Euroz Hartleys Nickel Snapshot Conference
Euroz Hartleys hosted a virtual Nickel conference yesterday. We had 14 companies present throughout the day.
The nickel macro is well understood, however we have pulled together a number of graphics to help illustrate the market dynamic. We note the Nickel cash price remains well off its all time highs, some 64% lower than 2007 prices – certainly has capacity to rally well beyond spot prices ~US$19,500/t. Declining stockpiles provide further impetus for ongoing strength in the underlying commodity price. We note since April we have seen stockpiles decline substantially, whilst in parallel, we have seen nickel price trade up +20%, temporarily breaching the US$20,000/t mark. The ESG wave is well and truly upon us…undoubtedly, nickel remains a critical commodity in defining a cleaner future.

We remain optimistic by the buoyant nature of the nickel landscape. M&A rumblings have commenced with recent negotiations between WSA and IGO publicised, with Twiggy backed Wyloo agitating as a substantial holder. Furthermore, Wyloo’s bidding war with BHP for Noront in Canada goes some way to illustrate where the majors think the nickel space is moving.
Below are some stock specific comments from yesterday’s presentations. Analysts always happy to chat through their respective names and broader thoughts.
Azure Minerals (AZS) – Tony Rovira
- Currently infill drilling its VC-07 East conductor within its Andover Ni-Cu project in the Pilbara, WA.
- Well funded with ~A$30m in cash to continue its high impact drilling throughout CY21, with 42km of diamond completed to date.
- Maiden mineral resource estimate for VC-07 East in early CY22 – we expect to grow over time with the inclusion of VC-07 West.
- Regional targets VC-23, VC-18, VC-41 all contain EM targets and some with historical mineralisation intercepted – regional heritage surveys approvals are progressing.
Blackstone Minerals (BSX) – Scott Williamson
- Recently released a PFS for the development of a downstream nickel refinery in Northern Vietnam, to produce NCM811 precursor.
- The refinery will process 400ktpa of nickel sulphide concentrate to produce 86ktpa NCM811 for total capex US$490m, with a NPV8 of US$2b IRR 67% (US$3.5b at spot NCM811 prices)
- Has commenced work on their pilot plant, due to produce first product in early CY22, will assist in their negotiations to secure a JV partner.
- Strong news flow with the upstream PFS due in 2H CY21 and downstream DFS is due to be released in 1H CY22
Neometals – Chris Reed
- NMT is in JV to develop a large LIB (“lithium-ion battery”) recycling business with an initial footprint in Europe.
- It is very advanced, with the demonstration scale plant due for commissioning now, and first small scale commercial operations in the MarQ 2022.
- Chart below shows that peers are at a similar stage to NMT. The potential growth is very substantial, and NMT is very well positioned.
- FID for slightly larger 20ktpa capacity is early CY22. The potential growth is substantial, and industry tailwinds (mega-trends) are extremely strong.
- NMT also has two secondary projects. The second European project is vanadium recovery from stockpiled steel slags in Finland and Sweden. A third project is the very large Australian Barrambie titanium/vanadium deposit, likely to be exported as a high margin concentrate.

Nickel Mines – Cam Peacock
- NPI payabilities have reached >99% through SeptQ – JunQ average was ~88% of LME
- Expecting both higher NPI price received and higher costs for SeptQ – Average price received in JunQ US$13,990/t, with average cost ~US$9,100/t.
- Targeting production profile of 10kt Ni for Sept Q.
- Angel Nickel (ANI) construction on schedule for commissioning in 2HCY22 – More than doubles nameplate nickel production to 49.2ktpa.
- Outperformance of ANI in line with HNI/RNI could see group EBITDA generation of +US$500m
- There remains growth opportunities beyond ANI coming on line.
Western Areas – Dan Lougher & Joe Belladonna
- The emergence of potential corporate interest has seen stock price rally +20% since mid August.
- IGO publicly stating it was in preliminary change of control discussions with WSA and Andrew Forrest’s Wyloo Metals emerging as a substantial holder.
- Valuation looks stretched (EH val @ $2.59) with the stock at +$3 – we see risk to above negotiations falling away (wyloo effectively frustrating a transaction with IGO having form in walking away) with the elevated share price.
- We look to the following key catalysts:
- Execution of the documentation to secure the $75m debt facility with CBA (we still see balance sheet tightness assuming this closes)
- Operational performance of the Forrestania assets
- Execution of the Odysseus development to budget
- The Company will be encouraged to expand on the organic upside of the business given corporate interest: Look for economic parameters around Mt Goode, New Morning and green field exploration as value catalysts
Centaurus Metals – Darren Gordon & Roger Fitzhardinge
- Recent results highlight some significant value ‘levers’ that Jaguar offers via the scale and open pitable nature of the majority of the Resource.
- Drilling otherwise remains active, providing on-going news-flow leading to additional Resource tonnes and confidence when re-calculated in the new FY.
- Jaguar has the Resource footprint to underwrite a 20yr operation on what we know today – the Tigre greenfields exploration discovery is evidence of the Project’s potential to grow materially;
- We note that Tigre will form part of the updated Resource Statement due mid FY.
- Significantly, Jaguar Project has the added ESG appeal on account of its input energy consumption being largely sourced from renewable electricity.
- Forecast to be class-leading at 4.69 tonnes of CO2/tonne of nickel equivalent.
- And the access to cheap renewable power, plus cheap labour and oxygen combined lends better to the sulphate process flowsheet. This inturn provides greater recovery and throughput flexibility
- It remains cheap vs the peers on Ni Resource inventories and trades well below the valuations implied by the recent comprehensive Scoping and Value Enhancement Studies.
- DFS for delivery mid FY’23
IGO – Peter Bradford, Richard Glass & Andrew Eddowes
- The potential material M&A (vis WSA) – for which there is uncertainty regarding quantum and structure – we see merit in pausing to look for a better entry price.
- Whilst we see strategic merit in controlling nickel units (in light of BHP Nickel West’s stated ambitions and the growth to battery and EV manufacturer interest in securing upstream Ni sulphide supply) we also view that incumbent IGO holders may not be enamoured with WSA assets and certainly not at current or higher prices.
- Beyond the Ni business, Li sentiment continues to be a large driver for IGO, and certainly carries the lions share from a valuation sense.
- ESG/EV thematic remains robust and IGO offers debt free exposure to low cost long life and already operating lithium assets which should result in IGO imputing more industrial style earnings multiples into its valuation.
- Feels fairly priced at these levels, noting risks on 1) overpaying for WSA; 2) execution risk on the Lithium hydroxide business 3) commodity price carry risk
Mincor Resources – David Southam
- Recently raised $60m via a single tranche placement at $1.28/sh. Ongoing an SPP of up to $5m at the issue price (open 16/09; closing 7/10).
- Significantly, this enabled MCR to replace the $55m Syndicated Project Finance Facility with a simplified, low covenant, low cost, $30m Revolver.
- On-going drilling and assays from the Golden Mile (Long-Durkin North) as well as on-going regional exploration results (Wannaway “Location 1” & Republican Hill) remain of interest in near term.
- The Golden Mile hits to date were a surprise (expectations were for greater probability of success near to Durkin North) and regardless of size, will be highly economic tonnes given proximity to the decline.
- Resources & Reserves Update – though we expect only incremental changes to this point.
- Longer term, Cassini drilling in the new CY will material grow life of operations as well as may yield a new development front at the Cassini North discovery. Cassini North could underwrite a doubling of output to +600ktpa from Cassini alone.
- This is material given the Kambalda Concentrator has 1.5mtpa capacity (of which MCR currently only utilises 600ktpa under the current mine plan).
- Formal execution of the OTCPA (Ore Tolling & Conc Purchase Agreement) by MCR with BHP Ni West (mid Dec).
- M&A activity remains possible.
Widgie Nickel – Steve Norregaard
- Lists on Wednesday under ticker WIN. EV at 20cps of $25m.
- The Mt Edwards nickel projects are located south of Kambalda (163kt contained nickel resource).
- Some projects have previously been mined, with the most recent mining finishing around the GFC.
- The BHP Kambalda concentrator is located approximately 40km to the north east of the Mt Edwards Project, and with easy road access.
- Capital to bring back into production will be small.
- Aiming to be in production in two years, although depends on nickel prices.

Duketon Mining – Stuart Fogarty
- The current drill program at Rosie aims to increase resource confidence in the Upper North Area; collect PGE-rich samples from the Oxide Zone for met-testwork; and test depth extension below the South-Eastern Area.
- Resource growth is anticipated, adding mine life and/or opportunities to lift targeted production levels above the Scoping Study design.
- Potential consolidation within the WA nickel industry, bodes well for further tightening of nickel sulphide supplies, enhancing the development attractiveness of Rosie. Nickel price continue to strengthen, pushing through US$20,000/t.
- We note first mention of U3O8 ground through the presentation- expect this to garner more airtime given current macro around U3O8.
- $30m cash and liquids (backing of ~25cps somewhat caps downside) leaves the company well funded – and trading with an EV of ~$36m post recent share price run.
- Our latest modelling factors in improved nickel and copper prices which has improved our valuation, now 70cps (up from 60cps) – note spot val pricing is closer to $1/sh.
Legend Mining – Mark Wilson & Oliver Kiddie
- On-going diamond drilling at Mawson in the Fraser Range of WA, has continued to grow the mineralised footprint of the discovery, particularly to NE with an implied +3km by +1km dimension.
- We are particularly drawn to, is the consistent EM anomalism flanking the SE margin to the intrusive in the NE quadrant.
- We stress that the intrusive – where encountered by diamond drilling – is nearly always extensively mineralised: The system is clearly metalliferous and thus we view that the ongoing evolution of the geological model will ultimately vector in on trap sites for economic accumulation of massive mineralisation;
- These are exciting results highlighting the scale potential of Mawson both aerially and at depth;
- The discovery of an economic accumulation represents material leverage but would likely ensure the lower grade halo can be economically mined given the depth of the deposit;
- LEG is well funded with $35m in cash and options in the money – we believe economic proof of concept and or new discovery is matter of when and not if;
Lunnon Metals – Ed Ainscough
- Initial assays from the recently commenced 28km drilling program are guided for delivery in the coming week
- Downhole EM testing currently underway with regular resource updates due in the coming months
- Potential for resource growth at Foster is promising – focus will be RC drilling to 250-300m, DD to test deeper conceptual targets with DHEM to follow
- One of the more likely M&A candidates of the ASX listed names given strategic value of location and proximity to Kambalda concentrator
Panoramic Resources – Victor Rajasooriar
- Underground mining progressing well to plan, surface ore stocks building nicely in preparation of plant restart/commissioning (Nov’21) and ultimately for first production and concentrate shipment in Dec’21.
- Pleasing to see grade control drilling slightly better than expected and first stope to be dropped in Oct’21.
- Exploration upside in converting some Inferred resource into Indicated and growing mine life.. sustain higher production levels.
- PAN remains well-funded, cash ~$24m at JunQ end, ~A$60m loan facility in place, only modest capex (~A$41m) – first draw of debt anticipated this quarter (SepQ).
Poseidon Nickel – Peter Harold
- Maiden resource at Golden Swan and extensions to Silver Swan expected October/November. DHEM a strong indicator of targets and opportunity exists to test depth extensions at Silver Swan.
- Multiple ore source feeds for the Black Swan plant and studies aim to maximise return by blending different ore types. Recent results from Silver Swan tailings (High Fe content) is a perfect supplementary feed for low-grade and low Fe Black Swan open-pit dirt and higher grade underground dirt. Opportunities also exist for material to be treated via third parties in the area.
- Regional exploration potential offers upside to current resources and reserves.
- Tight labour squeeze is putting pressure on Dec 22 commissioning however a re-jig of the proposed schedule is allowing some of these risks to be abated. Personnel have been secured to complete feasibility studies in allotted time.
Some further charts with stock specific metrics below:



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