Try, try again...As some of the heat goes out of the nickel...

Try, try again...

As some of the heat goes out of the nickel boom, investors are beginning to consider more coolly the fundamentals of the various nickel companies competing for their money. While companies like WSA, VRE, SMY and FXR have all enjoyed spectacular gains in recent months (and with merit in some cases), it is only now that people seem to be waking up to the facts that:
1) most have very long lead-up times to production
2) most lack the cash to make it to production without further placements (see the market's reaction to WSA's cash position this morning)

For the reasons above, Titan Resources (which I hold) and Independence Gold (which I don't) are the stand-out nickel investments in my view.

TIR appeals to me because:
a) it is cashed up
b) it is very close to production
c) it has enormous potential to become a very cheap producer through its innovative BioHeap technology
d) it is continually expanding its resource base through an active drilling programme
e) further share placements to fund further drilling / exploration are unlikely in the near future

IGO is also a good investment IMO because it is already producing and has good cash-flow. Of all the nickel prospects out there (and there are many newly-minted nickel miners!), these two would seem to have the fundamentals on their side - and when the heat goes out of a boom, fundamentals return to the fore.

Of the two, I prefer TIR because on current SP it appears to have stronger upside potential. IGO virtually trebled in six weeks whereas TIR has enjoyed a steady but less spectacular rise and has consolidated around the low fifties in recent weeks.

I have held TIR since the low .20s and believe it will reward those patient enough to wait until its BioHeap technology renders it one of the cheapest nickel producers anywhere, able to extract value from not only its high grade ores but its vast lower grade reserves as well. The potential to license this technology to other producers down the track remains an attractive possibility.

No doubt others have their own favourite stocks but I believe the fundamentals above favour TIR and IGO and that some of the others will retrace significantly as the realities of their cash positions and distance from production sink in. Having said that, the global nickel boom should continue for another 12 - 18 months yet and the prospects from any of the nickel juniors cited remains very positive long term.

Good luck to all,

Gupper