Good Afternoon,
I've been admittedly a bit early in my eager bullishness for nickel junior mining stocks. However, I'm 100% sure that I am also NOT wrong and will make a substantial addition to my net worth in the coming months/years due to my size of exposure in said bullishness. Giga Metals (GIGA/HNCKF) yesterday might have kicked off something few people are likely reading into yet. Mitsubishi Corp investing $8M CAD for just 15% ownership in a NewCo owning the Turnagain nickel deposit valued the asset right around DOUBLE the entire market capitalization of Giga Metals corporation. Even so, they "stole" their 15% in my view but this is massive in a few ways beyond the price tag.
#1--This is the first company I've seen directly investing into an asset that could be a potential future source of metals required to build their products and have the supply to meet growing customer demand for them for decades to come. Back in the day, call it a century ago, this is how it was done. Ford and other auto makers were owners and on site at the mines to build out their vehicle lines. I believe that this forward thinking and "ballsy" move my Mitsubishi going first WILL kick off a number of follow on type partnerships where the auto companies begin buying direct ownership into the DIRT that will supply critical metals for their cars and batteries. And they better GET MOVING because we're coming up fast to the time where the growing demand curve for EV's crosses the dwindling supply curves for raw materials needed to make these batteries!
#2--Just like individuals, corporations are SHEEP! The first shot has been fired and it will not be long before #2-3-4 start popping as well and that could swiftly turn into a FOMO frenzy to lock in key metals supplies for al of the serious players in the auto business. The majority of them, in my estimation, will start investing directly into the dirt/projects themselves with mining companies and/or buying out the miners. Mitsubishi just launched a big ole "WAKE UP" water balloon into board rooms across the global auto industry.
#3--Giga Metals (GIGA/HNCKF) will have a very busy next few months ahead of them fielding calls from dozens of auto manufacturers. They are well prepared, because having been working through diligence/negotiations with Mitsubishi for MANY months, they know what to expect and have done the work to respond. I think if they're going to sell off another piece of the project, it's going to be a "you better get off your butt Ford, VW, etc) because there's a line out the door and this issue is a MANDATORY one for each major auto play to address! And they're already far behind, considering the time work, and capital required to build these new mines, this is a catastrophe waiting to happen for some auto manufacturers who act too late.
I'll write more tomorrow but I am convinced that this partnership could have lasting substantial bullish ramifications for the nickel mining sector. The first mover paid a 95% premium to market cap of the company for just the 15% stake in their main asset ($53.3M CAD which while the entire mkt cap was just $29M!). A second interested party? Say "they" want in by year end, even if the market is still trading like sloth, they aren't getting any for less that $100M valuation is my strong guess. Giga could go from a $29M CAD market value last week to a buyout between $200-$300 million in 6-24 months.
That's why this has become my second largest junior miner position behind Phenom. Not only because the upside is huge, but I just don't see much downside from here! This sector is already blown out. I've been accumulating more and more Giga with the meat of my purchases right around where it's trading now....high .30's-.40 CAD. I remain very bullish on quality nickel junior mining stocks. The fact Mitsubishi chose Turnagain as where to plant heir first flag to me is exceptional validation regarding the quality of the project.
Don't discount the potential importance of this news for the sector at large. We could see numerous asset level or direct corporate stakes/buyouts in the nickel, cobalt, lithium, etc. arenas because of this and FAST.
Eric