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FPX Nickel Corp has had a Bottom-Fish Spec Value rating since 2017 while the junior worked on over-coming the limitations embedded in the PEA Cliffs delivered in March 2013 for a 114,000 tpd open-pit nickel mine at Decar which required a $9/lb plus nickel price to be viable. Most of this work has been completed and 2020 promises to be a relaunch of the Decar nickel story with an updated PEA expected in September 2020. FPX was introduced to Discovery watch in November 2016 as a different type of discovery in the sense that the Decar deposit, recognized in 2009, is unusual in having a very low 0.12% nickel grade as defined by a Davis Tube assay which only measures nickel recoverable through crushing and magnetic separation. This is different from a fire assay which will yield a similar grade for almost every ultramafic body that is economically worthless because it reflects nickel trapped in an olivine lattice. The Decar nickel is different because it occurs as awaruite, a nickel-iron alloy that is in effect natural stainless steel. The result is a very homogenous 1 billion tonne deposit that can be large scale open pit mined for 40 years without any sulphide related acid drainage and which, thanks to the magnesium content that ends in the tailings, could operate as a carbon sink which could bring Decar close to the holy grail of a carbon neutral mine. The key changes achieved by FPX management headed by Peter Bradshaw and Martin Turenne since buying back 100% ownership from Cliffs in 2015 are 1) replacing gravity separation with a flotation stage that generates a concentrate with 65% nickel that can be fed directly into stainless steel mills, delineation of the SE Baptiste zone that allows front-loading the ore schedule with higher grade ore, and preliminary studies that indicate that the concentrate can be converted directly into nickel sulphate, the form required by the EV battery market. FPX is unusual in that it has been funded by insiders and close associates through private placements that did not include warrants, a sign of strong internal belief that Decar is a winner. A key question the PEA will answer is the cost structure of Decar using the new flowsheet, which will make it easier to assess the potential economic value of developing Decar, expected to have a CapEx of $2 billion or more. The wild card is the future price of nickel which during the past decade has suffered from a glut of low grade laterite ore mined in Indonesia and the Phillipines and shipped as whole rock to Chinise blast furnaces where it is converted into nickel-pig-iron, a feedstock for lower quality stainless steel that meets China's standards. Indonesia no longer allows direct shipping of ore, and the Philippines is rapidly depleting the laterite resources suitable for this NPI market. The FPX PEA will show what nickel price is needed to achieve an NPV at least 50% of CapEx. Given that it will take another $40-$50 million to push Decar through feasibility to a permitted production decision, the speculative question is who might pay what percentage of the NPV at what stage for the privilege of investing another $2 billion to develop Decar as a 40 year mine in a secure jurisdiction that threatens little variation during the life of the mine. A decade ago the FPX team scoured the world in search of similar deposits, but concluded that Decar is pretty much unique. (Jul 22, 2020)
Disclosure: JK owns FPX Nickel & Scandium Intl; FPX Nickel is a Good Spec Value rated Favorite, Scandium Intl is a Bottom-Fish Spec Value rated Favorite; Golden Goliath is Bottom-Fish Spec Value rated.