Investors pinning hopes on a nickel comeback – by Barry FitzGerald (The Australian – March 27, 2015)

Talisman Mining (TLM)

It has got to be of some comfort to the band of ASX-listed nickel ­juniors that despite the price of the metal not going on with last year’s price rally, their market capitalisations have held up well.

Nickel got to $US21,000 a tonne last year on enthusiasm that Indonesia’s ban on the export of unprocessed ores was a big structural change that meant ­prices had to head higher. Prices for the steelmaking ingredient did for a while, but are now back at $US13,680 a tonne.

But again, the values of junior producers like Western Areas (WSA), Panoramic (PAN) and Mincor (MCR) have held up well, at least in the sense that they have not given back all of their gains achieved during last year’s price surge.

The fall in the dollar has helped. But the bigger reason seems to be that investors are betting that the nickel price is going to come storming back at some point. Macquarie’s equities desk estimates that the share ­prices of PAN and MCR appear to be factoring in a nickel price 50 per cent higher than the current price, and in the case of WSA, 27 per cent higher.

On the basis that the weight of money is rarely wrong on these sorts of things, the positioning to catch the upwards shift in nickel is clearly under way. Helping fuel that sentiment is the situation where Chinese stocks of Indonesian material accumulated ahead of the Indonesian ban are near exhausted, forcing its pig iron nickel producers to get their ­required nickel units from elsewhere.

And above all, the current price is not exactly an inducement price for new production, adding to the expectations that a supply deficit is not that far off.

All that has got the punters thinking about listed ASX nickel stocks, which although not yet in production, might be nicely placed to catch the nickel wave, if and when it comes. In that regard, it is Talisman Mining (TLM) that is getting most mentioned around the traps.

Earlier this year — as reported here — Talisman bought its ticket to the nickel ride through the $8 million acquisition of the Sinclair nickel project in Western Australia from Ivan Glasenberg’s Glencore.

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