A sneak peek at three ASX nickel stocks

Highlights:

• Western Australia accounts for 7% of the global production of nickel.
• New nickel mines have been opened and developed following the expected demand for battery materials.
• In 2020-2021, the nickel sector was worth AU$3.5 billion in Western Australia.

Nickel is one of the most prominent metals used in the industrial sector. Nickel is mixed with other metals to create alloys that are strong, can be shaped into anything, are rust resistant, and are resistant to high and low temperatures. Apart from its use in alloys, nickel or its alloyed forms have various applications, being used, for example, in rechargeable batteries, coinage, magnets, and electroplating.

The Department of Mines, Industry Regulation and Safety website states that Western Australia is the only nickel producer in Australia. It accounts for 7% of the global production. 

The expected growth in demand for battery materials has led to the development and reopening of nickel mines. As reported by the Government of Western Australia, in 2020-2021, nickel was the fourth most valuable mineral sector of Western Australia, valued at AU$3.5 billion. 

This article focuses on the ASX-listed nickel companies Pacific Nickel Mines Limited, Nickel Industries Limited, and Widgie Nickel Limited.

On Thursday (17 November 2022), the broader Australian market index, S&P/ASX 200, gained 0.18% at 10:52 AM AEDT. Along with the index, eight out of the eleven significant sectors were also trading in green. The Information Technology sector reported the highest gain of 1.49%.

Meanwhile, the Materials sector was down 0.58% to 17,375.10 points at 10:55 AM AEDT.

Pacific Nickel Mines Limited (ASX:PNM)

Pacific Nickel develops two nickel projects, Kolosori and Jejevo, located on the Solomons Islands. According to Pacific Nickel, both projects have direct shipping ore (DSO) potential. 

The company has 80% ownership of the Kolosori Nickel Project, and the previous owner owns the rest. The project offers several benefits, such as proximity to the coast, local landowner support, no processing requirements, and a low capital route to DSO production. 

At the Jejevo Nickel Project, the company has 80% ownership and the local landowner 20%. Previously, drilling was conducted in 2013; the initial objective was to undertake a considerable amount of work to confirm the 2021 JORC Resources.

Recently, the company released its quarterly report for the period ending on30 September 2022. During the quarter, the Kolosori Nickel Project was awarded a mining lease from the Minister of the Ministry of Mines, Energy and Rural Electrification, and definitive feasibility study work has progressed. 

The resources in the indicated and measured categories have surged by 27% from the previous resource estimate. 

At 10:10 AM AEDT, Pacific Nickel’s shares were spotted trading 2.78% higher, at AU$0.074.

Nickel Industries Limited (ASX:NIC)

Nickel Industries produces nickel pig iron, which is a key material in stainless steel production. The company has an 80% interest in the Ranger Nickle and Hengjaya Nickel Projects. The company also have an 80% interest in the Hengjaya Mineralindo Nickel Mine. 

In 2021, Nickel Industries acquired an 80% holding in the Angel Nickel Project. The same year, in December, the company inked a definitive agreement to buy a 70% interest in the Oracle Nickel Project. 

Nickel Industries reported rotary kiln electric furnace (RKEF) production of 20,275 tonnes of nickel for the September quarter. RKEF quarterly sales were US$319.2 million, EBITDA was US$45.3 million, and the EBITDA margin was US$2,261/t Ni sold.

Nickel Industries shared that the Angel Nickle power plant was commissioned before the scheduled date. The company has entered into a strategic cooperation agreement with PT QMB New Energy Materials (QMB) for the supply of 5-7 million wet metric tonnes of limonite ore annually from the Hengjaya Mine over a period of 20 years to the high-pressure acid leach plant of QMB. The estimated value of the agreement is US1.5 billion over the contract life (considering the existing ore prices). 

At the end of the quarter, cash, inventory, and receivables stood at US$513.2 million. 

At 10:38 AM AEDT, Nickel Industries’ shares were spotted trading 4.55% lower, at AU$0.94 per share.

Widgie Nickel Limited (ASX:WIN)

Image source: © Adwo | Megapixl.com

The Australian mineral explorer Widgie has a consolidation of a 240 km square package of nickel and new economy metal prospects in the Eastern Goldfields nickel sulphide belt. 

Initially, the Mt Edwards project of Widgie Nickel was bought as a lithium and nickel project, but the magnitude of the nickel discoveries realigned the core focus to nickel. The project is situated 75 km south of Kalgoorlie in Western Australia. The location offers infrastructure facilities like potable water pipelines, gas, mains power, and sealed roads. Widgie highlighted that the project location also provides the flexibility to construct a processing plant, sell the ore directly, pursue offtake opportunities, and utilize nearby concentrators. 

Widgie South, Widgie North, Widgie West, and Lake Eaton-Mt Eaton are parts of the Mt Edward project. 

While sharing the quarterly activity report for the period ending on 30 September 2022 Widgie confirmed the resource growth potential at the Gillett Deposit and the Gillett North prospect. At the Armstrong deposit, the company has completed infill drilling, obtaining strong results, reaffirming Armstrong’s objective to reach production-ready status by the end of next year.

At 10:39 AM AEDT, Widgie’s shares were spotted trading 3.85% lower, at AU$0.38 apiece.