Ann: Results of Annual General Meeting, page-53

Thanks Trapper

I must admit I was concerned with the revelation that Chinese interests had taken a 4.9% stake in the dragon. This will be the norm as the battery industry heats up and companies take strategic positions to ensure supply. A Bloomberg article on the weekend stated
Philippine nickel miners and Chinese battery makers are exploring a potential collaboration ahead of Indonesia’s ban on ore exports by 2020.The Philippine Nickel Industry Association and the power battery committee of China Industrial Association of Power Sources recently signed a pact for strategic cooperation, according to a statement from the Phillippine group on Sunday.

This again highlights the importance of Ni supply for the next decade and we can expect more of the same and I am sure SGQ will be right in the middle of it. Kates9999 highlighted this from a trading perspective. It will be interesting to watch the behaviour of the bot trading in the future as bigger players run the ruler over the company. It is probably inevitable that a big play for SGQ will eventuate but I would be very disappointed if sold out to overseas concerns. There has been many instances where local investors have lost out to overseas takeovers. FML springs to mind!

From the Australian on Saturday

Nickel is poised to roar back into fashion as Independence Group’s $312m bid for Panoramic Resources unleashes a corporate free-for-all with mid-tier miners scrambling for scale amid predictions of a looming nickel supply shortage.

Panoramic put itself on the market on Friday, opening up its books to would-be suitors as it looks to spark a bidding war in the wake of November’s all-scrip offer from Independence.

At least three companies are believed to have already sought access to Panoramic’s data room, with more likely to join the fray in the wake of Friday’s decision.

Western Areas is believed to be one of those, approaching the company in the wake of Independence Group’s hostile bid for Panoramic. Private equity-backed Black Mountain Metals, which bought the mothballed Lanfranchi nickel mine from Panoramic in September 2018 after failing in a bid to acquire Poseidon Nickel, is also believed to be looking over the books.

As other potential buyers line up for a closer look at Panoramic’s Savannah nickel project in WA’s Kimberley Region, manoeuvring across the sector suggests a fresh wave of consolidation is looming.

Investors and miners are positioning themselves in the expectation that high-grade nickel sulphide deposits, rarely found outside WA, will be in strong demand as the electric vehicle revolution takes off in the 2020s, given nickel from sulphide deposits is easier and cheaper to convert for battery use.

The bull case for electric vehicles could see another 1.75 million tonnes of nickel needed in the market up to 2028, according to a recent report by ratings agency Fitch, in a global market that produced about 2.3 million tonnes in 2018.

Even a bear case for the uptake of electric vehicles would see another 500,000 tonnes of nickel needed, given the high-performance batteries needed for cars and trucks require a higher-proportion of nickel than other commodities.

That demand drove BHP to take its once-unloved Nickel West operations off the market, and has spurred mining majors such as Rio Tinto, South32 and Glencore to intensify their hunt for new sources of nickel.

The same equation looks likely to spur a new wave of consolidation in the WA sector as producers such as Independence and Western Areas look to extend their control of production assets.

One Perth resources veteran said on Friday that nickel’s situation was similar to gold in 2013-15, when companies such as Northern Star Resources and Evolution Mining were able to pick up cheap assets and build the foundations of multi-billion-dollar companies as the gold price flew.

“If you can get in early, it will look pretty clever in a few years if the nickel price starts to run,” he said.

Speaking on the sidelines of Independence Group’s annual shareholder meeting on Wednesday, managing director Peter Bradford said he expected interest in WA projects to grow as nickel demand lifted.

“You can count the shovel-ready nickel sulphide projects around the world on one hand. You’ve got the likes of Kabanga in Tanzania, which is 1000km inland and has some geopolitical risk, you’ve got Victoria in Ontario and the top of the deposit 1000m deep,” Mr Bradford said.

Most of the rest were in WA, he said.

If Panoramic falls to one suitor or another, fellow Mincor Resources may find itself the next with a target on its back. A former producer that mothballed its assets as the nickel price fell in 2015 and 2016, Mincor is expected to deliver a feasibility study on its Cassini project early next year as it looks to restart its Kambalda mining operations.

Mincor boss David Southam tucked away a well-supported $30m placement at the start of the week, with Independence and Andrew Forrest’s Squadron Resources both taking up extra stock. Squadron emerged as a substantial shareholder in Mincor with a 6.2 per cent stake, suggesting Mr Forrest — who owns 17 per cent of Poseidon Nickel, also looking to return mothballed operations to production — is positioning himself in the sector.

Interim Poseidon chief executive David Reikie, who will be replaced by former Panoramic boss Peter Harold in March 2020, said Poseidon hoped to make a final investment decision on returning its Black Swan and Silver Swan operations to production in the new year.

Poseidon is the only company in the Kambalda region other than BHP that controls a mill capable of producing nickel concentrate — Mincor and other regional players relied on BHP’s concentrator for their ore — and Mr Reikie said on Friday the company believes its infrastructure, which also includes a processing plant in WA’s southwest, could position the company to lead nickel consolidation.

Also potentially in play is First Quantum’s Ravensthorpe mine, also returning to production, and a potentially significant discovery made by WA prospecting legend Mark Creasy, dubbed Silver Knight. Mr Creasy is still believed to be drilling that deposit, hoping for another big payday to round out an illustrious career, despite interest from Independence and Western Areas.

Industry sources suggest a serious consolidation play could also force BHP to enter the market.

Despite significant progress on opening its own new mines, BHP’s Nickel West arm is still likely to be reliant on smaller miners for ore and concentrate to keep its Kalgoorlie smelter and Perth-based refinery full for some years to come.

Retaining Nickel West is BHP’s big bet on the battery market.

In the previous era, when sales to steel mills dominated demand for nickel, BHP largely had the upper hand in price negotiations with a scattered group of smaller miners.

But industry sources already speculating that the prospect of dealing with a sector consolidated into only one or two producers, more able to sell into growing international markets, could force BHP to consider writing a cheque for assets it would once have considered too small to bother with.

Industry speculation suggests Nickel West itself could also emerge as a target for players looking to enter the battery market, such as Wesfarmers, which has already bought into a WA lithium hydroxide chemicals plant through the $776m takeover of Kidman Resources.