Nickel Prices Consolidate After Impressive Rally, Supported by Tight Supplies and Battery Demand

• Nickel prices have risen significantly off lows and should remain well-supported around the $19,000-20,000/ton level
• Global nickel supplies are constrained, with Indonesia having to import lower-grade ore from the Philippines
• Canada Nickel Company is aggressively drilling its Deloro project near Timmins, expecting a 500Mt resource with 1Mt contained nickel
• Several other junior nickel companies reported promising exploration results, including Mega Mining, Talon Metals, SPC Nickel, and Fathom Nickel
• Strong long-term demand fundamentals and current supply constraints make nickel an attractive investment

Nickel: A Compelling Investment in the Green Energy Transition

As the world accelerates its transition to green energy technologies, the demand for critical metals like nickel is poised for significant growth in the coming years. Nickel is a key component in the lithium-ion batteries powering electric vehicles (EVs) and energy storage systems. It also remains essential in traditional industries like stainless steel production. Nickel presents an attractive opportunity for investors seeking exposure to the green energy transition and compelling supply-demand dynamics.

Nickel Price Outlook

Nickel prices have staged an impressive recovery in 2024, rising 30% off the lows seen in February to over $19,000 per ton. While prices have pulled back from recent highs around $22,000, analysts believe $19,000-20,000 should be a strong support level.

As Mark Selby, CEO of Canada Nickel Company, explained, "We should see prices come back to that $19-20,000 dollar per ton level - still up 30% off the lows in February. We're in good shape here.

Selby noted that while nickel prices have dipped, prices for nickel sulfate used in batteries and stainless steel have edged higher. This divergence suggests any further commodity price weakness should be limited. He stated, "If the commodity price is falling but the price that people are willing to pay to buy the products they use is moving in the other direction, that says okay, whatever sell-off there should be relatively limited.

Constrained Global Supplies

A key factor underpinning the bullish outlook for nickel is constrained global supplies. Indonesia, the world's largest nickel ore supplier, recently imported lower-grade material from the Philippines to feed its processing plants. "If the world's largest ore supply place isn't supplied enough ore for the plants locally and they have to import it, and generally it's lower grade, lower quality from the Philippines than what they're used to using in Indonesia, again that's a pretty good sign that generally supplies are constrained," explained Selby. He noted that Indonesia wants to manage its nickel supply as OPEC does with oil, which is another signal of a tight market.

Promising Exploration Results

Several junior mining companies focused on nickel exploration have reported promising drill results, highlighting the potential for new high-grade discoveries.

Canada Nickel Company is rapidly advancing its Deloro project in the Timmins region of Ontario. Deloro is shaping to be another large-scale nickel sulphide discovery, leveraging the company's success at its flagship Crawford project. Selby commented, "We're planning to drill 90 to 100,000 meters this year and deliver a maiden resource by this time next year. It has less than 9 meters of overburden, about a third of what we have at Crawford, and it's still over a kilometer long by 700 meters wide. If you multiply that out, you can easily see 500 million tons of resource and a million tons of nickel. Canada Nickel Company is advancing its flagship Crawford nickel-cobalt sulphide project and the recently acquired Deloro property, in the Timmins region of Ontario, Canada. The company is aggressively drilling Deloro, to delineate a maiden resource of 500 million tons with 1 million tons of contained nickel by mid-2024. With a strong management team and strategic partnerships, Canada Nickel is well-positioned to become a significant global nickel supply chain player.‍

Talon Metals reported impressive step-out drilling at its high-grade Tamarack project in Minnesota, with multi-percent copper grades and strong PGM values accompanying the nickel mineralization. Talon Metals Corp (TSX:TLO) - Talon Metals is advancing its high-grade Tamarack nickel-copper-cobalt project in Minnesota, USA. Recent drilling has intercepted impressive grades, including massive sulphides with multi-percent nickel and copper values and significant PGMs. Talon's partnership with Rio Tinto and its proximity to U.S. battery manufacturing facilities make it a compelling investment opportunity in the domestic EV supply chain.

SPC Nickel announced channel sampling of near-surface mineralization grading 1% nickel and 0.5% copper over 17 meters at its Sudbury, Ontario project. SPC Nickel Corp (TSXV:SPC) - SPC Nickel is focused on exploring for nickel, copper, and PGMs in the Sudbury Basin, Ontario, Canada. The company recently reported encouraging drill results from its Lockerby East project, including near-surface intercepts grading 1% nickel and 0.5% copper over 17 meters. With a prospective land package in a world-class nickel district, SPC Nickel offers investors exposure to potential new discoveries in a low-risk mining jurisdiction.

Fathom Nickel intercepted 1.4% nickel and 0.4% copper over 7 meters at its Albert Lake project in Saskatchewan, showing potential for a new high-grade discovery. Fathom Nickel Inc (CSE:FNI) - Fathom Nickel is exploring its flagship Albert Lake project in Saskatchewan, Canada, targeting high-grade nickel sulphide discoveries. The company recently reported drill intercepts grading 1.4% nickel and 0.4% copper over 7 meters, confirming the potential for significant mineralization. With a focus on high-grade exploration and a strong technical team, Fathom Nickel presents a compelling speculative opportunity for investors seeking exposure to new nickel discoveries.

Magna Mining (TSXV:NICU) - Magna Mining is focused on nickel-copper-PGM exploration and development in the Sudbury Basin, Ontario, Canada. The company is advancing its Shakespeare project, which includes a past-producing mine and a processing plant. Magna recently announced plans to toll-mill mineralized material from Shakespeare at the nearby Glencore Strathcona mill, providing a potential source of near-term cash flow to support ongoing exploration and development activities. With a significant resource base and the potential for high-grade discoveries in a world-class nickel district, Magna Mining offers investors exposure to both near-term production and long-term exploration upside.

The Investment Thesis for Nickel

• Accelerating adoption of EVs and green energy technologies to drive nickel demand growth
• Stainless steel production remains a steady source of demand
• Current global supplies are likely insufficient to meet projected demand
• Indonesia is looking to control exports to manage supply like OPEC
• Ongoing exploration success highlights the potential for new high-grade nickel discoveries
• Battery-grade nickel sulphate prices at a premium to LME prices
• Nickel equities provide leverage to rising nickel prices

The bullish long-term outlook for nickel is underpinned by robust demand growth from the accelerating adoption of green energy technologies and constrained global supplies. Major producing regions like Indonesia are already showing signs of supply insufficiency and actively looking to manage exports. Ongoing exploration success by junior miners points to the potential for new high-grade discoveries in stable jurisdictions like Canada. Battery-grade nickel products continue to command strong premiums, reflecting the industry's need for reliable, high-quality supply. For investors, nickel equities provide compelling exposure to rising nickel prices and the green energy transition.