Recording date: 16th July 2024
It has been a big couple of weeks on the nickel market front.
Nickel prices gave up 5% last week driven by the news flow - have seen inventories climb another few thousand tonnes (as expected). Sulphate prices in China have held steady, while stainless has gone a little soft.
The big news since we last talked is BHP's announcement that it will close all of its Western Australian operations later this year until at least 2027. We’ve talked at length in the past about how their February market statement was completely off-base. This has impacted a number of operations that depended on the BHP mill to process their ore - expect another mill to emerge to process ore in the region.
This closure is much more an indictment of Western Australia's cost structure than the nickel market. Nickel prices today still above $16,500 (or $7.50 a pound) - if we can’t generate cash at these levels (we used $7.75 for LT nickel price in 2019 for Dumont project (and we’re comfortable given change in underlying costs structures then the $21,000 we used for Crawford for 40 years starting in 2027), then you have some real operational issues (more of a result of WA labour & energy costs, and lack of investment in new mine production!)
IGO and Wyloo also shelved plans to build a $1 billion precursor plant in Western Australia. In my view, it is stupid for mining companies to look at something like precursors, which are continually evolving products that require specialized refining and technical know-how. Just make the best, cheapest product that battery and alloy consumers can use.
This follows on the heels of Vale Base Metals’ strategy announcement two weeks ago, which effectively just had mines attempting to ramp back up to recent levels with really no new projects and no real North American growth - other than some vague 2030+ potential projects.
Why is this good news for Canada Nickel and other new nickel projects?
Companies need IRA-compliant nickel-hundreds of thousands of tonnes-just add up the battery plants under construction. Companies want to source nickel that’s not Indo-Chinese “blood nickel.” They just lost another big chunk of clean, safe supply, and one of the other major producers isn’t going to expand production anytime soon.
Now for a few market facts that may counter the oversupply narratives ….
INSG just put out their July report (which is YTD May) - The market was in a small DEFICIT over the last 3 months, YTD 2024 demand is up 8% (less than my forecast, but still 7 months to go), but because refined production only up 6% and mine production less than 3%, the market has been in deficit. Indonesia has limited ore supply growth either by managing quotas or lack of higher grade supply (still importing from the Philippines)
On the EV Front:
Plug-in car registrations for May (YOY change): up 23%, BEVs up 17%, hybrids up 37%. US/Canada up 18%. YTD May up 25% - thought this was collapsing ?!?!?
Company News:
Canada Nickel announced a 6-month bridge facility with Auramet - done 3 times previously, all too significant events - the last one was to Samsung SDI financing. Also announced the creation of ExploreCo taking the existing 80/20 Mann JV with Noble and spinning our Eastern properties into a new subsidiary 80/20 with Noble Minerals, in which we received remaining surface rights and other patents/claims around Crawford, making it easier to begin construction.
Chalice announced an MOU that sets out a framework for ongoing collaboration and assistance between Chalice and Mitsubishi concerning the development of the Project. The aim is to explore the possibility of further joint engagement with Chalice, including a potential binding partnership following the completion of the Gonneville Pre-Feasibility Study, which is expected to be completed by mid-CY25.
Centaurus announced good feasibility study results - NPV of $US 700 million, IRR 31% on $US 370 million initial capital and $US 600 million LOM capital.
Good results from Sudbury - Magna and SPC Nickel
SPC Nickel doing near-surface infill drilling in in-pit areas with some excellent open-pit results.
Magna Metals also had some good infill results (within 200 metres of surface) from 109FW zone (mostly copper and PGM).
On the Financing Front
Talon Metals sold an additional 1.67% royalty to Triple Flag (one of leading royalty Cos) for $US 8 million.
Alaska Energy raised $3.3 million to advance their Nikolai project and made a number of Board changes.
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29 авг 2024
