Tripling Down on our Nickel Bet with this Stock
Palisade Research January 29, 2018 Category: Research
We think 2018 is going to be a big year for gold and silver and other base metals.
But as we have highlighted in the past, the not-so-talked-about ‘battery metals’ are also setting up for a massive move upwards.
Things like:
Cobalt. . .
Lithium. . .
And especially nickel. . .
Because of the Eletric Vehicle Revolution taking hold around the world, there isn’t enough of these metals being mined to keep up with demand.
And that’s something we are amped up about. . .
Metals with booming demand paired with diminishing supplies.
That’s why when an opportunity pops up in this space - we immediately pounce.
In the past, we recommended two nickel companies that are poised to take full advantage of the higher prices.
First is Giga Metals Corporation (CVE:GIGA, FRA:BRR2, OTCMKTS:HNCKF).
Currently, 2.25 million tonnes of nickel is produced per year in the world.
However, only nickel sulphide deposits can produce the ‘Class 1 nickel’ that is suitable for batteries – and ‘Class 1 nickel’ represents only 50% of current nickel production.
Giga Metals owns the 2nd Largest undeveloped nickel-cobalt sulphide deposit in the world. The 100%-owned Turnagain Project contains a resource of 1.8 billion tonnes, which is based on less than 25% of the prospective geology. . .
This means there is significant exploration upside with minimal drilling required.
Turnagain has the potential to become the world's largest undeveloped nickel cobalt-sulphide deposit – and one of the largest cobalt producers outside of the Congo.
Second is Mustang Minerals Corp (CVE:MUM, FRA:NJF1, OTCMKTS:MSMGF).
It has the same narrative as Giga Metals Corp; a completely mispriced and forgotten asset of two near-surface open-pit deposits – Mayville (Cu-Ni-PGM) and Makwa (Ni-Cu-PGM-Co).
The projects have had C$40-50 million in exploration and development expenditures already put into them.
They even have a PEA (preliminary economic assessment) done that shows positive project economics.
There is considerable exploration upside that awaits future drilling. . .
In fact, the company just announced a geophysical program targeting high=grade Nickel Sulphide at the Makwa Property.
But. . .
There is one more company that has us very excited. . .
And that is Tartisan Resources (CNSX:TTC, FRA:8TA)
Tartisan Resources is a Canadian mineral exploration and development company focused on base and precious metals in Canada and Peru.
Recently, they gained a critical nickel and base metal property - The Kenbridge Deposit – in Ontario, Canada by acquiring Canadian Arrow Mines Limited.
The advanced stage Nickel-Copper-Cobalt ‘Kendridge Deposit’ has had almost $100 million put into it by companies such as Falconbridge, Blackstone Ventures, and Canadian Arrow.
It has excellent infrastructure in place and outstanding project economics.
Best of all – Tartisan Resources got it for a steal. . .
It only cost them 8 million shares.
At time of announcement, Tartisan was trading at 12 cents per share. This gave them an implied value just shy of $1 million for a project with over $100 million in past work and over $600 million in contained metal.
Tartisan plans to further drill the property, advancing it through feasibility, and update the already impressive 2008 PEA.
This acquisition alone gives Tartisan shareholders a great asset for battery metals.
But if we look deeper - there is even more hidden value.
Tartisan Resources owns 20% of Eloro Resources (TSX: ELO.V) and has a 2% NSR (net-smelter return) on their high potential ‘La Victoria’ property.
Why is this such a huge deal?
Because as I am writing this, Eloro Resources has a C$32 million Market Cap.
That gives the 20% stake that Tartisan Resources owns a C$6.4 million value. . .
Now, subtract that C$6.4 million from the current C$11.8 million market cap of Tartisan Resources, and that shows that the market is only valuing their recently acquired Kenbridge Deposit for only C$5.4 million.
This is where things get important
As the PEA chart shows above - Kenbridge Deposit has a 7.5% discounted NPV (net present value) worth an outstanding $253 million. . .
That means if you exclude the 20% they own from Eloro – and any future additional resources they will add – you get all of their Kenbridge nickel-copper-cobalt deposit for roughly 5 million Canadian dollars. . .
As value investors will note, that’s an incredible discount relative to their intrinsic value, even with economics calculated at higher nickel prices. . .
That’s why we’re bullish on Tartisan Resources.
Like Giga Metals and Mustang Minerals, they offer a thick margin of safety and own exciting assets for critical metals.
We expect the market to re-price all of them – Sooner rather than later.
Palisade Global Investments Limited holds shares of Giga, Mustang, and Tartisan. We receive either monetary or securities compensation for our services. We stand to benefit from any volume this write-up may generate. The information contained in such write-ups is not intended as individual investment advice and is not designed to meet your personal financial situation. Information contained in this report is obtained from sources we believe to be reliable, but its accuracy cannot be guaranteed. The opinions expressed in this report are those of Palisade Global Investments and are subject to change without notice. The information in this report may become outdated and there is no obligation to update any such information. Do your own due diligence.
