should be up, page-3

Oops, Says GSJBW
FN Arena News - June 13 2008


By Rudi Filapek-Vandyck

On June 4th FNArena reported commodity analysts at GSJB Were had turned bearish on the price prospects for nickel and as a result the broker pushed all nickel stocks under its coverage out of favour (in other words: clients were advised to say bye, bye to their nickel exposure).

Today, however, GSJBW has reversed that decision.

The reason behind the backflip is not difficult to figure out: the gas supply problems in Western Australia caused by an explosion at an Apache Corp operated facility offshore, is impacting on the production of the metal in the state. This will tighten the market and thus keep the price up, the analysts now believe.

Apache Corp has declared the explosion at its Varanus Island plant off the WA's north-west coast may result in no natural-gas output for at least two months.

Management at Minara Resources (MRE) has already stated its nickel output will be affected. As such Minara's problems have become a blessing for the rest in the industry.

GSJBW has not changed its supply-demand forecasts for the year, but simply acknowledges the odds have now turned into favour of a tighter market than previously anticipated. Because the news of less supply coming on market in the short term is expected to boost overall market confidence, the broker has nevertheless raised its price forecasts for the second half of calendar 2008.

The new H2 2008 nickel price forecast now stands at US$11.50/lb (versus $11.00/lb previously), and if correct this should take the average price for the full calendar year to US$12.00/lb (versus a previous estimate of $11.75/lb).

In line with the small changes made in price forecasts, GSJBW has upgraded the nickel stocks under its coverage -Minara, Independence Group ((IGO)) and Western Areas ((WSA))- to neutral from sell. for S