Interview with Mark Selby, CEO of Canada Nickel

Recording date: 2nd May 2024

Nickel bouncing around on either side of $19,000. Post our last meeting, nickel got up to $19,700 before turning back down, dropping through $19,000 last night for the first time in 2 weeks.

LME inventories, after falling down to mid70 thousand tonnes, have bounced back up to a high 70 thousand tonnes

The price rally has been helped by short covering – remember back to preChinese New Year – funds at the largest short position ever (which helped support my case for limiting downside and case for the rally); funds now covered those shorts and are actually positioned slightly long. Positioning pretty neutral generally helps prevent moves from getting too big.

For those of you who are long copper, the green signals I saw 56 months ago are long gone. We still may see one more surge higher, but I think we’ve topped out for a while. Take some profits

INSG put out their April forecast (they meet twice a year). World primary nickel production was 3.060Mt in 2022 and 3.356Mt in 2023, and is forecast to reach 3.554Mt in 2024. The estimates do not include an adjustment factor for possible production disruptions. World primary nickel usage was 2.963Mt in 2022 and 3.193Mt in 2023. The INSG forecasts an increase to 3.445Mt in 2024.

Therefore, the implicit market balances are surpluses of 98kt in 2022, 163kt in 2023 and 109kt in 2024. This compares to forecast surpluses last October of 223kt in 2023 and 239kt in 2024.

Note INSG only forecasts supply without a disruption allowance, At a 35% allowance, their 2024 forecast is effectively a deficit, particularly as they only have 8% demand growth (my forecast is for 10+% this year)

First Quantum confirmed previously announced shutting down mining at Ravensthorpe and processing lowergrade stockpiles

Magna Mining got a permit to take a water–key permit which will allow them to start dewatering ramp and begin exploration development (which will allow them to mine and have ore processed)

FPX Metals announced a successful pilot plant to process 76 tonnes of material, which confirmed metallurgical performance and successfully tested some process optimizations which should further simplify their flowsheet

Ardea Resources deal with SMM and Mitsubishi – earn 50% by spending $A98 million by funding and completing feasibility study targeting 2nd half This will be important to see what cost structures will look like for Australian laterites – most of the projects have been around since the 1970s (Inco optioned this project in the 2000s) and this is one of the bigger/better ones, SMM is a leader in HPAL production and will be interesting to see what economics will look like given cost structures in Australia

Queensland Pacific Metals (QPM) is now a gas producer – shelving nickel project – sadly not surprised, the basis of technology was the nitric acid leaching process, which historically has not been shown to work. Attracted several auto/battery investors into the project (POSCO, LGES, GM) – project FS in late 2022 used $27K nickel prices ($25K nickel price +$2,204 sulphate premium), $60K cobalt prices

Western Mines getting some interesting results at their Mulga Tank project east of Kalgoorlie (had said one to keep an eye on) – getting large disseminated dunite with some higher grade intervals (over1%) over narrower intervals

Aston Minerals announced metallurgical work – very good recovery numbers to good grade concentrate flowsheet looks pretty similar to other projects

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