BY:

Nickel – The Essential & Forgotten Battery Metal

Tony DonaghyPrincipal Consultant – NickelNew World Metals ConferencePerth, WESTERN AUSTRALIADecember 2019

Introduction

Topics

• Sources of nickel:

• Key deposit types; Regional breakdown; Constraints/Risks.

• Economics of the nickel market:

• Historic production, demand, price.

• Present drivers of consumption.

• The changing market place:

• Electric Vehicles (EV’s).

• Sources of future supply?

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Sources of nickel

2018 Published Global Nickel Resources

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• 95 million tonnes contained nickel

• Not all economic

• 60% laterites

• 40% sulphides

Source: ESGS

What are Nickel Laterites?

• Laterites are the residual products of chemical weathering of rocks at the surface of the earth in tropical and sub-tropical humid conditions.

• Ni Laterites are the products of lateritisation of ultramafic rocks (olivine-rich) with a primary Ni content of 0.2-0.4% Ni.

• The lateritisation processes result in the concentration by factors of 3 to 30 times the Ni and Co contents of the parent rock.

• Well known distribution.

• Open pit mining, range of process routes depending on laterite type.

• Capital intensive with historically high capital risk.

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Nickel Laterite Types

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Source: Elias pers. comm.

Nickel Laterite Total Resources Tonnes vs Grade

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Source: USGS

Nickel Laterite Global Distribution

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Source: USGS

What are Nickel Sulphides?

• Hosted in mafic to ultramafic igneous rocks where the original magma is derived from melting of olivine in the Earth’s mantle.

• Can be broadly divided into two categories of host rock:

• Komatiite hosted in volcanic flows or subvolcanic feeders.

• Tholeiite hosted exclusively within intrusive complexes.

• Simple sulphide assemblage - Pyrrhotite - Fe(1-x)S, Pentlandite (Fe,Ni)9S8, Chalcopyrite – CuFeS2, ±PGE, Au, Ag.

• Good residual prospectivity for discovery globally.

• Open pit and underground mining, typical process route of flotation, smelting and refining.

• Lower capital intensity with lower capital risk.

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Nickel Sulphide Types

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Komatiite

Tholeiite

Source: Lesher pers. comm. (modified)

Nickel Sulphide Formation Environments

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Komatiite

Tholeiite

Source: Lesher pers. comm. (modified)

Nickel Sulphides Total Resources Tonnes vs Grade

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Nova 14 (2.28)

Source: Naldrett 2014 (modified)

2018 Published Global Nickel Production

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2018 Production 2.3 Mt Ni metal

Source: USGS

Economics of the nickel market

2018 Published Global Nickel Production Cost Curve

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LME Cash Bid December 10 2019 $5.93

Predominantly Laterite

Predominantly Sulphide

Source: S&P Global Market Intelligence

Nickel Price History

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Recent speculation and long positions on Indonesian nickel export ban.

LME Cash Bid December 10 2019 $5.93/lb.

Sustainable 2019-2020 ca $5.9-6.0/lb driven by demand forecasts.

Source: S&P Global Market Intelligence, Consensus Economics

Nickel Stockpile History

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Ton

ne

s

Long term drawdown based on increased demand.

Recent speculation and long positions on Indonesian nickel export ban.

Stockpiling by Chinese buyers.

Source: S&P Global Market Intelligence, Consensus Economics

2017 Nickel Consumption

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Stainless Steel dominated by Chinese industry.

Source: Natural Resources Canada

The changing market place

Electric Vehicle Nickel Consumption 2017

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Nickel is the dominant metal by weight in the majority of preferred Electric Vehicle (EV) Battery Cathode technologies.

Electric Vehicle Nickel Consumption On The Rise

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2017 2018 2020

Source: Tesla, Chevrolet

Nickel is the dominant metal by weight in the majority of preferred Electric Vehicle (EV) Battery Cathode technologies.

Electric Vehicle Nickel Consumption On The Rise

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Sales of EV’s expected to rise significantly over next 5-6 years.

90 millions EV’s by 2025.

Sales of 14 million EV’s per year by 2025

Source: CleanTEQ, Wood MacKenzie, BHP

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Electric Vehicle Nickel Consumption On The Rise

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Sales of EV’s expected to rise significantly over next 5-6 years.

Sales of 14 million EV’s per year by 2025 representing 14% of all vehicle sales

Source: CleanTEQ, Wood MacKenzie, BHP

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Electric Vehicle Nickel Consumption On The Rise

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Continuing the trends by 2035 EVs will be:

• 14% of the light vehicle stock

• 30% of annual sales.

A 14 per cent share in 2035 means total stock of 275 million EVs.

Source: BHP

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Electric Vehicle Nickel Consumption On The Rise

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Source: CleanTEQ, Wood MacKenzie

Demand area 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Plating 12 13 13 13 13 14 14 14 15 15

Catalysts 6 6 6 6 6 6 6 6 6 6

Batteries 47 60 78 100 132 154 179 210 247 293

Total 65 79 97 119 151 174 199 230 268 314kilotonnes contained nickel

Electric Vehicle Nickel Consumption On The Rise

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Source: Vale

By 2030, nickel consumption in EV’s could rival stainless steel

2018

Electric Vehicle Nickel Consumption On The Rise

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Source: Vale

By 2030, Class 1 nickel consumption in EV’s could outstrip supply

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Nickel Price Consensus Forecasts

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Significant upside to long-term sustainable base nickel price.

Pressure on Class 1 nickel supplies:

• Class 1 nickel and nickel sulphates could demand premium pricing above LME.

• End users direct partnering with suppliers to guarantee supply.

Sources of future supply?

Nickel Laterite and Class 1 Nickel

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Decreasing amenability/increasing cost to producing Class

1 nickel and nickel sulphate

Increasing capital intensity and capital

risk

Nickel Sulphides and Class 1 Nickel

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Nova 14 (2.28)

• Simple process route very amenable to producing Class 1 nickel and/or nickel sulphate.

• Aging existing mines.

• Low new mine discovery rate.

• Good residual potential for significant discovery.

• Requires significant exploration investment NOW to meet projected demand.

Thank You

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Principal Consultant –Nickel

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info@csaglobal.com

Tony.Donaghy@csaglobal.com

Tony Donaghy is an internationally recognised expert in the global search for nickel, copper, cobalt and platinum group elements (PGEs).

He is a skilled exploration geologist who is familiar with most geological environments and a broad variety of mineral commodities.

He has more than 25 years' experience covering all continents and all aspects of the industry.

Tony Donaghy

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