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Nickel Monthly News For The Month Of September 2019

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Includes: AAUKF, AMMCF, AMSLF, ARRRF, ARTTF, AXNNF, BHP, CBLLF, CSSQF, CTEQF, ERMAY, EV, FQVLF, GGIFF, GLCNF, HNCKF, IIDDY, MSMGF, NCPCF, NIKAY, NILSY, NMTLF, PANRF, PLM, PSDNF, PUCCF, RNKLF, SAMMF, SHERF, SMMYY, TNTMF, TSLA, VALE, WNARF
by: Matt Bohlsen
Summary

Nickel spot prices were significantly higher in September, and the LME inventory was slightly higher but remains near a 7-year low.

Nickel market news - Nickel prices soar as Indonesia brings forward export ban. Nickel mining indefinitely suspended in Southern Philippines.

Nickel company news - Western Areas/St George Mining intersects more nickel-copper sulphides at Mt Alexander. Garibaldi Resources drills 18.2 meters of 7% nickel and 3.8% copper at Nickel Mountain.

Welcome to the nickel miners news for September. The past month saw nickel prices rise sharply yet again and LME inventories rise slightly but remain near a ~7-year low. Large supply cuts ahead from Indonesia (2020 ore export ban) and the Philippines have jolted the market higher, with concerns of deficits ahead.

Nickel price news

As of September 25, the nickel spot price was USD 7.80, up sharply again from US$7.21 last month.

Nickel spot prices - 5-year chart - USD 7.80/lb

5 Year Nickel Prices - Nickel Price Chart

Source: InfoMine.com

London Metals Exchange [LME] nickel 5 year inventory

5 Year Nickel LME Warehouse Levels - Nickel Levels Chart

Source: InfoMine.com

Nickel demand v supply

On August 30, The Wall Street Journal reported:

Nickel prices soar as Indonesia brings forward export ban. Futures prices on the metal jumped about 9% to their highest level in nearly five years. Nickel prices soared Friday after the Indonesian government said it would ban exports of nickel ore earlier than traders had expected, sparking concerns of shortages in the stainless-steel ingredient.

The chart below shows nickel is forecast to be in deficit after ~2020-2022 (or at least require new supply to come online).

Source: Wood Mackenzie

Note: Some others such as BMI have been forecasting a nickel surplus by 2020 due to increased Indonesian production and reduced Asian demand.

As a reminder, the November 2017 McKinsey report stated: "If annual electric vehicle [EV] production reaches 31 million vehicles by 2025 as expected then demand for high-purity class 1 nickel is likely to increase significantly from 33 Kt in 2017 to 570 Kt in 2025." That is a 17-fold increase in just 8 years, albeit only on Class 1 nickel.

Nickel Market News

On September 10, Reuters reported:

Electric car boom to turbocharge battery metal producers: Moody's. Demand for metals used in battery electric vehicles could rise sixfold if electric cars reach 8% of road traffic by the mid-2020s, delivering huge dividends for producing countries like Democratic Republic of Congo, Moody’s said on Tuesday. The credit ratings agency said a worldwide shift to electric vehicles would likely drive up demand for cobalt, of which DRC is the world’s number one producer, as well as lithium, nickel and copper.

On September 16, Reuters reported:

Nickel mining indefinitely suspended in southern Philippines: official. A nickel mining hub in the southern Philippines, which produces mostly high-grade material, has suspended extraction operations indefinitely as the regional government conducts an industry audit, a top government official told Reuters on Monday. The suspension was based on a memorandum order dated Aug. 5 issued by the regional government, Macacua said in an e-mail reply to Reuters’ queries about the status of mining in the region’s Tawi-Tawi province. Latest available industry data showed that 2.34 million wet metric tonnes [WMT] of high-grade ore, or nearly 90% of 2.66 million wmt of the high-grade material the Philippines exported to China in the first half of 2018 came from Tawi-Tawi. Tawi-Tawi accounted for 27% of overall nickel ore exports, totaling 15.8 million wmt, to China during the six-month period.

On September 27, Reuters reported:

Nine countries join U.S. strategic minerals initiative. The United States on Thursday said nine countries have joined its initiative to help discover and develop reserves of minerals used to make electric vehicles, part of an effort to cut the world’s reliance on China for the high-tech materials. ....The countries joining the United States include Australia, Botswana, Peru, Argentina, Brazil, Democratic Republic of the Congo, Namibia, the Philippines and Zambia.

Nickel Company News

Producers

Vale SA (NYSE:VALE)

Vale plans a US$1.7B Voisey's Bay expansion plan to boost their nickel production.

On September 12, Vale SA announced:

Vale announces a cash tender offer for up to US$1 billion of notes due 2039, 2032, 2036, 2026, 2034 and 2022.

On September 17, Steel Guru reported:

Vale to resume Onca Puma nickel operations.....The operation, which had its mines paralyzed since September 2017, and its nickel processing plant since June this year, will resume its activities.

On September 24, Vale SA announced:

Vale informs on permission to enforce US$ 2 billion arbitral award. Vale S.A. (“Vale”) informs that, on September 20, 2019, the English High Court ruled that Vale can proceed with enforcement of its US$2 billion arbitration award against BSG Resources Limited (“BSGR”) in England. The arbitration award was issued in Vale’s favour on April 4, 2019 after a Tribunal of the London Court of International Arbitration ruled that BSGR defrauded Vale in relation to Vale’s investment in the Simandou iron ore project in Guinea.

Norilsk Nickel [LSX: MNOD] (OTCPK:NILSY)

No news for the month.

Investors can read my article "An Update On Norilsk Nickel."

BHP Group [ASX:BHP] (NYSE:BHP)

In 2017, BHP announced a US$43.3m investment in its Nickel West project to enable conversion to nickel sulphate.

No nickel-related news for the month.

Jinchuan Group [HK:2362]

No news for the month.

Glencore (OTCPK:GLCNF) [LSX:GLEN]

On September 5, Glencore announced: "Notice to holders of the U.S.$625 million non-dilutive cash-settled guaranteed convertible bonds due 2025 issued by Glencore Funding LLC [the “Bonds”, ISIN: XS1799614232]."

Sumitomo Metal Mining Co. (OTCPK:SMMYY)

On September 5, Sumitomo Metal Mining Co. announced: "Receipt of the FY2019 National Mining Society Award by Sierra Gorda S.C.M. in the Republic of Chile."

Anglo American [LSX:AAL] (OTCPK:AAUKF)

No nickel related news for the month. You can view a September presentation here.

Eramet (OTCPK:ERMAY)

No significant news for the month.

Sherritt International (OTCPK:SHERF) [TSX:S]

No nickel related news for the month.

Independence Group [ASX:IGO] (OTC:IIDDY)

No nickel related news for the month.

Western Areas Ltd. [ASX:WSA](OTCPK:WNARF)

On September 2, Western Areas Ltd. announced: "New discovery of nickel-copper sulphides at Mt Alexander." Highlights include:

  • "Massive nickel-copper sulphides discovered at shallow depth in first ever drilling at the recently named Radar Prospect.
  • 7.5m thick mineralised interval from 44.2m downhole in drill hole MAD152....49.07m to 50.01m Massive sulphides with average XRF readings of 6% Ni and 1.92% Cu* (100% sulphides comprising pn, cp, po).
  • The new discovery is located in an area that has never before been drilled, and more than 1km east of the nearest known sulphide mineralisation at the Cathedrals Prospect.
  • The east-west strike of mineralisation on the Cathedrals Belt is now extended to 5.5km with potential for significant further extensions at the West End Prospect and Fish Hook Prospect, where new EM anomalies have been identified by ongoing EM surveys."

On September 12, Western Areas Ltd. announced: "Thick nickel-copper sulphide intersection confirms down-plunge continuation of Stricklands mineralisation."

On September 23, Western Areas Ltd. announced: "Thick nickel-copper sulphide intercepts extend continuation of investigators mineralisation."

Panoramic Resources [ASX:PAN] (OTCPK:PANRF)

Panoramic's Savannah mine and mill has a forecast life of mine average annual production rate of 10,800t of nickel, 6,100t of copper and 800t of cobalt metal contained in concentrate.

On August 30, Panoramic Resources announced:

Preliminary final report for the financial year ended 30 June 2019. The Savannah Nickel Project generated $39,567,000 of sales income following the re-commencement of bulk Savannah nickel/copper/cobalt concentrate shipments to China in February 2019.

On September 3, Panoramic Resources announced: "Sale of Thunder Bay North Project–Amending letter agreement."

On September 3, Panoramic Resources announced: "Savannah operations update & further amendments to project loan facility." Highlights include:

  • "Concentrate shipments - three concentrate shipments from Wyndham port, aggregate provisional invoice value of A$23.6 million.
  • Mining - production and development rates improved.
  • Equipment availability - mobile fleet availability improved.
  • Processing - average nickel recovery of 84.8% compared to previous quarter of 71.4%.
  • Metal production - 1,518t Ni, 814t Cu and 80t Co contained in concentrate."

Nickel Mines Ltd [ASX:NIC]

On September 9, Nickel Mines Ltd. announced: "Amendment to HNI collaboration and subscription agreement." Highlights include:

  • "Nickel Mines currently owns 60% of HNI and has agreed to limit its contractual option to further equity interest in HNI to not more than 80% (previously 100%)

On September 13, Nickel Mines Ltd. announced:

Nickel Mines Ltd crushing it. Profitable ramp up an excellent start. NIC’s FY19 financial results came in ahead of our expectations, delivering a maiden, underlying NPAT of US$7.2m. While modest, it was ahead of our forecast of a minor loss and was generated during the ramp-up and commissioning phase of operations at the Indonesia Morowali Industrial Park [IMIP]. Typically, this can be a period of low production rates and high unit costs, however NIC has outperformed on both these fronts for a resultant strong financial performance.....We think the key takeout is that the underlying EBITDA of US$20.4m has been generated by ramp-up production of 5,477t Ni in NPI in the 5 months to June 2019 and from the Hengjaya RKEF lines alone.

RNC Minerals [TSX:RNX] (OTCQX:RNKLF)

On September 17, RNC Minerals announced: "RNC Minerals refiles Beta Hunt Mine and Dumont Nickel Project technical reports." Highlights include:

  • "The report entitled "Technical Report on the Dumont Ni Project, Launay and Trécesson Townships, Quebec, Canada" (the "Dumont Technical Report") prepared for Royal Nickel Corporation and dated July 11, 2019, to provide additional detail with respect to certain items (as noted in the Notice to Reader included with such updated filing). There were no changes to any material conclusions, recommendations or other material items included in the Dumont Technical Report."

On September 20, RNC Minerals announced:

RNC Minerals closes oversubscribed $18.5 million bought deal financing.

Axiom Mining [ASX:AVQ] (OTC:AXNNF)

On September 3, Axiom Mining announced:

Monthly activities report for the period ended 31, July 2019. During the month of July, the Company mined an additional 26,200 wmt of nickel laterite at San Jorge. Although this was our highest mined tones in a single month our mining rate will be significantly lower in August after a decision was made to scale back operations pending the issue of an export permit.

Other nickel producers

Franco/Nevada [TSX:FNV], MMG [HK:1208], South32 [ASX:S32], Lundin Mining [TSX:LUN], Nickel Asia Corporation [PSE:NIKL] (OTC:NIKAY).

Note: First Quantum Minerals [TSX:FM] (OTCPK:FQVLF) plans to restart their Ravensthorpe nickel mine in early 2020.

Nickel juniors

Poseidon Nickel [ASX:POS] (OTC:PSDNF)

On September 2, Poseidon Nickel announced:

Appointment of interim CEO. Poseidon Nickel Limited (ASX: POS or “Poseidon”) has appointed Mr David Riekie as interim Chief Executive Officer, following the retirement of Mr Rob Dennis and pending an appointment of a permanent Managing Director and CEO.

On September 9, Poseidon Nickel announced: "Annual financial report for the year ended 30 June 2019."

On September 11, Investing News reported:

Poseidon preps to restart Black Swan operations. Last summer, Poseidon released a feasibility study surrounding a potential restart of the operation. It laid out predicted revenues of AU$288.6 million with a pre-tax net present value of AU$43.6 million and a 92 percent internal rate of return.

On September 16, Poseidon Nickel announced: "Black Swan underground RC drilling update." Highlights include:

  • "2,500m Underground RC Drilling program below the Black Swan open pit is progressing well, with eight holes (~50% of program) finished successfully.
  • Drill technique being used is a first for nickel in Australia and offers potential for Research and Development status and support.
  • Immediate benefit to Poseidon is that this RC technique overcomes Black Swan blebby sulphide “nugget effect” by increasing sample volumes much more efficiently than conventional drilling.
  • Assay results are due within 2-3 weeks.
  • Poseidon continues to work on the restart plan for nickel mining operations at Black Swan/Silver Swan."

Garibaldi Resources [TSXV:GGI] [GR:RQM] [LN:OUX6] (OTC:GGIFF)

On September 12, Garibaldi Resources announced: "Garibaldi drills 18.2 Meters of 7% nickel and 3.8% copper at Nickel Mountain." Highlights include:

  • "Drill hole EL-19-53, filling a gap on the northwest part of the Lower Discovery Zone [LDZ], has cut 30.2 meters of 4.74% nickel and 3.22% Cu (plus cobalt and precious metals) including 18.2 meters of 7.04% nickel and 3.81% copper within a broader intercept of 86.5 meters (65 m to 151.5 m) averaging 1.88% nickel and 1.32% copper (true width estimated at 69.2 meters);
  • Drill hole EL-19-48 has intersected 7.12% nickel and 3.34% copper over 4.76 meters within 44.5 meters of 1.20% nickel and 0.79% copper (true width estimated at 35.6 meters), widening the LDZ by 12 meters to the northeast...
  • Additional assaying by SGS and Actlabs of selected interval samples reported in 2017 and 2018 has revealed that the Nickel Mountain massive sulphides are unusually enriched with rhodium, iridium, osmium and ruthenium compared to global magmatic sulphide mineralization."

Cassini Resources [ASX:CZI]

On August 28, Cassini Resources announced: "West Musgrave–Pre-feasibility study progress update." Highlights include:

  • "Pre-feasibility study assessing a 10 Mtpa scenario aligned to the Further Scoping Study with an extended mine life.
  • Original Pre-feasibility Study timeline extended for detailed evaluation of a range of potential value-add opportunities.
  • Further update and maiden Ore Reserve planned for release early 2020."

North American Nickel [TSXV:NAN]

No news for the month.

Amur Minerals Corp. [LSE:AMC] [GR:A7L] (OTCPK:AMMCF)

On September 16, Amur Minerals Corp. announced:

TEO reserve estimation programme initiated. Amur Minerals Corporation, the nickel-copper sulphide mineral exploration and resource development company focused on the far east of Russia, is pleased to provide shareholders with an update on the Reserve Estimation programme to be included in its Kun-Manie nickel copper sulphide project (“Kun-Manie”) Permanent Conditions TEO (“TEO”) report [Russian Feasibility Study]."

St George Mining Ltd [ASX:SGO] [GR:SOG]

On September 2, St George Mining Ltd. announced: "New discovery of nickel-copper sulphides at Mt Alexander." Reported above under Western Areas.

Sama Resources [TSXV: SME] [GR;8RS] (OTCPK:SAMMF)

No news for the month.

Cobalt27 Capital Corp. [TSXV:KBLT] [GR:27O][LN:OUPZ] (OTC:CBLLF)

Cobalt27 is a listed investment company that offers unique exposure to a portfolio of cobalt and nickel assets - Cobalt metal, cobalt royalties and direct cobalt/nickel properties, and one lithium royalty. Cobalt27 owns 2,905.7 tonnes of cobalt.

On August 30, Mining.com reported:

Ramu sends nickel price to 5-year high amid tightest market in decade. Expectations of booming demand for electric vehicles have bolstered the longer term bull case for nickel, and a supply crunch, following threats of a shutdown of a major Asian supplier only added fuel to the fire on Friday. Friday’s move comes after the mines ministry of Papua New Guinea said a nickel processing plant owned by Metallurgical Corp of China [MCC] that spilled mine waste into Papua New Guinea’s Basamuk Bay may face closure. “The (Ramu) operation produces approximately 35,000 tonnes of nickel.

Source

On September 3, Cobalt27 Capital Corp. announced:

Cobalt 27 announces 2019 Q2 production update for Ramu Nickel-Cobalt operation. Cobalt 27 Capital Corp., is pleased to announce quarterly production results from its 8.56% direct equity interest in the world class Ramu integrated nickel and cobalt operation (“Ramu”). In the quarter ending June 30, 2019 Ramu produced 22,490 tonnes of mixed hydroxide product (“MHP”) containing 8,767 tonnes of Ni and 793 tonnes of Co. Year to date production at Ramu is 16,430 tonnes of contained nickel and 1,497 tonnes of contained cobalt. “The Ramu operation continues to demonstrate that it is a top tier nickel asset. Cash costs continue to be in the bottom quartile with annual production consistently at or above design capacity. Production remains on track to produce 34,000 tonnes of Ni and 3,300 tonnes of Co in 2019. With nickel prices now trading around $8.00 per pound, Ramu is generating significant free cash flow which will enable the Company’s attributable 8.56% share to be used to repay its debt”, commented Anthony Milewski, Chairman and Chief Executive Officer of Cobalt 27.

Note: In recent news: "Pala Investments to acquire Cobalt 27 for C$501 Million; Creation of Nickel 28. Offer of C$5.75 per share, comprised of C$3.57 in cash plus C$2.18 in shares of the newly established Nickel 28."

Other juniors

Ardea Resources [ASX:ARL] (OTCPK:ARRRF), Artemis Resources [ASV:ARV] (OTCQB:ARTTF), Australian Mines [ASX:AUZ] (OTCQB:AMSLF), Cassini Resources [ASX: CZI] (OTC:CSSQF), Clean TeQ [ASX:CLQ] [TSX:CLQ] (OTCQX:CTEQF), Giga Metals [TSXV:GIGA] (OTCPK:HNCKF), Grid Metals Corp. (OTCPK:MSMGF) [TSXV:GRDM], New Age Metals [TXV:NAM] (OTCQB:NMTLF), Nickel Creek Platinum [TSX:NCP] (OTCQX:NCPCF), Pancontinental Resources Corporation [TSXV:PUC] (OTC:PUCCF), PolyMet Mining [TSX:POM] (NYSEMKT:PLM), S2 Resources (ASX:S2R), Transition Metals [TSXV:XTM] (OTC:TNTMF), and Wall Bridge Mining [TSX:WM].

Note: Some of the above companies are covered in the Cobalt monthly news.

Conclusion

Nickel spot prices rose again in September, and the LME nickel inventory remained near 7-year low levels.

Highlights for the month were:

  • Nickel prices soar as Indonesia brings forward export ban.
  • Nickel mining indefinitely suspended in southern Philippines (Tawi-Tawi). Tawi-Tawi accounted for 27% of overall nickel ore exports.
  • Vale to resume Onca Puma nickel operations.
  • Western Areas/St George Mining intersects more nickel-copper sulphides at Mt Alexander.
  • Poseidon Nickel preps to restart Black Swan operations.
  • Garibaldi Resources drills 18.2 meters of 7% nickel and 3.8% copper at Nickel Mountain.

As usual, all comments are welcome.

Disclosure: I am/we are long NORILSK NICKEL [LSE:MNOD], GLENCORE [LSX:GLEN], RNC MINERALS [TSX:RNX], AXIOM MINING (ASX:AVQ), ARDEA RESOURCES [ASX:ARL], AUSTRALIAN MINES [ASX:AUZ], POSEIDON NICKEL [ASX:POS]. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: The information in this article is general in nature and should not be relied upon as personal financial advice.