Nickel stocks get a boost as Twiggy injects more cash in Poseidon

Nickel stocks got a boost on Friday with Andrew “Twiggy” Forrest’s injection of more cash into Poseidon Nickel.

The mining mogul’s investment firm, Squadron Resources, increased its stake in Poseidon (ASX:POS) – which has a market cap of around $53 million – to about 18 per cent, from over 12 per cent previously, by participating in a $5.8 million placement.

Squadron has also agreed to sub-underwrite a $68.8 million entitlement offer priced at 5c – a premium to Poseidon’s share price on Friday.

If no shareholders take up their entitlements, Squadron’s ownership of Poseidon will increase to 59.3 per cent.

The move comes just a week after Black Mountain Metals tabled a 6c-per-share offer – a nearly 54 per cent premium to Poseidon’s last closing price before the news was announced.

Over the past 12 months about half the 50 or so ASX stocks with nickel exposure have made gains of up to 469 per cent.

>> Scroll down for a list of six-month and 12-month returns on ASX stocks with exposure to nickel

But it’s been a different story over the past six months, with only a handful advancing.

The nickel price is down 15 per cent since June — though it’s still ahead by 50 per cent since May 2017:

Twiggy’s investment also follows close on the heels of an investment in another junior nickel explorer by one of the largest lithium-ion battery electrolyte manufacturers in China.

Xu Jinfu, the chairman and a major shareholder of Guangzhou Tinci Materials Technology, became a cornerstone investor in Cassini Resources (ASX:CZI).

Cassini raised $4.2 million under the placement, which also included other high net worth Asian investors.

The cash will be used for working capital for Cassini during the feasibility study stages on the West Musgrave nickel and copper project and to progress its exploration stage projects in Western Australia.

The studies for the West Musgrave project are being funded by partner OZ Minerals (ASX: OZL).

Poseidon, which wants to bring its Black Swan and Silver Swan mines back into production, is one of the gainers – advancing 92 per cent in the past year and over 14 per cent in the last six months.

Positive outlook

While the nickel price has slipped back from its high of $US15,745 per tonne in mid-June to $US13,135 per tonne, nickel producer Western Areas (ASX:WSA) says its view on the medium to long-term outlook “has never been more positive”.

“This view is supported by independent research but, more importantly, customer feedback and the increasing number of new customers expressing interest for nickel concentrate offtake and investment,” the company said in its FY18 results this week.

The world’s largest stainless-steel company, Tsingshan Group, is a key customer of Western Areas and it plans to substantially increase its high nickel content stainless steel capacity over the next few years on the back of robust, end-user demand, according to Western Areas.

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Demand for nickel in batteries is also on the rise as battery makers shift to a chemistry that requires more nickel and less cobalt.

China’s biggest lithium battery maker announced this week that it will increase its use of nickel from next year.

The $150 billion Contemporary Amperex Technology Ltd (CATL) plans to switch to a chemistry make-up of 80 per cent nickel, 10 per cent cobalt and 10 per cent manganese – also known as NCM811.

At the moment CATL produces batteries containing 50 per cent nickel, 20 per cent cobalt and 30 per cent manganese for electric car makers SAIC Motor Corp, Geely, BMW and Volkswagen.

BHP (ASX:BHP), which only just last year announced its foray into the battery metals market, is already selling about 60 per cent of its nickel to the battery sector.

And the major expects to be selling as much as 90 per cent by the end of next year, BHP Nickel West asset president Eduard Haegel said recently.

Australian Mines (ASX:AUZ) was the biggest mover over the past year, adding 469 per cent to its share price, which is trading at about 7.4c. But on a six-month basis shares actually dived 29.5 per cent.

In July, the company produced 40kg of battery-grade nickel sulphate and 4kg of battery-grade cobalt sulphate and shipped it to its Korean partner, SK Innovation.

It is the largest sample of battery-grade cobalt and nickel sulphate ever shipped from Australia, according to the company.

On a six-month basis, Admiralty Resources (ASX:ADY) led the charge with an 87.5 per cent jump to 1.5c. Over 12 months it also rose 87.5 per cent.

Admiralty is a diversified explorer with a cobalt and nickel project called “Pyke Hill” in Western Australia.

Here’s a list of ASX-listed stocks with exposure to nickel. (We include here stocks that are primarily nickel-focused as well as those with nickel side projects):

Scroll or swipe to reveal full table. Click headings to sort