@Mkr you are correct.
On that front there is lot to like about WSA. The recent increase/run in nickel price is emotionally and technically helpful in rebasing price anchoring biases that might have set in and hopefully bringing with it a tailwind of interest and further price action. A change in sector sentiment from a down and out money pit, to a possible rebirth driven by broader macro-growth, technology based demand drivers and even environmental policy in China and other countries is a compelling sales story (hardly a new one, but flavour of the month does tend to change).
The value equation, to me, looks compelling presently. The company has a strong balance sheet bearing in mind it has coming out of what, hopefully, was the bottom of the cycle for nickel. My own back of the envelope still gives me upside and, personally, I would need to see a fairly large shock to change that view. I also like the fact that WSA (and other ni producers) are looking at some relatively low cost efforts at pushing further down the value chain and giving less value away to others.
The short interest is also close to it's lowest for this calendar year right now and, while I'm not an expert, with the ni price moving the way it is then I would think it would be harder to commit capital to a short strategy now; harder to control price action if things stay the way they are. This is definitely helpful to the equation for us holders. If prices push further up into the USD15-16k/tn (I remember when those prices were considered low) then we might start seeing a range of mines that closed on the downturn looking at reopening. However, with many of those being fairly deep, dewatering and re-start up costs may have pushed a chunk of reserve/resource further up the curve over the last couple of years and thus may much higher prices to justify the cost. That's not to mention trying to reattract experienced workforces to those assets.
The potential for reserve upgrades remains and a price moving in the current direction will make that process easier. The current WSA share price, to me, still doesn't seem to have a significant value implied for resources. A bump in reserves and continued, focussed exploration and resource re-generation I think has a fairly high probability of occurring and will likely materially add value if it occurs. My back of the envelope gives me around 7-8c/lb of resource in the current share price and marginal cash flow of current operations must be in the positive $1-1.10/lb range. It doesn't seem a lot to pay for those resources (including when considering conversion probabilities and development capex etc)
Nickel is a volatile beast, but my two cents is that WSA looks very well placed and still seems relatively good value to me.
DYOR
