A rising commodity price, promising new geophysical data and fresh hopes for a Native Title agreement have coincided to inject confidence that the highly prospective nickel targets in PepinNini Lithium Ltd.'s Musgrave Joint Venture with Rio Tinto in South Australia may finally be tested after a lengthy wait.
Adelaide, Australia-based junior PepinNini's subsidiary NiCul Minerals Ltd. holds two granted leases and eight applications over a total of 14,003 square kilometers in the Musgrave Province with Rio Tinto.
NiCul is the operator on behalf of the project participants for the Pink Slipper Exploration License Applications, or ELAs, covering 615 square kilometers, as former PepinNini Chairman and Managing Director Norman Kennedy, who died in 2013, negotiated the agreement with Rio Tinto in 2009.
Acutely aware of the cultural sensitivities of the traditional owners — the Anangu Pitjantjatjara Yankunytjatjara people — PepinNini re-drew the ELA boundaries in 2015 in conjunction with Rio Tinto.
Those discussions are part of the company's attempt to undertake community engagement seeking the consent and granting of ELAs and heritage clearances for future exploration programs.
PepinNini also showed in an Oct. 4 ASX statement new geological data from an electromagnetic survey which the Commonwealth Scientific and Industrial Research Organisation, or CSIRO, completed over a Pink Slipper geophysical target in March.
PepinNini Managing Director Rebecca Holland-Kennedy, who floated the company on the ASX with her late husband Norman in 2005, said in an interview that CSIRO's new data indicated the anomaly is "close to surface and significant."
While the prospect has "been around for a while as an interesting area" as it has been in application since the 1980s, Holland-Kennedy said things now appear to be "coming together," with the potential for land access to be granted, along with the new geophysical data and rising nickel prices.
She also said in PepinNini's 2019 annual report issued Oct. 9 that the JV is also targeting copper, cobalt and six platinum group metals, with a number of targets defined from an aerial electromagnetic survey in fiscal 2017.
While no exploration activity has been undertaken on the Musgrave JV in the past year, Holland-Kennedy said the company is "eager to test" the targets.
PepinNini's Oct. 4 statement said there is "renewed interest" in nickel, citing Mitsui Bussan Commodities data suggesting nickel has posted its best quarterly performance since 2010, rising to US$17,120 per tonne by the time the release came out.
S&P Global Market Intelligence data, displayed below, suggests strong performances were last observed in the second and third quarters of 2014.


Price drivers
Still, Holland-Kennedy said that given Indonesia's nickel export ban was brought forward by two years as the country seeks to boost downstream value-adding in-country, it will be some time before there will be any correction in nickel prices, particularly given LME data of late suggests demand is rising.
Bloomberg reported Oct. 8 that sources said Chinese steel giant Tsingshan Holding Group Co. Ltd. securing supplies ahead of Indonesia's export ban drove a record draw-down in LME nickel inventories for the week ending Oct. 4.
Holland-Kennedy said Mitsui posits that new nickel projects coming online would need a nickel price of between US$20,000/tonne and US$22,000/tonne. LME nickel closed trading at US$17,740/tonne Oct. 9.
She also cited reports from Reuters that electric car maker Tesla would continue to focus more on nickel as part of CEO Elon Musk's plans to use less cobalt in cathodes, also adding further buzz to hopes for nickel's growth.
Organizers of the Oct. 15 Australian Nickel Conference in Perth, Australia, noted in an Oct. 10 statement that the country's leading nickel plays are now seeing investor briefings dominated by questions more about expansions, as opposed to recent years where "the focus was simply on survival."
"The metal's firmer foothold has attracted more serious assessments of the sector’s fundamentals rather than the previous quick profit taking scenarios," the organizers said.
While about 70% of global nickel output is used in stainless steel, the less available nickel sulfate is essential to emerging electric vehicle batteries as it is stable under high temperatures and resists over-charging, but battery materials buyers generally pay a premium.
UBS expects batteries in electric vehicles to account for 12% of global nickel demand by 2023, up from 3% in 2018.
Although the electric vehicle segment of demand is currently only 6%, the conference's organizers say there is consensus among nickel analysts that it is set to rise above 20% market share over the next decade along with a nickel floor price more in the range of between US$7 per pound to US$8/lb.
