Nickel Prices Poised for Long-Term Rally, Canada Ripe to Benefit

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Wednesday, July 10, 2024

Nickel prices are expected to hold steady around $18,000 per tonne in 2024, according to Fitch Solutions unit BMI, but the story doesn't end there. While a current surplus due to surging production in Indonesia and China is dampening near-term growth, the future shines brightly for the metal.

This temporary plateau shouldn't overshadow the significant upside potential. Fitch highlights potential supply disruptions and a weakening US dollar later in 2024 as factors offsetting increased Asia Pacific supply that could create a price floor, preventing a major decline.

The real excitement lies beyond 2024. As electric vehicle battery production accelerates, nickel demand is projected to swell. This surge, coupled with a gradually shrinking market surplus, paints a picture of steady price increases. Fitch forecasts nickel reaching $21,500 per tonne by 2028, a substantial jump from around $17,000 today.

Forget China, Buy Domestic

It’s also worth noting that countries are actively trying to reduce reliance upon metals coming through China. “We need to end our long-term reliance on China and other countries for inputs that will power the future,” said U.S. President Joe Biden in 2022 upon invoking the Defense Production Act to support miners of metals critical for electric vehicles (EVs).

An answer to the problem is next door in Canada, a country that has made moves to cut into China’s market share. “We don't think it's in anybody's interest to have a large concentration of control of minerals and processing in any one country,” said Canadian Minister of Natural Resources Jonathan Wilkinson last year, effectively adding that Canada can play a "big role" in reducing reliance on China for key EV metals.

Top Canadian Players

Canada has the capabilities to be listed as a global nickel powerhouse. Sudbury, Ontario in the northern Canadian Shield boast some of the world’s most nickel-rich ground, home to mining giants like Vale (NYSE: VALE) and Glencore (NYSE: GLCNF).  

Smaller companies are grass roots opportunities to capitalize on a shift away from Asia to local metals; companies like Nickel North Exploration Corp. (TSX-Venture:NNX), which is exploring its 173 km2 Hawk Ridge nickel-copper project in Quebec, and Fathom Nickel Inc. (CSE: FNI) (OTCQB: FNICF).

Don’t Sleep on Fathom Nickel

Fathom is a sleeper in the group with a tiny market capitalization of just $6.3 million and an impressive portfolio of projects comprising a commanding land position in the Trans-Hudson Corridor in Saskatchewan. Fathom’s three properties – Albert Lake, Gochager Lake, and Friesen Lake – span more than 122,000 hectares. 

To put that in perspective, a straight line of one-kilometer-wide squares would roughly reach from Toronto, Ontario, Canada to Savannah, Georgia, U.S.A.

Nearby discoveries include the historic Rottenstone Mine that is integral to Fathom’s Albert Lake project, the historic Gochager Lake nickel-copper-cobalt deposit, the Friesen Lake Ni-Cu+Pd-Pt showing, the Toppings Lake copper-nickel showing, and Ramp Metals Inc.'s (TSX-Venture: RAMP) recent Ranger-01 drillhole that recently intersected 73.55 g/t Au and 19.50 g/t Ag across 7.5 meters. 

The historic Rottenstone Mine was in production from 1965-1969 and produced some of the highest magmatic nickel sulphide grades in Canadian mining history. It is theorized that the nickel production nearly 60 years ago cherry-picked the easy mineralization and left a potential motherlode in the ground. Fathom is looking to bring that nickel to surface.

At the same time, Fathom just received a new drill permit for Gochager Lake where it aims to further validate and add to an NI 43-101 non-compliant open pit resource consisting of 4.3 million tons at 0.295% Ni and 0.081% Cu.

Now add in Friesen Lake, where historic drilling yielded significant drillhole widths of ultramafic rock; up to 38.5 meters, with localized zones of mineralization yielding up to 565 ppm (parts per million) Ni, 540 ppm Cu, and 0.2 g/t Pd-Pt. A 1998 heli-borne biogeochemical survey which collected and analyzed representative ash samples from the tops of 11 Black Spruce trees within the Friesen Lake showing area returned anomalous Ni (up to 352ppm), Cu (up to 407ppm) and Pd (up to12 ppb) values.

This long-term outlook makes nickel a compelling commodity for investors with a future-focused perspective. While 2024 might see a pause in price growth, the groundwork is being laid for a sustained upward trajectory driven by the burgeoning electric vehicle revolution. As nickel demand surges alongside battery production, the coming years promise a bright future for this essential metal.

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Fathom Nickel Inc. (CSE: FNI) (OTCQB: FNICF) Full Corporate Write-Up: Click Here. 

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