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Corporate plays on the horizon:

Hartleys

he current nickel climate is primed for a round of M&A activ-
Tity, according to Hartleys analyst Mike Millikan.
Speaking at the Australian Nickel Conference, Millikan said
the combination of structural demand change and a lack of in-
vestment options made corporate activity extremely likely.
“There are not a lot of investment opportunities in nickel sul-
phides and some of the players are going well with good bal-
ance sheets,” Millikan said. “I think the time is also right; the
nickel price is about to pop, companies have got very good cur-
rency in their scrip as well as cash. I think we will see something
in the next 6-12 months.”
There has already been some movement in recent times with
Oz Minerals Ltd farming into Cassini Resources Ltd’s Nebo-
Babel project and US private equity group Black Mountain Met-
als Ltd acquiring the Lanfranchi mine in Kambalda but Millikan
is also eyeing other commodities for a lead.
“There is an increased likelihood of consolidation when you
look at the financial strength of some and potential vulnerability
of others but there could also be new entrants,” he said. “Wes-
farmers [Ltd] acquired Kidman for its lithium and had a go at Ly-
nas [Corporation Ltd] for the rare earths, nickel could be next.”
If Wesfarmers and others are hunting for nickel projects, their
options are limited. Millikan said there were few nickel sulphide
Mike Millikan
development stories in the market with only Cassini, Mincor
Resources NL and Poseidon Nickel Ltd being anywhere near
production starts.
Juniors in other commodities such as gold and lithium have
recently floundered when trying to match actual production with
development numbers and Millikan warned the market was
aware of the hurdles.
“The key deliverables for us are how expectations stack up
against actuals; how the DFS relates to production,” he said.
While nickel sulphide developers are enjoying strong market
support, the climate is still difficult for laterite players.
“The laterite projects’ capex is still too large for small compa-
nies and even though we have some construction-ready pro-
jects everyone is looking for partners at the moment,” Millikan
said. “We believe higher commodity prices are required to as-
sist in getting some market interest and partner interest.”
On the exploration front, juniors such as St George Mining
Ltd had enjoyed investor support off the back of good drill re-
sults but Millikan warned the market would punish explorers
who couldn’t follow up initial success with further economic in-
tercepts.
All nickel companies are relying on the EV narrative to drive
their share price and Millikan said the trend towards EVs could
open new investment doors.
“Nickel is one of the key ingredients for the EV revolution, low-
ering carbon emissions, making it great for socially responsible
investors,” he said.
“We’ve certainly seen a change and it is consistently much
more a part of the dialogue with every investor,” Independence
Group NL managing director Peter Bradford said of ethical
investment credentials. “We see a future where your perfor-
mance from an ESG perspective is going to be a gating deci-
sion before they start looking at your delivery from an operating
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and financial perspective.
“The size of money which has moved into that ethical invest-
ing is huge, it’s gone up 15 times in the last decade.”
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