered new areas with high nickel-copper-cobalt 3E potential, including a new nickel-copper-cobalt PGE discovery in the Bay-Island trend spanning over 300 meters along strike. Drilling here in 2022 was highlighted by a cut of 0.62% Ni, 0.29% Cu, 0.63 g/t 3E across 13.27 meters.

A new discovery made in February 2024; drillhole AL24077, intersected 0.42% Ni over 2.01 meters in an ultramafic rock containing minimal sulphide, suggesting high nickel tenor in this intercept. The geological characteristics of this discovery and the Bay Island Trend bear resemblance to the historic Rottenstone mine located within the project area. In geologist-speak, this is best explained by the fact that nickel mineralization is hosted in orthopyroxenite. Orthopyroxenite is part of the host rock assemblage recognized at the historic, and very high-grade Ni-Cu+PGE Rottenstone deposit located approximately 1.2 kilometers to the northeast of drill hole AL24077. This drill hole was part of a 6-hole, 1,386-meter drill program completed in January-February.

The company has now drilled 66 holes totaling 12,100 meters at Albert Lake since Fathom came public in 2021. Albert Lake results were released in April.

Investment Opportunity

In laymen terms, Fathom is proving that the Rottenstone deposit at Albert Lake is not an isolated system; it appears to be part of a significant MNS system that could be a company maker for Fathom. A similar opportunity is at Gochager Lake, where new data complements historic data, as Fathom accelerates work with the drill bit to further validate the mineralization.

While the broader market has cooled momentarily, Fathom's share price presents a potential opportunity for nimble investors. The company's ongoing exploration success strengthens its position in the race to meet the growing demand for nickel, particularly in the context of the North American push for critical mineral independence.

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