Multimineral explorer, Boadicea Resources Limited (ASX: BOA) is currently expanding its ground position in the highly prospective Fraser Range located within the favourable mining jurisdiction of Western Australia. The focus commodities for Boadicea primarily include nickel and copper while the Company remains open to other commodity opportunities as they arise.
The Fraser Range Nickel Belt, with Nova-style high-value targets, is a fast-developing mineral province with 18 million tonnes of total known resources that remain significantly underexplored. Thus, there is a huge untapped potential for new nickel deposits in this region. In line with that, Boadicea Resources is gradually transforming its exploration project portfolio through the consolidation of more and more tenements in the Fraser Range region.
Base Metals - Copper and Nickel
The most fundamental minerals produced for the modern economy are base metals such as copper, zinc, nickel, lead and aluminium, and these can be considered as the building blocks of infrastructure with several industrial and commercial applications. These are extracted with more ease than precious metals including gold, silver, platinum, and palladium.
Base metal prices often indicate periods of economic expansion or contraction and are the first to support a thriving economy. For years, most of the demand for base metals has come from China. Moreover, base metal prices are notoriously cyclical over time which presents opportunities for investors as well as allows for development of new mines.
As per the Resources and Energy Quarterly Report released in December 2019 by Australia’s Department of Industry, Innovation and Science (DIIS), the base metal prices remained flat for aluminium and copper while increased significantly for nickel and zinc over the last quarter of 2019, as worries over the US-China trade deal begun to settle.
Copper: It is an economic bellwether commodity with several qualities like resistance to corrosion, high conductivity, high tensile strength, and is a super conductor of electricity. The metal finds a myriad of applications in piping, refrigeration, transmission lines, construction, air conditioning, cookware, computers, and even some medicines have copper in them. Brass, being an alloy of copper, is used to produce construction materials, musical instruments, jewellery, as well as artwork.
It is interesting to note that copper is 100% recyclable and nearly 80% of copper produced to date is still in use around the world.
Australia is the seventh largest producer of copper in the world and the second largest exporter of copper ores and concentrates. The key markets for copper consumption, as per DIIS, include the United States, Germany, Japan, South Korea and Italy, all led by China.
As per DIIS, copper exploration totalled ~ $ 117 million in the September quarter, up 60 per cent than the prior corresponding period (pcp). Western Australia witnessed a high level of investment in copper exploration, that tripled on pcp.
In 2019, copper prices remained subdued amidst slowing economic growth, globally. However, copper consumption is expected to rise in 2021, which would consequently boost prices with the price forecast to reach USD 6,190 a tonne in 2021, as per DIIS. In Australia, production from expansionary and new copper projects would benefit from this uptick in demand and export volumes are forecast to reach 1.0 million tonnes in 2020–21 from 932,000 tonnes in 2018–19.
Copper producers in Australia would benefit as a whole, as higher volumes and stronger prices augment copper export earnings. Besides, the International Energy Agency, in its latest World Energy Outlook, in Stated Policies Scenario, estimates that the share of wind and solar generation, where copper is a key component, is projected to double and reach 13 per cent of world generation in 2025.
Nickel: The silvery white shiny metal is resistant to corrosion. Due to its ferromagnetic nature, it is utilised in creating magnets of intermediate strength. The metal finds application in development of glass, coins, plating, stainless steel, rechargeable batteries and even bulletproof safes. Australia is the sixth largest nickel miner in the world and its annual nickel production exceeds 200 thousand tonnes.
The most prospective nickel deposits in the country reside in Western Australia while the main global nickel markets include China, European Union, United States and Japan in that order.
In the December 2019 quarter, nickel prices stabilised after recording gains over the prior three quarters. Going forth, nickel prices are expected to go up again to average USD 16,500 a tonne in 2021, up from USD 14,000 in 2019, as per DIIS.
Various new and expansion projects are coming up in Australia that would support the exports and thus, Australia’s nickel export earnings are also estimated to reach $ 4.7 billion in 2020–21, up from $3.6 billion in 2018–19.
The world demand for nickel remains very high and consumption is expected to outpace constrained production growth through to 2021. Australian nickel explorers and miners such as Boadicea Resources have a great opportunity to capitalise with Indonesia’s restrictions on exports of nickel ore.
Overall, there has been a surge in global demand for base metals with the key drivers being application in renewable energy, electric vehicles (EVs) and battery technologies that require huge amounts of metals with rising global adoption. In fact, the next wave of metal demand is also expected to be driven by clean energy sources and electrification of everything.
As pe DIIS, base metals should hold relatively buoyant levels over the outlook period until 2021 (referring to the figure above), as the world economy stabilises and base metal supply remains relatively constrained, presenting an opportunity for the upcoming miners to capitalise on.
Stock Information: With a market capitalization of around $ 12.79 million, Boadicea Resources’ stock last traded at $ 0.230 on 12 March 2020. BOA has delivered impressive positive returns of 39.39% in the last six months and 15% in the last three months.