In recent years nickel was a by-word for indifference. This year everything has changed.
Nickel started the year at a price of US$20,757 per tonne, which was already a 10-year high but since then it has continued an uptrend reaching a high of US$28,919 on 4 March. Prices steady climbed, as investors speculated that the supply for the metal would fall short of growing demand from electric vehicle manufacturers.
What happened next caught everyone off guard, as nickel spiked to an all-time high of US$101,365 per metric tonne (t) on 8 March. This movement doubled the previous record high for nickel, at US$50,263/t set on the 2nd April 2007.
This drastic rise led the London Metal Exchange to take the unprecedented step of suspending trading in the metal because of the severity of the crisis. When the suspension was lifted on 16 March, a sharp drop in nickel prices forced the Exchange to suspend trading again, and the nickel price has been volatile ever since.
The alleged cause of this crisis is partly due to Russia’s invasion of Ukraine, a country that accounts for 11% of world nickel production, and rumours of covering of a very large short position by Chinese tycoon Xiang Guangda, who controls the world’s largest nickel producer, Tsingshan Holding Group, with the short being squeezed by other investors. Guangda’s loss has been estimated as being as high US$8 billion by some reports.
While nickel prices have now returned to a high but “more normal” level of US$34,000/t, the supply-demand fundamentals for the metal remain positive and it is these medium to long-term fundamentals that have been driving an uptick in acquisitions and transactions.
Western Areas Limited is currently the subject of a A$1.1 billion takeover by IGO Limited (ASX:IGO) and Noront Resources Ltd (TSX-V:NOT) is subject to a C$616.9 million takeover by Wyloo Metals. Nickel Mines Limited announced last month a US$225 million capital raise to fund the acquisition of an initial 30% interest in the Oracle Nickel Project and Ardea Resources Limited completed a A$21.5 million capital raising to fund nickel sulphide drilling, regional nickel exploration, feasibility study programs and working capital.
Other companies well-positioned to take advantage of the resurgence in the nickel market include:
Horizonte Minerals PLC (AIM:HZM, TSX:HZM, OTC:HZMMF)
Horizonte Minerals PLC is developing two projects both located in Pará State, Brazil. The Araguaia Ferronickel Project and the Vermelho Nickel-Cobalt Project are both high-grade, low-cost, long-life projects.
Araguaia has a total NI-43 101 compliant measured and indicated mineral resource estimate of 119.4 Mt (million tonnes) at 1.27% nickel with additional cobalt and an inferred mineral resource estimate of 12.9 Mt at 1.19% nickel with additional cobalt. Vermelho has a total NI-43 101 compliant measured and indicated mineral resource estimate of 145.7 Mt at 1.05% nickel with additional cobalt and an inferred mineral resource estimate of 3.1 Mt at 0.96% nickel with additional cobalt.
The 2018 feasibility study for an open pit nickel laterite mining operation at Araguaia, returned a post-tax NPV8 (net present value with a discount rate of 8%) of US$401 million with a post-tax internal rate of return (IRR) of 20.1% and a 4.2 years post-tax payback period at an assumed nickel price of US$14,000/t. At a nickel price of US$23,000/t, the project would generate an after-tax NPV8 of US$1.5 billion and an after-tax IRR of 43%. The mine is estimated to have a capital cost of US$443 million and an average operating cost of US$3.72/ lbs of ore over a 28-year mine life.
The 2019 preliminary feasibility study for an open pit nickel laterite mining operation at Araguaia returned a post-tax NPV8 of US$1.7 billion with a post-tax IRR of 26.3% and a four-year post-tax payback period at an assumed nickel price of US$16,400/t. At a nickel price of US$23,000/t, the project would generate an after-tax NPV8 of US$3.4 billion and an after-tax IRR of 38.6%. The mine is estimated to have a capital cost of US$652 million and an average operating cost of US$7,286/t of ore over the first 10-years of a 38-year mine life.
The development of Araguaia is now fully funded and Horizonte has already awarded the furnace contract. The company is finalising contracts for engineering, procurement and construction management, all the other major process equipment, overland power lines, earthworks and civil works. Horizonte expects to start the main earthworks at the start of the dry season in early-Q2 2022. At Vermelho, the next stage will be the completion of the fully-funded feasibility study.
Kabanga Nickel Limited
Kabanga Nickel Limited recently secured an initial US$40 million investment from mining major, BHP, to accelerate the development of its Kabanga Nickel Project, located in Tanzania, in return for an 8.9% interest in the company. The initial investment will potentially be followed by a further US$50 million on successful agreement of definitive documentation and other conditions, which would give BHP a 17.8%-interest in the company. This gives Kabanga a see-through valuation of US$658 million.
Kabanga has a non-compliant indicated mineral resource estimate of 37.2 Mt at 2.63% nickel, 0.35% copper with additional cobalt and an inferred mineral resource estimate of 20.8 Mt at 2.6% nickel and 0.30% copper with additional cobalt.
The company plans to use the funds raised to complete a programme of enhanced metallurgical drilling to enable an update of the definitive feasibility study and support the construction plans for the hydromet refinery. These studies are expected to be completed by the end of 2022.
Magna Mining Inc (TSX-V:NICU)
Magna Mining Inc recently announced a non-binding memorandum of understanding with Mitsui & Co. Ltd to assess the possibility of Mitsui acquiring a 10% to 12.5% interest in Magna’s Shakespeare Nickel Project, located in Sudbury, Ontario, in exchange for cash consideration ranging between C$8 million to C$10 million. Magna currently holds 100% of the Shakespeare Project.
Shakespeare has an open-pit constrained NI-43 101 compliant indicated mineral resource estimate of 14.4 Mt at 0.34% nickel, 0.37% copper with additional cobalt, platinum, palladium and gold for a nickel equivalent grade of 0.63% and an inferred mineral resource estimate of 1.7 Mt at 0.29% nickel and 0.31% copper and other metals with a nickel equivalent grade of 0.54%.
Magna has also recently announced the completion of a feasibility study for the Shakespeare Nickel Project that returned a base case post-tax NPV6 of C$140 million with a post-tax IRR of 21.5% and a 3.5-year post-tax payback period. The mine is estimated to have a capital cost of C$232.9 million and an average operating cost of C$41.18/ tonne of ore over a seven-year mine life.
Magma currently has two drill rigs operating on-site and is planning to complete 10,000 metres of drilling in 2022. The company is also planning to accelerate the evaluation of the potential of toll milling at Shakespeare to better understand the potential economics.
Talon Metals Corp
Talon Metals Corp is developing the Tamarack Nickle Project, located in Minnesota, US, and is the only high-grade development stage nickel project in the US. The Project is a joint venture with mining major, Rio Tinto, which holds a 49% interest in the project, with Talon holding the balance. Talon is planning to earn an additional 9% interest in the project by completing a feasibility study and paying Rio US$10 million.
Tamarack has a NI-43 101 compliant indicated mineral resource estimate of 3.9 Mt at 1.91% nickel, 1.02% copper with additional cobalt, platinum, palladium and gold for a nickel equivalent grade of 2.62% and an inferred mineral resource estimate of 7.2 Mt at 1.1% nickel and 0.68% copper and other metals with a nickel equivalent grade of 1.57%.
A preliminary economic assessment for an underground operation was completed in February 2021, which returned a post-tax NPV7 of US$569 million with a post-tax IRR of 31.9% and a 2.1-year post-tax payback period. The mine is estimated to have a capital cost of US$553 million and an average operating cost of US$48.15/ tonne of ore over a nine-year mine life.
In early January this year Talon announced it had entered into an agreement for the supply and purchase of nickel concentrates with Tesla Inc (NASDAQ:TSLA). Tesla has committed to purchasing 75,000 tonnes of nickel in concentrate from Tamarack over 6 years.
FPX Nickel Corp (TSX-V:FPX)
FPX Nickel Corp has recently announced the results of its summer 2021 infill drilling programme at the Baptiste Project, within the company’s 100%-owned Decar Nickel District, located in central British Columbia.
Holes in the area of the planned starter pit in the southeastern portion of the Baptiste Deposit all returned near-surface, broad intervals with average DTR Nickel grades at or above the global resource grade of 0.120%, validating the preliminary economic assessment (PEA) block model. Baptiste has a NI-43 101 compliant indicated mineral resource estimate of 1,995.9 Mt at 0.12% nickel, and an inferred mineral resource estimate of 592.9 Mt at 0.1% nickel.
The 2020 preliminary economic assessment for an open-pit operation, returned a post-tax NPV8 of US$1.72 billion with a post-tax IRR of 18.3% and a 4.0-year post-tax payback period at an assumed nickel price of US$7.75/lb. At a nickel price of $12.00/lb., the Project would generate an after-tax NPV8 of US$4.3 billion and an after-tax IRR of 30.2%, based on 2020 PEA metrics. The mine is estimated to have a capital cost of US$1.67 billion and an average operating cost of US$2.74/ lbs of ore over a 35-year mine life.
FPX expect these drill results will confirm the conversion of inferred mineralisation to the indicated category for an updated mineral resource estimate, which will support a preliminary feasibility study at Baptiste, the world’s third-largest undeveloped nickel deposit. The company is also planning to commence a follow-up drill programme at the new discovery, Van Target, which has a larger surface expression of outcropping nickel mineralization than Baptiste.
Tartisan Nickel Corp
Tartisan Nickel Corp has recently completed drilling at its 100%-owned Kenbridge Nickel Project, located in the Kenora Mining District, Ontario. The Kenbridge Project currently has a total NI-43 101 compliant measured and indicated mineral resource estimate of 7.58 Mt at 0.58% nickel, 0.32% copper for a total of 95 million pounds of contained nickel and an inferred mineral resource estimate of 0.985 Mt at 1% nickel and 0.62% copper for 22 million pounds contained nickel.
Drilling during 2021 has defined additional mineralisation outside of the current resource estimate, and Tartisan is in the process of updating the mineral resource estimate with these recent results. Once updated the new resource will form the base for an updated preliminary economic assessment.
The company is also planning to begin baseline environmental surveys and geochemical kinetic studies in order to have sufficient data to move towards permitting for an eventual production decision, if warranted.
Gungnir Resources Inc
Gungnir Resources Inc is advancing the Lappvattnet Nickel Project, located in the eastern part of the Vasterbotten District, Sweden. Lappvattnet currently has a total NI-43 101 compliant inferred mineral resource estimate of 0.78 Mt at 1.35% nickel.
Drilling at the project last year resulted in the expansion of shallow and high-grade nickel mineralisation with drill results including:
- 3.19% nickel over 4.25 metres within a 10.4-metre interval grading 1.51% nickel in drill hole LAP21-02 (from 45 metres)
- 2.62% nickel over 5.65 metres within a 14.0-metre interval grading 1.40% nickel in drill hole LAP21-05 (from 60 metres)
- 1.74% nickel over 10.00 metres in drill hole LAP21-13 (from 21 metres)
- 36.00 metres grading 0.93% nickel in drill hole LAP21-04 (from 49 metres)
To date, this drilling has only tested around 20% of the total strike length of the electromagnetic anomaly at Lappvattnet and the company is planning a late spring drill programme of up to 4,000 metres at the project to expand the area of defined mineralisation. Further exploration upside potential remains in the form of an untested “twin” electromagnetic (EM) conductor, located around 100 metres north of the Lappvattnet nickel resource estimate.
Power Nickel Inc
Power Nickel Inc is advancing the NISK Nickel Project, located in Quebec, Canada. NISK has a total historic and non-compliant measured and indicated mineral resource estimate of 2.04 Mt at 1.0% nickel, 0.5% copper with additional platinum and palladium and an inferred mineral resource estimate of 1.1 Mt at 0.8% nickel and 0.3% copper.
Initial drill results have confirmed the presence of nickel mineralisation in the north-eastern portion of the Nisk Main Lens, and extended it by 150 metres at depth to the northeast. These assay results appear higher grade than the historic results potentially suggesting an underreporting of grade.
The company expects to complete a NI 43-101 compliant mineral resource estimate at the project in early-Q222, with a Phase 2 drill programme to follow. The Phase 2 programme is expected to be around 5,000m of resource expansion drilling and is likely to culminate in a resource upgrade before the end of the year.
Quebec Nickel Corp (CSE:QNI, OTCQB:QNICF)
Quebec Nickel Corp. is advancing the 100%-owned Ducros Nickel-Copper-PGE Project, located in the eastern Abitibi Greenstone Belt. The project contains three prospective mineralised zones: the Fortin Sill; Ducros Sill; and the Ducros Gabbro.
The company is currently drilling at the Fortin Sill, where chip/channel sampling returned grades up to 2.64% Cu + 0.49% Ni + 3.44 G/T Au-Pt-Pd from the main pyroxenite unit and up to 24.33 g/t Au in the nearby silicified and sheared mafic volcanics.
The Ni-Cu-PGE targets at the Fortin Sill have been generated from a ground electromagnetic survey completed in 2020. To date, a total of five holes have been completed, over 1,500 metres, with one hole in progress. In 2022, Quebec Nickel Corp. plans to drill over 20,000 metres across the Ducros Project.
Of the holes completed, drill holes QDG-22-04 and QDG-22-05, are located about 260 metres apart, have both intersected wide intervals of ultramafic rocks, some of which appear to contain primary magmatic sulphides, though assay results are pending.
A 1,717 line-kilometre property-wide helicopter-borne VTEM electromagnetic-magnetic survey is also underway and nearing completion. Once reviewed and interpreted, the results from this survey will be used to guide the Phase II drilling programme, which will focus on testing new Ni-Cu-PGE related geophysical anomalies associated with unexplored mafic-ultramafic intrusions over the entire project.
Platinex Inc
Platinex Inc recently announced the acquisition of 100% ownership of the W2 Copper-Nickel-PGE Project, located in Ontario, Canada. The W2 Project covers 70% of the layered mafic-ultramafic Lansdowne House Igneous Complex that contains widespread Cu-Ni-PGE mineralisation defined in seven significant mineralised zones within a 7.5 km long folded corridor.
To date over 5 km of the PGE horizon has been drilled at wide spacing, with wide intervals of Cu-Ni-PGE mineralisation defined, giving the company the potential to build a large-scale resource through additional drilling.
Platinex is planning to focus its initial efforts on the reprocessing and remodelling of the historic data and interpretation of 2006/2008 VTEM and AeroTEM II survey data as part of a full project data review and compilation. This will be followed up by a 4–6-week prospecting and mapping programme in the summer of this year to refine targets for drilling with a view to conducting a 5,000-metre drill programme in the autumn and winter.