Hi all – first a bunch of disclaimers.
· This post will be a long ass post!
· This is my initial research on nickel… those of you who know your nickel space may find this boring. But you may also find things that need correcting, or you may have more to add. I’ll welcome either
· The purpose of this is partly to share, but partly for me to sponge learnings of those that know more.
· PLEASE KEEP THIS THREAD TO NICKEL FOCUSSED INFORMATIVE INSIGHTS – be they positive of negative in sentiment
· This is internet research. We all know the internet can lie
WHAT IS NICKEL AND WHY USE IT
One thing that caught my attention is that in the nickel world it’s important to recognise that there’s primary nickel (mined and refined) and secondary nickel (recycled). It is surprisingly easy to recycle! Therefore this needs to be taken into account when looking at demand and supply, as efficient recycling methods would certainly value a recycler highly, so these will inevitably grow in number. I’ve not had much time to do that in this little research, so keep that in mind..
Primary use is in steel & other alloy production – but we all know that it’s also a key part of modern day batteries. In 2020 this was about 6% of global supply, but this is expected to grow to 36% by 2030… and all the while, its needs within the steel industry will also INCREASE – it’s not simply taking a greater share. Depending on where you read, this is approx. a 5x increase in battery demand from 2020 to 2030.
A side note…. A disruptor in this space could obviously be the evolution of battery tech to remove the dependency on compounds such as cobalt and nickel. I’m invested into one of those on the ASX (hunt and you’ll find it if interested – warning though, I’m in the red on that over the years, although hanging in there). There are a handful of other players out there, including the LGs of the world. But – even if a disruptor comes along, I would imagine there’s 5+ years before supply needs change, but it could impact the share prices of the miners and the objectives of the explorers. Lucky we’re not a 1 trick pony.
PRODUCTION & DIRECTION
Global production was 2.4Mt in 2020, with Asia representing 82% of the consumption, and China at 60% (having doubled in 10 years). We all know that the West and the USA in particular is looking to separate it’s supply chain dependencies from the East, so this bodes well for nickel in Australia (about 12% of global supply, I think).
From 2010 until 2016 there was a deficit in market due to the additional projects being brought online, particularly in China. This ended in 2020 where we switched back to a surplus, but I’d assume this was simply a symptom of the world’s manufacturing turning off for months. Global demand for nickel is seen increasing by 9.2% in 2021 to 2.58 million tonnes, while supply is expected to climb by 5.8% to 2.638 million tonnes.
There seems to be some suggestion that there are a number of mines in development, so we aren’t expecting desperate deficits in the next 2-3 years, but we all know what forecasts can sometimes do. Note – remember the recycling option is a part of this.
NICKEL PRICEMay 2007 saw the peak - $52,179 USD/tonne! In September 2019 they reached $17,600 before covid hit, the surplus began, and prices obviously dropped. Right now we’re scratching away at the $20,000/t mark, and are expecting a borderline surplus this year.
Interestingly, stock prices in the nickel players took a MASSIVE hit prior to covid, and during covid, but has rebounded sharply. This suggests to me that if you’re not in nickel PRODUCERS or companies with funding to bring a mine online now, then the potential growth there for you is limited. Will it grow? Yeah, probably will, but is it the biggest opportunity? No… that comes, as always, with the risks… the explorers with currently unidentified nickel potential. GBR, for one.
DEPOSIT TYPES & ECONOMICS
Nickel of interest is in nickel sulphide or lateritic nickel form, the latter forming about 60-70% of the world’s deposits but forming only about 40% of global nickel production.
HIGH GRADE = >1.8%MID GRADE = 1.3-1.7%
LOW GRADE = 0.6-1.2%
Laterite – deposits range from about 1-1.6%. Often contain more impurities, and greater energy costs for purification. As a result you’re really looking for the higher end of the grades in order for this to be economical - estimates are that smelting projects need >1.7% to be viable, and leaching require >1.3%, and that’s assuming near surface ore.
Sulphide – deposits typically ranging from 0.15-2%, although there are some out there at 5% and 8%. Sulphide is cheaper to refine, however estimates are that you need 3% for underground mining and 1% for near surface mining in order to be profitable. @Von Rico said – “sulphides are what you want”
GBRs NICKEL PROSPECTS
To steal from our latest quarterly…
The Whiteheads Projectis located directly along strike to the north of KalNorth Gold Mines Limited’sLindsay Gold project. No definitivenickel mineralisation has been identified to date within the project area howeverthe Black Swan, Silver Swan and Carr-Boyd Nickel deposits are all locatedwithin the region and the project remains prospective for further nickeldiscoveries.
These deposits are sulphides – I remind you that “sulphides are what you want”. “But there’s none there”, I hear you say, as I also said. Go back to the GBR announcement on 26th October 2020, “Nickel sulphide potential at Whiteheads”. I’d imagine that this is where@Von Rico got excited.
On 8 October 2020Estrella announced the intersection of a 2.9m zone of massive sulphide at theT5 Prospect within their Carr Boyd project north of Kalgoorlie1 . On 20 Octoberthey followed this announcement with further information including the resultsof a down-hole EM survey on the discovery hole2 . After each of these twoannouncements Great Boulder’s share price climbed 56% and 27% respectively,coincident with heavy volumes of shares traded.
Whilst our latest quarterly states there’s been a lot of exploration in the Whiteheads area, the 2020 announcement makes it clear that we haven’t much info on the northeastern area, near Carr Boyd, the deposit that Estrella found. Although you need to note… they went from 1.3c to 15c in days, but they’re back at 4.1c. I need to look more into it, but it seems that whilst they’re bordering the economical grades, the lodes are deep as hell, so it looks like there was excitement for the possibility of more, but they haven’t found more.
Where’s that leave us? I need to get some real work done so I’ll look more later and share more, and hopefully others have valuablespecific and relevant facts that they are willing to share too.
But my guess is that Andrew’s turned the ship towards the gold, knowing that it’ll cost us a fortune to strike nickel (again, things from your post Van are now making a lot of sense for me). So I like what was suggested around focus on gold but keep the nickel in the back pocket – question is when should you go into the back pocket, or, should we? Am I missing more compelling suggestions that there's more nickel in them there hills than Estrella turned up?
Cheers all
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