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Mining
The fear of missing out has sparked an industry wide shift to investing upstream in the mining sector with raw materials and future facing commodities the largest cost driver for a battery.
For the most part, this trend has played out in the lithium space, where EVS will be responsible for more than 80% of global demand by 2030, but we are starting to see more and more deals come to the fore in the nickel sector as well.
The most recent of these is the deal entered into by carmaker Stellantis and Australian nickel play Alliance Nickel, for the supply of battery grade nickel and cobalt sulphate from the NiWest project in Western Australia.
Stellantis CEO Carlos Tavares said the partnership with Alliance Nickel was an important element of the group’s plans, which “are built on the foundation of a guaranteed supply of key materials” for the automakers battery electric vehicles.
Ford, the world’s fourth largest automaker in 2022, recently joined Brazilian mining giant Vale and China’s Zhejiang Huayou Cobalt in backing a nickel processing plant in Indonesia to advance nickel production in the country and help make EVs more affordable.
And Chalice Mining (ASX:CHN) is rumoured to be in discussions with automakers interested in striking a minority stake in the company as it develops its Julimar nickel discovery in Western Australia.
While the heat has come off nickel prices in 2023, exploration figures from S&P Global show global expenditure reached its highest level since 2012 last year (US$612m) with drill holes returning some of the best results the market has seen in a long time.
The real pickle for the sector that’s nickel revolves around issues stemming from the same environmental, social and governance concerns that have made renewables so popular in the first place.
Indonesia remains the world’s largest nickel miner despite President Joko Widodo slamming the gates on raw ore exports.
However, opportunities in the nickel space continue to grow and here are the ASX nickel stocks that could pick up a piece of the pie.
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Alliance Nickel signed an agreement with Stellantis, one of the world’s largest carmakers, at the beginning of May for the supply of nickel and cobalt sulphate from its NiWest project in Western Australia.
Stellantis is the producer of the Peugeot, Chrysler, Alfa Romeo, Jeep, Dodge and Fiat car brands and more, explaining its eagerness to enter into a binding off-take agreement to take 40% of its nickel and cobalt sulphate producer over the first five years from NiWest.
The car manufacturer has spent $15 million building an 11.5% shareholding in Alliance which also gives it the right to nominate a director to the AXN board.
Located near Glencore’s Murrin Murrin nickel and cobalt mine in WA’s northern Goldfields, an update of the NiWest project PFS in July 2022 anticipated the mine would produce 456,000t of nickel in nickel sulphate and 31,400t of cobalt in cobalt sulphate over its 27-year life.
Annual production is expected to average 19,200t of nickel and 1400t of cobalt over its first 15 years, making the mine one of the largest in both EV metals in Australia.
Poseidon Nickel is pressing ahead to the restart of Black Swan, following the release of a 1.1Mtpa smelter grade concentrate feasibility study and a $6m equity raising to grow its nickel inventory at the end of last year.
The funds raised have been spent towards converting more resources to reserves at Black Swan to expand the mine life, continue with pre-production works, order long lead items, complete the rougher concentrate feasibility study and undertake an extensive drilling program at Lake Johnston targeting Emily Ann style (+3% Ni) mineralisation.
POS managing director and CEO, Peter Harold, says the company is currently combining offtake and project financing with a shortlist of parties undertaking site visits, as required.
“We are planning to finalise the preferred partner/s early in the second quarter of 2023 and we remain on track to announce the Final Investment Decision for the restart during the second quarter.”
NickelSearch inched closer to becoming a nickel sulphide producer during the March quarter, following the reveal of an upgrade in indicated nickel sulphide resources at the Carlinup project to more than 40,00t.
The company is looking to revive the nickel sulphide mining industry on WA’s South Coast at Carlingup, which includes the historic and high grade RAV8, mined by Tectonic Resources in the mid-2000s nickel boom.
It’s resource estimate has been upgraded to 11.6Mt at 0.56% nickel, 0.05% copper and 0.01% cobalt, an inventory of 64,900t of nickel.
And of that, 8.3Mt at 0.52% Ni, 0.06% Cu and 0.01% Co for 42,300t of nickel metal is in the higher indicated category, which can be used to calculate economic mineable reserves at the right nickel price, coming off the back of successful infill drilling programs in 2022.
The global JORC resource at Carlingup is now around 155,000t of contained nickel metal.
Centaurus Metals’ Jaguar project is one of the largest undeveloped nickel sulphide projects, with a proposed output of 20,600t of nickel and 600t of cobalt annually over a 12-year mine life.
There are two main types of nickel deposits, sulphide and laterite.
Sulphides, like those found at Jaguar, are the holy grail for explorers because they are easier and cheaper to process into battery quality nickel.
Located in the Carajas region in the Para State of North Brazil, Centaurus expects to complete a DFS for the 108Mt nickel sulphide development by the end of the year due to delays in completing test work and processing design for its refinery.
A FID has been pencilled in for Q3, 2024.
Meanwhile, the project continues to grow with a massive new step drilling program (seven rigs working double shifts) recently hitting a highlight 20.4m at 3.94% Ni from 612.7m, including 9.5m at 5.59% Ni.
The 938,500t of contained nickel at Jaguar could tip over the 1Bt mark with a new resource update due later this year.
Azure has embarked on an accelerated growth strategy to rapidly advance its multi-commodity opportunity at the Andover.
Although a major part of its focus has shifted towards assessing the lithium potential at the project, nickel still remains a primary driver at the site through exploration and development studies.
In February the company boosted the Andover resource by 28% to 97,300t with a maiden resource estimate (MRE) at the Ridgeline deposit delivering 1.3Mt at 1.11% nickel, 0.46% copper, and 0.05% cobalt for 14,700t of contained nickel, 6,100t of contained copper and 640t of contained cobalt.
The resource update marked a second mineral resource estimate for Andover in just over two years.
“Ridgeline is blind to surface, which increased the challenge of identifying and defining the mineralisation,” AZS managing director Tony Rovira said at the time.
“Given the technical understanding and knowledge that our team has built up through systematic exploration of the project area, I am confident that the team can deliver more discoveries.”
Blackstone own’s the large and low-grade Ta Khoa nickel project in Vietnam.
With a mining inventory of 64.5Mt at a grade of 0.41% nickel, a PFS last year anticipated producing an average of 18,000t of nickel in concentrate per year over a roughly 10-year mine life.
But Blackstone’s ambitions are broader, with the company aiming to head downstream and refine nickel-cobalt-manganese 811 battery precursor for battery producers.
At the end of the March quarter, the company had $16.43m cash in the bank as discussions continue with partners to reach a final JV structure and investment contribution.
At Stockhead, we tell it like it is. While Alliance Nickel, NickelSearch, and Azure Minerals are Stockhead clients, they did not sponsor this article.
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