Monsters of Rock: Sunshine on a cloudy day for Nickel Industries and Boss gets busy

Nickel Industries singing in the rain as deluge fails to dampen investor spirits
Boss ready to ship uranium from South Australia
Arafura, WA1, MinRes and Bellevue among the gains

To the markets first today and materials stocks went all Scrooge McDuck, diving headfirst into a pool of green on the back of some bullish commodity moves overnight.

Materials stocks were up 2.3%, led by the big ASX 20 players, with iron ore surging to US$113.50/t and copper hitting US$9868/t on the hope of rate cuts.

That boosted gold, with property support in China also on the dashboard for metals investors.

“A stabilising macroeconomic backdrop in China has provided much-needed support to the market (for iron ore),” ANZ’s Adam Boyton, Daniel Hynes and Brian Martin said in a note.

“The property market challenges have been easing but are not over.

“The upcoming Third Plenum meeting over 15-18 July will be crucial as more stimulus is likely to be announced to bolster the sector.

“Supply-demand fundamentals have not changed much, exports are still rising from Brazil and Australia. China’s port inventories are high at 148mt.”

ANZ said copper stocks were also declining in China, adding to the bullish sentiment, despite falling long bets by traders, while nickel was up slightly as the LME’s Russian nickel ban saw it revoke deliveries from October for metal from a Norilsk plant in neighbouring Finland.

Iron ore and lithium miner Mineral Resources (ASX:MIN) led the large cap gains, up nearly 5%, while Evolution Mining (ASX:EVN) , Fortescue (ASX:FMG), Lynas (ASX:LYC) and Rio Tinto (ASX:RIO) also ran hot.

Nickel Industries rolls with the punches

A few quick hits now for your arvo reading. Rain dampened Nickel Industries (ASX:NIC) in the June quarter, but the miner still saw EBITDA up from US$70.3m in March to US$75-80m in the most recent three month period, well above the US$55.9m generated at the same time in 2023.

Its shares rose tentatively despite that falling shy of planned earnings as the company ramps up to full flight across its now four RKEF plants in Indonesia.

NIC was forced to process lower grade stocks due to wet weather that pummelled haulage routes from its Hengjaya mine and third party operations around Sulawesi.

At 1373mm, rain in the June 2024 quarter at Hengjaya ran 48% higher than the same period in 2023 and 91% up on the same period in 2022.

At the same time, $3.5 billion capped NIC has put itself on the path to acquiring all of its planned 55% stake in the Excelsior HPAL plant being built by its major investor Shanghai Decent – an arm of Chinese stainless steel giant Tsingshan.

It spent US$379.5m for a further 16.5% to take the Aussie company’s stake to 44%, with another US$253m to spend to complete the US$1.265b transaction by October 2025, though construction is being expedited to meet customer timelines.

FIRB approval has also been granted for NIC’s second largest shareholder PT DTN, a subsidiary of Indonesian conglomerate PT United Tractors, to take its stake beyond 20%, enabling the completion of a US$100m share buyback.

“Despite significantly higher than average rainfall across Indonesia for the June quarter, the Company’s mine and processing operations have still performed strongly, once again highlighting the robustness of our operations,” NIC MD Justin Werner said.

“Historically from August till the end of the year is the driest period and the company is placing a significant amount of focus on delivering a strong second half to the year following challenges with the re-issuance of Rencana Kerja dan Anggaaran Biaya (RKAB) licences in the March quarter and higher than average rainfall in the June quarter.

“On the corporate front we are very pleased to announce the expected expedited commissioning of the ENC Project ahead of the contracted October 2025 date. This will potentially bring forward cashflows from the operations which will have an expected capacity of 72,000 tonnes of nickel equivalent per annum.”

That latter point is a bullish sign for nickel after months of concerns about low prices and battery demand for nickel.

Boss getting busy

Boss Energy (ASX:BOE) shares fell over 2% despite announcing it was in line to make its first shipment from the refired Honeymoon mine in South Australia.

The company has produced 57,364lb of yellowcake at Honeymoon so far, with BOE planning to ramp up to 850,000lb in FY25, 1.63Mlb in FY26 and its 2.45Mlbpa nameplate beyond that.

The key piece there is the construction of additional ion exchange columns, with one operational and two more expected to be constructed in the September and December quarters.

Honeymoon will eventually host six columns at its processing plant. The mine was last in operation in 2013 as uranium prices nosedived, but also suffered from high costs and processing issues.

Boss hopes a change in processing method can help improve the performance of the mine as it ramps up to full flight. Historic wellfield performance has been around 53mg/L, with a conservative 48mg/L modelled in a feasibility study.

So far wellfields have delivered actual tenors of 80-100mg/L.

In other notable large and mid cap mining news, Arafura Rare Earths (ASX:ARU) rose 11% on news the German export credit agency Euler Hermes had conditionally approved up to US$115m of untied loan guarantees for its Nolans project in the Northern Territory.

The deal will see NdPr sold from the mine to German based companies including wind turbine supplier Siemens Gamesa, coming hot on the heels of finance deals with the Australian Government and Korea’s export credit agency.

In the world of gold, West African Resources (ASX:WAF) fell 13.5% after announcing a discounted $150m capital raise and Westgold Resources (ASX:WGX) rose over 3% after declaring a second dividend for FY24 of 1.25c a share fully franked.

That $5.9m return will bring total divvies for FY24 to $10.6m.