Nickel......The new oil.First, just a few thoughts & notes on Elon's comments during Battery day. The most obvious and most pertinent for many here being the exclusion of Giga Metals NOT being mentioned. What did you expect really? The odds on this happening was practically nil, if one knows how Elon's mind works. This was a s/h meeting to discuss company events & developments not a place for possible negotiations, deal making or giving out/devulging sole source contracts. If anyone knows anything about Tesla or Elon, this is not how they operate. For an insight on this, one just has to look at the Maxell acquisition or the Glencore cobalt contract, there's enough there to give you a GOOD idea on what's possible with this team. I know some folks were disappointed or let down but people need to be informed & realistic when it comes to expectations. So what's the bright spot here concerning Giga? So, even though Giga was not mentioned by name directly, Elon did make a few interesting (and expected!) statements that might include companies like GigaM is a much greater plan some time in the next few years. If you were listening or watching attentively, not only did they carefull tread on this subject of possible company sourcing/links but they clearly laid out the path they will travel. It was evident from their comments & postures that this is a delicate topic, almost like walking on egg shells, which could have great consquences for several industies and could make or break companies. So their words were CAREFULLY chosen.
A few other critical points made which were of importance was concering vertical intergration. It's been some time now that they've been hinting at incorporating several processes into their operation, one of them being making their own batteries. It's evident from the presentation yesterday that's where their heading and it's also one of their main choke points preventing the company from growing & expanding. So i fully expect for them to start exploring this idea soon and maybe have some sort of operation up & running in the next 2 years. And this is where someone like GigaM comes in. As i DONT expect for Elon or Tesla to go as far as to vertically intergrate a mining outfit into their massive company, i DO EXPECT them to start slowly securing raw material between now and the next 24 months for that battery factory. As it was done with Glencore & their cobalt supllies. Once all the pieces come together, it's at this point that mining giants like Glencore, Bhp , Vale, Tech & a few others will start their predatory stalking of potential targets. And let me tell you that when it starts it will be a feeding frenzy because there ARENT that many large operations in a sufficiently advanced state or relatively economic near Tesla ops. Remember these words as they will be crucial going forward " Ethically sourced, sustainable mining which is efficient & environmentally friendly".
Secondly, Battery day, Elon's comments and his/Tesla's plan going forward and their impact Nickel pricing. Well, if folks were listening, you would have noticed that they intend to "slightly" adjust their battery composition and thereby not only phasing out cobalt completelt BUT also increasing nickel content quite substantially. Straight from the horses mouth folks, you CANNOT misinterpret what was said. I cannot stress enough how much of an impact this will have on Nickel supplies/demand and prices in the next 5 years. Not only is there a delicate supply/demand issue RIGHT NOW, carefully kept in balance by scrap & PigIron stock but there will be a great pressure exerted on this balance when the slow (for now!) transition beings from ICE to battery from the masses. The Ev market is only a small fraction of nickel demand for now as industrial stainles steel production takes up much of the supply, BUT as the EV boom comes and grows, there won't be enough supplies for the demand and this WILL force prices up. Some might say this isnt possible because Ev's, especially Teslas are just too expensive! Yes, they are. But so were computers in the 80's & 90's, now everyone has one. Diddo with cell phones. As the technology becomes affordable, so does it's ease of acceptance & intergration within the population. Many just cannot afford a $60k Tesla or ~$40k for the other car makers, along with the fact that the neccessary infrastucture isn't there (Yet!) and it's an issue with most. But mark my words, once a $25k base model comes out, as Tesla stated they would do soon, many car makers will soon follow & match Tesla on pricing and the rest will just come along by itself. Imo, i would be VERY surprised if Tesla doesn't announce this by end of 2021 or the latest eafrlt 2022.
Last words, what happens with GigaM now & next steps? As the hype & attention moves away from this Telsa union, the company will begin to focus on elements to bring the mine closer to production. One of the first steps to be taken is the Pfs & Eas. In order to do this they needs money, so we have to be realistic here. Managment were savvy enough to exercise their options and fill up the company coffers with about $4M with out doing a PP and dilute too heavily. So this money though not sufficient to get those studies done is enough for another round of infill holes and delinate the property further including paying some of the overhead costs. But this unfortunately will not last long and they WILL need to get these studies done in order to move the project along. So if they are not able to entice or convince a major to take a partial interest in the company to pay the upfront costs for those studies then there will be no either choice but to do a PP. Which isn't neccessarily a bad thing but when you options are limited better this than nothing at all, at least with some financing the project will move along. Therefore, WHERE the company decides to go in the next few months is not certain but i do know they rather give a % of the interest in the asset away than to dilute share capital. As for the share price, with the attention & volume dying down in the next few week along with the lack of any developements or news, this should settle down in to a tight range around .75-$1.25. It will probably trade in this narrow range until the company updates on it's intentions and/or how to deal with the financing issues around the asset. As GigaM would require a nickel pricing of about $9/lbs for the project to become feasible/economic, any moves in that direction would greatly add to the momentum in the share price. Though i would greatly like for Vale or Glencore to swoop in and take an interest right away or buyout the company entirely, i doubt anything happens until or at least the ESA is done to get the go ahead from federal authorities. Especially when considering the 1.5B capex required to get the mine to production, no small sum or feat for sure.
So the choice is yours folks, i've tabled pretty much the situation here, so depending on your goals, the choice should be fairly easy. It is still my personal belief that this nicekl mine is STILL the premier project for anyone wanting exposure to nickel, if your willing to take on SOME risk. If you want to play it safe, then this isnt for you and maybe a smaller investment in a larger more mature company or a conglomorate would be better choice. In any case, the reward will be relative to the risk taken. Smaller risks always equals a smaller reward, but a big risk taken would always most certainly entail a very nice reward if it pays off..... for sure.
Good luck to all