• Western Areas posts record monthly revenue as nickel prices soar
  • Mincor ready for start of Kambalda nickel production in May after rejigging BHP supply deal
  • Jervois Mining lays out plan to revive nickel-cobalt refinery in Brazil


Nickel made the star turn on the ASX today, with junior nickel plays capturing the limelight despite a 1% drop in the LME price to US$32,977/t overnight.

That is understandable given that at those levels companies mining the battery metal are making a tonne of cash, as highlighted by Western Areas’ (ASX:WSA) quarterly today, probably its final one before an imminent takeover by IGO (ASX:IGO).

Western Areas is going out on a high, hitting record monthly revenue of $52 million in March as operating cashflow for the March quarter rose on the prior period from $15.2m to $50.1m on a “robust nickel price environment”.

That came despite maintenance at the Cosmic Boy mill at its Forrestania nickel mine and a decision to develop lower grade zones suddenly made economic by the flying nickel price took production, which pushed down production from 4200t to 3254t.

The nickel price hit US$100,000/t briefly on an epic short squeeze in March which was quickly nixed by the London Metals Exchange.

But prices remain unbelievably buoyant. Western Areas enjoyed a roughly one third rise in realised prices from $13.16/lb in the December quarter to $18.44/lb in March against cash costs of $5.52/lb, a pretty insane margin given the historically fraught profitability of nickel companies.

Western Areas, which has $151.8m in the bank, no debt and spent $38.3m on capex mainly on the new long life Odysseus mine in WA, was able to barter the value of the IGO cash takeover up from $3.36/share to $3.87 after nickel prices rose 70% YTD, squeezing the value out of IGO’s original offer.

WSA has now registered the scheme booklet with ASIC, with the meeting to vote on the scheme to take place on June 1.

The International Nickel Study Group this week went against general analyst expectations, saying the nickel market would swing from a big deficit to a 73,000t surplus in 2022, but Western Areas says short term issues around Russia’s share of the nickel sulphide and long term demand from the growth of electric vehicles paints a picture of both short term and long term supply issues.

“We are continuing to build on the positive momentum in the development of Odysseus, de-risking the construction schedule further during the quarter, and we have received an excellent response from potential offtake partners for Odysseus’ initial production in an evolving and positive nickel price environment,” WSA MD Dan Lougher said.

“Further upside at our emerging operations is on the horizon, with the AM6 Feasibility Study reaching a very advanced stage during the quarter. The strengthening nickel market conditions enabled us to deliver enhanced operating cash flow from Forrestania, with a record revenue result achieved in March.”

Western Areas (ASX:WSA) share price today:



Mincor sets start date for Kambalda production

Mincor (ASX:MCR) shares rose 5.4% this morning after it locked in first production from its Kambalda nickel mines, with concentrate due from its deal with BHP’s (ASX:BHP) Nickel West division in May.

Cashflow is due in June 2022 and comes at a fortuitous time, with the $46,000/t Aussie dollar value of nickel more than double the $22,500/t factored into Mincor’s definitive feasibility study.

It will be the first production from nickel ore out of the historic 55 year old Kambalda concentrator since 2018, when the Long nickel mine was placed on care and maintenance.

Mincor has rolled a number of improved terms in its offtake deal with BHP as well, with ore deliveries to be converted to concentrate production, with a grade recovery curve to be fixed for the first three months of production.

“I would like to acknowledge BHP Nickel West for their unwavering commitment to assist Mincor in re-joining the ranks of Australian nickel producers. The recent amendments to the OTCPA agreed with BHP represent an elegant and sensible solution for the measurement of nickel concentrate within the Kambalda processing plant,” Mincor MD David Southam said.

“Mincor’s ore deliveries to the end of May 2022 will be converted into an Imputed Nickel in Concentrate, using a grade-recovery curve, thereby meeting our commitment to shareholders of delivering first production in the June 2022 Quarter. Importantly, this will result in cash-flow from first concentrate sales in June 2022.”

Mincor is set to ramp up the production of its nickel, along with copper and cobalt by-products, through its commissioning to the end of the September quarter, when it will release FY23 guidance.

RBC mining analyst Paul Wiggers de Vries, who has an outperform rating and $2.75 price target on Mincor stock, said the terms removed ramp up risks associated with the restart.

“A positive outcome for Mincor, as the modified deal removes some of the startup and delay risks from the Kambalda concentrator while also ensuring cash flow for the company in FY22,” he said in a client note.

“We marked the start of production and cash flow as one of the key catalysts for Mincor, and we believe that this announcement will act as such.”

Mincor Resources (ASX:MCR) share price today:


Jervois plots revival of Brazilian nickel plant

Cobalt and nickel play Jervois Mining (ASX:JRV) says it will cost just US$55 million to refurbish the Sao Miguel Paulista nickel and cobalt refinery in Sao Paolo, Brazil.

The refinery will produce 10,000tpa of refined nickel and 2000tpa of cobalt metal cathode from mixed nickel-cobalt hydroxide, with a post tax NPV of US$141m and 35% post tax IRR.

The newly minted ASX 300 firm says at prices of US$8/lb nickel (around 60% of current levels) and US$25/lb cobalt the project will generate US$30m in EBITDA after ramp up with a potential expansion to its full 25,000tpa on the cards beyond that.

The BFS for the second stage is due in the second half of 2022, with commercial production from a stage 1 restart anticipated in 2023.

Sao Miguel Paulista previously operating for over 30 years but was placed on care and maintenance when nickel prices bottomed out in 2016.

Jervois also boasted record quarterly revenue of US$105.1m from its Finland business, up 9% on the prior quarter with EBITDA of US$14.9m a four-fold increase on the December quarter haul after a rise in cobalt prices.

They have charged from US$20.7/lb in the June quarter last year to US$35.7/lb in the March quarter.

Jervois has left EBITDA guidance unchanged at US$50-55m for 2022, with sales volumes of 5750-6000t cobalt at a Q2-4 price of US$39.75/lb.

Jervois Mining (ASX:JRV) share price today: