What is happening today? At another forum one person wondered why no stocks were traded (Saturday), and most people on this forum behave as you are having a new year’s eve party already.
I have to admit I used to work in the nickel business when the nickel price hovered between 2 and 3 $/pound. Most of present top management lived and worked through the same times and they are pretty conservative in their future price predictions. Yes, there is potentially significant upside to NOT's share price but there are limits. Here is an example of why.
If NOT processes let us say 5 million tonnes of ore annually with 1.75% Ni and 0.9% Cu and with an overall recovery of 80% they will produce 70,000 tonnes of Ni and 36,000 tonnes of copper, plus a few other valuables. At this annual tonnage NOT needs at least 100 million tonnes(20 years) reserves in my opinion in order to commit the capital required. If they can prove an even higher reserve they can increse annual production, and the relative capital costs will decrease.
The 'futuristic' annual cash operating profit used by a potential takeover organization could be anywhere between 200 and 500 million $ depending on assumptions made to future costs and prices. This does not include financing costs and other costs.
With this annual tonnage of Ni and Cu production, the total capital costs should have an upper limit of 3 to 5 billion $ in order to be economic. This capital cost involves everything, take over of present players(all?), mine and mill development costs as well as infrastructure costs. The development and infrastructure costs will be very high, definitely significantly above a billion, and it will take a long time. I am not giving any actual estimate since that is beyond me. On a positive note, as suggested by other posters, the governments may support the infrastructure developments.
The above numbers are just based on my personal estimates and hypothetical futuristic numbers. Make sure you do your own DD before you make any investment decision.
