Shares in Talon Metals (TSX: TLO) opened Tuesday’s session up nearly 41.7%, trading near a 52-week high, following an earlier announcement that the company has signed a nickel supply agreement with Tesla.
Under the agreement, Tesla has committed to purchase 75,000 tonnes of nickel in concentrate over a six-year period. A portion of the metals is projected to be produced from the Tamarack nickel project in Aitkin county, Minnesota, jointly owned by Talon and Rio Tinto.
Talon currently holds a 51% interest in the Tamarack project, comprising a large land position (18 km of strike length) with numerous high-grade intercepts outside the current resource area. The focus is to expand this nickel resource and develop a responsible processing capability in the US.
The Tesla supply agreement is conditional upon Talon earning an additional 9% interest in the Tamarack project (for a total of 60%) and moving the project towards commercial production.
Tesla also has a preferential right to negotiate for the purchase of additional nickel concentrate over and above the initial 75,000-tonne commitment.
By market close Tuesday, Talon’s stock erased some of its gains, but still traded up 16.6% at C$0.70 a share. The nickel miner has a market capitalization of approximately C$418 million.