Ann: Sconi Off-take Update, page-231

First things first- let’s hope the faithful can hold the price above 3.0-3.5 cents here**

I think Buffett means business as in the market with all the different companies in it. Not one particular company. No single company sets prices. ( careful of idolising him too- he’s had information most don’t ever since he was quite young ).

The biggest issue was timing of metals prices.
In December the Koreans were getting ready for tax time & most likely finalising their game plan for this year.

Then they took a look at the following:
( see the 2 pictures above or wherever they are ).

It’s probably not a bad idea to stop comparing CAPEX for all Aussie juniors because they’re all going to pay pretty similar prices for equipment/labour/state taxes ( royalties ), etc.

Unless they don’t need a tailings dam or something like that which is a material difference to most.

Just look at their own projections.

Nickel was almost $1 below the projected cost of extraction. ( I know, I know- there are the credits but let’s keep it mega simple ).

Imagine the SK board room last December.
‘So- we can pay 3 times what the shares are worth right now & we may have to find an extra $1 of efficiencies per pound when the company itself says $5.73 is the best price they can get the nickel out of the ground for’.

I’m pretty sure we all know what we would have said in their shoes.

Something like ‘let’s wait and see. It costs us nothing either way & we may be able to negotiate better terms or at least a more SP relevant buy in on the shares- we might get them for 4cents ( or lower ), instead of 12.... after all they did agree to 12cents when their SP was 14cents.’

We all know that BOD put their best foot forward. If $5.73 is the best price they could come up with then it’s probably going to be a challenge to get it much lower than that.

Unless someone would like to argue that AUZ doesn’t know how to calculate their own costs?

If there are lower projected cost deposits out there then perhaps SK will take this time until September to try to get a piece of them but eventually time will run out. I really think this year is the last when the big players can have any hope of pushing any of the juniors around.

For the next 6mths at least we need peace between the US & China on trade or a war between some smaller states. That would force nickel higher.

Big peace, small war or more supply taken off the table ( for example like Katanga last year ).
Those are the only possible price driving shocks I see until next year when EV sales growth will become undeniable.