Good to see someone else on the NNL page. I agree with you re the capital structure and IF they hit some decent grade then it could get moving quick smart.
The ‘bulk’ intersections of disseminated nickel in sulfide (>50%) at Hotinvaara are generally quite low grade as you say, lots of ~0.2% Ni punctuated by narrower intervals (presumably channelised flow) of ~0.5 to 1% Ni.
To put it in perspective…Kevitsa down the road operates with quite a low head grade of ~0.22% Ni, but when you look at the detail this is averaged from ‘normal ore’ running 0.17 to 0.4 % Ni and pods of higher grade running 0.5 to 2% Ni. Plus need to keep in mind that nickel accounts for around 44% of the revenue base at Kevitsa, with 38% attributable to the copper and then the rest as Au-PGEs credits. Hotinvaara is basically going to have to stack up on the nickel alone, maybe some credit through the Co.
But lets see what the updated MRE comes out with based on last year's work. The results from the initial met test work are also crucial, if they can show the potential for producing a high-quality nickel concentrate AND there is a substantial MRE upgrade it adds significant leverage to the project.
I listened to Todds presentation at RRS and the ongoing discussion with BHP is encouraging…as much as it pains me to say, I just don’t see how NNL can take this project forward on their own. Because here’s the problem, like it or not, much of the value is now going to be based on the MRE and to advance that from this point on (i.e. after the update) with more deep drilling on circa 2 mil capital raises each-time is a death spiral. Todd mentions of the focus on higher grade nickel throughout the belt is potential game changer, and I agree with him…but again you need the resources to test that ground and that means no progress on the MRE. So, if a deal is on the table then I’d be happy for something to eventuate, at least if it allows NNL to focus on the more regional exploration while retaining interest in the resource area. Now the trick is obviously getting the project to a point that is attractive and swings the pendulum in NNLs favour before such a time…but easier said than done, especially with the costs associated with deeper drilling and only ~2.9m cash to hand.
The other issue is the location, and the timelines for any eventual permitting. Todd brings up the quality of Sakatti as an analogy for the target prize.
But, in doing so he touched on an important point …Anglo have been drilling for 18 years and they have only just received environmental permitting! Now fair enough Sakatti has its own set of issues, not least of which is being inside Natura2000 designated area. But while those sorts of timelines are survivable for an Anglo American, they would be certain death for a junior ex co.
Not in any way saying this extreme would be expected, but just to highlight the point. The Pulju Project doesn’t overlap with any existing Natura2000 ground, but it is in close proximity, potentially bordering? So, there are sensitivities there. The biggest concern is the core of the Hotinvaara MR is very close to the Ounasjoki river…so from an environmental perspective it’s going to be an issue (imo)…from a future development perspective. I know potential development is not even close to the horizon, but to me it would be a smart move for NNL to isolate themselves from any such timeline issues by bringing someone in (unfortunately).
To go it alone, I think a lot hinges on the EU Battery passport…if there truly is an EU-wide push to favour and pay the premium on ESG and provenance based metal then maybe keeping it outright would be the play, but that is such a longshot. Because without that premium…if Hotinvaara is subject to current nickel market conditions (which many supply analysts are forecasting could stick around longer than people hope) then it’s a non-starter, at least based on what has been defined to date.Its all good for Todd to say ‘there is a big demand coming for ESG/Provenance sourced nickel….I hope he is right, but I’m skeptical and will believe it when I see it.
Anyway, i realise this might come across negative, but i feel NNL is in a precarious position (just imo).
GLAH
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