Guest Blog Post by Giga Metals
April 9, 2018
As the importance of battery metals continues to grow in the minds of automakers, utilities and investors, we asked Mark Jarvis, CEO of Giga Metals, to weigh in with his thoughts on nickel. Giga has advanced-stage nickel deposit in BC, Canada and I think investors will find his insight useful.
Anthony Milewski, CEO of Cobalt 27
Long-term nickel fundamentals sketch rosy picture as EV boom looms
Although nickel prices have only started to recover from multi-year lows, it’s becoming increasingly apparent that prices must go significantly higher to cope with the demand for battery materials. Electric vehicle penetration rates are growing faster than anyone had imagined, and both nickel and cobalt are vital components of the lithium-ion batteries that are powering this green revolution.
Projections based on announcements by national governments and automobile manufacturers place the demand for (battery market) nickel at two-million tonnes per year by 2030. That’s the same amount of metal the entire market uses today for all end-uses and, without substantial new supply coming online, will mean serious shortages of nickel by the early 2020s.
Clearly, this could place certain, advanced-stage nickel projects in the sweet spot of a fundamentals-driven commodity cycle that looks set to last for decades.
However, it’s important to realize that analysing nickel deposits is complicated because they ultimately produce two completely different finished products. Class II nickel, or ferro-nickel (including nickel pig iron) is only suitable for the stainless-steel market, due to the mixed nickel and iron content and impurities; Class I nickel is nickel that can be economically refined to greater than 99% purity, which is suitable for all other applications, including batteries.
Even more interesting is the fact that less than half of all current world production comprises Class I, battery-grade nickel. In other words, more than half of current production cannot be used for the battery market and is only suitable for making stainless steel, according to Vale, the largest nickel producer in the world.
Class I nickel can be economically produced from two deposit types. You have “High Pressure, High Temperature Acid Leach” (HPAL) projects, which are used to process limonite deposits, and you can also obtain it via nickel/cobalt sulphide deposits such as our Turnagain project in BC, Canada.
Incentive prices for both types of project are estimated to be between $9 and $11 per pound of nickel by most pundits. However, Sherritt estimates the incentive price for new HPAL projects at between $13 and $22 per pound, based on actual capital costs of HPAL projects built in the last ten years.
There is also a trend towards higher enterprise value per pound of contained nickel equivalent as the engineering advances from the preliminary economic assessment-stage through the prefeasibility, and feasibility stages.
With new nickel production required in such a short space of time, the low hanging fruit is going to get picked first and that means strong economics, stable jurisdiction and permitting.
As an example of one such potential project, I’m going to briefly turn the spotlight on our Turnagain project, which is among the largest undeveloped sulphide nickel deposits in the world in terms of total contained nickel.
Turnagain is host to a NI 43-101 complaint resource, containing measured plus indicated resources of 865 million tonnes @ 0.21% nickel and 0.013% cobalt, or 4 billion pounds of nickel and 250 million pounds of cobalt. Inferred resources are an additional 976 million tonnes @ 0.2% nickel and 0.013% cobalt, which translates to another 4 billion pounds of nickel and 280 million pounds of cobalt. In addition, extensive metallurgical test work has delivered very positive results.
Our goal is to have a PFS completed in the first quarter of 2019, and a feasibility study completed early in 2020. We aim to have permits in place, which would make the project shovel-ready, by 2021 and thus potentially among the first large nickel and cobalt projects built in the 2020’s.
As we all know, Cobalt is on the radar of every battery metals investor and until recently, nickel has been somewhat under the radar. Now, however, things are about to change.
President, CEO, Director
Giga Metals Corp
Forward-Looking Information: Some of the posted entries on the CEO Corner may contain forward-looking statements. Forward-looking statements address future events and conditions which involve inherent risks and uncertainties. Actual results could differ materially from those expressed or implied by them. Examples of forward looking information and assumptions include future estimates of the worldwide supply and demand for cobalt and other metals and the effect that these changes could have on the short term and long term price of cobalt and other metals on the world markets, statements regarding the future operating or financial performance of Cobalt 27 including the net present value, metal recoveries, capital costs, operating costs, production, rates of return and payback. Forward looking statements involve known and unknown risks and uncertainties which may not prove to be accurate. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Among those factors which could cause actual results to differ materially are the following: market conditions and other risk factors listed from time to time in our reports filed with Canadian securities regulators on SEDAR at www.sedar.com.
In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "projects", "plans", "anticipates" and similar expressions. These statements represent management's expectations or beliefs concerning, among other things, future operations and various components thereof affecting the economic performance of Cobalt 27. Undue reliance should not be placed on these forward-looking statements which are based upon management's assumptions and are subject to known and unknown risks and uncertainties, including the business risks discussed above, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted.
Links: Some of the posted entries on the CEO Corner may include links to 3rd party websites. Cobalt 27 has not reviewed all websites linked to or from this Site and is not responsible for the contents of any such websites. The inclusion of any link does not imply endorsement by Cobalt 27 of the linked website or its content. Use of any such linked website is at the user's own risk.
For further information we refer you to our legal notice.