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Co. On Way To Supplying Nickel, Cobalt to EV Market
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The Australian firm has several factors working in its favor but still needs to secure financing for its mining project, noted an Arrowhead report.

Alliance Nickel Ltd. (AXN:ASX) "is strategically well-positioned to meet the growing demand for nickel and cobalt sulfates of the booming electric vehicle market," purported Arrowhead analyst Sumit Wadhwa in a June 12 due diligence and valuation note.

Substantial Return on Investment

As such, Arrowhead has a fair share value range on this Australian mining explorer of AU$0.70–1.10, noted Wadhwa. Alliance's current share price is AU$0.094.

These figures imply a significant potential return for investors of 645-1,070%.

Strong Project, Offtake Agreements

Wadhwa presented the factors supporting his claim about Alliance being primed to capitalize on demand from the global electric vehicle battery space.

1) The company's flagship asset NiWest, a nickel-cobalt project in Western Australia, is one of the highest-grade undeveloped nickel laterite resources in the country. Alliance plans to commence early construction work by Q1/24, start production in H2/25, and reach nameplate capacity in 2026.

2) The NiWest project economics are favorable, Wadhwa wrote. According to a prefeasibility study updated in July 2022, the project's after-tax net present value discounted at 8% is AU$1.6 billion, and the internal rate of return is 19.9%. These projections are based on Measured and Indicated resources from only three of NiWest's seven deposits.

3) Significant upside at NiWest exists.

"There remains a significant opportunity to optimize the grade profile and increase the annual production/operating life of the NiWest project," Wadhwa wrote.

This would require incorporating the Inferred resources within the three deposits and the Measured, Indicated, and Inferred resources of the four other deposits, Wanbanna, Murrin North, Waite Kauri, and Mertondale. It also would take further drilling, which Alliance has started. In April, it launched an infill drill program at Mt. Kilkenny to upgrade the existing Inferred resource.

4) Alliance has two offtake agreements already in place. One, signed just last month, was with Stellantis, a leading player in the electric vehicle market, for 40% of supply of nickel and cobalt sulfates from NiWest for the first five years of production. Per this share subscription agreement, Stellantis is to pay Alliance AU$15 million (AU$15M). Stellantis already paid the first tranche of AU$12.7M and is expected to pay the second in Q3/23.

The second is a non-binding framework agreement for the future offtake of battery-grade nickel and cobalt sulfate and project financing with VinES. Vietnam-based VinES focuses on research, development, and manufacturing of battery cells and battery technologies.

Next Steps To Advance NiWest

Wadhwa pointed out what Alliance has yet to do to move NiWest to the production phase.

One hurdle to overcome, he noted, is "raising adequate funds for the project." As such, Alliance continues to pursue various options. It is continuing discussions with Australian banks and financial institutions and intends to divest its gold assets to generate some cash.

Also, the company is working on a definitive feasibility study and final engineering, on track for completion in Q4/23. Alliance has chosen Ausenco Engineers to perform the engineering work.

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Important Disclosures:

  1. Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
  2. The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

For additional disclosures, please click here.

Disclosures for Arrowhead Business and Investment Decisions, Alliance Nickle Ltd., June 12, 2023

Analyst Certifications I, Ayushi Saraswat, certify that all the views expressed in this research report accurately reflect my personal views about the subject security and the subject Company, based on the collection and analysis of public information and public Company disclosures. I, Sumit Wadhwa, certify that all the views expressed in this research report accurately reflect my personal views about the subject security and the subject Company, based on the collection and analysis of public information and public Company disclosures.

Important disclosures Arrowhead Business and Investment Decisions, LLC has received fees in 2022 and will receive further fees in 2023 from Alliance Nickel for researching and drafting this report and for a series of other services to Alliance Nickel, including distribution of this report and networking services. Neither Arrowhead BID nor any of its principals or employees own any long or short positions in Alliance Nickel. Arrowhead BID's principals intend to seek a mandate for investment banking services from Alliance Nickel in 2022 or beyond and intend to receive compensation for investment banking activities from Alliance Nickel in 2023 or beyond. Aside from certain reports published on a periodic basis, the large majority of reports are published by Arrowhead BID at irregular intervals as appropriate in the analyst’s judgment. Any opinions expressed in this report are statements of Arrowhead BID’s judgment to this date and are subject to change without notice. This report was prepared for general circulation and does not provide investment recommendations specific to individual investors. As such, any of the financial or other money-management instruments linked to the company and company valuation described in this report, hereafter referred to as “the securities”, may not be suitable for all investors. Investors must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors are advised to gather and consult multiple sources of information while preparing their investment decisions. Recipients of this report are strongly advised to read the Information on Arrowhead Methodology section of this report to understand if and how the Arrowhead Due Diligence and Arrowhead Fair Value Bracket integrate alongside the rest of their stream of information and within their decision-making process. Past performance of securities described directly or indirectly in this report should not be taken as an indication or guarantee of future results. The price, value of, and income from any of the financial securities described in this report may rise as well as fall and may be affected by simple and complex changes in economic, financial and political factors. Should a security described in this report be denominated in a currency other than the investor’s home currency, a change in exchange rates may adversely affect the price of, value of, or income derived from the security. This report is published solely for information purposes and is not to be considered in any case as an offer to buy any security, in any state. Other than disclosures relating to Arrowhead Business and Investment Decisions, LLC, the information herein is based on sources Arrowhead BID believes to be reliable but is not guaranteed by Arrowhead BID and does not purport to be a complete statement or summary of the available data. Arrowhead Business and Investment Decisions, LLC is not responsible for any loss, financial or other, directly or indirectly linked to any price movement or absence of price movement of the securities described in this report.

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