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Western areas managing director Dan Lougher and Mincor managing director David Southam joined paydirt editor Dominic piper,
Hartleys resource analyst Mike Millikan and Legend managing director Mark Wilson to talk about the state of play in the nickel sector

eter Bradford’s arrival at this year’s like [Mincor’s] Cassini are looking very good, As nickel stockpiles continue to be
PAustralian Nickel Conference in his but some of the projects in South America burned through as the full impact of Indo-
brand-new Tesla is a sign of the times. were plagued from the word go. Nickel is nesia’s stance transpires, the manipulation
Braford, the managing director of only $US17,000-$US18,000/t, we are more happening on the nickel pig iron landscape
one of Australia’s leading nickel pro- familiar with $US25,000-$US30,000/t, so driving the stainless steel sector is expected
ducers – Independence Group NL while the price is better it has not jumped out to intensify.
(IGO) – had been waiting patiently for the box; it is unlikely to scream and spikes in “I have no problem with that whatsoever,
his revolutionary electric vehicle (EV) prices are not good for any company; you as the EV market will drive the sulphide
and its performance has reportedly not lose investor confidence when it is up and market,” Lougher said.
disappointed. down, up and down.” “We are starting to see that divergent
And while the talk of nickel’s im- At the time of print, nickel had dipped to market happening, but subtly. When you
portance in the EV supply chain has just below $US17,000/t, however, the slight are the largest stainless steel producer in
rejuvenated the entire sector, West- price correction in mid-October appeared the world you can manipulate a lot of things
ern Areas Ltd managing director Dan the only downside, according to panellists and with Indonesia they have done what
Lougher provided a timely reminder of involved in the closing discussion. they needed to do. Some people are an-
its backbone. Lougher tipped nickel to be $US17,500/t noyed by that, but it is the right thing to have
“The truth that you have to be believe in October 2020, a conservative forecast done from the nickel pig iron perspective.”
in is that stainless steel is running the compared to Mincor managing direc- Lougher said the Indonesian ban had led
nickel price. Nickel pig iron put a floor tor David Southam’s view ($US18,762/t), to North American investors queuing up to
on the price, EVs currently only de- Hartleys resources analyst Mike Millikan speak with Western Areas.
mand 6% in the world of nickel. But, if ($US18,000/t) and Legend Mining NL man- Being among a rare breed of nickel sul-
you don’t believe in EVs then for your aging director Mark Wilson ($US18,001/t). phide producers puts Western Areas, IGO
investment in nickel or cobalt you have When Southam joined Mincor in Feb- and soon-to-be reborn miner Mincor in the
to rethink what your logic is,” Lougher ruary, nickel was plodding along at limelight but interest has yet to filter further
said during the closing panel discus- $US12,000/t. The price has since risen down the pipeline into the exploration sec-
sion. and so too has Mincor’s prospects of enter- tor.
With governments around the world ing another chapter in the Kambalda nickel However, Millikan said investors were al-
setting policies designed to increase story. ways on the hunt for a quality nickel play.
the replacement of traditional combus- This year alone, Mincor has purchased “Investors are definitely looking for a good
tion engine cars with EVs over the next the Long nickel mine from IGO, signed a nickel story, but there is a lack of exposure
10 years, nickel players are positioning deal to supply feed to BHP Nickel West’s to nickel stories on the ASX,” Millikan said.
themselves to be a part of the equation. concentrator in Kambalda, raised $23 mil- Legend is one company gunning for at-
In the short term, Indonesia’s deci- lion without a DFS and substantially in- tention and with drilling about to start at
sion to bring forward the ban on ex- creased its appeal to institutional investors, Area D in the Fraser Range, as well as re-
ports of raw nickel ore, starting in Janu- which now account for 24% of the compa- cent headline grabbing exploration success
ary, has only added further intrigue to ny’s share registry. in other commodities, one good hit could
the nickel market. Southam’s experience with Western Areas see Wilson’s company attract the following
Even before Indonesia’s decision and lithium player Kidman Resources has it is craving.
on exports, which effectively removes held him in good stead at Mincor and from his “Funds looking for money want returns
350,000t ore out of the global sea discussions with end-users he is convinced of and we can’t deliver so that market to a jun-
trade, the nickel price was expected the insatiable appetite developing for nickel for ior explorer is non-existent,” Wilson said.
to be strong in 2019. Leading into the both EV-related and stainless steel uses. “So, I need to go out to get my funding
Australian Nickel Conference, the base Southam said the buying of nickel from through IGO. And, what is the character-
metal recorded its best quarter in nine LME warehouses, presumably by Chinese istic of IGO that makes Legend attractive
years, with the strong price perfor- outfits, last month had seen stockpiles re- to them and what makes IGO attractive to
EV the driver for nickel ciation of the likes of IGO, Western Areas was concrete. the light of day. I am not dealing in a market-
Legend? Not one of those shares will see
mance reflected in the share price appre-
duced and indicated that the Indonesian ban
place where there is a flood of stock coming
and Mincor Resources NL.
“If they aren’t getting Indonesian laterite ex-
With demand for quality nickel rising and
and the attractive part for IGO is that they
has much lower grades but they still need
companies around the world assessing ports they have to go to the Philippines, which back on after you have done a placement
project restarts, Lougher said there was no those units. If these guys are buying LME understand the exploration risk perfectly.
concern that a spate of such activity would nickel units, it must mean they are very con- “IGO is spending 5-7 times the amount
result in the market being oversupplied. fident that this ban is going to hold, we’re very we are on greenfields exploration in my
“You are justified to invest in restarts, but optimistic about that,” Southam said. belt annually; they know the story and prob-
it won’t be a walk in the park,” Lougher said. Southam is also certain that bifurcation of ably know I put more cents in the ground
While Lougher was supportive and not Class 1 and Class 2 nickel will occur. for every dollar than they can ever hope to
frightened by the competition posed from “As Dan [Lougher] pointed out, it is happen- because I am a junior burger.”
brownfields operations reopening, he was ing. There is bifurcation in concentrates, we – Mark Andrews
more wary of start-ups considering some have heard of payabilities of 70% I know that
high-profile failures in the recent past. there are payabilities higher than 70% but it all
“We are not going to get a flood of sul- depends on the quality of product,” Southam
phide projects restarting,” he said. “Projects said.

aUSTRaLIa’S PaYDIRT NOVeMBeR 2019 Page 31