Lens Over Nickel Dynamics; CTM Reports High Quality Assay Result

  • Jan 24, 2020 AEDT
  • Team Kalkine
Lens Over Nickel Dynamics; CTM Reports High Quality Assay Result

Nickel prices are now under pressure after soaring in the international market over the high demand forecast for lithium-nickel based batteries and stainless steel, apart from that the Indonesia export ban also played a significant role in galloping nickel prices to reach USD 18,842.50 (high in September 2019), which almost took prices to its previous five-year high of USD 21,602.00 (high in May 2014).

To Know More, Also Read: Indonesia Export Ban to Create a Nickel Boom while Mincor and Independence Develop Assets?

However, nickel prices are under pressure in the market as the current supply is outweighing the consumption. China, which is the primary consumer for nickel amid its high stainless-steel manufacturing ability, is currently entering the New Year Holiday season, which along with reason related to supply, exerted some pressure on nickel prices.

The refined nickel inventory in China witnessed a week-on-week surge amid opaque demand and higher supply. As per some data vendors in China, over 18,300 metric tonnes of pure nickel across the Shanghai-bonded area, which remained ~2.2 per cent up against the previous week inventory (as on 17 January 2020).

Nickel Market:

Nickel prices are currently under a short-term pressure as global mining companies start filling for the supply shortage due to Indonesia export ban, and while the mining for nickel has made their way to every halted prospect over a major rally, the demand is presently slightly off over slower global activities and holiday seasons in China.

Despite a short-term correction, nickel is on a bull run since February 2016 amidst the supply shortage fears. Many industry experts anticipate that the world’s nickel demand could soon surpass the global production chain, which in turn, is keeping nickel prices well ballooned from its February 2016 low of USD 7,550.00.

Nickel markets are supported amid high demand estimation from the energy storage industry and stainless-steel future forecasts.

To Know More, Also Read: Nickel Future Prospect And Lens Over The Potential Shiners- POS, MCR and MLX

Steel Markets

The global stainless-steel sector consumes 68 per cent of nickel, while the worldwide battery sector consumes only 3 per cent of the global production chain. Market experts are bullish on both the segments over the longer-term.

World steel production cooled-off in late 2019 due to weak demand in the wake of U.S-China bilateral trade dispute, which marked a slowdown in infrastructure and development activities in China.

Chinese steel mills, which relatively enjoyed the high-profit margins during the September 2019 quarter over the higher steel consumption and surging prices in China, remained under pressure amid a drop in steel prices and, in tandem, the profit margin.

Steel Mills Profit Margin (Source: DIIS)

The DIIS estimates that global steel production would remain in line with global consumption. However, global production is still anticipated to witness a slight growth, which could boost the nickel prices if the supply shortage forecast from industry experts come into play.

While the steel market is anticipated to witness a slight increase in demand, the stainless-steel market is expected by the industry experts to witness a boost from the last quarter of the year 2019 till the end of the year 2020, which could further, support the primary uptrend in nickel prices.

ASX-Listed Nickel Stocks:

While nickel prices may be retracing its primary rally, but ASX nickel mining companies are gushing high to shatter multi-year records. Market participants currently seem to be bullish over the future outlook, which is also expected to address the supply issues related to palladium, which is a by-product of nickel mining and is currently trading at a record high.

To Know More, Do Read: Palladium Dazzles to Record Highs; Sparks Bubble Concerns

Centaurus Metals (ASX: CTM)

CTM gained the rating of the deepest value and highest potential nickel developer by a leading broking firm, and the company is not lagging behind in maintaining the status.

The company recently received high quality assay result from its nickel prospect- Jaguar nickel prospect in Brazil.

The new diamond drill results received by CTM further confirm and extend the high?grade nickel sulphide mineralisation, which was previously drilled by the Brazilian iron ore giant- Vale. The mineralisation and its high-grade results correlate strongly with the historical high?grade intersection.

Some of the most significant results of the drilling are as below:

  • The drill hole identified as JAG?DD?19?011 intersected 11.9m at 1.43 per cent of Ni, 0.05 per cent Cu, 0.02 per cent Co from 148.0m, which further includes 5.7m at 2.18 per cent of Ni, 0.07 per cent Cu, 0.04 per cent Co from 154.2m.
  • 7m at 0.99 per cent of Ni, 0.04 per cent Cu, 0.02 per cent Co from 40.1m, which further includes 3.1m at 1.92 per cent of Ni, 0.06 per cent Cu, 0.03 per cent Co from 40.1m.
  • 4m at 0.88 per cent of Ni, 0.03 per cent Cu, 0.02 per cent Co from 100.1m, which further includes 7.8m at 1.66 per cent of Ni, 0.05 per cent Cu, 0.03 per cent Co from 100.1m.
  • 0m at 1.91 per cent of Ni, 0.04 per cent Cu, 0.05 per cent Co from 144.0m; and,
  • 0m at 1.74 per cent of Ni, 0.05 per cent Cu, 0.04 per cent Co from 56.3m.

The recent drill results from Onça?Preta Deposit have further added ~50m of new strike length.

The company has currently mobilised three rigs, which is working at a double shift, and presently focused on Jaguar South and Onça?Preta Deposits, and CTM would start commencing drilling over other deposits in the coming weeks ahead.

CTM recovered from $0.005 a share on ASX (low in May 2019) to the present high of $0.017 (high in November 2019), which marked a price appreciation of 240 per cent.

The stock is currently trading at $0.011 (as on 24 January 2020 2:58 PM AEDT).

Independence Group NL (ASX: IGO)

IGO is an ASX-listed nickel miner engaged in the development of high quality, longer life and larger scale nickel and gold prospects. The operational portfolio of the company includes Nova and Tropicana, along with many other regional exploration and development projects and Joint Ventures.

Also Read: Equity Gains Cap Gold Shine; Market Apprehensive Over Risky Assets

IGO recently moved to acquire the Panoramic Resources Limited (ASX:PAN); however, the offer period lapsed on 17 January 2020 as a number of defeating conditions to the Offer was not waived.

Nova Operations:

The wholly-owned nickel, copper, and cobalt prospect of the company is in the Fraser Range, Western Australia and contains an underground contract mining along with an owner-operated processing plant.

The nickel production from the prospect in FY2019 stood at 30,708 tonnes, while copper and cobalt production for FY2019 stood at 13,693 tonnes and 1,090 tonnes, respectively. The overall production in FY2019 surpassed the FY19 guidance by 2.4 per cent.

The Nova project demonstrated steady-state production over the nameplate with a throughput of 1.5 million tonnes per annum.

The other nickel prospects of the company include Fraser Range, lake Mackay JV, West Kimberley JV, Raptor and Yeneena JV Option.

Key Takeaways

  • Nickel prices are under pressure after soaring in the international market over the high demand forecast for lithium-nickel based batteries and stainless steel.
  • The current nickel supply is outweighing the consumption as the primary consumer for nickel-China, is currently entering the New Year Holiday season.
  • The refined nickel inventory in China witnessed a week-on-week surge amid opaque demand and higher supply.
  • The market anticipates higher stainless steel demand and production along with the development of nickel-based energy storage device to support nickel demand ahead.
  • CTM gains a pivotal rating from a leading broking firm.

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