Deficits are tightening, prices are rising and the outlook is brightening so it’s likely no coincidence that some of Australia’s most promising emerging prospects are in nickel.
Deutsche Bank believes the nickel market deficit grew to 112,000 tonnes for 2017.
“We expect deficits to continue in the medium term, as steady demand growth from stainless steel (plus-5% year-on-year) and batteries (plus-45% year-on-year, 238,000t by 2025) outpace muted exports from Indonesia and the Philippines and limited new projects,” it said.
“We upgrade our price forecast by 4% in 2018 to US$5.45/lb as market tightness continues, and maintain our price recovery profile towards a long-term price of $7.50/lb.”
Nickel is currently sitting at $5.77/lb, up from $3.96/lb at its low point of 2017.
There has been a lack of nickel exploration since the global financial crisis, and it’s not hard to see why. Aside from the discovery of Nova-Bollinger in 2012, there’s been little excitement or market appetite for nickel exploration.
That might be changing if the past few months are anything to go by.
Market newcomer Golden Mile Resources shot up in November when it reported multiple hits of more than 2% nickel at the Quicksilver project in Western Australia’s Wheatbelt region.
Shares peaked at A$1.21 that month – a nice return from the 20c listing price in June – but have halved since.
The last update was just before Christmas, with Newexco initiating an EM survey and Golden Mile awaiting results leading up to a maiden resource.
Great Boulder Resources got pulses raising over its Mt Venn find at Yamarna, which is still unfolding.
Initial drilling has focused on a copper-rich zone, but Great Boulder believes there’s also a nickel-rich zone yet to be found.
Similar to Golden Mile, Great Boulder shares peaked at 71c in November, but have pulled back to 30c as the market awaits further results.
Long-time nickel explorer St George Mining has had a run of recent success, hitting more than 5% nickel at the Stricklands and Cathedrals prospects, part of the Mt Alexander joint venture in which Western Areas is a 25% holder.
St George shares peaked at 47.1c in early December, but have since halved.
In December, Mithril Resources shot up on high-grade nickel identified at the Kurnalpi project and was able to raise $640,000 to kick off a work program this month.
And former nickel producer Mincor Resources raised $6 million for nickel exploration from institutions in December, and reported strong demand for a share purchase plan.
The SPP was seeking $3 million, but the company received applications for more than $12 million, an upsized the offer to $4 million.
Independence Group, which controls much of the Fraser Range these days, has committed to spend up to $30 million on exploration throughout the district this financial year.
Separately, Legend Mining is receiving some interesting results from its Rockford project in the region, with recent hits including 47m at 0.3% nickel, 0.11% copper and 0.03% cobalt from 64m to end of hole.
Aside from Nova, things have also been quiet on the nickel development front in recent years.
Again, that seems to be changing.
Western Areas is set to release the definitive feasibility study for its Odysseus development this quarter.
The March 2017 prefeasibility study returned a net present value of $292 million and internal rate of return of 28% for a 12,000t per annum operation over 7.5 years at all-in sustaining costs of $3.69/lb.
Western Areas boss Dan Lougher recently said the DFS was targeting a 10-year life.
The company is also close to commissioning the Forrestania mill recovery enhancement project (MREP), which will lift metallurgical recoveries by 3-5% and attract a market premium.
The MREP will also allow the development of the New Morning open pit project at Forrestania, which is currently at scoping study phase.
Panoramic Resources released a study into the $36 million restart of its Savannah mine late last year, and has gone into a trading halt this morning over a capital raising after reporting that it has received financing proposals.
Average Savannah annual production would be 10,800t of nickel, 6100t of copper and 800t of cobalt per annum at cash costs of US$2.40/lb over 8.3 years.
IGO is undertaking studies into downstream processing at Nova, while BHP Nickel West is building a $42 million nickel sulphate plant at Kwinana.
BHP is also considering the development of the Venus and Mt Keith satellite mines.
Poseidon Nickel released a DFS last year into the restart of the high-grade Silver Swan mine, which has an initial mine life of two years.
On longer-dated options, the remote Musgrave region may finally have its day in the sun with OZ Minerals ramping up its involvement in Cassini Resources’ Nebo-Babel project, committing to spend at least A$20 million this year on a prefeasibility study following a positive scoping study.
Metals X is getting nearer to the long-awaited development of the Wingellina nickel project, with updated resource focused on a smaller start-up option due shortly.
Then there is a bunch of nickel-cobalt projects at various stages of feasibility, with Clean TeQ Holdings’ Sunrise project due to start construction in the current half following the release of a DFS this quarter.
Australian Mines also has projects in Queensland and New South Wales, near Sunrise, while Jervois Mining is also advancing a project near Clean TeQ.
On the production front, Nova continues to ramp up, while small-scale producer RNC Minerals has flagged higher nickel production from its Beta Hunt mine in Kambalda.
RNC had been prioritising gold production at Beta Hunt due to the low nickel price, but recently said it expects to double 2018 nickel output to 4 million pounds.