Nickel 28 Capital Corp. (TSXV: NKL) is an innovative battery metals investment vehicle with a focus on metal streaming and royalty agreements. They focus on exposure to metals integral to key technologies of the electric vehicle and energy storage markets. Nickel 28 is led by an experienced team of mining executives and financial professionals under Nickel 28’s Chairman, Anthony Milewski, with a track record of value creation in the natural resources sector.
One of the company’s main assets is its 8.56% interest in the Ramu Nickel Cobalt Mining Operation, located near Madang on the north coast of Papua New Guinea and operated by the Metallurgical Corporation of China. The company’s interest in Ramu increases to 11.3% following repayment of Highlands’ attributable Ramu construction and development loans. Nickel 28 recently announced the second quarter results of the Ramu project. Production at the Ramu Nickel Mine in Papua New Guinea was consistent in the second quarter of 2022, with a production of 8,128 tonnes of contained nickel and 695 tonnes of contained cobalt during the quarter. Nickel sales were also consistent in the second quarter, with 6,624 tonnes of contained nickel sold.
The mine is currently generating substantial free cash flow. The company has repaid all of its operational debt and is now receiving cash flow distributions from the project. Nickel 28 has significant leverage to Nickel and Cobalt prices, which should continue to support strong cash flow generation from the project.
The second quarter looked extremely promising as sales improved due to increased demand for lithium-ion batteries. However, the continued conflict in Ukraine, the continued pandemic’s effects, and the suspension of nickel trading on the LME in March, were significant challenges. Ramu has been able to successfully navigate through these challenges due to the consistent and stable production at the company. This level of production has allowed Ramu to maintain a position of strength in the nickel market despite the challenges that have arisen.
In addition to their main project, Nickel 28 also has a number of royalties. Streams and royalties have some key advantages as commodity investment vehicles. They provide exposure to the resource’s underlying earnings and dividends rather than capital costs. This strategy means that they offer investors the potential to participate in both resource growth and production growth. In addition, streams and royalties avoid direct exposure to the many risks associated with commodity production, such as increasing capital, operating, and environmental costs. As a result, they can provide a more stable and predictable return profile for investors.
These royalties are likely to pay off for Nickel 28. Recently, they announced an update on their 2.0% Net Smelter Return royalty from Giga Metal’s Turnagain Nickel/Cobalt deposit. This deposit is a world-class nickel-cobalt deposit, and metallurgical test work indicates that a clean concentrate grading 18% nickel and 1% cobalt is achievable using proven technology.
On August 15, 2022, Nickel 28 announced the formation of a joint venture for Giga with Mitsubishi Corporation. This joint venture will investigate the Turnagain Nickel Deposit in British Columbia, Canada, for the potential of nickel and cobalt. Mitsubishi has a long history of investing in high-quality mining projects all over the world. The backing of a massive corporation like Mitsubishi in a joint venture is good news for both Giga and Nickel 28. If the joint venture successfully develops the deposit, it could provide a significant source of battery metals for anticipated electric vehicle growth over the next decade.
The formation of the joint venture is just the first step in what is sure to be a long and complex process. However, it is an important step that increases the chances of success for all involved. Nickel 28 is in a solid position to continue to benefit from both the Turnagain and Ramu projects.