Wed, Apr 8, 2009

Featured, Nickel Articles

By Leia Michele Toovey- Exclusive to Nickel Investing NewsAt last week’s G20 summit, world leaders gathered and pledged their support to take bold steps to lift the global economy. The summit’s host- UK Prime Minister Gordon Brown claimed the meeting marked the emergence of “A New World Order.” Together the leaders unveiled a $1,100 bn package aimed to tackle the global down-turn head on.

The presented stimulus package bolstered confidence, and sent equity and commodity markets on a rally. LME base metals posted gains across the board, with nickel leading the way, up 12.7 per cent. The impetus was a direct reflection of sentiment, but lacked a change in underlying supply-demand fundamentals. The sentiment adjustment also induced a short-covering rally, partially reversing downside gained when traders sold their positions during the closing months of 2008. This across-the-board short-covering phenomenon is a classic symptom of a bear market rally. In order for the bear market rally to give way to a bull market, we need a consistent stretch of market gains According to state owned nonferrous metals information provider Beijing Antaike Development, China’s nickel consumption is expected to fall by 6.25 per cent year on year in 2009 to 300,000 tonnes, from 320,000 tonnes in 2008 as domestic demand slumps.

An Antaike nickel analyst said that even though the government’s recently announced CNY 4 trillion stimulus package to boost the economy would raise demand for nickel, it would not have any immediate positive impact on domestic nickel demand. Antaike forecasts London Metal Exchange spot nickel prices to move in a range of US $10,000 to US $15,000 per tonne in 2009 as compared with an average LME nickel price of US$ 21,104 per tonne in 2008. Meanwhile, China’s domestic nickel prices are expected to hover around CNY 100,000 per tonne in 2009, compared with an average domestic nickel price of CNY 176,000 per tonne in 2008. China produced 35,398 tonnes of refined nickel during the first two months of 2009, up by 52 per cent year on year from the corresponding period in 2008.

Company News

Norilsk Nickel’s deputy chief executive officer Oleg Pivovarchuk has claimed the company will consider an offer from Australian nickel miner Poseidon Nickel. In March, Poseidon said it was in “confidential discussions” with Norilsk Nickel to acquire the Cawse nickel operation in Western Australia. Russian nickel miner Norilsk put the laterite mine on care and maintenance last year, citing low nickel prices. Cawse is estimated to be worth about $50 million and produced about 8,500 tonnes in 2008. Pivovarchuk said the Australian assets were hit particularly hard by the drop in nickel prices, which fell 80 per cent at the end of 2008. The cost of production ranged between $12,000 a tonne and $20,000 a tonne at the Australian operations, and prices on the London Metal Exchange are currently trading around $10,600 a tonne, having fallen to as low as $8,850 a tonne in October.

Mirabela Nickel Ltd. has announced the signing of a credit agreement with Barclays Bank plc, Credit Suisse International, WestLB AG, Caterpillar Financial Services Corporation and Bayerische Hypo-und Vereinsbank AG. The lenders have given Mirabela, a non-revolving term loan in the aggregate principal amount of US$190 million. On March 19, 2009, the company completed a public offering of 120 million subscription receipts at a price of C$1.00 per subscription receipt for aggregate gross proceeds to the company of C$120 million. The proceeds of the offering were placed in escrow pending satisfaction of a number of release conditions, including execution of the Amended Senior Loan Agreement. Net proceeds of the offering would be released from escrow to the company and all subscription receipts would automatically convert into ordinary shares of the company, without any further action on the part of the holders. The company intends to use the net proceeds of the offering, the concurrent private placement and, once available, the senior loan, to fund the completion of construction of the company’s Santa Rita project in Brazil.