Mark Selby – Is Nickel On The Comeback Trail? (Transcript)

Canada Nickel Co Inc
  • TSX-V: CNC
  • Shares Outstanding: 68M
  • Share price C$1.15 (29.05.2020)
  • Market Cap: C$81M

Interview with Mark Selby, Nickel Market Commentator and CEO of Canada Nickel Company (TSX-V:CNC).

Following on from our recent interview to discuss his blossoming nickel exploration and development company, Selby is back to discuss the state of the nickel market.

First up, what is Selby’s take on the global metals markets? Has the market bottomed out? He thinks in China the market has reached the bottom, based on various metrics. The latest data in China for copper, the largest metal by market volume, has seen the premium of the price in China at 18-month+ highs. Selby likes to use copper concentrate terms as a reference point for the wider market, because at these “inflexion points;” the Chinese decide that the copper price is low and try to obtain as much as possible in any form: cathodes, concentrates, scrap etc. They just want copper on the way at today’s price. Copper concentrate terms are currently at “multi-year lows.” Time to get excited? Is this a sign to make metals investors feel bullish? There are significant Year-On-Year (YoY)increases in imports for a “bunch of materials.”

What strategy will the Chinese government adopt? Play catch up with production or carry on as usual? Selby states that, based on several metrics, the Chinese government is trying to drive metal production via infrastructure and construction spending. 6-weeks ago, cables producers that feed this supply chain have been up over 100% of capacity. Anecdotally, he says that excavator sales are up 60% Year-On-Year. There is clearly a “big shove” happening to get the Chinese economy going again.

This is great for copper, but what about metals with different supply dynamics. He states that while speculation on a several hundred thousand tonnes of copper might be possible, it won’t happen for bulk metals. Iron ore imports have been “rocketing” into China, and iron ore prices are at “very, very, very solid levels.” The fact we are witnessing this sort of market behaviour in copper, bulk metals and in other economic indicators, this helps confirm that we are back on the way up. For nickel, Selby claims stainless prices are up year over year. Stainless steel inventories have come down a little bit, but they still have quite some way to go. In terms of a specific positive indicator for nickel, we are observing the price discount between nickel pig iron produced in China and nickel has closed a lot. On the supply side, all of the mines in the Philippines have been shut down, which has massively hampered nickel supply. We are seeing ore imports on the ground hitting multi-year lows in China.

Investors are now coming into the nickel space as evidenced by Canada Nickel’s rising share price. Selby is hoping to capitalise on this with a U.S. listing for Canada Nickel: this is something that is definitely on the cards in the not-so-distant future.

We Discuss:

  1. China’s Number Announcement: Situation of the Metals Markets
  2. Catch Up vs Stay at Normal Levels: Chinese Government Decisions
  3. Looking for Clues in Copper, Base and Bulk Metals: Where are These Markets Going?
  4. Nickel Might See Some Blue Sky: Investors are Coming Back?
  5. Canada Nickel: Listing in the US?

CLICK HERE to watch the full interview.

Matthew Gordon: Hey Mark. How are you doing?

Mark Selby: Great, Matthew. Good to see you again. 

Matthew Gordon: A long time – it has been days. I don’t see you for months and then you show up.

Mark Selby: Bang, bang. There you go.

Matthew Gordon: Fantastic. Good. I’m glad that I’m talking to you because I wanted to catch up on something that we talked about a few weeks ago, which was trying to identify bottoms; bottoms of the market and how you went about doing that. And I know we started a conversation, we said we’d kind of pick up again because the market has been through a few waves, which we talked about, I think way back when, in December about the scrap market being influential about Nickel, but then we’ve obviously had a few market movements as well. So, what’s your take on this with regards to the metals market at the moment? Have we reached the bottom?

Mark Selby: Yes, I think in China, I think we have, based on the various metrics. If you go back to the discussion we had earlier, I talked about a bunch of market premium type information that’s there, taking a look at changes in pricing for very metal and various forms and how that’s stacking up. And then 3, in terms of,  what’s happening in the scrap market, that’s there. So, yeah, no, the latest sort of data over China over the last month or so, Copper is always the biggest metal so obviously that is a good indicator. And so you see, the arbitrage –  the premium of the price in China versus outside of China, so there’s an incentive to import material into China; is that 18-months plus highs?

The one that I always like to see is Copper concentrate terms because what happens at, again, at these inflection points, both top and bottom, we’re talking about a bottom here, the Chinese just decide that Copper is cheap at this price and I think the price is going to go higher, so I just want to grab Copper in whatever form it’s in: cathode, concentrate, scrap, whatever. I just want Copper units on my way, priced at today’s price, and if they get delivered in a month, two months, four months, I hopefully am going to sell that at a great big profit. And so, Copper concentrate terms again are at multi-year lows. So that is a real sign that sort of the buy is on right now.

Another; the Chinese import data for the month of April came in and you see stuff, again, given how brutal things were in February, March, you’re going to see month over month increases. But we’re actually seeing significant year over year increases in imports in a bunch of materials as well.

Matthew Gordon: But that’s them playing catch up, right? All that’s telling us is that they’re playing catch up because not much was happening for a while. So, what do you think the government is instructing Chinese companies to do now? Play catch up or just run along the normal levels here? I mean, because we have been talking to Uranium companies and we have looked at some of the big producers there, they’re saying they’re not going to play catch up, they’re just going to continue at the rates they were pre-COVID, et cetera. So, have you any insight as to what is happening in China?

Mark Selby: Yes, I mean, again, in China, every recession, 2001, 2003, 2008, and slow-down in the middle part of the last year, one of the big levers is just in terms of infrastructure and construction spending; they are sort of the 2 key metrics. There is no one state grid. I mean, the state grid company of China uses a significant portion of the world Copper supply. It’s a pretty crazy percent, I can’t remember exactly what it is, but it’s much larger than most countries in the world, I think, except for China – just with 1 company. But 6-weeks ago producers in China who produce the cables and so forth, that sort of feed that supply chain for state grid, were up over a 100% of capacity at that time.

There are some other metrics that commodity analysts look at, and again, I would encourage people to go and read as many different commodity analysts, because they each, a lot of people have their ‘favourite indicator’. So, one that I’ve seen a couple of times and much like, is excavators, right? You’re not going to speculate on excavators. It is used very broadly. And excavator sales are up 60% year over year in April. So that’s a pretty good sign that there’s a big shove happening to get the economy going from the government in China.

Matthew Gordon: Okay. So, that is great for China, like I said, that’s great for Copper, but are there other metals which will give us clues as to what’s going on, like say bulks for instance. I mean, what’s happening there?

Mark Selby: That’s a very good point. Again, you have to be careful not to just look at one metal because the supply dynamics of that specific metal might be influencing what’s going on. But one of the things I always like to check to see what’s going on is, is if you see a few base metals moving and then you see the bulks moving, because again, it’s easy to speculate on a few thousand tons of Copper and shove it in the warehouse somewhere, but you’re not going to speculate on a 200,000t iron ore shipment and think about storing that for three or four months. So, iron ore imports have been rocketing into China. And so, iron ore prices, again, are at very, very, very solid levels. So, the fact that you’re seeing this in Copper, seeing this in the bulks and then you’re seeing these other economic indicators, you were talking about excavator sales and so forth, I think that really helps confirm that we’re on our way up here.

Matthew Gordon: And what do you think that means for Nickel?

Mark Selby:  I think that the nice thing is, in terms of Nickel, we’re seeing the same sort of things happen. So, stainless prices are up 10% year over year, even though stockpiles again, we talked earlier about Nickel, about how prices were way too high and had to correct. And we’re going to be along the bottom here is a stainless inventories have built up quite a bit in China as we fell down that price. Inventories have come down a bit. They still have a way to go. We’ll see, maybe by the end of the May, we’re a long way back to where we were because stainless prices are already up 10% off the bottom. So that’s a pretty good sign. Again, they’re seeing their order books come in. If they’re already lifting prices with a bunch of inventory on the stainless steel side, still sitting around.

In terms of Nickel metal specifically, what we’re seeing is the discount in China between the Nickel pig iron produced there and Nickel has closed quite a bit. The R that I talked about in Copper is not quite open yet, but it looks like it’s heading in that direction. And then very importantly on the supply side, one of the things, because I had talked before, initially back in September, that we’re going to have a July, August turn and then post-COVID I said, okay, it’s off to year-end. But it might actually be coming back in towards maybe September, October now.

Another thing is that Indonesia banned ore exports in January 2020, that was going to cause stockpiles to shrink. Well, COVID has basically shut down all of the mines in the Philippines, which are sort of the replacement source for some of what Indonesia was shipping. So, we’re seeing ore imports on the ground in China, again, approach multi-year lows. So, that’s really setting up for that supply squeeze within China. Now, Indonesia’s growth there is up by 50% or more in terms of Nickel, pig iron, coming out of China so that’s offsetting some of the gap. But it looks like things will be tightening up, definitely in the second half. So, I am quite keen to see that coming down the pipeline for Nickel.

Matthew Gordon: Yes. That’s fantastic. I mean, that’s very good news for Nickel, but what do you think it means for investors? You had said, okay, this may be a few months out here, but now with what’s happening in the market are you seeing Nickel investors coming back in? I know you at Canada Nickel, your share price has tripled and it’s all good news for you, but what about some of the other bigger players, are they seeing a renewed interest in the market?

Mark Selby: I don’t know in terms of how the equities have yet to respond to that. Again, prices of commodities have come up off the bottom. But the thing I would encourage investors is, is again, when you have these turns, they don’t happen gradually and you kind of think, Oh, I’ll maybe pick some up next week or in two weeks, or I’ll gradually get back in. You always have a short covering that happens at the bottom and you end up with these, all of a sudden you wake up and copper prices are up 15% or 20% or 25%, and the liquid copper equities have started to move pretty dramatically. And again, in any market turn, it’s going to be the most liquid names that go first and then it starts trickling down. So, in terms of your junior Explorer at this point in time, you still have to sort of trickle down that pipeline. But it’s when you start to see these signs, start to get ready and then watch if you can start to see that cascade happening down towards whatever type of companies you invest in.

Matthew Gordon: Perfect. Can I just ask you very quickly, I know we spoke at the beginning of the week about Canada Nickel, but we’ve had such a good response to that, and some of the questions that came back was, is there going to be a US listing?

Mark Selby: Yes, we’re definitely, that’s the next listing that we want to get done. So, we will work to get a full OTC QX listing, because I know that makes it easy for US brokers to trade the stock for their clients and so forth. So yes, that’s definitely coming down the pipe. And we’ll get back to you and let you know as soon as it’s ready to go.

Matthew Gordon: Okay. Well, watch this space, and look, Mike, thanks very much for coming on and answering some these questions. It helps us to get back to, the viewers and followers of the show, who are always quite engaged when it comes to Nickel so, I appreciate your time and hopefully I’ll see you soon.

Mark Selby: Yes. Most definitely, Matt. Take care.

Check out another interview with Selby here.

Company Website:

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

Canada Nickel (TSX-V: CNC) – The 11th Largest Nickel Sulphide Resource Globally In Just 6-Months

Canada Nickel
  • TSX-V: CNC
  • Shares Outstanding: 67M
  • Share price C$1.33 (22.05.2020)
  • Market Cap: C$87M

Interview with Mark Selby, CEO of Nickel Exploration company, Canada Nickel (TSX-V: CNC).

Nickel could offer battery metals/EV investors a massive upside. Mark Selby has a history of success in the nickel space that extends back to his time at Inco and RNC.

In just 6 months, for just US$4M, Canada Nickel has uncovered the 11th largest nickel sulphide resource in the world, and it has a PGM upside.

Canada Nickel has its skates on and has some big plans for this year and beyond. Is Crawford an exciting take-out target for nickel majors?

We Discuss:

  1. Company Overview
  2. Putting Together Nickel Projects: Timeline and Strategy
  3. Recent Raise: Shareholder Support and Investor Interest in Nickel
  4. What Makes Canada Nickel Different to Other Nickel Companies?
  5. Drilling for Value: A Run Through the News Release
  6. Impact of COVID-19 on Canada Nickel and The Nickel Market
  7. Timeline for Deliverables

CLICK HERE to watch the full interview.

Company Website:

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

Canada Nickel (TSX-V: CNC) – The night is young, And we’re just getting started (Transcript)

Canada Nickel
  • TSX-V: CNC
  • Shares Outstanding: 67M
  • Share price C$1.33 (22.05.2020)
  • Market Cap: C$87M

Interview with Mark Selby, CEO of Nickel Exploration company, Canada Nickel (TSX-V: CNC).

The newest nickel story on the block, with a trebled share price since we last spoke with them around the time of their IPO. Highly impressive. EV/battery metals investors, take note.

Mark Selby is a renowned mind in the nickel space; his experience at Inco and the helm of RNC has given him plenty of experience with large nickel projects: in particular, the Dumont Nickel-Cobalt project. Can he develop the Crawford Nickel-VMS Project in a faster, more capital-efficient fashion? The aim is to complete a PEA/scoping study (C$4M) by the end of 2020, with an FS (C$20-30M) following a year later. This is an accelerated monetisation event for nickel investors.

Canada Nickel just announced some encouraging drill results with an exciting PGM upside: 2.6g/t. Canada Nickel has managed to create the 11th largest nickel sulphide resource globally in just 6-months for just C$4M, and it is little surprise the market has cottoned on to this value proposition. Selby believes we are on the verge of the start of a new nickel supercycle at the start of this new decade, and he believes having one of the world’s few large nickel projects outside of Indonesia will stand Canada Nickel in good stead. The CAPEX is a whopping US$1B+, but he claims the sheer scale of Crawford will be enough to attract a major to take it out, despite it not having the “sexy high grades.”

In order to hit the upcycle, Selby wants to move fast. Canada Nickel has its skates on and it doesn’t appear anything is going to stand in its way. Canada Nickel recently completed a private placement of c. C$4.5M. The original aim was to raise C$2.5M, and now with the share price tripled, Selby feels this has shown the confidence of investors in the EV narrative, even if COVID-19 has distracted. It’s incredibly impressive that Canada Nickel’s share price is up 5X on its February IPO in a COVID-19 market scenario.

What sets Canada Nickel apart from the swathe of other nickel juniors?

A.) This is a new nickel sulfide discovery: something of a rarity right now.

B.) The potential scale of Crawford: big enough to attract a major, and Selby claims Canada Nickel has only just scratched the surface.

C.) The team’s experience demonstrated at Dumont has given investors confidence, taking something from resource to fully-permitted project.

Selby reveals that from the first two step-out holes from its latest drilling operations have more than doubled the strike length already registered. Exciting. Perhaps most importantly, the first assays from the first drill hole were the highest grade nickel intersection in the main nickel dunite area: 55m at 0.42% nickel, with 0.2g/t palladium+platinum. What will capture the excitement of investors is the prospect of filling the mill with as much high-grade ore as possible, and Selby is clear reticent of this.

The third highlight is that Canada Nickel has hit a PGM zone 100m outside of its main nickel resource, and the company has managed to hit it consistently, across several hundred metres down to 500m depth. It has been hit in 2 different spots a whopping 1.2km apart from each other. It is clear that Crawford is shaping up to be a really exciting nickel/PGM project.

What has the impact of COVID-19 been like for Canada Nickel, and what will it continue to be? In Ontario, mining was deemed an essential service, so there has been minimal disruption for the company. The assays have slowed down a little, but other than that, Canada Nickel has mitigated the impacts well and has kept employees safe.

Selby will put out another resource update in July, then another in October, in addition to a whole series of drilling/mineralogy results. these will be the key derisking events. We have no doubt Selby will continue to hit his deliverables. This could be exciting news for nickel investors.

We Discuss:

  1. Company Overview
  2. Putting Together Nickel Projects: Timeline and Strategy
  3. Recent Raise: Shareholder Support and Investor Interest in Nickel
  4. What Makes Canada Nickel Different to Other Nickel Companies?
  5. Drilling for Value: A Run Through the News Release
  6. Impact of COVID-19 on Canada Nickel and The Nickel Market
  7. Timeline for Deliverables

CLICK HERE to watch the full interview.

Hey Mark, how you doing, Sir?

Mark Selby Great. Matthew, how are you?

Matthew Gordon: Not bad. Been a while, been a while, and a few things have happened since we last spoke – good and bad.

Mark Selby: That’s right, we keep moving the ball. And there’s this virus thing that’s appeared.

Matthew Gordon: I heard, I read about that, I read about that. But look, your press release is out. There are a few things on there, which I want to talk to you about. I want to see how things are going because I was intrigued by Nickel generally in this market, and people trying to hit this cycle. There’s a real kind of interest in it. But you guys have done a financing since we last spoke as well, so I want to talk about that. But first, can we just kick off with that one-minute overview for people new to the story and we’ll pick it up from there?

Mark Selby Sure. So, what we have is a very rare thing: it’s a brand-new Nickel sulphide discovery. It’s within 6-months of drilling. We created the 11th largest Nickel sulphide resource globally. We are, because of my experience at RNC Minerals advancing Dumont and I was Head of Strategy at Inco before that, we’re able to move Nickel projects very quickly through so, and there is a scoping study by year end, a Feasibility Study by the end of 2021 because what we fundamentally believe is that Nickel goes through these super cycles which are relatively unique to Nickel, every 15 to 20-years, and we think that with the EV overlay on top of an already strong demand from stainless steel and other traditional Nickel demand sources, that we’re heading for one of these in the middle part of this decade. So, we have got one of the few large-scale Nickel projects outside of Indonesia ready for that market. We think that is going to create a lot of value for shareholders.

Matthew Gordon: It would be great if you can do that. But they are quite expensive to put together, aren’t they? Traditionally?

Mark Selby Oh yes. I mean, Nickel projects at the end are, to build these projects need a billion-dollar capital. And, again, when you look at most people in terms of how much money they need to spend on drilling, the nice thing about these larger-scale, lower-grade operations is, they don’t have the sexy high-grade attached to it. But the reality is, your chances of actually finding a resource of the scale that’s going to attract a major. You can drill these off relatively productively when you know what you’re doing. And so, we raised, we did the first 11th largest from scratch for USD$4M and this PEA is going to cost us about USD$4M to get done. We’ll continue to expand the Resource, the higher-grade part of this resource. That’s really what we’re focused on here – adding value, not necessarily tons. And so, yes, we’ll be able to deliver our Feasibility Study, we hope, for somewhere between USD$20M and USD$30M max.

Matthew Gordon: And what is the timing for all of this? You talked about doing a PEA by, by when? And when’s the Feasibility going to get done? Because if you’re going to hit the cycle, you’re going to need to get your skates on, right?

Mark Selby: Yes, yes. And we have, yes. I appreciate the Canadian analogy there. So yes, no, we’re skating, or skating as hard as we can. So, we’ll have that PEA done by the end of the year, hopefully a little earlier than the end of the year. And then we have got a whole team of people that we have worked with before, we’re getting them into place. And the whole goal with that team is, the scoping study is going to be to pull up before the end of the year. The goal is really having that Feasibility Study done by the end of December 2021. Because the reality is in terms of, you want to be one of the first projects out of the gate to attract the large-scale investors. And then two, in terms of take-outs, valuation wise, if you look at what Nickel sulphide discoveries, large ones, have gone out for it in the past, you get one or two per decade, they tend to get taken out between scoping study and Feasibility Study. So, we want to surface that value as quickly as possible for our shareholders.

Matthew Gordon: Okay. And then you raised this money recently. What type of people came in, because I know everyone’s sniffing around – EV revolution, battery revolution, whatever you want to call it. Nickel is at the forefront of a lot of people’s minds, but there’s a lot of stories out there too. Did you find it easy or difficult to raise capital?

Mark Selby Well, we chose probably one of the sort of second worst months in the history of capital markets to go to raise money, back at the beginning of April. I mean, Gold has been able to raise money, and it has been good to see the money that is being raised in Gold, but outside of Gold there’s been almost nothing raised in the base metal sector. So, I think it is a sign of confidence, A, in the Nickel story generally. And then B, in our project specifically, that we went out for USD$2.5M and we ended up with USD$4.5M, and our share prices has basically tripled since we announced that story.

I mean, we started trading at the end of February, just as COVID was breaking, but our share price is up 5x during that timeframe.

Matthew Gordon: Which is insane. So obviously people are liking what they’re hearing. So, what precisely do you think that’s resonating with them? Because again, we have spoken to companies telling Nickel stories, they’re not getting that kind of reaction.

Mark Selby I think that A, that it’s a new Nickel sulphide discovery; a lot of Nickel projects that are in the market have been around before and then recycled. This is truly a new discovery. B, I think it’s the potential scale of this asset, again, in this market, what has traded well and what gets valued well are those projects that have the scale that can attract a major. And I think our initial resource, which was the 11th largest right out of the gate, and we just scratched the surface of what we have, I think has really got people there. And I think C, I think there’s, we did it with Dumont in terms of getting from resource right through to fully permitted project. I think there’s confidence with the investors behind us that we’ll be able to do the same thing with Crawford, but because we have done it before, we’re going to be able to do it in a much, much quicker, much more capital-efficient fashion.

Matthew Gordon: Okay. Interesting. Let’s get into the news release here, because you have done a bit of drilling. You got some numbers that look good to me, but why don’t you tell us about it?

Mark Selby Yes, I mean there are three key takeaways from those drilling results: first off in terms of the Nickel resource, we drilled off one portion, which was less than 20% of the structure that we have there to deliver that 11th largest resource. These are the first new step out holes. And so, from the first two step out holes we basically confirmed that this is more than double the strike length of what we have got already. So, in terms of resource upsize, that should give you some sense of what the scale of this resource could go. Secondly, and probably the most important point is, the first assays that we did back when the first drill hole was the highest-grade Nickel intersection that we have drilled to date in that main Nickel Sulphide area. So, it was 55m at 0.42% Nickel, and with 0.2g p/t Palladium plus Platinum. And that’s about six times what our average PGM grade is for the resource.

And again, what we’re drilling for is, we’re drilling for value, not for tons. So, what’s going to make the PEA exciting and what’s going to make people get excited about this project is being able to fill that mill with as much higher grade, higher grade ore for the first years of the project. So that is where we’re really zeroing in on.

And then the third, the third takeaway is, we hit this PGM zone setting, about 100m outside our main Nickel resource, and hit it consistently. You could cross several hundred meters down to 500m depth. And we have hit it in two other places. So again, this offset mineralisation that is going to double the strike length, it has been hit in two separate places in the same spot, 1.2km apart from each other. And yes, and then the other place that we targeted to drilling was 1.5km away from our last drill hole on the main intersection. And, we hit 2.7g p/t. So, most of what we hit before was 1.5g/t. This 2.7g/t, and there was actually 3 separate intervals that total nearly 30m of 1.5g/t material. There’s very few PGM hits outside of South Africa. And again, most of what’s in the market today has been around for a while, this is a new PGM discovery on top of what is already a large Nickel discovery. So, I think that’s the thing, people are pretty keen on Palladium and there’s very few new Palladium stories. So, I think, what’s, I know we’re not going to change the name yet, but in Canada, Nickel, the Palladium part is going to be a pretty important part of by-product credit in the economics for the PEA and the Scoping Study.

Matthew Gordon: That’s fascinating. I mean, they are meaningful grades there on the PGM. But can I just come back to, and I’m sure as you drill out more, you’ll tell us more about that, can we talk about what you mean by drilling for value? And people don’t understand this, because I’m not sure I completely understand it either. The old model is drill for resource and you’re building out the size of the ore body and that’s the old way of doing things. You’re trying to do things in an accelerated way. So, you’re trying to bring the good stuff to the fore quicker. Is that, is that what you’re doing? Is that what you mean by that?

Mark Selby  Yes, that’s exactly it. I would say Australian mining companies tend to do it. They tend to build enough resource to get their mine built then they get going. Canadian resource companies have tended to just build up larger and larger resources and that at some point they’ll put some economics around them. But it’s all about making the resource as large as possible. We already, with the first set of drilling, we’re the 11th largest already. The key piece that’s really going to move, and we have enough resource for a 50-year mine life, the key piece is really finding more higher-grade, higher-value material to be able to mine in the first few years of that mine project life. So, the geophysics that we have got sort of points as to where those higher, best areas may be. And so that’s where we have been focusing our drilling, as opposed to just stepping out on a standard basis and trying to add, just maximizing tons for the sake of maximizing tons.

Matthew Gordon: Okay. So, things are going well; share price, I appreciate, it’s great. Well done. The numbers are starting to look good. You are going to try and deliver this PEA by the end of the year. I’m assuming therefore, COVID-19 has not drastically impacted your ability to move things forward. It seems to be what I’m hearing?

Mark Selby: Yes. Northern Ontario, in Ontario, mining was deemed an essential business. So, whereas a number of other businesses and their supporting businesses shut down. In Ontario, we were allowed to continue operating and we were able to, the work that we’re doing, we can still do it in a way that keeps our employees safe, so we have been able to continue drilling. Our assays have slowed down a little bit, that’s where you’ll see there’s nine holes of assays pending. But, by and large, all the suppliers and support industries have been, they’ve been able to keep working safely and we have been able to continue to move things along, which has been great.

Matthew Gordon: Okay. And what’s your view with regards to how all of this, again I’m talking about COVID-19, is going to impact the battery market? Is there going to be a slow down before it gets back up to what it was aiming to be before? Is there going to be an impact? Because we have had a couple of CEOs come on here and go, ‘Oh, it has absolutely devastated the supply chain. It’s going to impact the way people think about these things. What’s your take on it?

Mark Selby: Yes, so I think it’s really more, well, let me talk about the battery market in general and then more metal specific. I think we are going to go through several months of economic slowdown. But I think you’re going to see governments want to stimulate the economy. So, the Chinese have always done it through infrastructure projects. And if you look at the stats that are coming over the last six weeks, they are, you’ve got copper mills running at more than a hundred percent of capacity right now. Iron ore prices; huge amounts of iron are now going into China. And the Nickel market itself, you’ve seen a lot of the physical numbers improve pretty dramatically. So, I think that’s going there.

 I think in the West where consumer spending is the biggest driver, governments are going to have to provide incentives or mail checks to people to help get consumer spending to the point where the economy is going to be growing again. And again, cars are a big ticket item; that is something where you’re going to see government incentives show up. And again, there’s a lot of discussion on non-politicians around sort of using this opportunity to retool or redesign the economy. So, I think a lot of those incentives are going to be geared towards, okay, we’re going to give you money to buy a car, help you buy a car, but it’s going to be only if you buy a clean car. So, for those people who are kind of on the fence about buying one, okay, what if I get a thousand bucks from the government to do it, then I’m going to do it.

So, I’m not as doom and gloom in terms of, I think it is going to be pretty challenging for the next year or two economically. But I think the way out of this is to stimulate the economy. And so, I think those incentives will come. In terms of the individual metals, the metal I feel sorry for the most, I think is Cobalt through this process because  it’s got three whammies: if you look at Cobalt sources of demand, one is alloys for the oil and gas industry, which has just kind of took it in the teeth. The other part is for super alloys in the aerospace sector. And so, again, airplane travel is something that’s going to take a while to fully, fully come back. And then you’ve got the EV market, which has become the third source, which is going to be, again, a few bumps here going forward. So, I think Cobalt has got it the toughest.

Lithium. Again, you’ve just got so much supply sloshing around that as we go through this low point, I don’t think, I might be wrong, but I don’t know how much Lithium production has been impacted by COVID. Where we benefit from Nickel is that one of the major mining sources is mines in the Philippines and those are going to have to ramp up to help make up for the ore that’s not coming from Indonesia anymore. But those mines have been shut for quite a period of time and it’s just been extended again. So, we’re seeing ore stockpiles coming down in China pretty dramatically. I think that’s important for investors, to think about the COVID impact, not just on demand, but on the supply of the metal. And Nickel has come out of this in pretty good shape relative to the other metals.

Matthew Gordon: That’s fascinating. That’s funny. I always love listening to you to see your take and because you understand that, that with the ghost of the micro. So I appreciate that. Well it must be exciting times for you guys. I guess you’ve just got a whole bunch of deliverables to be able to get that PA done. You feeling confident about the end of the year? That’s, that’s definitely going to happen.

Mark Selby: Yeah, I mean, between now and then we’ll have, we’ll have

Another resource update on ode in July, right. Have another resource update in October. So, before we finalize the, the scoping study we’ll have a whole series of drilling and mineralogy results again for these deposits. The key issue is, okay, how much of the Nickel can you actually recover? And again, what we’re seeing so far is very encouraging. But, we’ll have those numbers come out. And again, those are going to be the key risking events in terms of, how do we have done well getting from $0.25 to $1.25 and how do we take this, to USD$5 a share or higher from here. It’s going to be some of that news that comes out, over the summer. And then, the other big thrust of this too is, it’s easy carrying around high-grade core that looks very sexy.

You know, I did that in a prior life with target, rocks with chunks of gold in it. And, that definitely gets investor attention. But I think, in terms of delivering, building a project that the majors are going to be interested in, know large lower grade projects. I, part of the reason I’m so keen to get the economics done is to really demonstrate to people, it’s like, yes, it’s low grade, but you’re going to build an operation that’s even,, equally low cost and you can deliver very good margins., I’ll point people to believe in ATEC mine in Finland, it’s started in Scandinavia, it’s a 0.22% copper where the tiny bit of Silver and Gold is a by-product credit and it is in the first core tile cash costs for copper,, so it has a fraction of the grade, but because it’s in the right location, lots of infrastructure, it has a productive workforce and it’s built to the scale to the,, it’s the right scale for that kind of grade., they can make money all day long. And so, that’s what we want to demonstrate with, with Crawford, know that we’re going to be able to build that kind of scale operation and generate those kinds of cash flows for many, many, many decades to come.

Matthew Gordon: Okay. Well, I appreciate your time today. I’m just, delighted for you, got the ball rolling and got the money in as well. But, you clearly know what you want to do and how you want to do it, which is fantastic. Now you’ve got to go and do it. So, yeah. Over to you. Stay in touch.

Company Website:

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

Canada Nickel – 11th Largest Nickel Sulphide Resource Globally! (Transcript)

The Canada Nickel Company logo
Canada Nickel
  • TSXv: CNC
  • Shares Outstanding: 57M
  • Share price C$0.47 (18.03.2020)
  • Market Cap: C$27M

Interview with Mark Selby, CEO of Nickel Exploration company, Canada Nickel (TSXv: CNC).

Selby tells us he already has the 11th largest nickel sulphide deposit from less than 20% of the structure that they are exploring. 260Mt with a higher-grade core running through the middle. And he claims they have an accelerated timeframe planned to get into production.

A PEA will be out in the next 3-4 months and then a Feasibility Study by the end of 2021. Canada Nickel Corp has hopes to time this nickel cycle right and therefore be able to fund the project into production off the back of the Feasibility Study.

Key take-outs are 1. This is a large project – elephant hunting territory – which is attractive to large Nickel Majors 2. The Nickel Resource has been added for only $1 per ton. Many projects cost spend $1,000 per ton to add to their Resource. 3. The PEA will be out in 3-4 months. Investor can understand the economics at this point. 4. The grade is relatively good and the company hopes to be able to mine a higher-grade core first to deliver a higher return in the earlier years. 5. It’s a Nickel Sulphide project which is preferred because of the significantly lower CAPEX compared to Hpal projects required for Nickel laterite.

CLICK HERE to watch the full interview.

We Discuss:

1:16 – Going Public: The Aftermath

1:46 – PDAC Conference: Low Attendance Rates

3:16 – Resource Numbers: What Do They Mean for Investors?

7:37 – Commercialisation: Possibilities and Timings

10:45 – Focusing on High Grade: How Will it Work?

12:22 – Coronavirus’ Impact on Market and Possible Outcomes

Matthew Gordon: Hi, Mark, how are you Sir?

Mark Selby: Good to see you again, Matthew.

Matthew Gordon: And we spoke last week; you went public. How did that go?

Mark Selby: It’s good. The transfer agent mechanics in the background took a little while to get people’s shares into account, but the nice thing is, we did trade a bit and the stock was up 250% on the first trading day, so that’s a great way to start. We’ll see what happens and we’ll see what happens today.

Matthew Gordon: Beautiful, beautiful, beautiful. Now you’re at PDAC; about to go through three days of marketing, shaking hands, meeting people, et cetera, et cetera. Tell me, what’s it like there? Because, I’ve heard various reports about attendance levels. What’s your sense of what’s going on there?

Mark Selby: Yes, I know what’s interesting, and again, there’s a lot less shaking hands and a lot more touching elbows!

Matthew Gordon: True, true, true!

Mark Selby: No, no, there really has been an impact. I know one of the guys who came in from out of town, you stay in a hotel in Toronto, he didn’t, he just asked them, he’s a consultant who wanted to just, just was curious. And so, yes, I think they basically had about a third of the people not show up, basically cancel the reservations from a few weeks ago. And I co-chair one of the larger introductory sessions at the conference. It’s held in the big room and I would say, yes, there’s probably 20-25% less people now than there have been in past years for that session. So yes, I noticed it. There’s definitely, definitely been an impact.

Matthew Gordon: So clearly coronavirus; people nervous about traveling at the moment. I think there’s a lot of news going around. Okay. So that’s having an impact.

Mark Selby: One of the speakers on the panel, she works for one of the big banks and yes, they were basically – she did it remotely because they have an only essential travel policy going right now.

Matthew Gordon: Right. Okay. Well I’m sure it’s going to impact some people’s ability to do business or a certain account chart with, whether it be strategic partners, funders, whatever. But I guess we’ll hear more of that as the week carries on. But let’s get down to business here: so we spoke to you last week, you went public – well done, 250% increase, but let’s see how that goes this week. You also released some numbers around your resource, so tell us about that.

Mark Selby: Yes, we were very happy. Again, we’ve been drilling since September. And so the resource results were the 12th largest Nickel Sulphide resource globally. The nice thing for that in terms of technically what’s there is, we’ve talked about this higher-grade core showing up in the drilling. And the nice thing is from a resource perspective, there’s a higher-grade core running right through the middle of it. So, again, Dumont is the closest comparison, and so this higher green core, we’ve got 260Mt out of 900Mt; that’s basically about 15% better than Dumont. And then we’ve got some additional grade shells. And we’ve got about 100M tons at 0.3, 0.4, so again, the key thing with that higher-grade core is that when you go to get this into production eventually, if you’re able to mine that material first, that means just a lot more cash flow right out of the gate, and that just helps the economics and helps you run the business.

Matthew Gordon: Well. Yes, for sure. So, yes, I guess you’re going to have to work out, are you going to be able to mine that first? And you’ll presumably be working on that over the next few weeks and months. And also some pretty big numbers out, right? So what does that actually mean? I mean, how should investors interpret that? I hear the numbers, but so what? What does it mean for me?

Mark Selby: Yes, no, the key thing again, because a lot of mining companies just add ounces or pounds for the sake of adding ounces or pounds. , the key thing here and that what I said the other day is that in the market today particularly is you see, companies that have elephant scale projects that can attract major mining companies or attract downstream partners to come into it. So a lot of companies in Columbia and Ecuador right now, with Copper and Copper Gold discoveries, being a Nickel Sulphide project of this scale, I believe right now in the market we’re in for EVs, and the majors wanting to get exposure to battery metals, that kind of a scale deposit should get BHP’s attention, should get Teck’s attention if they want to get meaningful exposure to battery metals: Nickel and Cobalt that we have.

Matthew Gordon: What do you mean? You talked about elephant hunting before, but where are you in the scale of things? Give me a sense of it. Is this like number one in the world or in the top 100?

Mark Selby: Yes, right now, we are basically around the 11th largest and we’ve only explored, that’s off less than 20% of the structure that we have at Crawford. So we think we’ve got potential to make it larger. And again, where we’re going to focus is on those areas where we’ve seen the higher grade. And so we’re going to take what we learned about where the high grade is at the one place we drove off and see if we can find some more of it. We’ve got some ideas in terms of where that may be sitting in the rest of the structure. And so, because again, the thing that I’m also quite proud of is our team added that resource for about a dollar a ton. You literally, because the scale of most Nickel Sulphide deposits is quite small, yes, they’re high grade, but you don’t find many tons for a lot of drilling and for a lot of companies, they are spending literally almost USD$1,000 per ton to add resource and reserve.

Matthew Gordon: Is that an extreme example or what was sort of average?

Mark Selby: No, no. I would say like I think in Western Australia you’re looking at $100 per tonne of exploration costs to define Resources. It’s okay because they’re trying to find little small Nickel lenses, that might be today quite deep. So you’re drilling again, you might be drilling 500m holes, 800m holes, hoping to hit 10m of massive Sulphide Nickel, where we get to drill a 500m hole, 450m of it have assets that end up in a Resource model.

Matthew Gordon: Right. Okay. So that’s going to give you, again, as investors, we’re all going to be interested in, at what point do you start being able to, and I know it’s early days, but at what point do you start being able to put some numbers or thoughts around the economics of this. So I’m hearing it’s large, you’re finding in terms of they contain Nickel Sulphide, 11th largest in the world. I mean that’s pretty good, straight out of the gate. It’s cheap. But at what point does that start converting into meaningful numbers for us as shareholders?

Mark Selby: Yes, so that’s the key. I mean, what we wanted was, again, we wanted to work this on an accelerated timeframe, given our understanding of this type of deposit. And so this Resource and the results we have are of the scale and are of the potential that we’re going to move that Resource right into PEA stage. I’m literally meeting today with one of the leading engineering firms to start scoping out to kick off that work. And we’d look to kick that off in April and have a PEA done for the fall for this coming year, which again, we’d roll right into a Feasibility Study from there. So again, from 6-months from drilling, we’re going to be able to start putting numbers around this which is very fast.

Matthew Gordon: Okay. And then how quickly, you mentioned the Feasibility Study as well, clearly, but what’s your timeframe on that? Because the more you do, the more notice people take. And when you say accelerated timeframe, I’m interested in, do you mean it? Or is this the usual long drawn out process and you guys are…

Mark Selby: …are we’re talking 6-years from now, hopefully not the project because it’s construction. Yes, no, we’re looking to have the Feasibility Study target would be the end of 2021. And so, and then a 2-year build from there. So that’s the timeframe we’re going to be working towards.

Matthew Gordon: Well, you’re suggesting there that you could get financed off the back of a Feasibility Study?

Mark Selby: Yes. Again, in a kind of market we’re in now, in the market we’re expecting for battery metals, when you’ve the head of BHP saying, ‘We need more future facing metals, we need more Nickel and more Cobalt’, I think when we get to that point we should be seeing the interest from the major mining companies and from the industry downstream players.

Matthew Gordon: Okay. That’s pretty big statement you’re saying. And in 2021, you could have a Feasibility Study ready. You will have been having, and would hope to conclude financing discussions around that point – is that what you’re telling me? Okay. And then there’s a 2-year build out, so when you say accelerated, you do mean accelerated, and you’re hoping to hit the cycle. There’s a lot of ifs and buts between now and then, obviously, right?

Mark Selby: Oh yes, yes. Nothing’s guaranteed in this space. But again, my view is we’re going to be hitting a Nickel super-cycle sometime in the mid-2020s. And so, we want to make sure that we’re as ready as possible to take advantage of that that super cycle.

Matthew Gordon: Okay. And when we talked previously, you talked about this kind of, and I think you mentioned at the beginning; this high-grade core, which you would look to focus on initially just in terms of the ability to positively affect the numbers out of the gate again. What do you know today about your ability to be able to do that?

Mark Selby: Within the release and the presentation, there is a slide with a series of grade shells to show how contiguous that material is. And again, it starts up at surface. So we won’t know exactly how much we’ll be able to pull in early, but based on the geometry of where it’s sitting, it looks quite promising on that basis. So and again, when you’ve got 98Mt of 0.34, that’s basically 8 to 10 years of ore for a large, the kind of scale mill that we’d be looking at for this type of deposit.

Matthew Gordon: Okay. Exciting times. Well, Mark, thanks for that update. I just wanted to catch up on it because I’m always interested in, well I mentioned battery metals at the moment, and obviously these are the newest stories in the marketplace and there’s been a lot of debate which you’ve helped stimulate actually with your education series, Insights series. I do appreciate that. Let us know, I might just call you at the end of this week to see how PDAC has turned out because obviously, those sorts of numbers of non-attendees is huge and quite meaningful. What do you think the wider impact is? Is it going to be short term in terms of the whole coronavirus? Because obviously, last week was a huge reset in the market. I mean huge reset. Do you think that was always coming or do you think that’s coronavirus linked?

Mark Selby: Well we needed a correction in the market place. I mean, so many stocks have just done this for a continuous period. And so we are overdue for a correction. I think the Corona virus has given people an excuse to take some profit. It is having an impact; the Chinese PMI came out over the weekend and they were in the 25 and 28 range; sort of the lowest ever recorded. So it is having a physical impact today and I think it will continue through this quarter as it kind of rolls around the globe. We’ll see that. But I think as long as we don’t get some highly, virulent evolution of that disease, so it starts killing lots of people, it’s basically a really bad flu right now. So I think we’ll have a quarter or two of impact. There’ll be a lot of government stimulus, particularly with China to help sort of restart the economy after that shock. So again, from a Nickel perspective I think it pushes out the recovery I was looking for the summer to fall, it will be pushed out another 3 to 6-months, so maybe by the end of the year, early next year we’d be able to sort of see new prices come back at that point.

Matthew Gordon: Right. And what do you think are the other…I’m just interested because you always have an opinion on these things, is around some of the smaller companies that are perhaps struggling for cash, to attract cash, who were struggling in terms of share price, et cetera; they’ve been hit pretty badly. Do you think there’s going to be some joint venture activity? There’s some takeovers and M&A, some mergers, farm-in, farm-out. What’s the impact of what’s been going on recently? Because in the Gold space, you’ve got producers producing cash, making money, losing a third or 25% of their market cap, like in a week. What’s going on?

Mark Selby: It would be a good time for companies to make some acquisitions. And again, you do have a whole group of companies, both the major mining companies are announcing, BHP had the second largest dividend in its history recently. So they have the cash to make some moves. Whether they’ll be aggressive enough to take advantage of the selloff in the market, again, those are the times when you should be buying, but a lot of companies just don’t have the to step in there when the market’s falling. So again, I would like to think that’s going to happen. I think we might get one or two deals done, but we won’t get, I don’t think there’ll be much activity. People will want to see the market bottom, see the market recover, and at that point in time, it’s time to start to step in and look at asset acquisitions at that time.

Matthew Gordon: It will be interesting. I’m very keen to see what happens over the next couple of weeks or month or so. Because there’s a few companies, I think who were on vapor before this happened, so we shall see. Always good to have a nice Spring clean. Right, Mark, thanks very much for your time today. I do appreciate that. Good luck with PDAC this week. Hope you don’t catch anything.

Mark Selby: Nope. Thank you, Sir.

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

The Canada Nickel Company logo

Canada Nickel (TSXv: CNC) – Accelerate, c’mon babe, Pick up your speed (Transcript)

The Canada Nickel Company logo
Canada Nickel
  • TSXv: CNC
  • Shares Outstanding: 57M
  • Share price C$0.47 (18.03.2020)
  • Market Cap: C$27M

Interview with Mark Selby, CEO of Nickel Exploration company, Canada Nickel (TSXv: CNC).

Mark Selby has previously weighed in with his expertise on the nickel market. His general insights have been very informative for nickel investors, but now it is time to talk about Selby’s latest play in the nickel space. Canada Nickel Corp. is a relatively small nickel play in Canada. But it has a lot of the right parts that you would look for as an investor. It is Nickel sulphide. Potential for large scale resource and district-wide. Funded for next stage of operation. Looking to an accelerated delivery of a PFS. In a nickel bull market. Low share count.

After giving us the details on the recently concluded IPO, Selby gives us a look at what Canada Nickel Corp. has to offer for investors. On February 21, 2020, Canada Nickel completed a private placement and issued 3,074,333 Common Shares at a price of C$0.25 for aggregate gross proceeds of C$768,583. Canada Nickel Corp. has acquired 100% interest in the Crawford Nickel-Cobalt Project.

Selby has previously doubled down on Robert Friedland’s words: “nickel is the new gasoline.” Nickel demand is robust in the stainless steel industry, but a projected fresh surge of demand for batteries, courtesy of the EV revolution, has got investors across the board foaming at the mouth.

Selby indicates that the Crawford Ultramafic Complex (CUC) could have strong potential for developing a low-grade, large-tonnage nickel resource. In addition, the resource hosts nickel and/or cobalt bearing minerals and possesses promise for the extraction of these elements. In addition, Crawford has been assessed via magnetic, borehole geophysical, airborne helicopter magnetic and electromagnetic, and FALCON© Airborne Gravity Gradiometer surveys, and was investigated by its previous owners, Spruce Ridge, through diamond core drilling.

Now Canada Nickel has the available capital from its IPO, it will look to provide an accelerated investment opportunity for investors. Selby sees this as the start of a new nickel super-cycle and states there are only a handful of close-to-production projects than can help double nickel supply by 2030.

With the expertise of the management team, the existing infrastructure at Crawford, and the work Canada Nickel Corp has already done in the last 6 months or so, Selby is confident the company can surprise the market with the rate of returns and value growth, and he is likely to draw on much of the knowledge and experience acquired from RNC’s Dumont Nickel Project. Investors can expect confident, decisive, technical mining. However, they will be hoping Crawford can fulfill expectations.

The resource should be out soon. Will it “shock people” like Selby claims? When will Selby look to bring in financing from institutional investors, and is there a risk he could have to give a big portion of the company away? Selby is adamant he will make the right deal at the right time and will delay if necessary. He would rather wait for a better deal than rush into dilution for shareholders. How will this play out?

Are there any issues left to resolve? An MOU needs to be arranged with a local tribal council group, and then there needs to be six impact benefit statements/agreements before full construction of the nickel project. Selby is confident that once the PEA is signed, sealed and delivered, these shouldn’t be problematic to acquire. Investors need to decide if this nickel sulfide story excites them. If it does, it could be worth some serious consideration.

CLICK HERE to watch the full interview.

We Discuss:

1:42 – Listing on the TSX: The Process of Going Public
4:55, 8:36 – New Deal, New Opportunities: What Have They Got and What Will They Do?
6:33 – Nickel Cycle: Have They Got the Timing Right?
11:51 – Business Model and Game Plan: What are People to Expect?
15:53 – Strategic Partners: Any Danger of Giving the Company Away?
18:46 – Share Breakdown and Company Strengths
19:37 – Outstanding Issues to Resolve

Matthew Gordon: Hello, Mark Selby. How are you, sir?

Mark Selby: Good, sir. How are you? It’s been a while.

Matthew Gordon: You’ve had your head down, because we spoke to you a few weeks ago now, and you’re in the process of getting Canada Nickel Corporation through the TSX and making it public. You’re there now. Must be pleased.

Mark Selby: Yeah, very happy just to start trading today. It’s been several months to get through this process. But, again, it’s a regulatory process so, it does take time but we’re glad to finally be there and that we can actually start talking about the story again, because there’s been lots going on in the project.

Matthew Gordon: You’ve got to tell me about this, OK because we usually speak to people when they’re public and they’ve been trading a while, or they’ve got their own issues and stuff. But we’ve started talking to pre-IPO, there’s a real process to go through. Give me an idea, give the people at home the sorts of things that you’ve kind of got to get through to be able to go public. What are the topics that the exchange wants to know about?

Mark Selby: Yeah. So again, I think with the transactions that we had, and again, it was just the nature of where the asset was. There were several degrees of difficulty that we had to kind of jump through. So, again, if you think of the majority of IPO’s it’s a single asset that’s been acquired from one company to another. It’s either an IPO or then an RTO transaction and that goes on. We first had to deal with the fact that we were consolidating a joint venture of a joint venture between two other small companies and then some private companies that don’t actually file any documentation. So, working through that in a regulatory process that likes things that fit into boxes and having stuff that doesn’t fit in any of those boxes was some additional work that we had to get through. And again, it’s really about they just want to make sure that you’ve got the financial resources that you say you do, that you own the asset and that you’ve got the capability to move it forward and deploy the capital that you’re raising to take it forward. So, again, on those parts of the process, again, we didn’t have any issues with that. It was just more that sort of that inherent complicated structure that we started with that didn’t fit into one of those typical regulatory boxes that caused some additional time, but as I said we’re glad to be finally here through that finish line. And then, again we should have a pretty steady series of news flow from this point.

Matthew Gordon: Okay. It’s interesting because there were three different parties and you had to get them to agree to the deal. And then you’ve got three different sets of data which you’ve kind of got to share or get in these boxes for the TSX and were you managing that process or was that all of you adding to the confusion, as it were?

Mark Selby: Oh, no, that’s it. Basically, you’ve got three general counsels. You’ve got three sets of auditors. You’ve got three sets lawyers. So, no it’s not a straight forward process, but it’s more than worth it.

Matthew Gordon: OK, let’s move away from admin hell. That’s my idea of hell. We always have people to do that so kudos to you for getting through that. Let’s talk about what you’ve got. Let’s give people a one-minute summary of the deal that you’ve put together and what you’ve got and then again, we’ll kind of remind people about what you’re going to try to do.

Mark Selby: Sure. We now own 100% of the Crawford Nickel Cobalt Project. Since September, we’ve continued to advance the project. So, we’ve been doing the drilling work that we need. We’ve been starting to do the mineralogy work that we need to do. And again, I think people are going to be surprised in terms of how far we’ve advanced this project already while we’ve been waiting to go public. And so, there’s going to be a very steady series of news flow over the next few weeks, which I think will really demonstrate the potential that we believe was there with Crawford to be truly one of the great nickel cobalt sulphide discoveries of this time, this decade and potentially beyond this decade.

Matthew Gordon: Well, I think it’s very timely.  I look back to your RNC days with Dumont, it’s a great asset. But the timing wasn’t quite there, it’s 12 years in the making. It’d be one of those 12, 13-year over night successes. Your timing, nickel sulphide, obviously, is where you want to play. You’re going to, I assume, be able to tell us a little bit about what you think you’ve got now. But I’m interested in how you’re positioning this business in terms of getting the cycle right. Because we look at this, the wave of conversations we’ve had about market, it’s been phenomenal. The EV thematic, no one’s disputing that. It’s a question of timing that seems to be important. So, do you think you’ve timed it right?

Mark Selby: Oh, no. I think that the timing’s been perfect. As you said with RNC, with Dumont, I spent seven years promoting a project when nickel was out of favour. And again, we were setting up to deliver a nickel project for the next nickel cycle, which has now arrived. Our view is we need to double the supply of Nickel that we have right now by 20%/30%. And there’s only a handful of projects that are ready. So, to get something like Crawford ready for this next cycle, I think it’s perfectly timed. I think in terms of investors looking for sort of how far sentiment has shifted, you know, BHP Billiton for most of the prior decade was looking to sell their nickel business. Mike Henry in their annual report, basically said we need more future facing metals, we need more nickel and we need more copper. So, if the biggest mining company has done a 180, I can assure you that the management teams of every one of the other large mining companies is doing this, has a similar view and has a similar take now on getting exposure to battery metals. And so, again, having a large-scale potential asset like Crawford in a jurisdiction like Ontario, where in the Timmins camp, where the mines have been permitted on a relatively straightforward basis, I think the timing of this couldn’t be better. And again, there are some other nickel sulphide opportunities we’re looking at because, again, I think our team spent a lot of time looking at nickel sulphide when no one else did. So, we think we’ve got a leg up on the rest of the competition in identifying those assets that are going to be able to deliver the nickel the EV market needs by the end of this decade.

Matthew Gordon: Okay. Interesting. We spoke with Anthony Milewski last week and we put a piece out at the weekend. He was quite complimentary of what you’ve got, and people perhaps should take a look at the interview and get his take on what you’ve got. What do you know about what you’ve got today? And then what are you going to do with it? And how do you pay for that? Because, again, there’s so many exploration plays which just aren’t able to get the funding in place. I mean, you’ve just listed, you got some cash now. What are you going to do with that cash?

Mark Selby: Yeah. So, again, I think the key thing is here, because we’ve got that experience, we’re going to be able to accelerate the process and advance the process in a much more timely and cost effective manner than we were, because Crawford is basically a very similar asset to Dumont with its own unique set of strengths. So, with the money that we’ve raised, we’ll have a resource out here very, very shortly, which I think will shock people in terms of just the scale of the resource that we’ve been all ready to drill with a few million dollars that we’ve raised to date. And, again, I think as we take this forward, we’ll be able to highlight what I think this resource will show, what the potential of this property is. We’ve only drilled off 15% to 20% of what we have at Crawford. And so, I think the highlight of that scale potential will be there. I think the what we’ve been able to deliver for the cash that we’ve invested to date will make it easier for the next set of investors to bring that next round of money that we need. And again, given our experience with Dumont, we’ll be able to quickly advance Crawford into the resource we have now, into a PEA and then look to basically build out the other 85% of the property that we haven’t drilled yet.

Matthew Gordon: Right. But what’s the game plan here? You’re using great words. So, it accelerated in value and all of wonderful things, which lots of people do. But I need to understand what that actually means. So, you’re going to deliver a resource which you’re saying gives you the scale and you’ve told me before scale…

Mark Selby: We’re going to deliver a real resource that I think will surprise a lot of people when they see it next week. And that resource on its own will be large enough to help support moving and what we’ve seen to date will allow us to move right into a PEA on that resource itself. We still have 85% of the property that we haven’t explored yet. And so, again, now that we understand what the best part of what we’ve drilled off already, we know there are other pieces on the property that we’re going to be able to find. There’s a good chance we’re going to find similar good stuff in other parts of the property to make it even larger than what we have right now. And I think the key thing in this market and again, to point to investors in generally investing right now, the market is really bifurcated into two categories of assets. So, if you own a world scale asset that the majors want to buy and again, there’s companies in Colombia and Ecuador that have found a new range of copper, copper gold elephants, those stocks have traded well. And then there’s everybody else. And so, what we really want to show with this first resource is that we’re in elephant country and that we’re hopefully going to find a bunch of elephants on this property and have something that I think will be interesting to large mining companies, to large EV players and to large suppliers that this is exactly the kind of nickel, cobalt resource that we’re looking to help build their business.

Matthew Gordon: Ok. So, this is the bit that interests me is the model, I need to understand the model. So, you’ve got some money, you will deliver a resource next week. You hope that will have an impact on the share price and also get people to notice that you’re here because there are not too many of these around. I get that. I want you to help me understand what people are getting into. What will investors get into? Will it be just a long series of diluted raises to get you where you need to be? How do you assure people that they’re not in for a long, drawn out process? And how quickly are you going to deliver your plan when you do either hand it over to a big strategic who actually goes and puts the money in for this? Or you bring in the strategic partners who again, coming in at asset level and not diluting people in the public company?

Mark Selby: Again, we will be out to raise the next set of money for the PEA, that’s the next stage that we need to get through. And, we will be looking to bring a strategic in at that point in time, if the pricing makes sense. And again, we’ve already had some interest on that front. I think the key thing from here is we’re going to advance in towards that, get that PEA done, and then from there we’ll be able to move right into a feasibility study. The key thing from it from a managing a process perspective is that you need to have some, and communicate to the market, very clear milestones that you are able to move quickly, because if you can’t demonstrate to the market that you’re going to move quickly, then the large mining companies suffer from inertia issues. And so, they’ll never quite get around to making you that investment. But if it’s very clear that if they don’t step up today or they don’t step up in three months, or they don’t step up in six months, we’re going to be moving the ball, to use a sports analogy, moving the ball very quickly down the field, and they’re going to find themselves chasing a valuation, which is hopefully going to be improving materially as we move forward here.

Matthew Gordon: Okay. But let’s come back to what some of those deliverables are, because again a lot of companies use these phrases. And I want to separate the cliché from actual delivery. But what are the moments, what do they mean for you?

Mark Selby: Yeah. First resource out very soon, PEA out by the end of September. Worst case, end of October. Feasibility study out before the end of 2021. That’s about as fast as you can advance a project today. We’re already assembling the PEA team in place again with experience with Dumont, that we’re going to be able to bring that knowledge and experience to bear and be able to quickly advance the project going forward.

Matthew Gordon: Okay. And clearly, each of those deliverables, you hope there’s a bump in the price and you’re able to raise money more cheaply this time? So, there’s not a long-diluted process here and there’s not a lot of money to get to feasibility. Is that what you’re saying to me?

Mark Selby: Yes, very much so. So, again, I think when this resource comes out in the coming week, people will be surprised at just how many tons of nickel we’ve delivered for how few exploration dollars at this point. The benefit of these large-scale low-grade deposits is we’re not drilling lots of 500-meter holes to hit 10-meter gold veins. We’re drilling a 500-meter hole, of which 450-meters of that end up in assays that you can use in a model. Again, because the deposit doesn’t twist and turn and then get faulted in 50 different directions, you can use much wider drill spacing to define the resource that you’re using. So, both of those things help to be able to define a very large resource very quickly.

Matthew Gordon: Right. So, I’m going to ask a maybe difficult question which is you talk about getting a strategic in, around the PE stage and if I look back at Dumont, Waterton came in there, RNC gave away, what, 78% of the company and how although it is a fantastic asset and it’s worth a lot of money on the balance sheet, or could be worth a lot money on the balance sheet for RNC. If you bring in strategics too early, are you in danger of giving away the company or do you think you can negotiate a sensible, reasonable position?

Mark Selby: The key thing is and again, when we did the Waterton deal, it wasn’t really around any issue per say with Dumont. A key portion of that deal was to set up a joint venture fund to look to acquire other nickel sulphide assets in time in a market where no one else was buying them. So, unfortunately, Cobalt 27 and Mr. Milewski came along about two months after we announced the deal. So, people we had been talking with for several years who were getting to the point of capitulating, if somebody shows up with a cheque, you can have my nickel sulphide asset. I think, if Cobalt 27 hadn’t come along, we would have gotten a couple of those deals done. And I think that’s sort of logic of that transaction would have been much clearer to a lot of people at that time. So, that would have allowed us to have a whole portfolio, of nickel sulphide assets that the smaller, easier, cheaper restarts, complementing the much larger large-scale asset is key. And again, to your point as well, in terms of too early and giving away too much, this is a time in the market where, if BHP is already talking about more nickel, I can assure you that Rio Tinto and Anglo American and all the others are also talking about more nickel. And there’s really very few ways to play it. So, I have most of my net worth invested in this company. If you see, when I was at RNC, I was buying the stock all the way along through the ups and downs. And again, here, I’ve taken a bunch of that money and put it into this company. So, I will do the right deal at the right time. And again, if it means we have to wait a few months, I’m not going to build it for the sake of building it. I think some other mining companies have done sort of full financing package deals where there’s a massive amount of dilution. Yes, you’re going to get your project built but how will your equity holders actually ever going to make any money off this thing? Because you’ve basically diluted their ownership interest in the project, you’ve issued a huge amount of equity relative to your current base. So, it’s going to be challenging for people to actually get a return on their shareholder value. You as management are great because you now can build your projects, you’re going to get your pay checks for three or four years, but your equity holders really are going to make any money.

Matthew Gordon: Right. So, you’re cognizant of that point, that issue and that’s a consideration.

Mark Selby: Yes, very much so.

Matthew Gordon: OK. So, how much do the management team own of the company?

Mark Selby: I personally own 4%, my family own another 5%, and the management team as a whole has over 10% of the company. I think that’s one of the other strengths with this company, too, is, again, as a brand-new company, we’ve got 57M shares outstanding. There are no warrants. And there’s a core group of individuals who spotted this opportunity, initially drilled those four holes in 2018 and are committed to seeing this through until we basically deliver what we think will be a great nickel cobalt sulphide project for the world.

Matthew Gordon: Okay. So, I know you’re in a great part of the world, the infrastructures there. You’re good. I’m not going to get into that yet. Have you got any outstanding issues with regards to permitting or First Nations or any liabilities, obligations which you’re still trying to resolve as part of this three-way triumvirate negotiation?

Mark Selby: Yeah, the one thing that’s been a real strength of this area is that Noble Minerals, one of the first thing they did, they were the original property holder, they have they had an MOU in place with the local group of First Nations, Wabun Tribal Council, who’ve been great to deal with them since we’ve now moved into the relationship. And we’ll have an MOU with them shortly for the property. They have six impact benefit agreements in place, which is what you’re going to need to have when you go to build the project. And again, once we kick off the PEA, we’ll be looking to start to advance that impact benefits agreement in place to make sure that it doesn’t become a bottleneck on the timeline going forward.

Matthew Gordon: Okay. Mark, I just wanted to catch up. I know you’ve got a busy day. The bell has rung as it were. I hope people at least have a look at this. It’s certainly a very exciting area to be playing in. Nickel sulphide is very, very topical. We got a lot of questions. And thank you, you did that series for us as well, and Anthony Milewski’ s followed up last week and reinforced what you said with regards to winners and losers and red flags and things to look for. So good luck with it. When the resource number is ready, please call us or we’ll call you and let us know because you seem quite excited by this scale.

Mark Selby: Yes.

Matthew Gordon: Congratulations on your new company. We wish you well. Let us know how you get on.

Mark Selby: Thank you, Matthew. We’ll be in touch soon for sure.

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5 Things You Need to Know about Class 1 & 2 and Intermediate Nickel (Transcript)

Nickel ore

Interview with Industry Commentator Mark Selby, CEO of Canada Nickel Company.

We catch up again with Mark Selby to get his take on investing in the Nickel market view our previous interview here. Fans of investing in the Electric Vehicle Revolution thesis will find this interesting. Some battery metals are on the up and others are not, why is that?

We discuss the Class 1 and Class 2 Nickel debate as well as the intermediate Nickel, and the amount of Nickel units required in the market. Investors new to Nickel may find the discussion around how to identify good investment vs. a lesser investment fascinating.

Do you know the difference between Laterite Nickel and Sulphide Nickel and why some investors won’t touch Laterite Nickel? And what HPAL plants actually cost and why some companies pushing that agenda may be about to fall off a cliff? As an investor you need to know what that entails.

Interview highlights:

  • 2:06 – Class 1 & Class 2 Nickel: Differences and Investor Concerns
  • 8:56 – HPAL Plants: Why Can’t They Be Built for Less Than $1B?
  • 12:39 – Red Flags and Differences in Grades: What to Look for When Investing in Nickel
  • 17:39 – Nickel Sulphate: What Should You Know?

Click here to watch the interview.

Matthew Gordon: I just wanted to say thank you very much for the piece you did last year, end of last year. We’ve had amazing feedback on that because it has helped clarify and expand people’s understanding of the Nickel markets and thanks for that, and you are probably seeing lots of different pieces of that now going out to the market too. I appreciate that. One thing we didn’t cover though was this Class 1, Class 2 debate. We said we would talk about it a little bit further. You kindly said yes to speak today. Why don’t we kick off – what is Class 1 and Class 2?

Mark Selby: Yes, so Class 1 and Class 2 refers to the type of Nickel product that gets produced. So, a Class 1 Nickel tends to be LME deliverable and meet a purity standard of 99.8%, or better. It gets used, you need it in applications like alloys, alloy steels, plating products, and then increasingly, that purity of Nickel will be required for Nickel sulphate into cars. Again, the key is the product, it doesn’t necessarily have anything to do with where it comes from, and I think that is one of the places where people get trapped up.

Class 2 is basically a Nickel-containing product that is less than 99%. That can still be used by a consumer and it doesn’t have a terminal market so the issue with that is, with an LME-deliverable product, if you can’t sell it to a customer, you can always drop it off at the LME and get the ‘LME  price’ that day for your product. Class 2 has to go to a consumer and so those products tend to have much more volatile premiums because there is not that terminal market like you have.

Matthew Gordon: So what do you mean by consumer? Because again, terminology in the industry is different.

Mark Selby: Sure, generally, Class 2 gets used in stainless steel and alloy steel applications where those processes have a robust refining step in the process so they can take materials that are less pure, or they are quite happy to have the iron that comes along with Ferronickel because they need iron to make stainless steel or make an alloy steel, anyways.

Matthew Gordon: Got it. So now we understand what they are, there’s a lot of conversation online and I think you alluded to the fact that perhaps people shouldn’t be expending as much energy worrying about whether it is Class 1 or Class 2, why do you think people are concerned first of all?

“The frustrating part for me is that there has just been so much air time on this Class 1 versus Class 2, and there are some really bad, to me, pieces of thinking that happen and get people distracted. What I think is the real issue is we need to make sure we have enough Nickel units, period, to meet the growth for stainless steel and to meet the growth for electric vehicles, going forward”

Mark Selby: Yes, I think where it has come down to is; yes, we will need lots of new Nickel to make Nickel-Sulphate batteries. And the Nickel that needs to go into those Nickel Sulphate, or the Nickel sulphate that comes with it, needs to have a very high Nickel purity to it.  That is true, but where people get tied up is that they then project that all the way back to that, okay, these types of deposits are only good for this type of application. At the end of the day, there’s basically three types of Nickel sources: there’s limonite ore, there’s saprolite ore, and then there is Nickel Sulphide ore. Limonite is what goes into the HPAL stream typically, Saprolite is used to make ferronickel and NPI, and then most sulphite ores, they make a Nickel concentrate and that then gets smelted and refined. The key piece of it is that each of those steps makes an intermediate product which can be smelted or refined into a whole range – it happens today and will happen even more so in the future because we are going to need a lot more Nickel Sulphate, so the Chinese are going to build way more capacity than the market needs, just like they do for every other product, and so there will be all this capacity to take an HPAL Intermediate, to take a Pyro-ferronickel Intermediate mat, or take Sulphide concentrate and turn it into 99.9% metal. Turn it into high-purity Nickel Sulphate. Turn it into Ferronickel if they need to, you know, again, you need to completely decouple the ore source discussion from the end product discussion.

Matthew Gordon: Right. Okay, so when I’m reading about people having discussions, debates, sometimes heated, online, about well; ‘I won’t invest in Laterites, I’ll only invest in Sulphites’, what you’re saying is that it doesn’t matter.

Mark Selby: Yes. It does not matter. There are today, more natural homes, and today, Nickel Sulphide processing has actually been a bit of an oligopoly between the very small number of Nickel smelters that exist, but the Chinese will build lots of capacity. Again, I’ve talked about, again, real world examples; in the Cobalt space, in 2003, China was 3% of finished Cobalt production. In 3 years, they were 30% of production, and in 5 years, they were 50% of production and that was basically taking bags of Intermediates and dirt, sometimes dug by children in the Congo, and turning it into a usable Cobalt product. It was a various range of Cobalt salts. And again, people get all excited about this Nickel salt premium, well, in a Cobalt market, because there is so much capacity to make salts in China, salts tend to trade at a discount to the metal, not a premium.

Matthew Gordon: That’s fantastic. That’s helped me understand it, certainly. There have been in the past, discussions about premiums on one versus the other, but you are saying, the way the market is setting itself up means that that is going to take that issue away as a concern.

Mark Selby: Yes, yes. And part of the reason that got some traction was because about 18 months ago, 2 years ago, yes, Nickel Sulphate prices at that time were trading at a about a USD$2,000 tonne premium to metal in China because, again, you had this surge in demand that started and the supply just hadn’t had chance to get going, you know?  Today, Nickel Sulphate premiums are recently, I haven’t looked this week, but Nickel Sulphate premiums in China were 0.  And that’s where I encourage investors again, don’t get caught up; if something is trading at a short-term very high premium or a short-term big discount, don’t extrapolate 3 months or 6 months and say that’s the long-term sustainable value for that premium discount.

Matthew Gordon: Well, hence, talking to people like you; you have been through a couple of cycles and understand the machinations of the sector, I appreciate that. Can we talk about HPAL? We’ve had so many people come back about your comment around HPAL, okay? Because some companies set themselves up and say we are HPAL ready – to use that term. You made a comment to us that the cheapest, well, the only and therefore the cheapest builder of an HPAL plant – it has cost them over USD$1Bn. So anyone who is telling you that it has cost them less to build than that, they need to have a pretty good reason as to how they justify that going forward, right? So that has obviously been what some companies, a handful of companies are saying about the market. It’s quite a big statement from you, and people have asked; where’s your certainty coming from? Why are you so confident that going forward, people aren’t going to be able to deliver a HPAL project cheaper than, say, USD$1Bn? 

Mark Selby: Sure. Okay. So where this comes to is, if you think about it, this is about USD$40,000 per tonne of installed capacity. So that is…the only company that has successfully done two HPAL plants is Sumitomo Metal Mining, and their costs to build those plants were between USD$30,000 and USD$40,000 per tonne of capacity, just to make an intermediate product that they shipped to their existing factory in Japan. So they are not going all the way to a pure Nickel Sulphate or a pure metal or a pure briquette, which is just additional costs that have to be built into it.

So this is the best case performer – number 1.  Number 2 -they are building these in the Philippines which is about, you know, lots of companies build modules in the Philippines because the construction work there is the highest productivity, lowest cost place in the world to build those things. So again, relative to Australia, relative to Europe, relative to Canada, the Philippines is a very low-cost place to build these types of operations. Unless the operation has higher grade than the operations that Sumitomo Metal Mining have built which is, you know, in the 1.3 to 1.4% range. And the reasons they built those ones were because the grade was pretty good. Two – unless it’s in a place that’s cheaper to build stuff than the Philippines, then, or that they have way more infrastructure, that may be one thing that may exist in those places relative to Sumitomo Metal Mining built their operations. But, that’s what you need to ask yourself to say, okay, do I believe this company’s capital cost number or not?

Matthew Gordon: Okay. That’s fair enough. What you have said to me and what I have heard there is that; don’t worry about Class 1 or Class 2, there’s an intermediate solution which is going to be coming into the market, it’s coming thick and fast. You are saying, worry about Nickel Units: there’s not going to be enough Nickel to cope with the demand for Nickel. So that’s a selling message. I want to help retail investors understand what are their red flags: so there’s a lot of…come on – mining is mining – people go around: there’s promoters and brokers and intermediaries, and they all go and loudly trumpet their story around the marketplace and it’s not always true and it doesn’t always come to be. So, what are the red flags around Nickel? What do companies need to have, or need not to have in place, because not all Nickel stories will work out. They are not all going to be economic. So, what do you look out for as an investor?

Mark Selby: So yes, as an investor, I think you know, one of the key things is scale and grade; you need, ideally, if you have got both those are fantastic.

Matthew Gordon: So what does scale mean? What do you mean by scale?

Mark Selby: That you can produce a sizeable amount of Nickel for a reasonable period of time, say, 20,000 to 30,000 tonnes minimum for at least 10 to 20 years. You know, that very quickly gets rid of a bunch of potential opportunities. You need to have, because again, there is the rare project that is at an extremely low capital cost, but at the end of the day, there is a chunkier enough amount of capital that is required to get into these operations. Now, if the grade is high enough, you can get away with smaller operations; so that’s the thing you need to look at. If you have both, so things like Nova-Bollinger, that was why it got acquired for USD$1.5Bn.

Matthew Gordon: Right.

Mark Selby: That’s why Voisey’s Bay was acquired for USD$5Bn. Because it was a big deposit that had a very high grade.

Matthew Gordon: So let’s talk about grade; you talked in the previous discussion about what is grade. What is low grade, what’s okay and what is high?

Mark Selby: Yes, so again, you would have to split that between underground and open pit. For underground, you know, 2 to 3% plus would be high grade and anything less than that would be low grade. For open-pit, high grade would be anywhere from 0.7 to 1%. Again, it depends on the strip ratio, anything lower than that would be lower grade.

Matthew Gordon: But lower grade can work if there’s enough scale to it?

“That’s what you need to ask yourself to say, okay, do I believe this company’s capital cost number or not?”

Mark Selby: Enough scale to make it work; which is what Dumont and then what we have at Crawford, that’s the key there, that there are just very large deposits in places with lots of infrastructure.

Matthew Gordon: So what else makes you nervous? You’ve got scale, you’ve got grade, what else is there?

Mark Selby: Yes, so the nature of the deposits – one. The other in terms of part 2 – the location of the project, so you know, again, political risk and infrastructure, right? Again, it is much easier and faster to build the mine if all the infrastructure you need to build it is actually already in place. So,   there are a lot of locations that are very remote that you have to spend money and time building the infrastructure before you can start building the mine. So that’s where you look at big Copper projects in the Andes, they cost USD$3Bn to USD$4Bn because you have to spend USD$1 to 2Bn to out in all the infrastructure and then you spend another USD$1 to 2BN just to build the plant, in places where there is infrastructure in place. So the benefit in a place like Dumont, or what we have at Crawford is that all the infrastructure is in place so you can just build the plant and the mill.

Matthew Gordon: Right. Without promoting your own company too much, just more generally, what do you think investors, when they are looking at the Nickel market, when they are hearing this EV story, what else should they be looking to avoid or what should they look for?

Mark Selby: Again, I think the market today is still tough for exploration and development stories. You really do – like where you are getting the premium valuations, if you look at some of the companies in Copper and Gold, in Columbia and Ecuador, is that they have this scale that will attract, that the Majors are willing to bid for, right? So they are really breaking out as a value category so again, as I think that investors are looking for opportunities as you want to look at, is it of a scale that is going to attract the bug guys that are going to write the big cheques that are going to make you, as an investor, a lot of money, right? That, I think, is key as you are looking for opportunities. If someone has been around for 30 to 40 years, unless there’s a really new take on it, again, the Majors probably looked at 10 years and then 20 years ago, 30 years ago, and they didn’t but it then.  So unless there is a really compelling reason as to why they should buy it now, they are really, probably not going to get there.

So that would be number one and then number 2, again, I think there is low capital, low, very quick kind of restarts, kind of Brownfield things, that you know, again, there was a track record of prior action, you don’t have to worry about, will the mine work? It’s worked a bunch of times before. And again, with the right team that has the experience to actually deliver it and has delivered it in the past, because they can generally get to free cashflow and use that to build the business as well. Those, to me, those are the two real paths to have a look at.

Matthew Gordon:  That’s really interesting. We have spoken to a few Gold companies, a few Silver companies, even a few Uranium companies who are employing that model. So you have got to have been there and done that before, as is the case in all of these individuals, but they are looking to get into production early.

Mark Selby: One of the things that again, in terms of this Class 1 and Class 2 and really around Nickel Sulphate, I think what investors need to be careful about is, you know, there is a lot of this talk about, ‘Oh, we’re just going to make Nickel Sulphate.’ I think there are a couple of important characteristics of Nickel Sulphate that people really need to be conscious of: so, Nickel Sulphate, you take a product, even that’s only 22% Nickel, so a lot of producers are taking a pure product and then making Sulphate which is a 22% product, or even most Nickel intermediates have a Nickel content that’s higher than 22%. So, you are downgrading the Nickel content and what you are shipping is a bunch of Sulphate molecules and some water. So, do you really want to do that 4,000 miles away from your nearest customer, right? Because all you are doing is you are adding a whole pile of costs to transport that material to the battery consumer.

Matthew Gordon: Okay. So you are saying –

Mark Selby: It’s better to ship the Intermediate closer to the market, and then process it close to where it is going.

Matthew Gordon: Got it. So it is Sulphates that are not necessarily as cost efficient, people may say. You need that all-in cost, as it were?

Mark Selby: Yes. Exactly. And so, and the other part of it too is that when you make Nickel Sulphate, one of the biggest cost components is to take the Sulphate molecules that are in solution and dry out the solution so that you crystallise it. So that requires a lot of energy, and again, in a lot of locations, energy is not cheap. Particularly because the first step, when you send it to the person that is going to upgrade it and turn it into a usable battery product, the dissolve it again. So, in terms of the overall value chain, it is a pretty stupid process to crystallise it, ship it and then re-dissolve it again. I mean, that’s what Nickel Iron integrated Stainless Steel was all about; they used to make Ferronickel, they would cool it, ship it, and the first thing the stainless-steel plant would do it melt it again, right? So the Chinese said, oh, that’s stupid. And I think you are going to see the same thing happen in the EV space; a lot of the downstream players are going to find a way and I know because we had discussions with them when I was at  RNC, they are going to look for ways to build onto their front-end plant so they can take a Nickel Intermediary directly into their plant, dissolve it once and make a final product that goes to the battery maker, car consumer who or however far down integrated they are.

The only time it really makes sense to make Sulphate is if you are already getting it in to solutions. So in an HPAL project, if you have leeched it, you haven’t built your plant yet to make it a high-grade product, in that case, maybe, if you are close enough to somebody, that might make sense to make Sulphate rather than a pure product. The other piece that all of these companies are going to deal with is that the purity restrictions on Nickel Sulphate are going to get stricter and stricter because all the car companies want to use more Nickel, because that’s what gives it the energy density. That’s what gives it the range.

Matthew Gordon: Right.

Mark Selby: The problem is that the Nickel is also the thing that makes the battery, in combination with a couple of other things, catch fire.

Matthew Gordon: Combustible, yes.

Mark Selby: So they are pretty concerned about catching fire. And so they have a bunch of systems that doesn’t happen. If you have random iron atoms or cobalt atoms, or other elements that are in the product, that complicates things. So, as we go from 33% Nickel to 50%, 60%, 80%, 90%, 95% Nickel, they want stuff that is as pure as possible into the process. So do you as a mining company want to continue to invest to meet the increasing quality standards that are going to exist going forward, and I think the answer to that is no. So there is Terrafame in Finland, they leach Sulphide ore and make a profit, and they were shipping an intermediate, for them to make a Nickel Sulphate plan to supply battery manufacturers in Europe – excellent idea, right? They have already got a very complicated chemical planet, making a chemical product out of the complicated chemical plant, that is okay because you need that expertise. For that scenario that made sense, but there are literally tens of other things I have heard of that just make zero sense to me. And again, to underscore with real world, not just Mark Selby’s opinion on stuff. Glencore runs Murrin pressure leach plant, you know, it’s an option for them and Glencore hasn’t talked to them about making Nickel Sulphate directly. They are quite happy to ship 99.8% briquettes to the end consumer who pays the premium for the briquette and then they don’t have to worry about the rest of the downstream process.

Matthew Gordon: I’m going to pick you up at a later date to talk about when you see things or companies that will worry you. I won’t get you to name names but I want to understand more about those. But, Mark, thank you very much for going through that with us. We have been reading with interest, people’s responses to your last piece. Thanks for that and thank you for today. Stay in touch. We should catch up soon about Canada Nickel because that is…when is that actually going to hit the market?

Mark Selby: Yes, we are in the final stages of the regulatory approvals.

Matthew Gordon: That’s always fun.

Mark Selby: We should be – oh yeah – we should be, we’re looking at hopefully the end of next week.

Matthew Gordon: Okay. Soon?

Mark Selby: We’ll be in a position to do that. We are in the final stretches there so next week or the week after, and again, we still need the very final from the regulators, but we are making good progress on that front. So hopefully, sooner than later.

Matthew Gordon: Well, we will look out for it; I’m sure there will be a press release on it and people will be able to start trading Canada Nickel in the next couple of weeks by the sounds of it.

Mark Selby: Yes. It will be a very exciting point in time.

Matthew Gordon: Well, come and give us an update. Sounds like a great project. I’d love to hear more. And thanks very much for your insight. Beautiful.

Mark Selby: Thank you, Matthew, glad to talk about Nickel.

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

Nickel ore

Canada Nickel Corp (TSX-V: CNC) – Here We Go!

The Canada Nickel Company Logo.

We recently sat down with Mark Selby, CEO of nickel explorer, Canada Nickel Corp (TSX-V: CNC).

Nickel is a commodity that appears to be undergoing something of a snowball effect: excitement surrounding the EV revolution is growing more enthusiastic by the day.

We’ve got plenty of detailed nickel-related articles on our platform, in addition to numerous nickel interviews, including with Selby on several occasions.

We discuss:

  1. The Promising Crawford Nickel Sulphide Project
  2. Nickel Outlook For 2020 & Beyond
  3. The Canada Nickel Corp. Business Model

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

The Canada Nickel Company Logo.

Canada Nickel Corp. (TSXv: CNC) – Accelerated Returns, Delivered By Experts?

The Canada Nickel Company Logo.

We recently interviewed Mark Selby, CEO of Canada Nickel Corp. (TSXv: CNC).

Selby has previously weighed in with his expertise on the nickel market on three separate occasions. His general insights have been very informative for nickel investors, but now it is time to talk about Selby’s latest play in the nickel space: Canada Nickel Corp.

Canada Nickel Corp. recently closed its IPO. This comes a few months after it obtained the Crawford Nickel Sulfide project from Spruce Ridge.

How exactly does Selby and his team plan to expose investors to the EV revolution in a safe, accelerated fashion?

We discuss:

  1. The IPO
  2. The Financial Situation
  3. Exploration at Crawford: Big Potential?
  4. Plans For 2020
  5. The EV/Nickel Market Outlook

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

The Canada Nickel Company Logo.

Nickel – 5 Things You Need to Know Before Investing (Transcript)

Interview with Industry Commentator Mark Selby, CEO of Canada Nickel Company.

Is Nickel the new gasoline?

Selby does a great job in this interview of shining a light on the key drivers for Nickel. And interestingly we discuss financing HPal operations and how to pick Nickel juniors.

After touching on his soon-to-be public project, Canada Nickel Company, Selby delves into the nitty-gritty details of the nickel market. During his nearly 20-year tenure as a nickel market commentator, he has seen a few Super Cycles in the Nickel market. We ask about some of the lessons that investors can learn from. Nickel is a particularly volatile commodity in comparison to other base metals that moves in sweeping super-cycles. Traditionally, this volatility comes from the pricing model of stainless steel, the historical primary driver of nickel use.

Selby discusses issues pertaining to over-supply from low-quality Chinese pig-iron courtesy of rising nickel prices earlier this year. He predicted last month that year year and half of next year to be a tale of two halves. Prices are likely to fall further while the scrap inventory comes into the market, but once it is out of the way, restocking will occur and nickel should rise again.

Selby also touches on the specific geological conditions that nickel necessitates and how Indonesia’s recent halt on exports has affected the market.

He then moves into exploring the exponential nickel potential of the inevitable EV revolution and talks us through the specific structural components a junior nickel company needs to survive in a world of large Nickel producers.

Lastly, Selby moves into the field of mineralogy and gives us an insight into nickel types and classes.

What did you make of Mark Selby? Are you excited by the Nickel thesis? Is talk of the EV revolution cheap or it is going to make you a fortune? Comment below and we may just ask your questions in the near future.

Interview highlights:

  • Overview of Canada Nickel Company
  • Understanding the Nickel Market: Before and Now
  • What are Super Cycles? Where are We Now and What to Expect From Prices
  • What Drives Volatility?
  • Stainless Steel & OPEC Affecting Nickel Prices
  • Geopolitics of Nickel: On Indonesia and China
  • HPLC Projects: Who Can Actually Put Them Together?
  • Influencers of Supply to the Nickel Market
  • Demand: Past and Present
  • Junior Companies: Have They Got Any Chance of Surviving? What Experience do They Need? What Defines a Winner?
  • Nickel Types and Classes: How They Differ and What Investors Should Know

Click here to watch the full interview.

Matthew Gordon: Hi Mark. So why are you in London?

Mark Selby: With Nickel being a metal that’s on investors’ minds, we’re getting lots of attention.

Matthew Gordon: It very much is. And what sort of people are you seeing?

Mark Selby: The full range of high net worth investors, institutional funds. And even corporates who are looking for new projects to invest in.

Matthew Gordon: Please give us an overview of what Canada Nickel is. It’s a relatively new company.

Mark Selby: We are advancing the Crawford Nickel Project. It’s a brand-new discovery. Nickel has very few new discoveries. And it’s very similar to a project called Dumont, which in my previous life at RNC Minerals, we advanced from a Resource, all the way to a fully permitted, full Feasibility Study (FS), construction ready project. And I will be able to take all the learning from Dumont and apply it to this deposit and advance it, we hope quite quickly.

Matthew Gordon: You have quite kindly said you’d give us a bit of time to understand the Nickel market. You’ve been in the Nickel market a long time.

Mark Selby: Yes. I was head of market research at Inco in 2001. And continued to be a commentator on the Nickel market now for nearly 20 years.

Matthew Gordon: We’re starting a series where we’re helping people understand various commodities as they hit certain points in the cycle. Nickel is complicated. So why don’t we talk about some of the background to that prior to 2001. And then we’ll get into some supply demand type conversations.

Mark Selby: I literally joined Inco within a few days of the trough of the Nickel price in October 2001, it hit about $2 a pound or $4,400 per tonne.

Matthew Gordon: The reason I ask is, because people need to understand the cycles to understand how commodities behave. You came in at a particularly interesting time. Was that tough?

Mark Selby: Oh, it was. I knew what I was getting into. I got into mining at that time, because I saw the rise of China and that it was going to transform metals demand and we were going to go through a Super Cycle. I quickly realized when I got in that role how important China was going to be.

Matthew Gordon: You mention a phrase, Super Cycle. It’s a phrase quite commonly associated with Nickel. Can you explain to people what that means and maybe give examples of some of those Super Cycles?

Mark Selby: Nickel is a metal that has always been more volatile than a number of the other base metals. It’s big, but not very big relative to say, copper and aluminium and zinc and so forth. The other part of it is there are some real structural issues in the market that have come to bear over time. If you go back in history, Nickel has gotten to very high prices. In the late 1960s, Nickel got to the equivalent of $50 a lbs in today’s dollars. We went through another Super Cycle in the late 1980s and again in the mid-2000s, so with Electric Vehicles (EV) and everything like that and a decade of under-investment in new supply, we’re on the verge of a new Super Cycle in Nickel, sometime during the early to mid 2020s.

Matthew Gordon: You mentioned another word there, volatility. What has traditionally driven that volatility? And is it something that you see happening going forward? People talk about the EV revolution solving a lot of problems for a lot of companies, apparently? So what is it going to do going forward? Let’s start with where this volatility is going to happen and then why it happened in the past?

Mark Selby: For investors, that’s one thing to pay attention to. We are going to go through some major swings as we go in a sustained upturn. But it’s definitely not going to be a straight line. The things that are specific to Nickel that enhance that volatility, is that historically stainless-steel is the primary demand driver for Nickel. And they have a pricing model that basically builds in the expectation of future price increases. So what happens is you get buying behaviour throughout the chain where people anticipate prices going up, so they stop buying. And then when they think it’s going to roll over, everybody puts their hands in their pockets and wait for the price to come back into the market again. We’ve seen evidence of it already this year. Nickel got to $18,000 a tonne / $8 lbs in September. And as I said when we previously talked, that by the end of the year, it’s going to come off, probably 15% or 20%. And it has.

Matthew Gordon: Explain why.

Mark Selby: Two reasons. As you get a new spike in Nickel prices, two things happen. 1. Nickel Pig Iron (NPI) production. Basically, the Chinese producers have a bunch of ore stockpiles and they turn that into cash at higher Nickel prices. They take advantage of those surge in prices. ‘If I can make money making NPI, I will make NPI’. 2. And the other piece of it is the stainless-steel scrap chain, which is a massive source of feed. Scrap is something that isn’t talked about. But it is a huge factor.

Matthew Gordon: What is scrap?

Mark Selby: Scrap is a big component of stainless-steel production. For most of the stainless-steel producers in the West, more than 2/3rds of their feed is scrap material, Nickel containing materials. Now, it’s not exactly a bunch of stainless-steel knives and forks. It’s actually a blended box of material that scrap makers make to a specific specification.

Matthew Gordon: Literally from scrap yards?

Mark Selby: Literally scrap yards. And then they take 10 of this, 5 of that, 4 of that, 2 of that, 1 of that, put it in a container and that container meets the specifications that have been agreed with that stainless-steel supplier. But what the entire scrap chain does is put a little bit away waiting for high-prices to come and when it hits their number, that scrap comes flooding into the market. So when we hit a price level this past Fall, that we haven’t been to for 4-years. You basically have 4-years’ worth of people putting stuff in a corner that all comes out into the market.

Matthew Gordon: Obviously Nickel has come off the last couple of weeks. That is possibly what the cause could be or is?

Mark Selby: Oh it is, because when lots of scrap become available, then stainless-steel companies don’t need to buy primary Nickel. And so that takes more demand out of the market. And you’ve got more Nickel Pig Iron in the market, as the Chinese producers produce it.

Matthew Gordon: What is the size of each of those markets is? The pig iron and the scrap markets… and how long is it going to remain at the current pricing?

Mark Selby: Next year is going to be a tale of two halves. It’ll probably take us most of the first half of next year to get through that extra amount of scrap that’s come into the market. And that extra amount of Nickel Pig Iron. Prices could go another 10% to 15% lower from here. But, once we work through that scrap, work through those ore stocks, then we come out on the other side and I think the prices start to move higher. Once that inventory is gone, it’s gone. You end up with a big restocking phase that’s happened as people have to come back out and say, ‘OK, well, I don’t have these stockpiles anymore. I need to go buy even more primary material’.

Matthew Gordon: You’ve talked previously about the OPEC of Nickel. What does that mean? Who are the players?

Mark Selby: Robert Friedland at the BMO Conference called Nickel the new gasoline. Which I thought was a great phrase and reflects what is going to be happening as the EV’s move forward. OPEC at its peak controlled about just over 50% of the market. And, we remember all the things that countries and companies did to avoid that supply concentration at that point in time. In the Nickel market, Indonesia, the Philippines and New Caledonia will control a very similar amount of global Nickel supply. Those are 3 countries that have intervened in their mining sector. Those are 3 countries that have financial issues, revenue issues. The temptation for them to put some sort of export duty, some way to capture additional value for the country, is going to be just too tempting. And that will make Nickel assets outside of those areas much more attractive. Was oil outside OPEC a good investment in 1971-1972?; that was a pretty good trade for a good 20yrs or 25yrs. It’s going to create those kinds of opportunities in the Nickel space.

Matthew Gordon: We can’t talk about supply and not mention Indonesia. The big news, 3-4 weeks ago… This Nickel Series is going to be for people of all abilities, a lot of people will know about Indonesia. Some won’t. For people that don’t know much about it tell us about their influence on the marketplace.

Mark Selby: One of the things that’s unique to Nickel is it’s not found in many places across the world. There’re some specific geological conditions that have to occur to have Nickel deposits. So as a result, Nickel supply is relatively concentrated in a few countries. In Indonesia, particularly the island of Sulawesi, and some nearby islands, is basically the Saudi Arabia of Nickel resources. There’s a substantial Nickel resource base that was tapped in the mid 2000s as they mined the ore, shipped it to China to make Nickel Pig Iron. And now what the Chinese producers are doing is building stainless-steel plants on top of the ore body, because that’s the cheapest way to make stainless-steel. And, we’ve seen a massive increase in capacity during that timeframe. And we will need more capacity to come. That’s one of the only places in the world where there’s substantial resource reserve available to be developed.

Matthew Gordon: But they also announced that they are halting exports. That’s had a big impact. Sent shockwaves. Why did they do that? What is the impact of that’s going to be short-term and medium-term?

Mark Selby: They first started banning ore exports about 4-years ago.

Matthew Gordon: They’ve been stop-starting?

Mark Selby: Yes, it’s come and gone into the market a few times. One of the reasons why Nickel has been a difficult metal to invest in is because of some of these dynamics. What is Indonesia going to do or not do as we move forward? In 2014-2015, they put a ban in place, because when you look at the price of ore, as a percentage of the contained Nickel value versus the price of Nickel, when you ship it in ore form, the country is only capturing 15%-20% of the value. Indonesia has a finite amount of Resources. They wanted to see as much value-add happen in Indonesia. So by putting the ban in place, it was forcing Chinese companies to build their plants in Indonesia, as opposed to China. And that plan worked very successfully. Indonesia has seen tens of billions of dollars of investment in capacity. They then changed their mind, and allowed some more exports to continue, partly because the local producers, including a state-run company, PT Aneka Tambang (AnTam), was mining to provide high-grade ore to the local Chinese plants. But they were also… you can’t just mine the high-grade ore, you have to take some lower-grade with it. They were facing mountains of unsold ore that they couldn’t do anything with. Indonesia then allowed exports for a period of time. And this was supposed to continue until 2022. And what the big announcement said ‘we’re going to bring that forward’. It got brought forward to 1st January 2021. And then in the past month or so, there’s been talk of banning, but they’ve actually now allowed some exports.

Matthew Gordon: This driven by what? There’s politics involved. You’ve talked about Chinese companies building plants in Indonesia. They must hold some sway, because of employment, building roads… What are the dynamics?

Mark Selby: It does come down to local stakeholders who are mining ore, and want to continue to sell ore to China and make money that way. And now you’re going to lose that ability and that revenue stream. It comes down to balancing off those local interests versus some of the larger Chinese companies that are there, and trying to find that balance. When they banned it the last time, it was hard fast rule. There is no leakage. And by 1st January of 2020, it will be enforced. And we don’t expect any leakage going forward, because they want encourage that next wave of investment. In terms of HPL plants as well and stainless-steel plants.

Matthew Gordon: And that’s going to come from China?

Mark Selby: Yes.

Matthew Gordon: HPal is not cheap?

Mark Selby: Not cheap at all. You’re looking at $30,000 – $35,000 per ton of capacity that you want, at best. HPL plants built in other parts of the world have faced massive overruns, and have ran up $60,000 – $100,000 per ton of capacity that’s in place.

Matthew Gordon: What does that mean, as a number? If you are looking at the CapEx for a HPal plant, what number are you asking me for typically?

Mark Selby: So if there’s a $30,000 tonne plant, the best example that has been done, is by Sumitomo Metal Mining. They spent about USD$1.4Bn.

Matthew Gordon: These are big CapEx numbers upfront. There are very few people can do that. Not only fund it, but very few people can put that consortium together. The Chinese influence, or the China building plants locally and funding them. How have they structured that? Is it build and operate model?

Mark Selby: It’s different between the NPI and stainless-steel. What they’re doing with the HPL. So the NPI and stainless-steel, you have several large producers and some smaller ones in China, who take the same technology that they put in place in China. Clearly building a carbon copy of that plant in Indonesia. Cut and paste. There you’re looking at $10,000-$20,000 tonne of installed capacity. All the way through to making stainless-steel in Indonesia. So they have expertise in that particular area when it comes to HPL, that’s Hydro Met technology. If you’re making stainless-steel there is no hydro metallurgy involved. What we’ve seen in terms of the HPal plants that are being built in Indonesia today is they are joint ventures between several different Chinese partners, some of whom bring that hydro met technology, people who bring the resources. And then people were able to bring the scope and scale of their existing business to help deliver some capital in there to build the HPL plant. None of them are operational yet. There’s going to be a big TBD to see how quickly they ramp up relative to some of the other plants that have not done so well. Typically, HPal has taken longer and costs more.

Matthew Gordon: We have talked to a few Nickel companies along the way and they drop in very casually that the HPal bomb, the conversations without comprehending. Are there many people in world who can put a HPal project together, not just financially, but technically?

Mark Selby: Sumitomo Metal Mining is the only company that has really done it successfully, that delivered projects that have ramped up relatively quickly and were delivered close to budget.

Matthew Gordon: So that’s important. Because all this is for the benefit of retail. High net worth office investors. These are little red flags, which I’m interested in getting and getting out of those conversations. Sumitomo. Noted. On the Supply side of things, who are the other influences? Who are the other players in the market?

Mark Selby: If you look at the supply today, you’ve got a handful of groups that really control the biggest bulk of supply. You’ve got Indonesian production that we’ve talked about in terms of NPI and to integrated stainless. You have the Chinese Nickel Pig Iron producers that have been taking ore from Indonesia. But we’ll have to get it from the Philippines and a few other countries to continue to produce Nickel Pig Iron in China. You’ve got the larger integrated historical producers. Vale, Inco from the past, Glencore with Falcon Bridge from the past. And then the Russian producer, Norilsk. Each of those are large integrated Nickel producers. AuraMet is a smaller integrated producer and has again been around a long time. And then obviously BHP has their operations in Western Australia. So that large base of integrated, multi-asset producers who Nickel has just one of their commodities, is other important big chunk of supply.

Matthew Gordon: The thing that those guys all have in common is they are vast. Big companies with access to finance. Because Nickel not cheap to put together.

Mark Selby: Yes, it is not.

Matthew Gordon: From investors point of view. You need to so understand when you’re looking at companies you need to understand where they fit in the cycle. I think we will get to the end of this conversation. But in terms of picking winners, it’s good to understand that the thesis behind Nickel. And how companies can actually monetize what they’ve got. So on the supply side, just as a first conversation, thank you very much. Demand. It comes back to our lovely Super Cycles. Demand at the moments is what sorts of levels?

Mark Selby: Demand has continued to be quite robust. That’s one thing people underestimate about Nickel. Nickel demand is grown at an average of almost 5% a year over the last decade. For things like copper and zinc, the comparable number would be 2-3%.

Matthew Gordon: What’s that been driven by?

Mark Selby: Stainless-steel growth. Batteries are just 2% of the market today. It’s a very small amount and is going to grow very quickly and very to a very large number. All of that historical growth has really been driven by stainless-steel and to another extent, alloys and Alloy steel. And the reason it’s able to grow and will continue to grow is stainless-steel is a very small fraction of the overall steel market. So stainless-steel has a lot of properties in terms of long-life, highly recyclable, which are becoming more valuable in today’s economy. Stainless steel continues to steal share from other types of steels. We don’t expect any slowdown in stainless-steel demand growth going forward.

Matthew Gordon: Is that coming out of China as well?

Mark Selby:  Yes, China has been the massive source of demand growth, but it continues to grow in a lot of a lot of other countries.

Matthew Gordon: What are the other common demand drivers for Nickel at the moment?

Mark Selby: The other big one is high Nickel alloys. That’s one of the things with China is that it moves up its economic development curve. You start with carbon steels, you move to stainless-steels. And then when you get into other sectors of your economy that become more important, you start to use Nickel as Nickel, and things like high Nickel alloys that, are used in jet engines, gas turbines. Nuclear power plant alloys. There’s another big chunk of about 15% to 20% of Nickel demand that goes into those types of applications. And every time you’re sitting on a plane, if you look out a window, there’s several tons of Nickel in every one of those jet engines. So as tourism becomes a big part of the Chinese economy, and Chinese tourists start to fly everywhere, they’re ordering thousands and thousands of planes. That’s helping drive Nickel demand globally for those airframe manufacturers.

Matthew Gordon: So you going to stick with the Super ~Cycle because it sounds terrifying and exciting at the same time to me. Where do you think we are in relation to the next Super Cycle? We know the price is today. Where do you think it’s going to get to?

Mark Selby: I think we’ve completed leg one. It’ll be three or four legs. You have a set of conditions that sort of have to unfold over a period of time. What set the stage for Super Cycle today is and when what historically has happened the past is, you end up in periods of underinvestment. To your point on supply, in supply you’ve got a lot of large companies. Well, they chose not to allocate capital to non-Nickel projects over the last decade or so. So most of the existing production has shrunk over the last decade. The existing mines are deep underground mines, or larger scale processing plants. Those are things that you can’t, add something and 12-months and be in production. It takes multiple years to do it. 2 underground projects. Vale finally approved the Voises Bay underground project a couple years ago, but that was announced in 2017 – 2018. First Nickel is not till 2021, and it doesn’t ramp up until 2023. 5-years from announcement to full production. Glencore and Sudbury again new mine in Sudbury called Onaping Depth. The first production won’t be for 3-years, because they’re sinking a several thousand metre shaft, and then it won’t ramp up fully for another few years after that. So with that under-investment, supply can’t be flipped on quickly again. So that’s starts the set the basis for it. And then there’s, a demand surge that comes out of somewhere. So, in the late in the 1960s, when we had the big spike, it was Japan that was growing very quickly. And there had been some underinvestment in Nickel, and they couldn’t catch up quickly enough. They then overbuilt in the 1970s. And in the 1980s, you had Korea and Taiwan industrializing. And so that was driving a significant amount of new growth. And we’d come off 10yr or 15yr of low Nickel prices under-investment as people were rationalizing vastly. That was overbuilt in the early 1970s in response to the big spike in the 60s. And in the 2000s, through the 1990s, Nickel had to absorb the collapse of the Soviet Union. So that was a big Nickel producer and consumer and their consumption of Nickel dropped by 80%-90%. And you had this huge amount of new supply introduced into the market and huge amount of scrap that came into the market, as basically the Russian economy got torn down and sent its scrap to the West. That time period leading up to the early 2000s had seen a significant under-investment in Nickel capacity, and then China came along and set the spike. So in this case, we’re coming off a decade of under-investment in other capacity outside of Indonesia. And we see now electric vehicles on the horizon. Then a big lump of demand that’s coming from the EV story.

Matthew Gordon: It’s fascinating because you’ve seen the replications and so therefore there are patterns, with these emerging economies, as they grow, get ever more demanding consumers. China at the moment is. Where are they in the phase of development? Because if you look at some of the cities and its hugely sophisticated. 1.3Bn people. They don’t all live in the cities.

Mark Selby: And that’s it. The thing that’s important about China is it’s not just one country. You’ve got several different areas that are going through a different stage of industrialization. So the Eastern coastal cities are probably all very up the curve. And then as you moved into the Western Centre of the country, you get less and less developed. So there’s, other parts of the regions that are moving up the curve. And then China’s got its Belt and Road policy. They’re extending that infrastructure build out into their neighbouring countries.

Matthew Gordon: We were there last year, Chengdu, Sichuan… And it’s exciting. There is a notable difference. But it’s coming. That wave is still there. They still have a way to go. This is so much of it. So the demand side of things for China is still encouraging for Nickel suppliers. And that’s not just the EV.

Mark Selby: That’s just 5% demand growth that we’ve seen in Nickel and will continue to see for long time. We don’t see that slowing down anytime soon.

Matthew Gordon: How do companies work out where they fit in to the mix? So you’re looking at these Super Cycles happening and these growth patterns. And, all the numbers point up, the pricing points up, but it takes a while to get into production. It also takes a lot of money to get into production. But before you get anywhere near production… how does a junior company establish itself in a world of giants? You mentioned super huge companies with big balance sheets and access to cash. How does a small company get into the market and establish itself?

Mark Selby: So one of the opportunities and this is actually going to be a fundamental shift, that’s going to happen over the next 3-4yrs. Nickel processing, historically was an oligopoly controlled by Falconbridge, Vale. Norlisk. Glencore. The problem for small miners was, you could build your mine, but then you had to sell your concentrate to somebody. And unlike, copper and zinc, where there’s benchmark terms, they’re negotiated very competitively every year. There was, some fairly, take it or leave it pricing, which transferred a significant amount of that value to the smelter refiner, and away from the miner. Mining is hard. But when you end up having to give up a fairly significant share of that value to the smelter. What’s now going to be changing in the Nickel space? It’s we’re not there now, but over the next 2-3yrs is the Chinese and every other semi-finished, semi-processed material goes ahead and builds way too much capacity to meet the market demand. And then they bid up the price of the feed to a break-even number. With Nickel sulphate for EVs, a massive amount of capacity is required in Asia. They will build capacity to take various Nickel intermediates and then process them into the products that the EV market is going to need. So it’s opening up the door now for smaller sulphide mines to be able to come into production and have competitive pricing for their product in 2-4yrs. It will create the opportunity for some smaller producers to more easily come to market. In terms of laterite ore suppliers, China is going to need ore supplies, because Indonesia is now not going to be supplying it. There’s not a lot of places where you find laterite ore in coastal deposits that you can ship out of the country. But there are some places.

Matthew Gordon: Can you explain the difference between those types of ores.

Mark Selby: Yes. There are two primary types of Nickel deposits. Sulphide is what you think of in Sudbury and so forth. And so that the issue there is generally the mining is expensive. You have to build a deep open pit. Now there tend to be deeper underground mines or bigger open pit operations, processing low-grade Nickel. Once you make a concentrate, because you upgrade it from anywhere from 0.3% to 3% Nickel, up to something that’s 10%-15% Nickel. The processing of it from there is relatively uncomplicated, smelter refiner and it gets them. The tricky part for a laterite project is it is much easier mine. It’s basically a rock that’s been converted to dirt, over time. And in that process, the Nickel and Cobalt gets concentrated in the soil. You literally are just digging dirt. These mines in Indonesia, that ship ore to China, literally just dig it up, put it on a boat. The mining part of its quite simple and cheap, and the processing the mineral that’s the Nickel is in is a very complicated minerals so you have to use a lot of energy either through electricity to melt it all. And that’s how Nickel Pig Iron works. You take all that soggy dirt, dump it in a furnace and melt it and make Nickel Pig Iron ore. You have to use energy in the form of acid to break the bonds, to liberate the Nickel and Cobalt. That’s the HPL process. Those are big, complicated, expensive plants to do that. So one’s easy to mine. One is harder to mine. One’s much easier process, one’s much harder to process.

Matthew Gordon: And while you’re explaining the technical detail, cause there’s lots of talk in the market about Class 1 and Class 2 Nickel. For the audience can you explain what the difference is.

Mark Selby: There’s been a massive amount of airtime about this particular discussion. And the issue is more should be more about how many total Nickel units we have. At the end of the day, you can take a sulphite intermediate and you can make a range of products with it. You can make Nickel Pig Iron, Ferro Nickel via the roasting approach that we had a Dumont. You can take that to a smelter and to make finished Nickel products, and the same thing through the laterite source-based material. Most of that does go to make NPI today, but there’s no reason…there are producers, PT Inco, AuraMet that have produced for a long time that make a product that does go to a Nickel refinery that gets converted into finished Nickel and cobalt products that can be used for the battery sector. I think it’s very important for investors to not get caught up in that particular discussion. The Chinese are going to build lots of processing capacity to process intermediate’s junior mining companies, having processing plants at a location to make a product. That specification as we go to have more Nickel in batteries that the specification for that sulphate gets stricter and stricter and stricter. Are you going to build a sulphate plant and then continue to improve that plant to be able to make that product? You should just focus on making high quality intermediate and then you will have a market to sell that into in the future.

Matthew Gordon: You are saying Class 1 & Class 2 is a distraction for investors, because the market will resolve the economics around that.

Mark Selby: Exactly. There will be short-term dislocations. So, don’t say, today the premiums X, but Nickel sulphate premiums were $2,000 two years ago They’re down to zero today.

Matthew Gordon: So back to our small company. You think it’s going to be easier for junior Nickel miners to actually get into market, be able to, not just find Nickel, dig it out the ground, but actually get it processed in market.

Mark Selby: At a competitive price.

Matthew Gordon: It’s got to be economic. Do you think mining Nickel in the past is advantageous, or do you think Nickel is a relatively easy type of commodity to mine?

Mark Selby: Generally mining is. The bottom line, the technologies, processes that are used are similar. If you’ve run a copper mine, you should be able to run an underground copper mine; should be able to run an underground Nickel operation because.

Matthew Gordon: We’ve talked to some CEOs of commodities and who have not mined in this space, who say you don’t know what you don’t know.

Mark Selby: I would say it’s consistent with the other base metals. Each metal does have its specifics. But you can find the expertise and put it in the place.

Matthew Gordon: I said earlier in the conversation, we’re going to try and work out how we can spot winners. So on a no names. I don’t want to pick any companies out. I want to understand the profile a little a little bit. There are bulk plays. And slightly higher grades. And they each have different challenges. So bulk for me is a little bit below 1%.

Mark Selby: No, it would be below 0.5%.

Matthew Gordon: What are the higher-grades?

Mark Selby: Higher-grades would be 3-4% Nickel. You get some massive sulphide Nickel, smaller players in Western Australia, and then you get another sort of bucket sort of between 1-3% that you could mine underground on a larger scale. Again, the biggest challenge with Nickel, is there’s not many new Nickel discoveries. If you look at the project pipeline of most metals, there’s literally hundreds of gold projects. There are dozens and dozens of copper projects. In the Nickel space there really are a very limited number of projects. And, there’s been a very limited number of new discoveries. When investors start to look at it, there isn’t a big universe of Nickel opportunities with which to invest in.

Matthew Gordon: And we have the pleasure meeting a few people with large-scale . This is a bottom up in terms of resource. But they’re all struggling at the moment, because the money’s just not there for them. But if you talk to institutions or banks, what are they feeling about this? But given the Super Cycle component, how does a financier put together a package based on what they’ve seen go on in the past? Or does it not matter to them?

Mark Selby: Dumont for the first 7-years, Nickel was an out-of-favour metal. There were concerns over the long-term price. It was very hard for people to get their head around building a big $1Bn Nickel project at that point in time. But with the shift over the last 2-years, the thing that’s been fascinating with the EV sector is they want the Nickel now. And they keep asking when can we, how quickly can you double it? Can you double it a second time? They have such massive growth requirements that discussion is starting to change. And I think one of the things, that’s to me is fascinating is you’re seeing literally tens of billions of dollars of investment in battery capacity. But they haven’t necessarily done that for the metal that they’re going to need yet. They’re going to wake up to that reality soon, that if you’re not also building the capacity to provide the raw materials that you’re going to need. It’s going to make it more challenging to make the battery if you don’t have this stuff, to make the battery out of this.

Matthew Gordon: It’s quite confusing for investors, because almost every company that we speak to is pitching the EV revolution …’that’s going to change our fortunes’ and therefore invest in us. Whatever the pitch is, some are more believable than others. We’ve had people talk about the timing of all of these things. The reality is a couple of years away. And realistically not going to be impacted by the EV revolution or price in the market, etc.. Demand in the market at the moment. But the what they what they will say is. ‘Get in cheap, our stock is cheap today. Get in ahead of the crowd’. How do you pick winners? What should we be looking for specific to market? What sorts of what are the sorts of things that should be avoided?

Mark Selby: The things to focus on are… because most projects are expensive. Vale’s new underground mine Voises Bay $1.5 billion. Glencore’s new mine $1Bn. Most Nickel projects are going to require $1Bn or so of CapEx To be able to fund that kind of investment, you need large companies to be interested. I think that’s one of the one of the things to look at is, is the scale of the resource that this company has got going to be attractive to one of the majors who say, ‘I want to grow in the battery material space and I can do that through Nickel’. If in attracting investment from the EV companies, they’re not going to fund 62 little mines to come into production. No, they want larger, long-life, large scale assets that can hopefully grow with them as they grow their businesses.

Matthew Gordon: So what is large scale?

Mark Selby: Nickel is a 2.4Mt market. And if you can produce, 20,000 to 30,000 tonnes a day. That’s a decent size mining operation. So roughly 1% of global supply.

Matthew Gordon: And if you can’t?

Mark Selby: I’d say that’s one class of investment. I think the other opportunity again would be smaller scale, that is produce a concentrate. Just make sure that, they’re using realistic operating cost assumptions and realistic capital cost assumptions, in terms of if they’re restarting a small scale mine. There are some of those opportunities out there today. Some of them are good, and are at a good price. They’ll be able to come to market relatively quickly and participate in the cycle as the Nickel market rebounds. When we were at RNC, we did the joint venture with Waterton. The cash-pool that we did was to sell down part of Dumont to be able to pick up some of these smaller scale restart opportunities. So you could participate in the cycle more quickly. As opposed to having to build a big project for 2-years. I would say that it’s the world scale asset, the sort of small-scale restart or small-scale resource that you can bring into production relatively quickly and cheaply. But again, make sure they’ve got realistic operating capital cost numbers.

Matthew Gordon: You talked about Sumito and HPal earlier. If someone’s pitching to the market, they can build a HPal operation for less than $1Bn. You’ve got to ask does that makes sense to me.

Mark Selby: There’s been one successful person, and that’s the cheapest. They’ve built multiple plants. They built it in the Philippines, which is a very low-cost place to operate. If you use that as a benchmark. And then scale it up from there. If you’re in a higher cost country than the Philippines, then that cost should go up. They only made an intermediate, they shipped an intermediate product that went to their existing refinery in Japan. If someone’s going downstream and going to a final product, that should be another chunk of higher cost. Because some of the less successful plants, if you look at some of the CapEx numbers, they ballooned to $7Bn-$10Bn before they started to work even close to properly. So that’s the upper end.

Matthew Gordon: So the answer is, you would be suspicious of someone saying HPal operate, if you’re spending less than $1Bn, that would be a red flag. Thank you for that.

Mark Selby: I would say justify to me why you think you can build a better than Sumitomo Metal Mining.

Matthew Gordon: Coming back to small companies. They are going to have to find strategic investors. Because with the balance sheet to be able raise the money to be able to invest in a Nickel project. How should companies structure those relationships? Obviously, you don’t want them coming into Pubco, because there’s going to be nothing left of the company. They tend to come in at asset level typically. What do those relationships look like?

Mark Selby: The Nickel projects that will get advanced this cycle are similar deals to what you saw in the copper space. You have an Asian either off-taker or a strategic who wants access to that material? And do they come in on a joint venture basis. They provide a big chunk of the equity capital that’s required and provide the balance of the financing to get that in place, we just haven’t seen it in Nickel yet. But it will be coming.

Matthew Gordon: I’m going to just to thank you because it is. Mark, thanks very much for your time today. Really enjoyed that. I learned a lot. I hope everyone else does too. We’re going to talk about your Canada Nickel company maybe when you when you’re back in Canada. So after that would make you look forward to hearing about that. But thank you very much for helping us learn a little bit more about the Nickel market. If we can talk to you again, some future date with some questions which do come in from a lot of the viewers and subscribers and followers.

Mark Selby: Oh, very much glad to do it. I think this is a metal that people haven’t had a chance to invest in very in very many ways. So, the more educated investors are, the better decisions are going to make.

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

The Nickel Investment Bible

A man walks on water, labelled 'This Article,' and pulls a man, labelled 'Your lacklustre investment decisions,' out of the swirling water. A wooden boat with a nickel on its front and full of men watches on in the background.
A photo of a pile of shards of nickel.
Nickel, nickel, nickel.

Nickel is the fifth most common element on earth. It is ‘a naturally-occurring metallic element with a silvery-white, shiny appearance.’(1) Frankincense, gold and myrrh? No. Nickel, nickel and…

However, if you’re an investor, I doubt you’ll be reading those words with any bubbling sense of excitement; you want to know one thing and one thing only: “how is this big hunk of metal going to make me money?” To realise the full potential of investing in nickel, one must have all the facts available to them.

The following serves as the definitive nickel investment article. It is filled with inside knowledge that the average investor would struggle to access. One shouldn’t consider investing in nickel without reading it. Sit back, relax, and take in all the information you need to make money investing in nickel.

The Commodity

Nickel occurs extensively in the earth’s crust. It had been utilised for thousands of years as meteoric iron before its isolation as an element in 1751 by Swedish scientist Axel Frederik Cronstedt.

Nickle: Key Properties

  • High melting point (1453 °C)
  • Strongly resistant to corrosion and oxidation
  • Can easily form an alloy
  • Magnetic (at room temperature)
  • Malleable and ductile
  • Can be a catalyst
  • Can be deposited via electroplating
  • Harder than iron
  • Good conductor of heat/electricity
  • Average life in many applications of 25-30 years

Applications of Nickel

Nickel is used in a massive 300,000 products, with fields varying from:

  • Engineering/Investment (33%)
  • Transport (20%)
  • Metal Goods (18%)
  • Home Appliances/Electronics (13%)
  • Building/Construction (10%)
  • Others (6%)
  • 70% of nickel’s specific application is alloying with a (minimum 10.5%) chromium to form stainless and heat-resisting steels. These steels form a multitude of items, from household cutlery to medical equipment.
A photo of a stack of stainless steel poles with holes in the centre.
Stainless steel is the main use of nickel.
  • 9% is used in alternative non-ferrous alloys. These have a more specialised application in industrial, aerospace and military equipment.
  • 6% of nickel is made use of in electroplating practices.
  • 6% is used in iron and steel castings and low allow steels.
  • A modern, rapidly growing use of nickel is in batteries for hybrid and fully electric vehicles and stationary storage. However, this still only accounts for 6% of present-day use.
A photo of a Tesla Model 3 battery pack inside a workshop.
A Tesla Model 3 Powerwall.
  • 1% of nickel is consumed to produce coins and for other electronic applications.

The Current Nickel Market: An Outline

The nickel price has demonstrated more volatility than a lion in a butcher shop. Since the 80s, Nickel has been regarded as a boom/bust metal that moves in giant super-cycles. The market saw a quite staggering boom, followed by a dramatic downturn and lingering bust.

Spot Price and Production Analysis

A primary factor behind nickel’s ascension to a high of $54,000/t in May 2007 was the rapid expansion of Chinese demand in the 2000s. However, this soaring price resulted in nickel becoming a victim of its own success. As prices rose, China began seeking more affordable options, thus turning to 200-series stainless steel (1-2% nickel) rather than 300-series stainless steel (8%) nickel; with this compression of demand, spot prices fell through a trap door.

A graph demonstrating nickel price in USD/lb against the date from Jan 3 1989 to Jan 3 2019.
A spot price chart that moves as frenetically as a broken elevator.

When nickel prices were high, a new source of cheaper nickel was developed: nickel pig iron, a version of nickel created using low-grade laterite ores and blast/electric furnaces. Nickel pig iron now accounts for 35% of international nickel supply, up from ≈0 in 2006.

The decrease in Chinese demand and oversupply combined to push the spot price of nickel off a cliff edge. Brief increases in the spot price, specifically around 2009, were attributed to the Chinese government’s economic stimulus. Subsequent price increases have been created by a nickel ore export ban from Indonesia in 2014 (partially over-turned in 2017) and again last week. A planned Filipino ban in 2017 never took place.

Nickel’s recent low point came in February 2006, with a price of $8,000/t causing 80% of the industry to lose cash.

However, over the last three years a large, and mostly permanent reduction in supply of over 200,000tpa (particularly Chinese nickel pig iron), and an increase in worldwide demand has caused the nickel market to recover surprisingly quickly. While uncertainty still exists surrounding high global inventories and the government policy in Indonesia and the Philippines, this upwards trajectory has caught the attention of many investors. This is especially true given that by the end of 2020, total market inventories are projected to fall below normalised levels, which paints a very promising picture of an increased nickel spot price.

Reasons to be Excited

If you’ve read any base metals company’s press releases in the last ten years, you will have heard a seemingly indelible torrent of positivity regarding the incoming EV revolution. If the macro is to be believed, the growth of nickel will be propelled. While, at present, nickel’s preeminent use is in stainless steel, an EV revolution would skyrocket the demand of nickel.

2006-18 quantities of nickel use for specific purposes are as follows:

  • 683,000t in stainless steel.
  • 103,000t in batteries.
  • 105,000t for other uses.

However, nickel forecasts for 2018-2030 place use at:

  • 729,000t in stainless steel, a 46,000t increase.
  • 825,000 in batteries, a massive 722,000t increase.
  • 119,000t for other uses, a 14,000t increase.

Nickel now has two growth drivers, batteries and stainless steel, whereas before it was just stainless steel. When investors also account for nickel’s specific importance in batteries, this is even more promising; another metal that is currently crucial for the EV revolution is cobalt which I wrote an article on and you can click here to read. However, because of cobalt’s controversial ethical issues, such as using child labour in the Democratic Republic of Congo, companies have been pressured into signing up to the Responsible Cobalt Initiative. Some high-profile individuals like Elon Musk, and companies like Panasonic, have stated they are actively at work to virtually eliminate cobalt from their batteries. By reducing cobalt in batteries, the beneficiary is nickel; in a recent interview with Crux Investor, Conic Metals explained the development of batteries with as much as eight times more nickel than any other metal in the battery designs, including cobalt.

The Vanadium Redox Flow Battery (VRFB) is yet to become a serious contender in the market because of their excessive weight and the poor ratio of vanadium to electricity stored. Unlike the short high-burst energy of Lithium-ion batteries, VRFB is seen as a means of long-term energy storage to allow for management of peak-flow energy requirements (we will write about this in the next few weeks). At the end of the battery’s life, the Vanadium is reusable for either use in steel or a new battery. Nickel-lithium batteries are a future technological prospect and are predicted to hold more than three and a half times as much energy per pound as lithium-ion batteries, while also enhancing safety.

All the production signs for nickel are incredibly promising, so what about the price outlook?

Price Forecast:

Year Nominal Constant
2018 13,122 13,122
2019 (f) 13,469 13,127
2020 (f) 15,000 14,249
2021 (f) 17,000 15,740
2022 (f) 18,000 16,244
2023 (f) 19,250 16,931
2024 (f) 19,811 17,000
2025 (f) 20,306 17,000
2026 (f) 20,814 17,000
2027 (f) 21,334 17,000
2028 (f) 21,868 17,000
2029 (f) 22,414 17,000
2030 (f) 22,975 17,000

The LME forecasts steady growth in the USD$/t spot price of nickel up until 2030:

In terms of constant 2018 dollars, the nickel price will have to average around $17,000 to incentivise sufficient new capacity to meet increased demand. Moreover, analysts have speculated the capital costs for non-Chinese and non-Indonesian integrated projects may need nickel prices above $25,000 to gain a return. However, increased EV demand is likely to be satiated by these cheaper projects in addition to high-pressure acid leach projects.

Inside Investment Tips

Now you’ve had some insight into the financials of the nickel market, it’s time to hear some crucial inside knowledge that could make or break your investment.

The primary drivers behind the EV hysteria are companies themselves. When you actually dig a little, the truth is the EV revolution is not as close as CEOs would like you to believe. Researchers are also uncertain as to when electric vehicles are going to take over. There are a lot of factors at play and while the trend is towards embracing EV to reduce our carbon footprint, there are still a number of psychological and financial barriers for the consumer to overcome.

The usability of this information will vary based on two things:

A photo of a pile of dollar bills.
  • Your confidence in the EV macro.
  • Your expected speed of returns.

If you have a wholehearted belief in the EV macro, it doesn’t matter if it happens tomorrow, the next day, or in ten years’ time, it is going to happen, and when it does, prices are going to rise. Therefore, if you’re a patient investor with some time to spare and have disposable income that you can afford to wait for a return on, now could be a great time to invest in a nickel company.

However, if you don’t fully buy into the EV thematic, nickel isn’t the commodity for you. Perhaps you foresee a shift in direction when it comes to vehicular transportation, or perhaps you see nickel as a commodity that will become obsolete in batteries after further advancement. Maybe you believe there will be an even longer time scale of 20+ years before EV rises to prominence, in which case many of the companies you might invest in today could have gone under, especially given nickel’s track-record of erratic prices.

Lastly, if you’re an investor looking to make a quick buck, don’t listen to the hype. In Crux Investor’s interview with Conic Metals Corporation (, it was clearly laid out that current spot price increases are not due to electric vehicle demand, and are instead generated by asset discovery, general euphoria and the Indonesian export ban on nickel ore. The EV revolution is a few years away at best.

What Nobody is Telling You

…smelting companies will march to their own drumbeat

Some investors might view all the information already mentioned as more than sufficient for them to make an investment decision on nickel. However, there’s an incredibly important secret that big nickel mining companies aren’t letting you in on: the nickel smelters currently have a huge amount of their own raw product on site, and the smelting companies, in many ways, control the market and the ability of public nickel producing companies to forecast. This means nickel mining companies are at their mercy; smelting companies will march to their own drumbeat. 

The Ten Commandments of Nickel Investment

A photo of an open bible with a woodland background.

To conclude this article, here are the ten things to be aware of when investing in the nickel market:

  1. Nickel is a volatile asset; its price is often unpredictable; depending on what type of investor you are, this is either an opportunity or a curse.
  2. The EV revolution is by no means just around the corner. Some say it is two years away from kicking in. Others point towards a longer timescale. However, nobody is disputing its inevitability.
  3. All financial projections point towards a prosperous future for nickel in batteries as there are very few large-scale operations globally; with nickel, scale is king.
  4. China, Indonesia and the Philippines are the foremost producers of lower quality steel, which contains only 1-2% total nickel. Indonesia has just stopped all exports of nickel.
  5. Nickel is almost certain to be central to any evolution generated by electric vehicle demand. Other battery metals (such as cobalt) lack its longevity.
  6. The smelters control the market. Until they can make money, no-one makes money.
  7. Not all nickel companies have the cash or assets to attract capital investment to last until the EV demand commences. Choose your nickel investment carefully.
  8. For the next 12 years, total nickel production is projected to be almost double what it has been for the last 12 years.
  9. As the nickel price recovers a lot of scrap metal will come into the market causing a dip in short-term prices until Q3/20.
  10. Don’t make investment decisions based on sentiment. Look at a company’s management and level of experience. Investigate their assets and potential. Analyse the point in the developmental cycle the company is at (ready to mine, or still exploring). Work out if the company’s priorities are aligned with its shareholders’. Finally, educate yourself fully on nickel by reading this article again and again and again. Oh, and maybe once more for luck.

An Example of a Good Nickel Company:

Examples of nickel companies I feel have great potential are Canada Nickel, Conic Metals or RNC’s Dumont asset. I’ll be writing a full piece on them in the near future; but, for now, happy investing!


Company page:

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

A man walks on water, labelled 'This Article,' and pulls a man, labelled 'Your lacklustre investment decisions,' out of the swirling water. A wooden boat with a nickel on its front and full of men watches on in the background.