After completing a high-level assessment of the facility's suitability to process material mined from its Crawford deposit, 40km to the north, Canada Nickel aims to complete a detailed study to assess the potential to upgrade concentrator capacity and for using existing Kidd infrastructure for milling and processing its nickel-cobalt and magnetite ores.

Should the study deliver a positive outcome for both parties, they will continue good-faith negotiations towards a binding agreement, according to Canada Nickel.

It expects to complete the detailed study by March. Ausenco Engineering Canada will act as the lead consultant for the study. Ausenco is also undertaking a preliminary economic assessment on Crawford.

Built in 1966 with several upgrades over the years, the Kidd concentrator currently processes ore to produce copper and zinc concentrates. The facility has a rated capacity of 12,500 tonnes per day and is connected to the national railway network via the Ontario Northland Railway.

Canada Nickel more than doubled Crawford resources in October to 657Mt at 0.26% for 1.7Mt nickel.

Canada Nickel shares (TSXV:CNC) last traded down about 5% in Toronto at C$2.18, which capitalises it at $174 million (US$136 million).