This minnow saw off challenges from Japan and China to get a mine off the ground
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With control of the one of the only large remaining laterite nickel deposits globally, Axiom Mining is the minnow that has seen off challenges from both Japan and China, as the big nickel users globally sought to squeeze it out.
Now its challenge is to deliver, with Axiom (ASX:AVQ) due to finalise offtake and funding deals by the end of the year as it advances plans to bring its deposits in the Solomon Islands into production.
The seemingly endless delays came in the form of a legal challenge from the Sumitomo group of Japan and, more recently, aggressive behind the scenes manoeuvring by some Chinese players to push the government of the Pacific islands nation to gazump Axiom’s hold over its deposits. But finally, approvals have been received.
In October, Axiom passed the hat around for a quick $2.5 million raising at 10c, which had attached options exercisable at 20c, signalling investor optimism for the outlook for the shares.
Lithium may have won the publicity battle in the hype over lithium ion batteries, but as well-known American mining investor Robert Friedland, who is backing the nickel-cobalt Sunrise project being developed in NSW by Clean-Teq, put it during a visit to Australia earlier this month, the batteries are misnamed.
“When we tear apart one of these batteries in a Tesla, 80 per cent of the metal value in that battery on the cathode side is nickel sulphate, and about 15 per cent is cobalt sulphate,” he said. “Lithium is one of the commonest salts in the crust of the earth.
“Two or three large hard rock lithium mines in Australia can supply all of the world with the required lithium; what is rare is the nickel sulphate. These things are totally misnamed as lithium batteries, the value of lithium is trivial.”
The role of nickel has been highlighted by the shift of some battery producers to use more nickel, and less cobalt, as they work to offset the rise in cobalt prices. Nickel accounts for around 60 per cent of cathode materials at the moment, which some producers are seeking to raise to 80 per cent.
Global supplies of nickel have been hampered by the crackdown in the Philippines in early 2017, when the new government of President Rodrigo Duterte forced the closure of a number of mines due to environmental breaches. But last week, it moved to allow a number of nickel producers to reopen, which may complicate the near term outlook for nickel prices.
“The Philippine mines have caused their own problems,” says Axiom’s chief executive, Ryan Mount. “It may open more mines for export, but it is not a reliable source of ore.
“There is no suggestion the government of the Solomon Islands could shut us down, or limit where we export to.”
Since its ore lies close to the surface, Axiom will begin export shipments from the first quarter of 2019, targeted at 50,000-80,000 tonnes.
Grading 1.6 per cent nickel, the landed price for this grade of ore in China is around $US40 a tonne. Shipping costs around $US14 a tonne, and since the Axiom reserves lie both close to surface and only an average of 2-3 kilometres from the shore, its production costs are very low, leaving a handy profit margin.