January 15, 2014

Nickel Asia posts 19% YoY hike in volumesales

In a disclosure to the Exchange, Nickel Asia Corp (NIKL, Not Rated) said it has delivered 14m wet metric tonnes (WMT) in 2013, up 19% from 11.7m WMT sold and delivered in 2012. Despite the increase in volume shipments, the value of the shipments fell by 7% due to the lower realized LME nickel prices in 2013.

The realized LME nickel price applicable to 5.2 million WMT of ore shipped in 2013 was at an average of $6.91/pound against $8.10/lb in 2012. The balance of shipments which consists of low- to medium-grade ore was sold at an average of $20.03/WMT in 2013 compared to $24.40/WMT in 2012.

Our Take:Market estimates put NIKL’s valuations at around 11x 2014E but these assume conservative nickel prices (US$6.50/pound) and do not take into account any upside on volume sales arising from the raw nickel export ban that Indonesia has implemented.

We also take note that Sumitomo Metal Mining Co Ltd, Japan’s biggest nickel smelter and a partner of NIKL, is reportedly looking to import more of its ore requirements from the Philippines and New Caledonia in light of the ore export ban by Indonesia(from where it secures nearly half of its annual ferro-nickel mineral requirements).– WealthSec