Welcome back everyone and what a roller coaster it has been in the nickel market,
over the last few weeks. The situation may seem to have calmed down at the London Metal Exchange
with control measures being put in place, but the nickel market tumult continues, as with many other
commodities, nickel has become a victim of the supply concerns brought on by the Russia-Ukraine
war. And even Tesla’s CEO Elon Musk has said nickel is the metal that he worries most about.
And so with Russia being the biggest producer with 16 per cent of the world’s high-grade nickel,
there are concerns that supplies could be disrupted by western sanctions on Moscow,
which provides other opportunities and so there is a lot to get excited about the future of Nickel.
And so in this video, I briefly share with you what drove this spike
and also details of one top nickel penny stock for your watchlist, which is well positioned to
benefit from the Russian supplier gap, given their high purity grade nickel.
This scenario could be the perfect setup for North American explorers … And so this junior
nickel miner which is looking to capitalize on the supply squeeze and rising prices that have been
disrupting exchanges right now, is certainly one you wouldn’t want to snooze on given the outlook.
And please do me a favour to drop a like on this video to spread its reach
and hit the bell so you never miss out on any of these gems from the channel..
Also leave me a comment below on what nickel stocks you’re current holding or are watching.
So that said let’s get straight into and see what happened.
So the surge in Nickel prices came as Xiang Guangda, the billionaire founder of world’s
biggest producer of nickel and stainless steel, Tsingshan Holding Group, was hit by margin calls
and tried to close a wrong-way bet that nickel prices would fall by purchasing London Metal
Exchange(LME) contracts. And for the benefit of anyone new to this term, margin calls are
requests for extra cash to cover losses on futures or ones positions across the market.
The billionaire also known as the Big Shot, has for months held a large short position on the LME
through his company as over several months, the tycoon had amassed a huge bet that the price of
nickel would fall. Tsingshan actually started to amass its short position at the back end of 2021,
when prices started to pick up because of demand from carmakers. But when the market moved sharply
the other way following the invasion of Ukraine, he was left exposed to losses of potentially
billions of dollars. And also compounded by the fact that he was under growing pressure from his
brokers for extra cash to meet margin calls on those positions, Xiang was forced to close some
of his position by purchasing LME contracts. But his buying only served to further push up prices
which more than doubled, topping $100,000 per metric ton for the first time on record, leaving
Tsingshan facing billions of dollars in potential losses and the exchange was finally forced to act.
Yet even as Xiang is sitting on huge paper losses, it doesn’t seem like he is about to give up on his
bet as he has secured credit promises from Chinese and western banks to meet further
demands for cash from his brokers and may receive support from Beijing to close his short position.
The LME, which referred to the events as “unprecedented,” then announced the suspension
of trading in all nickel contracts, and canceled all 5,000 nickel trades executed on the day,
worth nearly $4bn and wiping out about $1.3bn of profit and loss on the deals. And as you can
imagine, this caused a lot of unease as not only did the LME fail to manage the risks,
but it also picked a side when it should have been neutral.
They actually stated that “One of their key responsibilities is to serve the physical
traders,” “If they allowed the trades to stand, they would have to say that the price of nickel
is $80,000-$90,000 and that would not seem rational to the physical market..” CNBC also said
this regarding LME actions. Really interesting stuff. It should also be known that the owners
of LME are Hong Kong Exchanges and Clearing Ltd so clearly some common interests there.
Tsingshan has sinced reached a deal with its bank including JPMorgan Chase and Standard Chartered
who have agreed not to close out Tsingshan’s position or make further margin calls.
The standstill agreement will give the two sides time to hammer out a deal on a new secured
credit facility that they can use for their “nickel margin and settlement requirements”.
Nickel is currently sitting at $35,000 per tonne but still up 117% on the year.
So some uncertain times which creates equally fantastic opportunities
and one way to play the Nickel bull run is via this top nickel penny stock, Fly Nickel Mining
Inc (TSXV:FLYN) which we recently called at 63 Canadian cents per share but it is now sitting at
55cents with a market cap of $33m. As mentioned in our previous video on Fly Nickel, it is a newbie
to the markets and having seen an explosion and more than doubling its share price but it has
steadily been giving away those gains so much that it is now sitting up 37.5% on the month.
As we know the ev opportunity is mostly long term and so the beauty with plays like this
is to appreciate their business outlook and if it works for you you get in a the price which you
like, as I personally loaded up on this one once it had decent pull back hitting 50cents.
So good opportunity to cost average in.. They also applied for their shares to be traded on the OTCQB
which remains subject to the approval but granting this will increase their liquidity and
institutional ownership. And if you’re looking for a platform where you can trade Canadian and OTC,
you want to check out IBKR Platform from the link in the top pinned comment.
Flying Nickel Mining Corp. is a premier nickel sulphide mining and exploration company,
advancing its 100% owned Minago nickel project in the Thompson nickel belt in Manitoba, Canada.
Their Minago nickel sulphide project has outstanding level of nickel purity
which is sits at 0.74% grade which is high purity for their open pit mining.
Their strong focus on the environment means that the Minago project could potentially
have the world’s lowest CO2 emission per pound nickel produced. The Manitoba hydroelectric
power (is only 1km away from Minago) having 0.4% of CO2 emission intensity,
compared to other power sources used to mine and process nickel elsewhere in the world,
which is significantly lower than other regions.
And looking ahead for what could drive their share price even further in 2022, they plan to complete
their feasibility studies, commence dialogue’s and agreements with commercial partners.
And when you look at their roadmap to commercialise by 2026
which is just four years away, you begin to imagine how aggressive this timeline is,
given other sector peers are looking at a 2029 timeline for commercialisation.
Their Minago project is one of the few open-pit optimized
nickel sulphide projects in North America, with an excellent nickel grade of 0.74%
that is a pure nickel play. Minago is in the Thompson nickel belt in Manitoba, North
America’s second largest historic nickel camp with excellent infrastructure. So the potential
future Minago operation could possibly have one of the lowest carbon footprints in the world
as the Province of Manitoba is 97% hydro-powered, producing concentrate for Class 1 nickel products
that are an ideal fit for automakers’ green EV initiative.” Some brilliant stuff here.
So some very very interesting and mindblowing prospects ahead for this penny nickel penny stock
but only consider getting in if the price is right for you and if you fully understand the risks.
This video is not financial advice, a buy or a sell recommendation, but is meant to bring some
new and exciting penny stocks to your attention for you to do your own research.. As always I
would love to hear from you, so please let me know your thoughts on these top nickel penny stocks in
the comments section below and what other nickel penny stocks are catching your eyes lately.
And If you are new to my channel, please ensure to subscribe and hit the bell so you are notified
when I upload new videos. If you would like to see more videos like this, please check out this
video right here or this playlist right here to watch equally insightful content from the channel.
Thank you so much for being here and I look forward to have you in my next video. Thank you