Metals One (MET1) has released the results of a preliminary economic assessment for its Black Schist nickel project in Finland.
The PEA was undertaken by Wardell Armstrong International, and is leveraged to rising long-term nickel price assumptions.
On this basis, and according to the Wardell numbers, which use a discount rate of 5%, the net present value of Rautavaara deposit on Black Schist is US$188 million.
In addition, the net present value of the Paltamo deposit, also known as P5, is U$144 million.
Wardells considers the discount rate justified on the basis of Finland’s attractiveness as a mining jurisdiction. It’s worth noting too, that negligible amounts of nickel are currently produced in Europe.
Further upside may exist as the company adds resources to the 57.1 million tonnes modelled in the PEA.
"The PEA demonstrates that although it was undertaken at a time of weak nickel prices and inflated input costs, the Project is highly leveraged to rising commodity prices,” said Jonathan Owen, chief executive of Metals One.
“Considering demand for battery-grade nickel is forecast to triple by 2030 and that producing the metal domestically within the EU becomes an ever more critical goal, we are evidently sitting on valuable assets with compelling leverage to a rising nickel price. For now, however, capital availability for nickel projects remains tough.”
He added:
“Our next move is to apply to the European Commission for designation of the Project as "Strategic", as defined by the European Critical Raw Materials Act, within the first quarter of 2025, before assessing the future work programme."
To take it on to the next steps, Metals One also proposes to raise up to £5 million via a combination of convertible loan, equity placing and retail offer.
View from Vox
Weak nickel prices have kept the pressure on Metals One, but at least now investors have some idea of what the Black Schist project looks like under various scenarios. How long Chinese-backed Indonesian nickel production can sustain the current glut is a moot question, and when the current oversupply does begin to ease, it seems reasonable to assume a corresponding uptick in the price. Whether that will be 20%, as the Wardell Armstrong modelling assumes, or more remains to be seen.