July 15, 2015

NIKL’s 1H15 shipment volume up but revenues fall

In a disclosure to the Exchange, Nickel Asia Corp (NIKL) announced shipment volume of 9.68m WMT in 1H15 or 25% higher than the 7.73m WMT shipped in the same period last year. Revenues for 1H15 however, dropped 16.4% to P7.46b despite the increase in shipment as prices in 2Q15 were significantly lower than those in the same period last year.

1H15 shipments of 6.07m WMT of ore to Japanese and Chinese customers were sold at an average just US$23.10/WMT, 44% lower than the US41.42/WMT registered in the same period last year. Low grade limonite ore delivered to the HPAL processing plants were also lower at US$6.22/lb of payable nickel versus the US$7.57/lb realized in the same period last year. Management remains optimistic about a rebound in nickel prices towards the latter part of 2015.

Our take: NIKL’s 1H15 revenues largely track our full-year forecast and account for 38% of our estimates as we factored in some improvement in nickel prices towards the latter part of the year. Recent developments such as the dramatic fall in China’s stock market, however, have negatively affected commodity prices which have caused nickel prices to fall further than we initially estimated. Should the weakness prices persist, we could possibly revisit our 2015 forecasts again moving forward. – WealthSec