Batterymetals wrote: Hello all, please disregard an earlier version of this post, which had all sorts of formatting issues for some reason.
I am a new (small) investor in this company. I think it has exciting prospects. I'd like to discuss some of the underlying fundamentals of the market and of the company, to check my reasoning.
Can anyone run their eyes over the following and tell me if I am missing anything or getting anything wrong:
1. Global nickel market is about 2 million tonnes per year; [2,4 million as of now, see page 7 of Giga's corporate presentation]
2. 2 million tonnes = 2 billion KG;
3. About half of this, 1 billion KG, is nickel pig iron (NPI) unsuitable for batteries; [NPI can actually be turned into class 1 but it is more expensive, financially risky and environmentally hazardous]
4. About 1 billion KG is class 1 nickel suitable for batteries;
5. Each EV contains approx 50kg of nickel; [I think this is nickel sulphate. Right now I believe it is only about 20 kilos but the average amount will increase a lot in the coming years as higher nickel chemistries such as NMC811 becomes standard. Source: https://www.reuters.com/article/us-nickel-batteries-electric-graphic/new-projects-for-battery-material-nickel-need-a-price-spur-idUSKCN1VH18Z ]
6. 1 billion KG / 50kg = 20 million cars needed per year to be electric to exhaust current class 1 nickel supply;
7. Current global car market is about 80m cars, but falling; [Slightly less than 80, but I don't think that includes all types of vehicles. And as this is only vehicles, the energy storage market is not included at all in these numbers. Source: https://www.statista.com/topics/1487/automotive-industry/ ]
8. EV penetration would need to get to 25% of annual sales to exhaust current class 1 nickel supply [remember that the stainless steel market and other areas, special alloys etc, also use a huge amount of class 1 nickel. This market can not just switch to use only NPI/ferronickel. So it will be a tug of war for higher purity nickel between the rapidly growing battery market and other existing applications]
Do these numbers sound right?
Another thing I wanted to ask you Canadians about (I am Australian):
1. How easy or not easy is it to build a mine in this region of Canada (politically, geographically, approvals, indigenous people. I have heard the CEO talk about this in interviews but any thoughts appreciated). [I am european, so others can give better answer to this question.]
2. How easy or not easy will it be to get the product out, what is the most viable way (I have heard CEO in interviews say pop it in some trucks and truck it out via the highway, once a purpose built road is made. Does this sound right?) [This is the plan yes. According to the company, access road building will be fairly easy in this type of terrain. Also, there is potential to split the road cost with other players since at least one other company (Kutcho Copper) will need to use the same road.]
3. Where does it go from there? Where is a sea port for shipment to China. Alternatively, how hard is it to get the product to Tesla Nevada Gigafactory? Is there any reason why this doesnt make sense? The deposit seems to be about 1 day and 8 hours drive from the Nevada Gigafactory. Gigametals and Gigafactory, a match made in heaven? [The primary plan is to truck the material to the town of Stewart in BC, which has a suitable deep water port. From there it could be shipped to either the US or to other countries like China/Korea/Japan]
Also, the mine would cost about $1bn according to the CEO. Where does that money come from? I have heard him talk about stragetic partners taking roughly 20% of the project for this money. That seems a bit hopeful? If one doesn't materialise, what other options are there to get the high capex required to make anything of this giant deposit? [That is not a correct interpretation, Giga is looking to sell something like 20% of the project, but only a part of a $1bn capex would be equity financed. Likely the majority of the financing package would be debt facilities, in combination with other financing components like streaming/offtake etc. Please correct me if this sounds wrong to anyone]
The long term nickel price needed to get this project going is approx $26,000 per tonne? A belief in a long term price above this level seems to be a condition precedent to investing in this company? [Where have you seen that number? The company has stated that the project would make sense at a lot lower numbers than that, like below $20 000/tonne which is Wood Mackenzies long term estimated incentive price]
I am a long term believer in the economics of battery storage and EV adoption and see this stock as effectively a long term call option on the price of nickel at these levels, with some [A LOT OF] leverage. I also see it as a bet on the convergence of low battery prices and improved solar outputs and efficiency, creating severe disruption in energy markets. I look forward to engaging with any and all of you about this company. [I agree, this coming global disruption is a big part of why I have invested in GIGA. This is the most leveraged "battery play" I have found in the entire world, and also the PUREST play on the accelerating battery megatrend since GIGA are 100% focused on nickel and cobalt. If anyone knows other "battery plays" with the same crazy leverage, please let me know]
Thanks