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Giga Metals shares surge ahead of Tesla ‘battery day’

The miner’s shares have been in the green since talks of the Tesla deal began to surface. Credit: Giga Metals Corp.

Giga Metals (TSXV: GIGA) shares surged for the second straight day this week as investors speculate on the potential talking points of Tesla’s much anticipated Battery Day event, among which is the possibility of a cobalt-free battery future dominated by cheaper metals such as nickel and manganese.

Giga Metals currently owns the Turnagain project in north-central British Columbia, one of the largest undeveloped sulphide nickel deposits in the world.

Earlier this month, Reuters reported that the miner was in discussions with Tesla about developing the Turnagain mine together, which would give the EV giant access to low-carbon nickel for its batteries. Sources at Reuters also mentioned potential deals with other automakers including BMW and Mercedes.

The plan for Giga Metals is to produce 40,000 tonnes of nickel and 2,000 tonnes of cobalt a year for 20 years

Although Giga Metals president Martin Vydra declined to comment about any potential deals with Tesla or other carmakers when asked by Reuters, he did say that the company is “actively engaged, and has been for some time, with automakers” regarding its ability to produce carbon-neutral nickel.

In July, Tesla CEO Elon Musk promised that “Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way.” A month earlier, to avoid a supply squeeze on its battery metal, his company had struck a deal to buy up to 6,000 tonnes of cobalt from Glencore, which sources the metal from the Democratic Republic of Congo.

Giga Metals’ low-carbon nickel plans include turning waste from its operations into cement-type rock using carbon dioxide in the atmosphere and using hydropower. “It is possible a mine at Turnagain could be carbon neutral or better,” the company said in its investor presentation.

The plan for Giga Metals is to produce 40,000 tonnes of nickel and 2,000 tonnes of cobalt a year for 20 years, the company said in an earlier press release.

“The continued growth in lithium-ion batteries relies on available nickel in the form of intermediates, powders or briquettes of which 2020 production is expected to total 477,000 tonnes according to Wood Mackenzie,” Giga Metals’ Vydra said.

He estimated that 400,000 tonnes of nickel would equate to approximately 8 million electric vehicles (EVs) utilizing 50 kg of nickel per EV. “That’s not too far in the future and when you consider that it takes anywhere from 5-10 years to bring a nickel operation into production,” Vydra added.

Shares of Giga Metals were up 12.3% by 12:30 p.m. EDT Tuesday, after rising as much as 16.8% earlier in the session. The company’s market capitalization is currently at C$64.3 million.

When rumors of the Tesla talks first broke on September 11, Giga Metals’ stock nearly tripled from C$0.58 to C$1.65 in one day with over 9.1 million shares exchanged during the session. That momentum carried over to the following week as it hit a 52-week high of C$2.44, before investors began selling off the stock on September 15.

Equity Guru reporter Chris Parry last week raised questions about the timing of some insider sales as well as exercise of options before and after the initial report of a potential Tesla deal. However, Reuters said it stands by its reporting.