The rich and famous assemble for a slice of the nickel pie

31st August 2018
Tim Treadgold

A 15% fall in the nickel price from $US7 a pound to $US6/lb over the past two months has not endeared the metal to every investor but there is a gathering of the rich and famous in the nickel sector that is becoming hard, and perhaps unwise, to ignore as big bets are placed on its revival.

Andrew Forrest, best known for his iron ore interests, is putting his weight behind a star from an earlier era, Poseidon Nickel, just as a former chief executive of Western Mining Corporation, Hugh Morgan, gets serious about a unique nickel discovery in Nigeria.

Not to be left out is another big-time player from an earlier era, Norm Seckold, who floated Nickel Mines on the ASX last week, and then there’s the biggest of them all, BHP, which last year wanted to sell the last of its nickel assets but is now inclined to keep them.

The BHP situation is a starting point in understanding why nickel is staging a return as one of the hottest metals in the market with its traditional use in stainless steel being matched, and possibly overtaken, by its use in long-life, rechargeable, batteries.

From being a one-trick metal, nickel is emerging as a two-market player, though not all nickel is ideal for conversion to battery-grade material, which is why BHP is keen to develop three new mines in WA and convert most of its nickel into products for battery production.

Forrest’s return to an industry where he first made his name when running Anaconda Nickel and its Murrin Murrin mine is through participation in a capital raising by Poseidon, which plans to re-develop the Silver Swan and Black Swan mines after beating off a takeover bid from US-based Black Mountain Metals.

Morgan, a key man in the development of the nickel division of WMC which is now the heart of BHP’s nickel business, has been trying for two years to stimulate local interest in the near-surface nickel deposits in Nigeria controlled by his unlisted Comet Minerals but is now taking the story to London, where investors have a softer spot for assets in Africa.

On their own, each of those nickel situations should be enough to waken investor interest in the entire nickel sector, especially as the metal can deliver spectacular price moves such as the rush to more than $US22 a pound 10 years ago, 260% higher than its current $US6/lb.

However, it’s the collective nature of the latest nickel developments which represent a remarkable gathering of very different people and companies in the same metal at the same time.

What it means for the nickel price, and the price of ASX-listed stocks exposed to nickel, is the critical question, with the answer almost certainly positive, as could be seen in several local nickel-sector leaders this week, such as:

  • Independence Group, which added 24c to $4.40 after releasing a strong profit result which was aided by strong production from its high-class Nova nickel mine.
  • Western Areas, up 5c to $2.71 which represented the clawing back of ground lost after a less than sparkling profit.
  • Modest rises of 2c and 1c respectively by Mincor and Panoramic, to 38c and 50c respectively, and
  • Freshly-floated Nickel Mines bouncing back from a flat start which saw its 35c shares drop to 25c soon after listing to now be trading at 36c.

Other news events which shifted prices up or down in a week which saw some stability return to the global economy, included:

  • Sandfire Resources adding 41c to $7.66 after the release of a strong profit result, higher dividend and fresh news on a swelling pipeline of potential development projects.
  • Aeon Metals moved up 2c to 37c in what was a modest reaction to encouraging drill results from its Walford Creek copper project in Queensland with the best hit being an eye-catching 42 metres at 2.55% copper and 0.29% cobalt from a depth of 332m at a location 4.6km west of the main resource.
  • Artemis Resources added 3c to 19c after a strong set of drill results from its Carlow Castle project in the north of WA with the top assay coming in at 4.89 grams of gold a tonne over 132m from a depth of 211m. Included in that section was a reading of 0.25% cobalt and 1.11% copper.
  • Sheffield Resources hit a 12-month high of $1.05 immediately after reporting the securing of a favorable native title ruling over its Thunderbird titanium minerals project in WA. The stock closed yesterday at 94c for a one-week rise of 11c.
  • Northern Star shares were steady over the week at $6.96 (and in a trading halt) but are set for a re-rating as news about its expansion into Alaska is digested with the freshly acquired Pogo mine thrusting the stock into the international big league of gold.
  • Lucapa Diamond Co had expected a better response to its latest results from work at its Brooking project in WA, with news of the recovery of 1100 diamonds greeted with a 2.5c rise in the stock to 26c.
  • Golden Deeps added 1c to 4c as interest grows in its Abednab vanadium project in Namibia and the appointment this week of Michael Minosora as its chairman. Minosora is a former chief executive of the company behind the Windimurra vanadium project in WA.
  • Westgold Resources was another explorer reporting what looked to be encouraging results only to be sold off. The latest assays from its Paddy’s Flat project included just over half-a-metre assaying the bonanza grade of 139.8g/t. Despite that, the shares slipped 11c to $1.38.
  • Northern Cobalt added 4c to 16c but not from its namesake metal. The driver was an assay of 1.3% copper over 7m from a depth of 5m in the first hole drilled at its Wollogorang project in Queensland, with a 1m core grading 5% copper.
  • Beacon Minerals traded up to a 12-month high of 3c on Wednesday before easing to 2.4c for a gain of 0.4c after releasing a positive pre-feasibility study into its Jaurdi gold project near Coolgardie in WA, and
  • Ramelius added 2c to 50c after reporting record gold production and a record profit for the year to June 30.

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