Mincor Resources boss David Southam upbeat on nickel despite market turbulence

Mincor Resources boss David Southam says recent volatility in the nickel market has distracted investors from the healthy underlying fundamentals of the battery metal (reports The West Australian).
28th April 2022

His comments come after Mincor released its March quarter activities report and follow the nickel market’s plunge into chaos last month, which prompted a suspension of trade of the commodity on the London Metals Exchange.

The disruption was caused by Chinese nickel player Tsingshan, which had to move quickly to cover a series of short bets it had made that the nickel price would fall.

Mr Southam said while the recent “short squeeze” which sent prices soaring above $US100,000 a tonne had grabbed headlines around the world, the nickel price had in fact been trending higher for some time on the back of surging electric vehicle battery demand and diminishing stockpiles.

“While a degree of volatility will always be a characteristic of the nickel sector, the underlying forces driving the market bode well for the long term,” he said.

“The current nickel price of around $US44,000/t, which is nearly double the price assumed in our March 2020 definitive feasibility study, puts Mincor in a very strong position as we start production.”

Mincor is on the cusp of resuming its former status as a nickel producer following a restart of its Kambalda nickel operations.

The company has already delivered its first ore to Nickel West’s Kambalda concentrator with processing to produce a concentrate expected before the end of June.

The price of nickel has also been inflated by Russia’s invasion of Ukraine which led to sanctions against the pariah state, one of the world’s biggest nickel producers.

Mincor also noted LME nickel stockpiles had fallen by about 27,500t (or 35 per cent) to about 72,500t, representing less than one month of global demand.

Nickel has risen from about $US28,000/t at the start of the year to about $US44,000/t at the end of March.

The rising fortunes of the metal recently forced IGO to lift its cash offer for Western Areas from $3.36 a share to $3.87, representing a $160m increase.

Shares in Mincor were off 9¢, or 3.5 per cent, to $2.43 at the close of trade on Friday in a market that was sharply lower across the board.

However the company’s share price has more than doubled since the start of December when it was trading around $1.20.

Mincor shuttered its Kambalda operations in 2016 after a sustained downturn in prices for the commodity which was then used predominantly in steel making.

As well as the restart of its historic northern operations near Kambalda, the company has also opened a new greenfields underground mining operation at Cassini near Widgiemooltha.

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