Why nickel prices are in the ‘Goldilocks’ zone’

Despite the recent fall in nickel prices, FPX Nickel CEO Martin Turenne said mines and projects still work.

On Tuesday Turenne spoke to Kitco.

FPX Nickel (TSX-V: FPX) is a Vancouver-based junior nickel mining company advancing the Baptiste Nickel project at the Decar Nickel District in central British Columbia.

In September the company plans to release a feasibility study.

Mineralization at the project is awaruite nickel, which the company claims has advantages over sulphide or laterite deposits.

“It is a novel…type of nickel deposit, but one we think that can be very disruptive to global nickel supply,” said Turenne. “We’re the first company to have ever discovered an economic deposit.”

Turenne said the ore can be more simply processed and mineral processing operations would be more easily vertically integrated. To turn any project into a mine, Turenne said size is important.

“What does it take to move the needle for a major mining company to want to acquire you?” asked Turenne. “Whether it’s copper, zinc, or nickel, the criteria tend to be the same: scale. [Miners] need something that is going to move the needle from a revenue and a free cash-flow generation standpoint. This operation would produce over 100 million pounds of nickel per annum at a billion dollars per year top line.”

Nickel prices have dipped by about a quarter this year. Indonesian smelters have increased output tipping the market into a surplus. The metal is currently at $10.31 a pound. The metal hit a low in May of $9.20 a pound.

Turenne said the prices are still good.

“[That’s] actually a pretty robust price,” said Turenne. “It’s still one that supports a wide and expanding use of nickel. Nickel in the $9 to $12 a pound range is sort of a Goldilocks’ zone where it doesn’t have any dampening impact from a demand standpoint but for operating mines…they should be highly profitable.”

0:20 – Developments over the past six months
1:30 – Demonstration plant with federal government
3:00 – Nickel mineralization at Baptiste Nickel project
4:15 – Benchmarks
6:00 – Being a miner and working in B.C.
10:00 – Nickel M&A
11:40 – Soft nickel prices
12:35 – Developments at CO2Lock

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