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theflasherman

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In reply to: Twobees on Monday 03/11/08 12:37pm

Interesting times ahead for those invested in nickel companies...

 

THE NICKEL MARKET

 

Forecasts of 2009 and 2010 prices, supply, and demand in nickel are very uncertain at the time of writing of this report. Fortis/VM Group predicts short term prices to be in the range of US$9,500 to US$11,000/t. Informal guesses among the CEO's of nickel producers at the Australian Nickel Conference held last month in Perth, Australia suggested prices in 2009

would be in the range of US$14,000 to US$16,000/t. Steel production and consumption trends, particularly in China, will most influence spot pricing in nickel in the coming few years. It is clear from reports from China and visits by mining executives in the past two months that all direct shipping ore (DSO) nickel laterite operations worldwide have closed or will soon be off contract. All Chinese smelters which used direct shipping ore are either shut or operating at a substantial loss with ample stockpiles of ore on site. Prior disclosures from the London Metals Exchange (LME) and others were that DSO smelters needed prices at or above $25,000/t to be profitable in relation to sulphide concentrate nickel producers. It is not

anticipated that this price which was exceeded this past year will be reached again in the coming few years. In addition, at least 200,000 tonnes of annual nickel concentrate capacity has been closed or deferred in the past two months. It was forecast in August by the International Nickel Study Group that nickel production would be in surplus by 110,000 tonnes in 2009. This is unlikely now but it is not clear at all how much demand will be curtailed against available supply in 2009. It is known that most sulphide deposits in the world need a nickel price above current levels of US$4.50lb. to sustain production beyond a few months, not withstanding being able to finance new development, pay off debt, or find new deposits. Norilsk Nickel for instance has just announced that only its Finland and Botswana mines are operating at a profit in the current price environment and two small operating underground mines in Western Australia will be closed.

 

We feel the nickel price distress will not last longer than Q2 2009. It will all depend on a reversal in the LME inventory build up and some continued growth of GDP in China and India to retain some semblance of normal steel production capacity and exports to and from those countries. If this scenario is correct, we can foresee a 'short squeeze' in available supply in the spot markets developing during H2 2009 with the potential of the spot price to hit $20,000/t. This would not require the world manufacturing industry to come anywhere close to 'normal' prior year production rates in our view. As in the past 3 years, volatility in pricing and supply will continue to be the highest influence on the nickel spot market in the next year.

 

http://www.protoresources.com.au/GetFile.a...d1-af349e31b3a5

 

JB

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In reply to: Pub Lunch Man on Thursday 18/12/08 06:40pm

Hi daggie,

 

Thanks for the thanks!

 

IMO nickel prices were obviously pumped to unsustainable levels last year and naturally prices had to retrace this year. This combined with the recent annihilation of commodity prices IMO has excaserbated the retracement and pushed nickel prices to the other extreme.

 

Barnes forecast nickel surplus between 2009 and 2012

TD Newcrest metals analysts Greg Barnes suggests that as nickel heads for surplus, mining projects may be placed the back burner.

 

Author: Dorothy Kosich

Posted: Monday , 03 Mar 2008

 

TORONTO -

 

As nickel continues the "longest bull market ever," TD Newcrest metals analyst Greg Barnes Sunday predicted that nickel is heading for a surplus between 2009 and 2012, which may force some future nickel projects to be placed on the back burner.

 

In a presentation to the Prospectors and Developers Association conference, Barnes noted that nickel production should start to accelerate this year as new mines begin production. The bad news, however, is that as the next generation of nickel mines come on line, adding an additional 10% to current nickel capacity, it will throw the market into surplus, he advised.

 

While nickel production could generate a surplus between 2009 and 2012, Barnes forecast that the nickel supply/demand will slip back into significant deficit by 2013.

 

The Chinese nickel pig iron producers, who produce a lower-grade variation of nickel, have proven their staying power, employing product enhancement and improvement to remain competitive, according to Barnes.

 

As average nickel prices trade in the range of $10-$15/lb, Barnes anticipates stainless steel restocking in Europe and Asia during the second half of this year. Chinese stainless steel demand is expected to improve during the second quarter. Barnes anticipates that China's stainless steel production will exceed that of all western world producers in 2009.

 

Nonetheless, Barnes termed stainless steel production "notoriously fickle and volatile."

 

http://www.mineweb.com/mineweb/view/minewe...48414&sn=Detail

 

JB

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While nickel production could generate a surplus between 2009 and 2012, Barnes forecast that the nickel supply/demand will slip back into significant deficit by 2013.

QUOTE.

 

That looks a pretty fair bet but it doesn't do much for today's struggling nickel producers!

 

Despite everything, I see MCR and PAN as surviving a prolonged downturn in the PoN. Both are efficient producers with good mines, reserves and resources.

 

 

 

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In reply to: Pub Lunch Man on Sunday 21/12/08 11:50am

I,too, would like to hope that MCR will survive the crisis. Well, if we have to wait, than I prefer to wait, rather than selling MCR shares for peanuts now. http://www.sharescene.com/html/emoticons/sad.gif

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In reply to: gwydir on Sunday 21/12/08 12:34pm

Hi gwydir,

 

Check out PRW and in particular PRWOA which expire December 2013 which ties in nicely with the quoted, "nickel supply/demand will slip back into significant deficit by 2013".

 

They have enough money to get them through to production at their Barnes Hil project which begins early 2010.

 

http://www.protoresources.com.au/GetFile.a...d1-af349e31b3a5

 

JB

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In reply to: Pub Lunch Man on Sunday 21/12/08 01:34pm

 

 

They ( PRW ) have enough money to get them through to production at their Barnes Hill project which begins early 2010. QUOTE.

 

I'm not so sure about that.

The broker's report talks about $90m Capex to get the project underway - PRW share of that is 50%.

Cash in hand approx $1m currently.

Broker also identifies a potential "threat" in the SWOT analysis as the "inability to finance construction."

 

http://www.sharescene.com/html/emoticons/cool.gif

 

 

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QUOTE (macduffy @ Sunday 21/12/08 02:39pm)

A correction to my previous post re PRW.

 

The JV partner, MFC, is liable for 100% of the capital cost of the project to earn a 50% share.

MFC's SP is currently 7c, Market Cap $4.5m.

 

http://www.sharescene.com/html/emoticons/cool.gif

 

 

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QUOTE (macduffy @ Sunday 21/12/08 05:12pm)

At stated grades and current PON, Barnes Hill is not going into production with a "target cash cost" of $US4/lb. It would be simply uneconomic. I think MFC know that, but if they don't, they should take a look at what the market is telling them through their share price. Similar story with all the uncommitted Ni laterite projects I know of.

 

Note hungry's pick list - all sulphides.

 

Banking on CMR's RIP as yet unproven nickel extraction flowsheet adds to the risk.

 

 

 

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