Nickel prices are centre stage right now. Here are the ASX producers, and the near-term players
Link copied to
Nickel prices had already been rising steadily this year, hitting 11-year highs last month on low stockpiles and demand from the growing EV battery market. Nickel stocks held through the LME are at just 75,012t, the lowest level since 2019.
The idea that Russian nickel supply could be cut off amid its invasion of Ukraine, almost a fifth of the global refined nickel trade, has sent prices even higher since the start of the conflict.
Last week nickel prices reached $100,000 a tonne on the LME – double its previous all time high.
Analyst Gavin Wendt said the LME was in the grip of a massive squeeze, with substantial short positions being forced to cover at a time of low liquidity.
“Nickel is up $72,000 a tonne this week alone,” he said in a tweet.
For a quick snapshot of what a short squeeze is click here.
The madness led to the LME halting trading in its nickel market and exposed the world’s largest nickel player Tsingshan to potentially huge trading losses on short positions and hedges.
Regardless of whether $US100,000/t is short term exaggerated spike or not, prices are high and nickel producers are making bank right now. These are the companies directly exposed to high prices.
Last year Tesla signed a supply deal with BHP for offtake from its revived Nickel West business in WA.
At Nickel West, the company produced 39.8kt of nickel in the December quarter, down 15% on the same quarter last year due to planned maintenance the Kalgoorlie Smelter, Kwinana Refinery and the Leinster and Kambalda concentrators in the September 2021 quarter.
But BHP did achieve first saleable production of nickel sulphate crystals from the Kwinana plant – which it said was “an exciting new addition to our product suite that will further enhance our offering into the battery electric vehicle market.”
But ther company is looking beyond its comfort zone in Tier-1 (i.e. Western) jurisdictions like Canada and Australia to find and mine resources of the scale required to help fill the huge amount of demand going forward.
Having lost a bidding war over a pre-development nickel explorer in Canada to none other than Perth billionaire Andrew Forrest it’s already lowered its eyes on a proposed nickel sulphide mine in Tanzania.
In January, Kabanga Nickel announced a deal that will see BHP invest up to US$100 million over three tranches to claim a potential 15% stake in the company’s development of the same name.
Previously explored by mining giants Glencore and Barrick, who pumped more than 600,000m of drilling into Kabanga before relinquishing it in the downturn, the mine is regarded as the largest undeveloped nickel suphide resource in the world, containing 58Mt of ore at a grade of 2.62%, the equivalent of 1.86Mt of nickel metal.
The orebody is so large Kabanga compares its main, 1.2km deep orebody to four Eiffel Towers and has a potential mine life of over 30 years.
IGO has been a willing acquirer – and seller – of assets in the past couple of years.
That commitment to enhance and narrow its focus on so-called battery metals went a step further with the $1.1 billion acquisition of WA nickel compatriot Western Areas (ASX:WSA) last month.
But the company is facing a two-month delay for the purchase out til June – as it speaks to its independent expert KPMG about the medium and long-term implications for nickel prices from the recent volatility.
IGO have been unsuccessful in finding major new sources of nickel at its Nova nickel-copper mine since it opened five years ago and has just five years to run on current reserves – so the logic behind the deal was clear.
For the December quarter, the company produced 6,987 metric tonnes of nickel from Nova, with an average price of A$27,217/t – around 9% higher QoQ.
Western Areas’ Odysseus mine and broader Cosmos nickel complex in the northern Goldfields will be in operation for more than a decade at least.
In addition, IGO and Wyloo Metals entered into an agreement to evaluate opportunities for nickel downstream processing in Australia, and if its economically feasible IGO MD and CEO Peter Bradford reckons it will be a “great opportunity to progress Australia’s relevance in the battery metals supply chain.”
The $9.64 billion market cap company had A$569.8 million at 31 December 2021.
The emerging Indonesian nickel pig iron producer lost 30% of its value last week amid investor concerns about its ties with under fire Chinese nickel giant Tsingshan and Shanghai Decent, a subsidiary of Tsingshan, who own an 18.7% stake in NIC.
Shanghai Decent’s cookie-cutter model of building rotary kiln electric furnace nickel pig iron plants is the foundation of Nickel Mines’ expansion.
Tsingshan’s in-country team builds the plants which Nickel Mines then raises capital to take a majority stake in, selling Tsingshan the offtake and keeping it on as a minority partner.
Nickel Mines was in fantastic financial health before the squeeze, delivering a US$176.0M profit after tax in 2021 and issuing around $100 million in dividends to shareholders.
During the December quarter, the company said its Hengjaya mine produced 4,957 tonnes of nickel metal, at an average nickel pig iron (‘NPI’) grade of 12.7% and a production-weighted average cash cost of US$12,418/t.
And its Ranger mine produced 5,130 tonnes of nickel metal, at an average NPI grade of 12.9% and a production-weighted average cash cost of US$12,277/tonne.
Nickel Mines looking to more than double production over the next two years by opening the Angel and Oracle plants in 2022 and 2023 respectively. The company has a market cap of $3.14 billion and held US$137.9 million at 31 December 2021.
In FY21, the $5.3 billion Indonesian company’s unaudited nickel production was 11.01 million wet metric tonnes (wmt), which is a 131% increase on FY20 of 4.76 million wmt.
The December quarter accounted for 2.7 million wmt and was primarily used as ore feed for the company’s ferronickel plant as well as being sold to the domestic market.
ANTAM’s nickel ore deposits are generally not very deep, with the limonite nickel ore layer above the saprolite layer – making limonite mining cheaper and completed before saprolite.
The processed product currently produced is ferronickel, which contains about 80% iron and 20% nickel.
ANTAM’s ferronickel, which is differentiated as containing high or low carbon levels, is sold in the form of shots (pellets) to stainless steel producers.
The $615m market cap company sent its first shipment from its reopened Savannah mine in the Kimberley late last year and sent its second shipment in February this year.
The latest shipment contained a total of 9,409t of nickel-copper-cobalt concentrate worth around US$14.6M (A$20.5M).
A third shipment has been booked for early April, and MD Victor Rajasooriar said the current ore stockpile on surface at Savannah is approximately 30,000 tonnes, “providing us with ample plant feedstock and clear visibility on our next shipment.”
The mine has a 12-year mine life with clear potential to further extend this through ongoing exploration – which just last week returned assays from the new zone drilling intersection at Savannah North, with results including 5.7m at 1.47% Ni, 0.63% Cu and 0.07% Co from 3.3m – with grades similar to the overall Savannah Mineral Resource.
THE NEAR-TERM PRODUCERS (ADVANCED STUDIES ONWARDS)
The near-term producer is aiming to restart its Kambalda nickel operations with first ore expected this quarter. This will support the reopening of BHP’s Kambalda concentrator in WA in the June quarter.
And just last month, the company delivered its maiden parcel of high-grade nickel ore to Nickel West.
Multiple ore drives are now online at the Northern Operations and development is nearing the top of the orebody at Cassini.
“With the current nickel price substantially above the assumed price used in our DFS, we are incredibly excited to be on the cusp of production once again in Kambalda,” MD David Southam said.
For context, that price was $22,500 Aussie per tonne.
The company has a market cap of $1 billion and at the end of the December quarter had cash at bank of $109.5 million.
Poseidon Nickel (ASX:POS)
The Forrest-backed $278m market cap company plans to bring its high grade Silver Swan mine and Black Swan processing plant back into production by March 2023.
The company is currently advancing the bankable feasibility study – which includes evaluating offtake options.
And the project is one of the few nickel mines in the rich Kalgoorlie-Kambalda region not currently contracted to sell concentrate or ore to BHP’s Nickel West business.
MD Peter Harold, who previously ran Panoramic during the last nickel boom in 2007, said last month that options include traditional nickel smelters, existing leaching plants and proposed plants – like Pure Battery Technologies Limited’s Kalgoorlie pCAM hub who the company signed an MoU with last year.
Recently preliminary leach testwork by PBT has achieved >90% extraction of nickel and >95% extraction of cobalt.
The company also owns the Windarra, and the Lake Johnston Nickel Projects, which along with Black Swan, have a resource base of around 400,000 tonnes of nickel and 180,000 ounces of gold.
As at 31 December Poseidon held $21.9 million cash.
The $33.8 million company wrapped up early works at the Kolosori Nickel Project on Isabel Island in the Solomons this month, where samples from test pit work are in the process of being dispatched for assaying.
The company says a geotechnical report has also been completed and is now being assessed in preparation for the definitive feasibility study and the construction design of the wharf area – a critical element for the development of the project.
Kolosori is currently envisioned as a direct shipping ore (DSO) project, with its easily accessible resource of 5.89 million tonnes grading 1.55% nickel which requires no processing in a DSO model.
It is currently expected to produce 93,450t of contained nickel grading 1.5% nickel, with the option to mine higher grades of more than 1.6% nickel early in the mine schedule.
The company also recently completed a marketing study which showed that the DSO compares very favourably against the Philippines ‘standard’ DSO.
Typical grades of Philippines saprolite ore is in sharp decline, with average grades of 1.68% in 2018 reducing to 1.44% Ni in 2020 and 1.35% in 2021.
Plus, PNM says it met with prospective financiers, is finalising the DFS and is on track to progress regulatory approvals – and expects to receive a mining lease for this quarter.
In January the company received conditional finance support for up to $400 million of debt funding for its Sunrise Battery Materials Complex in New South Wales from Export Finance Australia.
The project could be one of the world’s largest integrated producers of battery-grade nickel and cobalt sulphate, supporting the production of up to 25 kilotonnes per annum (ktpa) of nickel and 7ktpa of cobalt, suitable for precursor feedstocks.
And it’s already nabbed Commonwealth Government Major Project Status, with the expected average annual metal-equivalent production of 21.3kt of nickel and 4.4kt of cobalt over the first decade of a 50-year resource life.
A DFS was completed in 2018 and updated as part of a Project Execution plan in 2020 – which revised cost estimates, updated design and engineering work and revised the master schedule for the engineering, procurement, construction, commissioning and ramp-up of the project.
Modifications were approved by the NSW State Government in January and the $194.5 million market cap company had $29.3 million cash at bank at 31 December 2021.
The company is working on the DFS for its Townsville Energy Chemicals Hub in North Queensland for mid-year, with production slated for 2024.
According to an updated PFS last year the TECH project would deliver $261 million in EBITDA at a base case, with a post-tax NPV of $1.47 billion and IRR of 30.7%.
Notably, QPM has deals with some global majors, with LG and POSCO having invested US$15 million with a binding offtake agreement from LG for 7000tpa of nickel and 700tpa of cobalt, and with POSCO for 3000tpa of nickel and 300tpa of cobalt.
And earlier this the company nabbed a five-year binding ore supply agreement with Societe Le Nickel, a subsidiary of Eramet group, for up to 1 million wmt per annum.
The TECH project will use an alternative to high pressure acid leach processing called the DNi Process, which QPM says will extract metals from nickel laterite ores (to be imported from New Caledonia) at a lower capital cost and with better environmental outcomes.
The $223 million market cap company had cash at the end of December quarter of $47.1 million.
The company completed a PFS for its Ta Khoa Nickel in Vietnam last month which will deliver a mining inventory of 64.5Mt at a grade of 0.41% nickel for 264,000t Nickel.
Its life of mine concentrate production is 1.9Mt at 8% nickel for 151,000t nickel – a 39% increase in nickel concentrate production compared to the scoping study base case.
BSX says the project has the potential to “transform Vietnam’s role in the movement towards electrification of transportation” and will generate “significant socio-economic benefits”.
The economics of the Ta Khoa Project are underpinned by ~50% concentrate feed for the TKR being provided by the TKNP – with first concentrate production set for 2025 before ramping up to nameplate design of 8Mtpa in 2027.
The company had a cash balance of $60m at end of the December quarter and has a market cap of $211m.
Last week the company nabbed two Groundwater Licences for the annual extraction of 3.5Gl of water resources within its Goongarrie Hub mining leases from the Department of Water and Environmental Regulation.
This will allow Ardea to abstract saline water for processing and mine dewatering within its Kalgoorlie Nickel Project in the Goongarrie Hub.
The project contains a massive 830Mt at 0.71% nickel and 0.046% cobalt for 5.9Mt of contained nickel and 380kt of contained cobalt.
A feasibility study is underway at the project, however due to laboratory delays the company says its unlikely the DFS will be completed in the December 2022 quarter.
The $139m market cap stock had $6.2m in the bank at the end of December.
The $79m market cap company’s Sconi’ nickel-cobalt project in QLD, when fully developed, will be one of the lowest cost battery materials producers in the world with a project life of more than 30 years.
The company is targeting a final investment decision by the end of the current financial year – and it’s a Condition Precedent of its offtake deal with LGES that it must secure financing for construction of the project on or before 30 June 2022.
AUZ signed a 6yr deal last year where LGES will buy 71,000 dry metric tonnes of nickel and 7,000 dry metric tonnes of cobalt as mixed hydroxide precipitate (MHP).
This is enough nickel and cobalt to power 1.3 million high-performance EVs, LGES says.
And during the December quarter, AUZ commissioned its pilot precursor cathode active material (P-CAM) production plant in Perth which is a fully integrated extension to the company’s high pressure acid leach (HPAL) plant.
The idea is to allow potential offtake partners to assess the fully integrated P-CAM production circuit, at a single facility, for laterite-hosted feedstock sourced from the Sconi and Flemington Projects.
The near-term producer recently clocked nickel sulphides in the latest drilling at Saints Nickel Project in Western Australia, with assays of up to 6.92m at 2.42% nickel, 0.17% copper, and 0.63 g/t PGE returned on top of samples grading as high as 8.8% nickel.
Auroch says the program is well on the way to upgrading and extending the current Saints Nickel Project mineral resource of 1.02Mt at 2.0% nickel for 21,400t of contained nickel.
And 10 drill holes for 2,667m have been completed, including three holes for composite samples required for the Saints scoping study metallurgical test work – as the company looks to leverage record nickel prices of US$100,000t through near term development.
The $41.5m market cap stock had $9 cash at 31 December 2021.