Search Results for "South Africa"

Norilsk Nickel Sees Drop in Production in South Africa

Mining Weekly reported MMC Norilsk Nickel (LSE:MNOD) has announced significant nickel production increases in its Southern African operations during the second quarter of this year.

As quoted in the market news:

Tati Nickel’s second-quarter output of 2 805 t of nickel in concentrate was a 7% improvement over its production in the first quarter, which came to 2 632 t. Production for the first half of this year was 5 438 t, which was also a 7% rise over the figure for the first half of last year, which was 5 071 t. In a press release, Norilsk attributed this success “to stable performance of the enrichment plant and optimisation of reagent flows in the flotation process”.

Click here to read the full Mining Weekly report.


Uru Metals Discovers Nickel In South Africa

Mining Weekly reported Uru Metals’ (LSE:URU) Zebediela nickel project may become one of the largest nickel mines in the world.

As quoted in the market news:

A prefeasibilty study will be conducted during the next 18 to 24 months at the Zebediela joint venture (JV) project near the platinum mining town of Mokopane, in Limpopo. The study has the potential to increase Zebediela’s projected revenue from the recently completed preliminary economic assessment (PEA) by up to 25% before year-end, he reveals.

Click here to read the full Mining Weekly report.


Nickel Exploration In South Africa Takes Off

Mining Weekly reported nickel exploration and discovery in South Africa is causing a stir of excitement on the Bushveld complex.

As quoted in the market news:

The exploration joint venture (JV) that made the find in 18 months had to outlay only $4.2-million to hit a $1-billion-plus jackpot.

The Africa-focused Aim-quoted URU Metals says that it has a compliant preliminary economic assessment (PEA) from consultants led by the MSA group. The PEA shows the Zebediela project to have a potential of 56-million pounds of nickel a year for 25 years.

Click here to read the full Mining Weekly report.


Norilsk Plans to Increase Australian, South African Nickel Production

Bloomberg reported Norilsk Nickel (LSE:MNOD) wants to curb its dependence on Russia for nickel and is expanding its production in South Africa and Australia.

As quoted in the market news:

Norilsk intends to raise production at its South African Nkomati project by 58 percent this year from 5,815 metric tons last year, while output at Australia’s Lake Johnston mine may jump fivefold to 8,400 tons, Roman Panov, the head of Norilsk’s overseas operations, said today in a statement.

Click here to read the full Bloomberg report.


South African ARM Financial Year earnings down

On Monday, South African diversified miner African Rainbow Minerals (JNB:ARIM) reported a 26 percent drop in full-year headline earnings, hit by a strong rand and lower prices for iron ore and manganese.

The press release is quoted as saying:

ARM, which has interests in nickel, coal, iron ore, platinum, chrome and manganese, said headline earnings per share for the full year fell to 807 cents from 1,094 cents the previous period. During the year, ARM completed the expansion of its Khumani iron ore mine to 10 million tonnes per year, commissioned a 375,000 tonnes per month plant at the Nkomati nickel operations, and its Goedgevonden coal mine is ramping up to its name plate capacity of saleable 6.7 million tonnes per year.

Click here to access the entire press release


NWT Uranium Corp’s 34% Owned Niger Uranium Announces Joint Venture Agreement With Southern African Nickel Limited

NWT Uranium Corp. (TSXV:NWT) congratulated Niger Uranium Limited on its Joint Venture Agreement with SAN, the joint owner and current developer of a portfolio of large nickel projects in Southern Africa.

The press release is quoted as saying:

Niger Uranium believes that the Joint Venture’s nickel projects have potential to host large low-grade, economic, open-pittable sulphide-nickel mineralization, with the flagship target being the Burgersfort nickel project in the Mpumalanga province of South Africa.

Click here to access the entire press release

Click here to access NWT Uranium Corp. Corporate Site


Norilsk Announces Nickel Concentrate Output for 2011 from African Mines

Mining Weekly reported Norilsk Nickel (LSE:MNOD) says it mined 15 161 t of nickel in concentrate at its African operations last year.

As quoted in the market news:

Norilsk Nickel Africa comprises two operations. These are Tati Nickel, in Botswana, which is 85%-owned by the Russian group (the remaining 15% being held by the Botswana government) and Nkomati Nickel, in South Africa, which is a 50:50 joint venture with South Africa’s African Rainbow Minerals (ARM). Management control of Nkomati is vested in ARM.

Click here to read the full Mining Weekly report.


NUM Signs Three-year Wage Deal at Nkomati Nickel Mine

Mining Weekly reported that South Africa’s National Union of Mineworkers (NUM) has signed a three-year wage deal for the Nkomati nickel mine. Nkomati is owned by African Rainbow Minerals Ltd. (JSE:ARI) and Russia’s Norilsk Nickel (MCX:GMKN).

As quoted in the market news:

The deal followed a three-day strike which started on Sunday evening. The agreement is effective from the 1st of July.

The agreement would see workers receiving increases of 8.5% in the first year, up to 9% in the second year and up to 10% in the third year, according to their category. Workers would also receive a housing allocation of R2 930 in the first year, rising to R3,512 in the third year and a medical award that started at R1 953 and rises to R2 342. There is also a long service award that would see workers with 10 years of service receive R4 000, while those with 25 years of service would receive R12 000.

Click here to read the full Mining Weekly report.


Ivanplats’ Flatreef Discovery Shows Substantial Nickel Deposits

Ivanplats’ (TSX:IVP) CEO, Robert Friedland, announced today that an intensive drilling program at its Flatreef Discovery project in South Africa showed results for indicated and inferred resources with substantial amounts of nickel deposits.

As quoted in the press release:

Flatreef is distinguished from other Bushveld projects by its tremendous size, the remarkable thickness of the polymetallic mineralized reef and its potential for significant by-product credits of nickel and copper,” Mr. Friedland said.

Click here to read the full Ivanplats (TSX:IVP) press release.


NUM Threatens Strike At Nickel Mine

Reuters reported a South African union has threatened a workers strike at Arican Rainbows Minerals (PINK:AFRBY) and Norilsk Nickel (LSE:MNOD) joint venture nickel mine.

As quoted in the market news:

The largest mining union in South Africa has declared a dispute with the mine owners over wages and NUM’s Regional Secretary in North East, William Mabap, said it would not hesitate to call a strike.

Nkomati mine is situated in Machadodorp in Mpumalanga and produced 10,100 tonnes of nickel in 2011.

Click here to read the full Reuters report.


Uru Metals Announces Potential For 56 Million Pound Nickel Project

Mining Weekly reported URU Metals (LSE:URU) has discovered the potential for a 56 million pounds of nickel a year for 25 years in the Bushveld complex in South Africa.

As quoted in the market news:

An exploration joint venture (JV) estimates the large nickel discovery it has made in South Africa’s northern Bushveld at more than $1-billion for an exploration outlay of only $4.2-million.

The Africa-focused Aim-quoted URU Metals says that it has a compliant preliminary economic assessment (PEA) from consultants led by the MSA Group, which shows the Zebediela project to have a potential of 56-million pounds of nickel a year for 25 years.

Click here to read the full Mining Weekly report.


NWT Uranium, URU Minerals Announce Nickel Joint Venture

NWT Uranium Corp. (TSXV:NWT,FWB:NMV) and URU Metals (LSE:URU) announced the results of the preliminary economic assessment for their South African join venture nickel project.

As quoted in the press release:

• The Preliminary Economic Assessment (PEA) of the Zebediela Project projects a pre-tax and preroyalty net present value of $1,018 million, an internal rate of return of 25.7% and a 3.8 year payback period at an 8% discount rate.

• Indicated resources stand at 485.4 million tonnes at a grade of 0.245% Ni with additional inferred resources of 1,115.1 million tonnes at a grade of 0.248% Ni.

• Using indicated resources only, a proposed open-pit mine is envisioned with a 25 year mine life producing 56,600,000 lbs of recoverable nickel per annum.

Click here to read the NWT Uranium Corp. (TSXV:NWT) press release.   

Click here to read the URU Metals (LSE:URU) press release.


The Nickel Market: Investing Ahead of the Crowd — Part 1

nickel-market-1

Source: US Geological Survey

First and foremost, the way to make money on a consistent basis in the junior mining sector is to buy quality. Chasing what is hot in the market typically means you are too late to the story. However, in my opinion, it’s still necessary to have a good idea of where the commodity is within the cycle, as buying near the bottom of the cycle will tilt the odds of success in your favour.

Today, we’re going to look at a base metal market which has been beat up over the last few years, but may be on its way up. This metal is nickel, one of the most important metals of our industrial world.

For the most part, nickel has been somewhat off the radar in the resource investment world; in the 4 years preceding 2016, the nickel market was over-supplied with nickel ore, sending the nickel price to 5 year lows under $4 USD/lbs.

2016 may have marked the bounce back in nickel prices for a number of reasons that we will get into later on in this report. Before we get into the supply and demand fundamentals, let’s take a look at some basic geological background information on the metal.

Nickel Ore

In the U.S. Geological Survey’s(USGS) 2017 review, it states that the world has 78 million metric tons of nickel reserves and produced roughly 2.25 million metric tons of nickel ore in 2016.

nickel-market-2

Source: US Geological Survey

Nickel is most often found in two types of ores, sulfides or laterites. While nickel laterite ores are more commonly found in the world, they are mined less than nickel sulfide ores, which make up the vast majority of current and historical production.

Laterites are formed near surface, typically in tropical regions, where high rainfall and higher temperatures have released the nickel from ultramafic rocks, forming highly leached soils. Laterite deposits are commonly found around the equator, for example the Philippines, Indonesia, Western Australia and southern Africa.

Nickel laterite ores are mined less often than sulfide ores because they require more extensive and more complicated processing to extract the nickel. Higher cost of production means these deposits typically sit and wait for higher nickel prices to make them economic.

Nickel sulfide ores are associated with ultramafic rocks, which sit near the surface. It’s theorized that during formation, ultramafic flows picked up sulphur droplets from adjacent rock. As the sulphur droplets moved through the ultramafic flow, they collected nickel, copper and other platinum group metals. Thus, we’re left today with nickel sulphide deposits that commonly have these other metal types.

A Conversation with Martin Turenne

I had the chance to ask FPX Nickel CEO, Martin Turenne, a series of questions pertaining to the global nickel market. Highlights from our interview will be shared throughout the report.

nickel-market-3

FPX Nickel Corp. (FPX:TSXV)

MCAP – $13.4 million CAD (at the time of writing)

CEO – Martin Turenne

FPX Nickel is developing its flagship Decar nickel project, located in central British Columbia, Canada. The Decar project is a greenfield discovery of nickel mineralization in the form of a naturally occurring nickel-iron alloy called awaruite.

Nickel Supply Analysis

Nickel ore is mined all across the world, however, the majority of current production is concentrated in a few keys areas: the Philippines, Russia, Canada, Australia, New Caledonia and Indonesia.

As a country, the Philippines represents roughly 20% of the world’s nickel production. Rewinding back to 2013, global nickel production looked much different, as Indonesia was the largest producer in the world, representing an overwhelming 34% of the market. However, this changed very quickly in 2014.

Indonesia’s Nickel Ban

Why did Indonesia’s production fall in 2014? In a nutshell, the Indonesian government instituted a ban on nickel ore exports in an effort to encourage investment in downstream nickel ore smelting operations. Prior to 2014, China, the largest importer of Indonesian nickel ore, would ship the raw nickel ore back to its smelters, where it would be processed into nickel pig iron (NPI).

NPI is a ferronickel product, the creation of which is credited to China, and it can be used in the making of stainless steel. Stainless steel producers have a choice between using NPI or pure nickel in their process, however, NPI is typically a cheaper alternative.

NPI is created using low grade, laterite nickel ores which are mixed with coking coal and a mixture of fluxes. The process culminates in a blast furnace, which renders the unwanted impurities into slag and allows the molten mixture to be cast into molds, forming nickel pig iron.

While the Chinese provided Indonesia’s nickel mines with steady demand for the ore, the Indonesian government wanted more from the industry and, thus, in 2014 issued a ban on the exporting of nickel ore.

To date, it would appear that this ban hasn’t worked out as well as the Indonesian government would have hoped, as earlier this year they relaxed their stance on nickel ore exports, saying that some approved, low grade (less than 1.7% Ni content) nickel ores could be released into the market, provided the buyer expresses a commitment to build a smelting operation in Indonesia within five years.

Considering this, I asked Martin the following:

Question 1:

In your opinion, will the Indonesian government further relax or lift their nickel ore export ban and how will that affect the global nickel market?

Martin: If the Indonesian government wants to encourage greater investment in domestic smelting capacity, it will not further relax or lift the export ban. When the export ban was relaxed earlier this year, the nickel price dropped; the Indonesian Smelter Association has since reported the closure of 13 out of 25 Indonesian nickel pig iron (“NPI”) smelters due to low nickel prices. So relaxing the ban has defeated the purpose of its initial implementation, which was to encourage investment in new smelter capacity. The relaxation of the export ban has actually had a relatively neutral impact on global nickel supply this year; to the extent the ban is further relaxed, any increase in Chinese NPI production is largely offset by lower Indonesian NPI production, and this limits the potential for further development of Indonesian NPI smelters going forward.

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The Environment and its Effect on the Nickel Market

I don’t think it should come as a surprise to anyone that the environment and how we live in it is becoming a larger political issue around the world with each passing day. A large segment of the population is demanding both industry and individuals reduce their impact on the environment, mainly via reducing carbon emissions.

The Paris Accord and the 450 Scenario are two examples of organized attempts to bring countries together in addressing our impact to the environment. While many countries have embraced these hefty goals for carbon emissions, there are still countries that choose not to conform to the trend, as well as others who are walking to the beat of their own drum by setting their own goals and plans to achieve them.

China has long been associated with poor air quality in its cities, an unfortunate trade-off for the country’s massive manufacturing industry. This trade-off has long been accepted, but this sentiment is quickly changing, as the Chinese government has begun to target industries that contribute significantly to air pollution, forcing them to shut down or improve their process.

Earlier this year, I wrote about the effect this has had on China’s zinc smelting operations and how that loss of smelting capacity has further contributed to the supply crunch in the zinc market. Nickel is no different, as, most notably, the Philippines are shutting or suspending nickel operations in an effort to reduce the industry’s affect on the environment.

The Philippines is particularly interesting in the nickel space, because they are by far the largest producer of nickel ore in the world. Anglo America states,

“The Philippines has ordered many nickel mines to shutdown, or to suspend operations, accounting for [roughly] 50% of the country’s annual output, [roughly] 10% of world mine supply” ~ April 2017 Nickel Perspectives Presentation – Slide 7

Further, the Philippines Department of Environmental and Natural Resources’ (DENR) Environmental Secretary, Gina Lopez, said in reference to the mine closures and their environmental impacts,

“My issue here is not about mining. My issue here is social justice. If there are businesses and foreigners that go and utilize the resources of that area for their benefit and the people of the island suffer, that’s social injustice.” ~ DENR

Philippine Ban on Nickel Ore Exports?

In recent developments, as reported by Channel NewsAsia on August 25, 2017,

“Philippine lawmakers have filed a bill seeking to ban mining in watershed areas and exports of unprocessed ores and will require miners to get legislative approval before operating, in line with President Rodrigo Duterte’s pledge to overhaul the sector.”

This would have major implications on the nickel market if it becomes official policy. As stated earlier, the Philippine government had already started to suspend and shut down mining operations due to their affect on the environment. Taking it a massive step forward is incorporating a ban on the export of unprocessed ore.

We need to keep a close eye on this, because in my mind, this makes the nickel narrative very bullish.

Question 2:

Brian: In what appears to be a growing trend, the Philippines have ordered the suspension or closure of roughly 50% of their nickel producing mines due to environmental concerns.

In your opinion, will the environment continue to play a role in the global nickel market moving forward, or are the actions by the Philippine government an isolated situation? If this is just the tip of the iceberg, how do you foresee it affecting future nickel supply?

Martin: The environmental factor could be significant going forward, because mining practices in the Philippines can be pretty gruesome for the local ecosystem, and the move to suspend operations has very vocal support from Filipino President Duterte and local populations. Beyond that, we have recently started to see some curtailing of NPI smelting operations in China, which are very dirty operations. Given China’s current crackdowns on polluting industries, and given that the country has capacity to produce up to 20-25% of global refined nickel supply, smelter shutdowns there are significant for the market.

Nickel Producers by Company

nickel-market-4

Source: Statista

Two companies stand above the rest when it comes to world nickel production, Vale and Norilsk Nickel. Combined, they control more than a quarter of the nickel produced in the world, let’s take a look at these two companies.

Vale (VALE:NYSE)

Share Price – $10.17 USD (at the time of writing)

MCAP – $52.4 Billion USD

Vale is a major resource company with a variety of different areas of business: mining, logistics, energy and steelmaking. While they have multiple cash flow sources, they are primarily a mining company. As a mining company, they have operations that mine iron ore, nickel, coal, copper, fertilizers and manganese/ ferro-alloys.

Currently, Vale is the largest producer of nickel ore, with 14% of the global market. Vale’s nickel operations are in Brazil, Canada, Indonesia and New Caledonia. Also, Vale is a refiner with both fully owned and joint venture operations in China, South Korea, Japan, the United Kingdom and Taiwan.

One of Vale’s largest footprints is in Canada with offices or mining operations in the following cities: Toronto, Sudbury, Port Colborne, Thompson, St. John’s, Voisey’s Bay and Long Harbour.

  • Vale’s Sudbury location employs roughly 4000 people and is one of their largest properties with six mines, a mill, a smelter, and a refinery. Along with nickel, the mines also produce copper, cobalt, platinum group metals, gold and silver.

Norilsk Nickel (MNOD:LSE)

Share Price – $15.35 USD (at the time of writing)

MCAP – $24.14 Billion USD

Norilsk is a Russian company and the 2nd largest nickel producer in the world. As their name would suggest, nickel is their primary focus, however, they do produce a number of other metals, including: palladium, platinum, copper, cobalt, rhodium, silver, gold, iridium, ruthenium, selenium, tellurium and sulphur.

Norilsk’s main mining operations are as follows:

  • Polar Division – Located in Russia, north of Arctic Circle. The Polar Division has 4 mines which produce sulfide copper-nickel ores.
  • Kola MMC – Located in Russia, near the border with Norway and Finland. Kola has sulfide disseminated ores mainly containing nickel and copper. The ore is then processed into a collective copper-nickel concentrate. Kola’s refining facilities can then create electrolyte nickel and copper, carbonyl nickel, cobalt concentrate and precious metals concentrates.
  • Norilsk Nickel Finland – Located in Finland, it is the only refining plant in the country. The refinery processes nickel concentrates from Norilsk’s other operations.
  • Norilsk Nickel Australia – Operations are currently suspended.
  • Norilsk Nickel Africa – 85% ownership of Tati Nickel Mining Company in Botswana and 50% ownership in Nkomati in South Africa.

Question #3

Brian: The major mining companies are typically a great gauge for the supply and demand fundamentals in their given sector.

In your opinion, from the information they are disseminating, where is the nickel market currently and where is it headed?

Martin: In terms of market fundamentals, all the analysts and the major companies are aligned in predicting supply deficits for the next several years and rising nickel prices. You just have to look at the deficit forecasts recently disclosed by Norilsk and Sumitomo Metal Mining, to name just two. We are also seeing companies like Glencore and BHP very publicly highlighting the growth in nickel demand from electric vehicle batteries, and the hugely bullish implications of that for the nickel price. Finally, we are starting to see majors starting to look for growth opportunities for their nickel businesses; that’s a common theme we hear when speaking to those companies and to investment bankers in the industry. As the nickel price continues to strengthen, that urgency to acquire new projects will pick up considerably.

Question#4

Brian: Mines are depleting assets and, therefore, regardless of where we are in the bull or bear cycle, the major mining companies, when push comes to shove, have to replenish their coffers with more pounds or ounces of metal on a continuous basis.

Roughly, 60% of the world’s nickel production is from major mining companies, which, in my mind, means that good nickel deposits are typically bought up in the market by the majors versus being developed by the junior that discovers them.

How close and what do you believe will be the catalyst for the next merger and acquisition rush in the nickel sector? Please explain.

Martin: Just one year ago at this time, mid-tier and major companies in base and diversified metals were still focused on repairing their balance sheets and in divesting non-core assets; growth wasn’t on their radar at all. With the subsequent run in the prices of base metals and bulks, those same companies are now generally very profitable again, and given that their pipeline of new projects is relatively empty, they are actively seeking growth opportunities and looking to add new development projects to their portfolio. We’ve started to see a few mid-tiers and majors investing into copper and zinc projects, and I would expect you will see them looking to add nickel assets into their portfolio next. The fact that there’s been so little investment in base metal projects in the past few years bodes extremely well for companies like FPX Nickel – companies with large, low-cost development-stage assets located in attractive jurisdictions.

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Nickel Mine Production Changes

Existing and newly approved nickel mining operations are projected to show an average yearly increase of roughly 440,000 tonnes of production leading up to 2020. Let’s take a look at a few of the largest contributors by country.

  • Indonesia is set to have the largest yearly increase in production with an average of roughly 258,000 tonnes of laterite ore over the next 4 years. Indonesia’s expected production increase is directly related to the low-grade ore which will exported.
  • Guatemala’s Fenix Mine is projected to show an average yearly increase of 27,000 tonnes of laterite ore over the next 4 years. The Fenix Mine was reopened in 2014 after 30 years of closure due to disputes over land ownership.
  • Finland’s Talvivaara (Sotkamo) and Kevitsa Mines are set to increase yearly production on average by 25,800 tonnes of sulphide ore over the next 4 years. The Talvivaara Mine will show the bulk of the increase in production. It is located in Sotkamo, and is mined by Talvivaara Mining Company, a company which has had its share of issues, including bankruptcy in 2014 and a tailings spill. The company has since signed a 10 year deal with Norilsk Nickel, which will buy all of its nickel and cobalt production over the contract period.
  • Australia’s Nova-Bollinger Mine is projected to increase its average yearly production by 20,400 tonnes of sulphide ore over the next 4 years. The Nova-Bollinger Mine is owned and operated by Independence Group, which is an ASX listed diversified mining, development and exploration company.

A decline in the yearly production of currently producing nickel mines is projected to average 270,000 tonnes leading up to 2020. Here’s a look at some of the larger reductions in nickel production from around the world.

  • Australia’s Long and Savannah Mines are expected to decrease their yearly production by a combined average of roughly 10,000 tonnes until 2019 and 2020 where that will double to 20,000 tonnes. The Long mine is owned and operated by Independence Group, which purchased the project in 2002 from BHP. The Savannah Nickel & Cobalt Mine is owned and operated by Panoramic Resources. All of the mineral concentrate produced by the Savannah mine is contractually sold to Jinchuan Group, one of the world’s largest nickel companies.
  • Brazil’s Mirabela and Niquel Tocantins Mines’ yearly production is expected to decrease by a combined 46,000 tonnes per year leading up to 2020.
  • Guatemala’s Montufar – Garnierite Mine is expected to decrease its average yearly production by 20,000 tonnes over the next 4 years.

Subtracting the projected decreases to increases in production, by 2020, the yearly available supply should roughly increase by 174,000 tonnes. However, a major wild card in this estimate is the actions by the Filipino and Indonesian governments. They hold a lot of influence on the future supply numbers, positive or negative.

Global Reported Nickel Inventories

When examining the supply numbers for any of the industrial metals, it’s important to check the inventory levels held by the London Metal Exchange (LME), Shanghai Futures Exchange (SHFE) and bonded warehouses.

London Metal Exchange

For those who aren’t aware, the LME is a major world centre for the trading of futures contracts in industrial metals. Established in 1877, the LME has a long history in the metals industry and, thus, has a great network of warehouses around the world.

Shanghai Futures Exchange

The SHFE is Asia’s answer to the LME, as it allows for futures contracts trading of a number of different commodities, which include: gold, silver, copper, aluminum, nickel, steel rebar, zinc, etc. While not being as old as the LME, the SHFE has become a major part of the global market, one that needs to be considered when researching any commodity.

Total Nickel Inventory Levels

Examining the total global nickel inventory, you see that they are down 15% from the April 2016 peak, and down 10% year-to-date in 2017. Currently, total global inventories sit just below 500,000 tons. (Source: ScotiaBank and RBC Capital Markets) Contrasting this against 2016 production levels, which were 2.25 million tons, the current total global inventory represents roughly 22% or 3 months of annual production.

To note, the LME nickel supply makes up roughly 80% of the total global nickel inventory. For those interested, the LME inventory data is readily available on their site or on the Kitco site. The LME’s nickel 5 year stock level chart shows that since 2012, nickel inventories have grown from just over 100,000 tons to a high in 2015 of roughly 450,000 tons. However, since 2015, these stock levels have fallen down below 400,000 tons.

Question #5

Brian: LME nickel inventory levels have trended downwards after hitting a 5 year high in 2015. Current LME nickel inventory is sitting just below 400,000 tons, which is roughly 18% of 2016 world nickel production.

How much influence does the LME inventory supply have on the nickel price? Secondly, is there a key inventory level which can be looked at as critical to its influence on the nickel market?

Martin: Global reported inventories do have a big influence, and we are a ways off from reaching a critical level in terms of perceived tightness in nickel inventories. I think the important takeaway is that global reported inventory levels are down 15% from the peak in April 2016, which reflects the supply deficit in 2016 and 2017; so we have some very positive momentum in inventory draw downs and spot price escalation. More importantly, the analyst consensus is for more severe supply deficits over the next several years, which is the fundamental driver for an increase in prices going forward. Among the major metals, nickel has by far the most upside from the current spot price; the long-term consensus forecast price is around $7.50/lb, which means the price has to go up 45% to reach a stable long-term equilibrium, whereas the current spot price for copper and zinc is already at or above the long-term consensus forecast level. If you’re looking for the base metal with the most upside, nickel is the choice.

Nickel Supply Concluding Remarks

Like all commodities markets, the supply fundamentals of any particular metal are complicated, not only from a quantitative perspective, but also because these markets are so large and widespread. Their size and geography leave them very susceptible to the jurisdictional risk that we all stress about when investing in individual mining companies.

There were a number of topics discussed in the article, let’s recap some of the key nickel supply numbers and the factors affecting its current and future supply:

  • 2016 marked the first year in the last 5 where the nickel supply was out-stripped by demand.
  • Major nickel producers believe that we will see continued supply deficits and a rising nickel price over the next few years.
  • The Indonesian partial ban on nickel exports should continue as the country looks to develop its smelting industry.
  • The Philippines have suspended or closed roughly 50% of its annual nickel production due to environmental concerns. In 2016, the Philippines were the world’s largest nickel producer, given the current direction of government policy, this may not be the case in 2017.
  • Subtracting the projected decreases to increases in nickel production, by 2020, the yearly available supply should roughly increase by 174,000 tonnes. The Philippines and Indonesia are wild cards in this projection.
  • Total global nickel inventories are trending downwards, falling 15% to below 500,000 tonnes, since hitting a high in April of 2016.

The Philippines and Indonesian will have a major impact on the direction of the nickel price. If things remain status quo, it would appear that the nickel supply should continue to get out-stripped by demand.

However, we have only covered only one component of the equation; we need to look at nickel demand. What does the nickel demand look like, currently? From there, we can make some conclusions about where we think the market is headed. Stay tuned!

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Until next time,

Brian Leni P.Eng

Founder – Junior Stock Review

Disclaimer: The following is not an investment recommendation, it is an investment idea. I am not a certified investment professional, nor do I know you and your individual investment needs. Please perform your own due diligence to decide whether this is a company(s) and sector that is best suited for your personal investment criteria. Junior Stock Review does not guarantee the accuracy of any of the analytics used in this report. I do own FPX Nickel Corp. shares. I have NOT been compensated to write this article.

About the author — Junior Stock Review provides investors with in-depth analysis of junior resource companies and interviews with key players from the industry. It’s also a platform through which its founder, Brian Leni, discusses where it is that he’s investing his money, and the people who have and do influence the way he looks for opportunity in the market. 

Brian is a Professional Engineer by trade, and worked in heavy industry for over 10 years. As a process engineer and then a manager of the steel rolling process, Brian honed analytical skills that lend themselves very well to the world of investing and speculation.

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Ivanhoe Mines Appoints Two Additional Leading Financial Institutions to Arrange Project Financing

Robert Friedland, Executive Chairman of Ivanhoe Mines (TSX:IVN)(OTCQX:IVPAF), and Lars-Eric Johansson, President and Chief Executive Officer, announced today that the company has appointed another two leading mine-financing institutions – KfW IPEX-Bank (KfW IPEX-Bank), a German government owned institution, and the Swedish Export Credit Corporation (SEK) – as Initial Mandated Lead Arrangers (IMLAs) to arrange debt financing for the ongoing development of the company’s Platreef platinum-group metals, nickel, copper and gold mine in South Africa.

Friedland commented:

“With KfW IPEX-Bank’s and SEK’s involvement and with the indications of interest received from lenders totalling US$900 million, we have great confidence that we will reach our total debt financing target.

“We are thrilled by the addition of SEK and KfW IPEX-Bank to the IMLA group. SEK and KfW IPEX-Bank bring extensive experience in mining project finance, in particular in export and import finance, and bring with them the potential for significant German and Swedish government backing.”

Click here to read the full text release. 

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Top Nickel Reserves by Country

Investors interested in nickel stocks are often curious about which countries produce the most nickel. After all, major producers are often home to many companies mining and exploring for the metal.

But investors should also be aware of which countries hold significant nickel reserves. Why? While many countries that produce large amounts of nickel have big nickel reserves, some countries produce little nickel but have high reserves of the metal. It’s possible that in the future they could become powerhouses in the space.

With that in mind, here’s an overview of the five countries that hold the highest nickel reserves in the world. All nickel reserves by country data is based on the US Geological Survey’s most recent report.

1. Australia

Reserves: 19 million MT

Australia holds the highest nickel reserves in the world at 19 million MT, but last year it was only the fourth-largest nickel producer in the world. In 2016, it produced 206,000 MT of the metal, down from 222,000 MT in 2015.

Some top-producing nickel mines in the country include BHP Billiton’s (NYSE:BHP,ASX;BHP,LSE:BLT) Nickel West assets, which produced 22,100 tonnes of nickel in last year’s December quarter, and First Quantum Minerals’ (TSX:FM,LSE:FQM) Ravensthorpe mine, which exports about 25,000 tonnes of nickel annually.

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2. Brazil

Reserves: 10 million MT

In second place is Brazil, with total nickel reserves of 10 million MT. The country saw a drop in nickel production in 2016, with output sinking from 160,000 MT in 2015 to 142,000 MT in 2016. It was the seventh-largest nickel producer in the world last year.

Vale (NYSE:VALE) is based in Brazil, and is a major nickel producer in the country. Other companies mining and exploring for the base metal in Brazil include Anglo American (LSE:AAL) and Horizonte Minerals (TSX:HZM).

3. Russia

Reserves: 7.6 million MT

Russia, which was the world’s second-largest nickel producer in 2016, holds a vast amount of reserves at 7.6 million MT. The country saw a slight fall in nickel production last year, putting out 256,000 MT compared to 269,000 MT in 2015.

Norilsk Nickel (MCX:GMKN), one of the world’s largest nickel and palladium producers, recently said it plans to increase its nickel output in 2017. It expects to produce 206,000 to 211,000 tonnes of the metal from Russian feedstock.

4. New Caledonia

Reserves: 6.7 million MT

New Caledonia produces less nickel than Russia, but nevertheless has a similar level of reserves at 6.7 million MT. Unlike most other countries on the list, New Caledonia saw an increase in nickel production in 2016; its output rose from 186,000 MT in 2015 to 205,000 MT in 2016, and it was the fifth-largest producer of the metal for the year.

The country’s South Pacific French Territory has resisted selling nickel ore directly to large nickel-consuming countries such as China in order to preserve its domestic smelting and refining industry, which is one of its key sources of revenue.

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5. Cuba

Reserves: 5.5 million MT

Cuba is not a major producer of nickel, but its reserves of the metal stand at 5.5 million MT. According to Reuters, nickel is one of the top foreign exchange earners for Cuba’s beleaguered economy, and the country averaged production of around 74,000 tonnes in the decade after 2000. Since then its nickel export earnings have been hit by plant obsolescence and low nickel prices.

More nickel reserves by country

Australia, Brazil, Russia, New Caledonia and Cuba have the highest nickel reserves in the world, but many other countries also hold significant reserves of the metal. Here’s a quick look at where other nations stand:

6. Philippines — 4.8 million MT

7. Indonesia — 4.5 million MT

8. South Africa — 3.7 million MT

9. Canada — 2.9 million MT

10. China — 2.5 million MT

11. Guatemala — 1.8 million MT

12. Madagascar — 1.6 million MT

13. Colombia — 1.1 million MT

14. United States — 160,000 MT

Various other countries account for nickel reserves totaling 6.5 million MT, and the world total stands at 78 million MT.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.


5 Top TSXV Stocks: LiCo Energy Metals rises 50 percent

The S&P/TSX Venture Composite Index (INDEXTSI:JX) rose 2.27 percent last week–a gain of 17.55 points–to close the five-day period at 790.57 points.

The recent report from PwC Canada cited a rise in the market capitalization of top junior mining companies, providing the industry with a more optimistic outlook. This week, there is more good news. A number of stocks saw weekly percentage gains, with the top five ranging from 30 to 50 percent over the five-day trading period.

The top five gainers for the week were:

  • LiCo Energy Metals (TSXV:LIC)
  • Azarga Metals (TSXV:AZR)
  • Asian Mineral Resources (TSXV:ASN)
  • Giyani Gold  (TSXV:WDG)
  • Corazon Gold (TSXV:CGW)

Here’s a closer look at those companies:

LiCo Energy Metals

Last week’s top TSXV stock was LiCo Energy Metals, a company focussed on the exploration and development of minerals essential to lithium-ion batteries. Shares of the company rose 50 percent to $0.18 after the company announced on October 19 that it recently filed a summary report on its Teledyne Colbalt Project, and is set to begin mining the property at Timiskaming Lake for cobalt and silver.

Azarga Metals

Azarga Metals is an exploration and development company engaged in the acquisition and exploration of mineral properties. Over the week, shares of the company increased 47.06 percent to $0.5.

Though there has been no recent news from the company to explain last week’s rise in share price, on October 7, the company announced that it closed a private placement, raising $1.1 million. The proceeds will be allocated to its Unkur Silver-Copper Project. Additional assay results discovered during the project were announced on October 6.

 

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Asian Minerals

Third on last week’s top 5 TSXV stocks is Asian Minerals, a company actively engaged in the acquisition, exploration and development of nickel mineral deposts, owning one the the few courses of nickel sulphide. The company’s shares sharply rose 40 percent today before closing the week at $0.035. The increase follows a press release on October 18 that announced further progress in the process of its proposed acquistion of Kasbah Resources (ASX:KAS).

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Giyani Gold

Next on last week’s top 5 TSXV stocks is Giyani Gold, a junior exploration company interested in acquistion, exploration, evaluation and development of underexplored, past producing gold assets in South Africa and Canada.

The company’s Rock Island Gold Project recieved an acceptance letter for a retention license application from the South Afircan Department of Mineral Rources (DMR) on September 1On October 19, Giyani Gold’s current chairman, Duane Parnham, was named Director and Chairman of the Board at Broadway Gold (TSXV:BRD).

Shares of Giyani Gold increased 31.11 percent and closed the week at $0.295.

Corazon Gold

Last week’s top 5 TSXV stocks finishes with Corazon Gold, a junior gold exploration company in Nicaragua and the US. The company’s shares saw gains of 30.91 percent to $0.36. There has been no recent news from the company to explain last week’s rise in share price. On June 29, Corazon Gold announced the appointment of Victor Goncalves as President and CEO of the company.

Data for 5 Top TSXV Stocks articles is retrieved each Friday after market close using The Globe and Mail’s market data filter. Only companies with a market capitalization greater than $10 million prior to the week’s gains are included. Companies within the mining and precious metals sectors are considered.

Don’t forget to follow us @INN_Resource for real-time news updates!

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Securities Disclosure: I, Cynthia Minh, hold no direct investment interest in any company mentioned in this article.

Top TSXV stocks in recent weeks:

5 Top TSXV Stocks: Northern Lion Gold Tops the List

5 Top TSXV Stocks: Patriot One Technologies Boosts Over 400 Percent

5 Top TSXV Stocks: G4G Capital Tops the List For Second Week

5 Top TSXV Stocks: G4G Capital Tops the List

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5 Top TSXV Stocks: Jayden Resources Leads the Way

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Ivanhoe Mines to be Added to S&P/TSX Composite Index

TORONTO, ONTARIO–(Marketwired – Sept. 12, 2016) – Ivanhoe Mines’ (TSX:IVN) Executive Chairman Robert Friedland and Chief Executive Officer Lars-Eric Johansson announced today that Standard and Poor’s (S&P) has added Ivanhoe Mines to the S&P/TSX Composite Index, effective after the close of trading on September 16, 2016.

The S&P/TSX Composite Index includes the largest companies on the Toronto Stock Exchange, as measured by market capitalization and liquidity. It is widely considered to be the leading indicator of broad market activity in Canadian equity markets.

“Ivanhoe’s addition to the S&P/TSX Composite Index represents a significant milestone for our company and reflects the tremendous efforts and successes of our entire team,” said Mr. Friedland.

“We have made substantial progress in advancing our three mine development projects in Sub-Saharan Africa toward production. Ivanhoe’s inclusion in the headline index in Canada will increase our exposure to a broader range of potential investors and should provide enhanced trading liquidity for our shareholders.”

About Ivanhoe Mines

Ivanhoe Mines is advancing its three principal projects in Sub-Saharan Africa: Mine development at the Platreef platinum-palladium-gold-nickel-copper discovery on the Northern Limb of South Africa’s Bushveld Complex; mine development and exploration at the Kamoa Copper Project – which includes the remarkable Kakula high-grade copper discovery – on the Central African Copperbelt in the DRC; and upgrading and exploration at the historic, high-grade Kipushi zinc-copper-lead-germanium mine, also on the DRC’s Copperbelt. For details, visit www.ivanhoemines.com.

Cautionary statement on forward-looking information

Certain statements in this release constitute “forward-looking statements” or “forward-looking information” within the meaning of applicable securities laws, including without limitation, the timing and results of increasing Ivanhoe’s exposure to a broader range of potential investors and providing enhanced trading liquidity for Ivanhoe’s shareholders. Such statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. Such statements can be identified by the use of words such as “may”, “would”, “could”, “will”, “intend”, “expect”, “believe”, “plan”, “anticipate”, “estimate”, “scheduled”, “forecast”, “predict” and other similar terminology, or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. These statements reflect the company’s current expectations regarding future events, performance and results and speak only as of the date of this release.

All such forward-looking information and statements are based on certain assumptions and analyses made by Ivanhoe Mines’ management in light of their experience and perception of historical trends, current conditions and expected future developments, as well as other factors management believe are appropriate in the circumstances. These statements, however, are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information or statements including, but not limited to, changes in the strategic process of the board; unexpected changes in laws, rules or regulations, or their enforcement by applicable authorities; the failure of parties to contracts to perform as agreed; social or labour unrest; changes in commodity prices; unexpected failure or inadequacy of infrastructure, or delays in the development of infrastructure, and the failure of exploration programs or other studies to deliver anticipated results or results that would justify and support continued studies, development or operations. Other important factors that could cause actual results to differ from these forward-looking statements also include those described under the heading “Risk Factors” in the company’s most recently filed MD&A as well as in the most recent Annual Information Form filed by Ivanhoe Mines. Readers are cautioned not to place undue reliance on forward-looking information or statements. The factors and assumptions used to develop the forward-looking information and statements, and the risks that could cause the actual results to differ materially are set forth in the “Risk Factors” section and elsewhere in the company’s most recent Management’s Discussion and Analysis report and Annual Information Form, available at www.sedar.com.

Although the forward-looking statements contained in this news release are based upon what management of the company believes are reasonable assumptions, the company cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this news release and are expressly qualified in their entirety by this cautionary statement. Subject to applicable securities laws, the company does not assume any obligation to update or revise the forward-looking statements contained herein to reflect events or circumstances occurring after the date of this news release.

Investors:
Bill Trenaman
+1.604.331.9834Media:
North America:
Bob Williamson
+1.604.512.4856

South Africa:
Jeremy Michaels
+27.82.939.4812


5 Top TSX Stocks: Stocks Rise on US Jobs Data

The S&P/TSX Composite index (INDEXTSI:OSPTX) was up last week by 1.15 percent to 14,795.70 points.

According to the Globe and Mail, the TSX in part gained on the US jobs data showing that employment growth slowed more in August than anticipated, which may put a hold on the Feds raising interest rates later in September.

With that in mind, a number of stocks also made some gains over the week.

Companies that were up for the week included:

Here’s a look at those companies:

Dalradian Resources

Dalradian Resources is a gold development and exploration company focused on advancing its high-grade Curraghinalt gold project in Northern Ireland. On August 31, the company released its grade reconciliation study showing an increase of 12 percent in grade and 16 percent in ounces within a portion of the V-75 vein.

Last week, shares of the company rose 12.78 percent over the five-day period–an increase of $0.17–to $1.50.

Lydian International

Up next is Lydian International, who wholly owns the Amulsar Gold Project, which is expected to be Armenia’s largest gold mine. Total estimated resources are 5 million ounces of gold with target production of 200,000 ounces annually.  Last week, the company announced the extension of the availability period for the second deposit.

Over the five-day period, shares of Lydian increased 12.64 percent to $0.49.

Imperial Metals

Shares of Ivanhoe Mines rose 9.58 percent last week to finish off at $1.83.

The company has three key development projects: the Platreef in South Africa, which is focused on platinum, nickel, copper and gold; the Kamoa in the Congo, which is Africa’s largest high-grade copper discovery; and the Kipushi, also in the Congo, which is a high-grade copper and zinc mine.

Balmoral Resources

Next is Balmoral Resources, an exploration company focused on high-grade gold and base metal assets in Canada. On August 29, the company announced it had gold recoveries of 99.5 percent and 96.3 percent from initial metallurgical test work done at its Northshore Property in Ontario.

Over the five-day period, shares of Balmoral Resources increased 8.41 percent to close the week out at $1.16.

Osisko Mining

Last but not least, is Osisko Mining, whose shares rose 8.11 percent to $2.40.

The company is a mineral exploration company focused on the acquisition, exploration and development of precious metal resource properties in Canada.  On August 31, Osisko announced new results from its 100 percent owned Windfall gold lake project. Earlier in the week, the company also announced a new gold discovery from its exploration drill program on its 100 percent owned Urban-Barry Project in Quebec.

Don’t forget to follow us @INN_Resource for real-time news updates.

Data for 5 Top TSX Stocks articles is retrieved each Friday after market close using The Globe and Mail’s market data filter. Only companies with a market capitalization greater than $50 million prior to the week’s gains are included. Companies within the mining and precious metals sectors are considered.

Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.

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