Mark Crux interview in words....
Merry Xmas all!!!!
Nickel About to Get 'Shoved' Upwards by Funds
Mark Crux interview in words......
Nickel price recently peaked over $17,000/tonne, now settled around $16,800/tonne
Analysts starting to talk about potential for restocking demand bump in 2024
Several junior miners announced positive drill results and resource updates, increasing available nickel supply
Some high-grade underground projects struggling with costs, highlighting that grade is not the only important variable
The nickel market has experienced substantial volatility in recent months, with prices peaking above $100,000 per metric tonne in March 2022 due to supply disruptions and strong demand from the electric vehicle and stainless steel sectors. However, prices have since moderated to settle around $16,800/tonne as of mid-December 2023.
Swings Expected in Coming Months
According to industry expert Mark Selby, nickel prices could continue to experience sizeable swings in the coming months leading up to Chinese New Year in January 2024. He notes that historically, periods of lower liquidity around the holidays provided commodity traders an opportunity to push markets in a new direction. However, Selby remains upbeat on the longer-term outlook.
"I think 2024 will surprise a lot of people again. One of the big underpinnings of that is Global [EV] sales are up 38% year-over-year in the month, both in the US and globally and again there's no one who's got 40% growth in any of their forecasts for the next while."
This continued strong demand growth, against a backdrop of constrained new supply, suggests conditions could align for further upside in prices as early as next year.
Growing Interest in Ethical Sourcing
Selby also hinted at a potential bifurcation in the market between supply from the East and West. He believes 2024 could see increased interest from automakers and battery manufacturers in sourcing nickel from safe, ethical jurisdictions amid rising concerns around human rights issues in some producing countries.
"I think in 2024 you will see a lot of safe IRA compliant mine sourcing deals happen...people very clearly want access to safe jurisdiction, IRA compliant, non-foreign entity of concern material...they can put their hand on their heart that they've got nice, clean, green nickel, cobalt graphite lithium."
This emerging trend toward ethical sourcing could benefit North American junior miners developing new projects in stable regulatory regimes.
Canada Nickel Advancing Toward Production
Canada Nickel recently extended their bridge financing facility with Auramet by only 30 days despite having the option to go up to 90 days. Their willingness to limit the extension window suggests confidence in being able to finalize various funding and offtake agreements within that one month timeline. This likely indicates constructive progress in strategic partnering negotiations as Canada Nickel advances efforts to bring the Crawford asset into production as an important North American source of nickel and cobalt. If successful in securing the necessary financing and agreements in coming weeks as expected, it would mark a major milestone towards production. With demand forecasts remaining strong in the electric vehicle and battery metals space, the company appears focused on capitalizing on the opportunity.
Other Company Updates
Western Mines
Western Mines' Mulga Tank asset in Australia continues to deliver encouraging drill results, including more broad intervals of grades comparable to Canada Nickel's flagship Crawford deposit. With an exceptional 1.8% nickel and 4.8% copper over 1 meter, the system clearly offers high-grade potential to supplement larger-scale mineralization. As Western Mines continues work to better understand scale and continuity, Mulga Tank represents a prospective development opportunity in a premier mining jurisdiction. The grades and geology reinforce similarities to Crawford, a billion-tonne resource being advanced to production by Canada Nickel. While early stage, Western Mines warrants monitoring as they unlock further value.
Lifezone Metals
Lifezone has substantially increased resources at their Kabanga nickel-copper asset in Tanzania, with attributable measured and indicated tonnes up 69% to 43.6 million grading 2.02% nickel. This world-class deposit now contains over 1 million tonnes of high-grade nickel amenable to lower-cost open pit mining. However, the location on a remote border region without existing infrastructure poses serious challenges to development that have stranded the asset since initial discovery in the 1980s. Major miner BHP has invested, potentially seeing through such issues given the quality and scale of mineralization. Moving Kabanga into production would still require substantial capex and innovative solutions to transport concentrates cost-effectively. But with strong demand forecasts and need for ethical supply, there may finally be motivation to solve the logistical hurdles.
Widgie Nickel
Widgie Nickel grew resources for their Armstrong deposit in Western Australia by 19%, now hosting close to 14,000 tonnes of nickel amenable to potential open pit mining. While grades around 1.4% are modest, good infrastructure and regional processing options offer a path to near-term production if studies support commercial viability. By pushing back completion of their scoping study to 2024, Widgie allows more time to optimize plans and ensure they can demonstrate adequate profitability before proceeding to financing and development. Pursuing a smaller scale, lower cost operation minimizes risk versus a larger capital investment. Though Widgie has more work ahead, they smartly focus first on confirming project fundamentals rather than rushing ahead, as grades alone will not guarantee success.
Lunnon Metals
Lunnon Metals achieved excellent recovery and concentrate grades from recent metallurgical testing on ores from Foster South, further derisking the potential for cost-effective processing through the Kambalda plant they own. These results help position Lunnon’s assets to resume contributing nickel supply amid growing ethical sourcing demand. Ongoing drilling continues expanding resources, now up to 104,400 tonnes across their entire Kambalda tenement. By methodically upgrading previously mined assets, Lunnon offers investors a unique low-risk entry point to the class 1 nickel district with significant existing infrastructure already in place.
Panoramic Resources
Panoramic Resources recently entered administration and filed for bankruptcy after determining their Savannah nickel project was no longer feasible to profitably operate as intended. With above-average grades but issues achieving planned mining and processing rates, they struggled controlling operating costs for the underground mine. The unexpected challenges highlight risks associating high grades alone with likely commercial success, as actual technical factors determine outcomes. Unfortunately Panoramic joins other miners unable to overcome difficulties translating strong grades into viable production. Savanah adds to a growing list of cautionary tales reinforcing that grade is not the sole crucial variable.
Horizonte Minerals
Horizonte Minerals recently underwent substantial board and management changes as key shareholder LaMancha Group asserted control, installing their candidate as CEO and bringing in new directors after sidelining former members. However, the appointment of industry veteran Maryse Blanger as COO offers upside potential. Blanger has an excellent track record reviving struggling operations, having previously turned around the Santa Rita mine for Mirabela Nickel before an untenable collapse in global nickel prices. Her efforts enabled the subsequent successful restart under new owner Appian. With new leadership at the helm backed by a strategic investor, and Blanger’s operational expertise, Horizonte could be primed for a similar turnaround at their project.
IGO Limited
IGO Limited is halting underground construction and will likely impair their Cosmos nickel project further after flagging extreme capex overruns amid delays potentially measurable in years. Despite attractive high grades, IGO has become the latest miner unable to translate strong geology into profitable production plans, with serious development issues more than offsetting grades over 2%. Even extensive review may fail to identify feasible options going forward after such dramatic budget and timeline blowouts. With inflation and technical struggles overwhelming initial designs, IGO looks poised to withdraw from Cosmos. Their challenges underscore substantial risks associating underground projects with modeled outcomes, as grades alone clearly do not ensure viability.
Cautionary Tales on Danger of High Grades
For all the positive updates, Selby injected an important note of caution regarding underground mining of high-grade sulfide deposits. The struggles of companies like Panoramic Resources and IGO with such projects highlights that grade is not the only crucial variable determining success.
"People get excited and get all hyped up about 1.5% and 2% nickel - well that's underground the cost of mining that is way higher right...10 million tons at 2% doesn't work. Grade is just a variable."
These cases underscore the potential pitfalls in underground mining and danger of overindexing on grades alone when assessing investment potential.
Key Takeaways for Investors
Nickel market volatility expected near-term but conditions aligning for continued price strength in 2024 on solid EV demand growth
Automakers/battery makers increasing focus on ethical sourcing could benefit North American juniors
Canada Nickel deal expected in January would derisk Crawford project; well positioned as Tier 1 North American supplier
Early positive results for some junior miners but important to consider all variables not just grade when evaluating developers
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Canada Nickel
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Western Mines Group
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Widgie Nickel Limited
Widgie Nickel Limited
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Lunnon Metals Limited
Lunnon Metals Limited
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Panoramic Resources Limited
Panoramic Resources Limited
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IGO Limited
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Horizonte Minerals
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