Member Info for pickedpeck

Hsbc xd tomorrow, I don't think we will see a corresponding drop. I see a small rally continuing, hopefully very limited exposure to a Russian default.

They (wrongly) assumed that the market had overheated and the extra production they were helping / bringing online in Indonesia would cause the price to drop back. The LME stocks would likely have recovered with that extra capacity, most analysts were predicting a drop back to around $20k later in the year. The Russian invastion of Ukraine and Norilsk nickel heading off market scuppered that.

TDT - I think they will survive, but it will put a big hole in their profits and investment capacity. I guess it depends how big the deal was, but for all intents and purposes it looks like it could have cost billions of dollars. That's not easy to shrug off even for an organisation as large as Tsingshan.

All good fun.

So Tsingshan goes bust... then what? It was a ridiculous bet on a tight market, I wonder if he was trying to bully the market like some kind of 'Big Shot'. Shot himself in the foot more like, and his company in the head. Tsingshan are the world's biggest nickel producer, for them to have lost their investment power overnight will shake up the nickel market for years.

Whichever outcome, HZM comes out smelling of roses, gold plated, sorry nickel plated roses. If Glencore really did this then having them as our off taker and one of the major shareholders doesn't look like a bad place to be.

No idea what happens next now, but will be getting the popcorn ready and watching closely.

Its possible that Vermelho will become a target for eV companies. Araguaia is a ferronickel operation with offtake already committed to Glencore.

I see some other companies rising on Ni price too. AMC and even EUA boards talking about the value of their nickel despite it being in Russia.

Imagine there was a company with 4m + tons of Ni in the ground, and had a fully financed project to start it's extraction. In operation the AISC less than $10k a ton. And all of that in a jurisdiction that is not Russia, and has high ESG credibility. Sighs...

Did anyone notice on the BMO slide deck (slide 4) HZM is now talking about three projects with a total production capacity of over 100,000t pa.? Araguaia South is what is being developed now in two stages, Araguaia North is also listed as having a PFS of 32ktpa, plus Vermelho is anyone's guess 25-46ktpa. Highest number from the three projects could be 107-138ktpa. I know that's a way off, but still... Imagine.

Finance isn't high, most of it is very low and some is around market rate. The export credit agency elements are extremely low in fact.

I fear the war is going to drag on. Clearly the Russians expected Ukraine to roll over, its done the opposite and is now getting an influx of western weaponry. I am afraid I can see a prolonged stalemate.

Nickel had risen to $25k a ton before the war started, sanctions haven't even really bitten yet in real terms, how many shipments short is the market so far? I'm guessing pretty much zero. We are all assuming the spike is because of the war, it may just be that supply had already run out.

So the outcome for Putin and Russia is to become Xi Ping's batch... I understand the point, but that's not how economies work. Economies are structured like interdependent networks, if you change your network to one pipe you transfer control of your economy to whoever controls the pipe.

I agree with TDT this is only bad in the long run. Diesel passing £2 a litre later this week will have knock on effects, like a massive increase in demand for EVs but also inflation and less discretionary money for everyone.

This is new territory for everyone, all crystal ball gazers are in a situation where they need a new ball!

Personally I think commodities that are squeezed for whatever reason are still a good place to be, so long as the squeeze stays on. Oil, gold, nickel, copper, rare earths, wheat, sunflower oil. Post pandemic recovery is massively threatened by the extreme commodity squeeze caused by Russia, but it will be a two year disruption for the west as production adjusts. Canada and the US have the ability to up oil and wheat production for example. Nickel is an interesting one, its hard to see where the gap in demand vs supply can be closed. As TDT says it will push a percentage, possibly a large percentage, of eV batteries elsewhere, but stainless steel will still be needed and there is no alternate formulation.

They already let Ukraine go, its an independent country with its own laws, government and borders. It was no threats to Russia, and had even voted to get rid of its nuclear arsenal nearly a decade ago.
Russia will be a cash economy like Zimbabwe after this. The only way to pay for goods, and only home produced ones, will be with wheel barrow loads of roubles.
Russia needs to face the new reality, that it is now shelling a civilian population on the doorstep of europe, and as a result has become a pariah state cut off from 95% of the world and with gangsters in charge. Its actions have reunited and invigorated the democratic world and brought about the end of its own economy.
Yes China may buy some exports, but even they have started calling the special military operation - war - regrettable and have offered to mediate. When even China is calling you dumb, you really need a look in the mirror before you start calling anyone else that.

As for Nickel, it was already squeezed before this. Even slowing down Norilsk shipments adds pressure. This looks like it will be sustained for a while, there simply isn't enough around to feed demand already and now there is even less. HZM timing could have been better, would be great to be making production announcements right now, but this situation isn't getting resolved quickly anyway.

Today's slip is about money exiting the stock market, not HZM directly regardless of the nickel price. Falling a little bit is better than the rest of the market which is falling a lot.

If your only risk in an investment is time, then that's no real risk at all. They have contingency funds, an experienced team, a relatively simple project. If the timeline is 2 years or 2.5 I don't really care over much. The needle is already moving though, I believe we have seen the bottom of the price range for HZM.

Reggie

It is absolutely achievable. To be clear I wasn't disagreeing with Craig's assessment. In the BRR video JM says commissioning Q3/Q4, by that I would assume he mean commissioning both starts and finishes in that period with nameplate capacity achieved by Q1 2024. That satisfies both eh two year build cycle (finance to nameplate) and also the 16 month from now start of commissioning.
Those timelines are achievable as this is about as an off the shelf project as you can get in mining. The mine is already fully permitted with access to power, water and roads. The plant is being bought off the shelf from tier 1 suppliers, and isn't novel. The mine is shallow open pit, as sime as it gets.

As I said in the post at the Weekend, and as some of the long time hands here have also said, it's all real and happening fast, against a background of a huge nickel squeeze putting additional incentives in play.

I first bought into this with nickel at about $12.5k a ton and thought a rise to and stabilisation at $20k per ton would make this a fantastic investment.

FTC - Norilsk likely going very offline has changed the landscape. There may well be a scramble for Nickel assets. Every mine is always for sale, just a question of price. If the investors can achieve their exit price or higher two years or more early then of course they will take it. The investors are mine financiers not miners. All of their investments have planned exits and price tags.

Can be quite a gap between the start of commissioning and nameplate run of mine production.
First pour / smelt should be just after start of commissioning, but will be small batches until the plant is tuned.
There should also be an ore stockpiling process in parallel, so the mine will have piles of higher grade material to start full production with.

Energy, inflation, wage increases, Real deflation against the dollar, higher finance volume, lower finance interest rates, more efficient / newer process lines, higher grade early production, and rapidly rising nickel price due to dwindled nickel stocks all make the NPV calculator inaccurate. There are obviously even more variables.

But some are positive influences whilst some are negative. The NPV calculator should give an approximate valuation rather than one where you're interested in the decimal point digits.

Loved the chartist trying to explain 'yes it can be anywhere between $21 and $35k a ton' based on the chart data....

If this all goes on for any serious length of time then nickel could top $40k a ton, and maybe even test the all time highs.

What value would HZM have producing say 15,000 tons a year with AISC at $10k, Ni price $35k a ton? $375m a year gross profit... Make it $750m when phase 2 kicks in after a year.

There is no way that significant bids will not be made for HZM in the near term future. Nickel away from Russia and China (Indonesian) influence is going to be at an even higher premium.

ECAs could be linked to a couple of items. One will likely be Scania mine trucks and excavators, they need quite a few and they are pricey.
The rest will be linked to the balance of process equipment. Have a look at the flow sheet, figure 17-2in the Araguaia DFS by Snowden.

Another will be the balance of the process equipment.

Just an zidea of who Hatch Ltd are if you don't know them:

https://www.hatch.com/About-Us/About-the-Company/Awards

I think they may have the experience needed to build for Horizonte.

Maintaining about 10% discount to nav, strange for this trust