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Ramp Metals: Battery Metals Exploration Company Focused on Mining Assets in Saskatchewan
Ramp Metals (TSXV:RAMP) specializes in battery and base metals, particularly nickel and lithium with three properties, two situated in Northern Saskatchewan, Canada, and one in Nevada, United States. The company's Rottenstone SW Claims is situated along a geological structure that historically yielded the highest-grade nickel and platinum group elements (PGE) in Canada. Rottenstone exhibits similarities to the Nova-Bollinger nickel-copper mine in Western Australia, which was discovered by Sirius Resources and ultimately sold to IGO Limited for AU$1.8 billion. The Nova-Bollinger mine had an estimated resource of 13.1 million tons (Mt) grading 2 percent nickel, 0.8 percent copper, and 0.07 percent cobalt.
Ramp Metals' fully permitted drill program in 2024 consists of four drilling locations with eight holes. The current drill program is focused on testing two of these targets. The first target is positioned at the anomaly within the center of the claims and falls within the "Rottenstone Eye" structure. The second target is an anomaly located outside the eye structure, approximately 3 kilometers east-southeast from the first location. To date, Ramp has successfully drilled four holes for a total of 1,180 meters.
The striking similarity between Rottenstone and Nova-Bollinger mine is encouraging and the appointment of Dr. Mark Bennett, the discoverer of the Nova-Bollinger deposit, as a strategic advisor, reinforces Ramp’s belief in the potential of the Rottenstone property. Bennett has over three decades of experience in establishing mines, and played a key role in multiple discoveries, such as the Wahgnion gold mine, the Thunderbox gold mine, and the Waterloo nickel mine, in addition to the Nova-Bollinger nickel-copper mine. Along with Bennett, Ramp Metals has also appointed leading geologist Scott McLean, a 35-year veteran in the mining industry, as its strategic advisor.
Company Highlights
- Ramp Metals is a battery and base metals exploration company with a focus on exploring high-grade nickel-copper-PGE in Northern Saskatchewan. Ramp intends to uncover the next major discovery essential for driving the green technology movement.
- The company has three properties covering a total area of 20,000 hectares. Of these, two are located in Northern Saskatchewan – Rottenstone SW Claims and Peter Lake Domain (PLD). The third property is located in Nye County, Nevada.
- The company’s flagship project Rottenstone SW property is situated adjacent to a northeast-southwest geological formation connected to the renowned Rottenstone Mine. This mine yielded 40,000 tons of high-grade nickel-copper-platinum group elements (PGE) and gold ore, with grades averaging 3.28 percent nickel, 1.83 copper, and 9.63 grams per ton platinum-palladium-gold.
- The geophysical program at Rottenstone highlights striking similarities with the Nova-Bollinger mine in Australia owned by Sirius Resources, which was eventually sold for AU$1.8 billion.
- Dr. Mark Bennett, founder of Sirius Resources who oversaw the development of the Nova-Bollinger mine, is a strategic advisor to Ramp Metals.
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Nickel Price Update: Q1 2024 in Review
Indonesian supply dampens nickel prices
Lackluster pricing in the nickel market is largely the result of the metal's ongoing oversupply position.
The largest factor is elevated production from Indonesia, which is the top producer of the metal by far. The country produced 1.8 million MT of nickel in 2023, according to the US Geological Survey, representing half of global supply.
Indonesia's output has climbed exponentially over the past decade, and has been exacerbated by government initiatives that placed strict limits on the export of raw materials to encourage investment in production and refinement.
In an email to the Investing News Network (INN), Exploration Insights Editor Joe Mazumdar wrote, “The growth in electric vehicle (EV) production and the escalating demand for nickel in batteries prompted the Indonesian government to mandate increased local refining and manufacturing capacity from companies operating in the country.”
Despite the lower quality of material coming from Indonesia, the investment was made to shore up supply lines for Chinese battery makers and was earmarked for EV production. However, EV demand has waned through 2023 and into 2024 due to high interest rates, range anxiety and charging capacity, increasing nickel stockpiles.
A report on the nickel market provided by Jason Sappor, senior analyst with the metals and mining research team at S&P Global Commodity Insights, shows that short positions began to accumulate through February and early March on speculation that Indonesian producers were cutting operating rates due to a lack of raw material from mines.
The lack of mined nickel, which helped push prices up, was caused by delays from a new government approval process for mining output quotas that was implemented by Indonesia in September 2023. The new system will allow mining companies to apply for approvals every three years instead of every year. However, the implementation has been slow, and faced further delays while the country went through general elections.
The nickel market found additional support on speculation that the US government was eyeing sanctions on nickel supply out of Russia. Base metals were ultimately not included in the late February sanctions, and prices for the metal began to decline through the end of March as Indonesian quota approvals accelerated.
Western nickel producers cut output on low prices
According to Macquarie Capital data provided by Mazumdar, 35 percent of nickel production is unprofitable at prices below US$18,000, with that number jumping to 75 percent at the US$15,000 level.
Mazumdar indicated that nickel pricing challenges have led to cuts from Australian producers like First Quantum Minerals (TSX:FM,OTC Pink:FQVLF) and Wyloo Metals, which both announced the suspension of their respective Ravensthorpe and Kambalda nickel-mining operations. Additionally, major Australian nickel producer BHP (ASX:BHP,NYSE:BHP,LSE:BHP) is considering cuts of its own.
Nickel price, Q1 2024.
Chart via the London Metal Exchange.
Meanwhile, the nickel industry in French territory New Caledonia is facing severe difficulties due to faltering prices.
The French government has been in talks with Glencore (LSE:GLEN,OTC Pink:GLCNF), Eramet (EPA:ERA) and raw materials trader Trafigura, which have significant stakes in nickel producers in the country, and has offered a 200 million euro bailout package for the nation's nickel industry. The French government set a March 28 deadline for New Caledonia to agree to its rescue package, but a decision had not yet been reached as of April 11.
Earlier this year, Glencore announced plans to shutter and search for a buyer for its New Caledonia-based Koniambo Nickel operation, which it said has yet to turn a profit and is unsustainable even with government assistance.
For its part, Trafigura has declined to contribute bailout capital for its 19 percent stake in Prony Resources Nouvelle-Caledonie and its Goro mine in the territory, which is forcing Prony to find a new investor before it will be able to secure government funding. On April 10, Eramet reached its own deal with France for its subsidiary SLN’s nickel operations in New Caledonia; the transaction will see the company extend financial guarantees to SLN.
The situation has exacerbated tensions over New Caledonia's independence from France, with opponents of the agreement arguing it risks the territory's sovereignty and that the mining companies aren’t contributing enough to bailing out the mines, which employ thousands. Reports on April 10 indicate that protests have turned violent.
While cuts from Australian and New Caledonian miners aren’t expected to shift the market away from its surplus position, Mazumdar expects it will help to maintain some price stability in the market.
“The most recent forecast projects demand (7 percent CAGR) will grow at a slower pace than supply (8 percent CAGR) over the next several years, which should generate more market surpluses,” he said.
Miners seek "green nickel" premium for western products
In an email to INN, Ewa Manthey, commodities strategist at financial services provider ING, suggested western nickel producers are in a challenging position, even as they make cuts to production.
“The recent supply curtailments also limit the supply alternatives to the dominance of Indonesia, where the majority of production is backed by Chinese investment. This comes at a time when the US and the EU are looking to reduce their dependence on third countries to access critical raw materials, including nickel,” she said.
This was affirmed by Mazumdar, who said the US is working to combat the situation through a series of subsidies designed to encourage western producers and aid in the development of new critical minerals projects.
“The US Inflation Reduction Act promotes via subsidies sourcing of critical minerals and EV parts from countries with which it has a free trade agreement or a bilateral agreement. Indonesia and China do not have free trade agreements with the US,” he said. Mazumdar went on to suggest that the biggest benefactors of this plan will be Australia and Canada, but noted that with prices remaining depressed, multibillion-dollar projects will struggle to get off the ground.
Western producer shope their material may eventually see a "green nickel" premium that plays into their focus on ESG. However, this idea hasn’t gained much traction. The London Metal Exchange (LME) believes the green nickel market is too small to warrant its own futures contract, and Mazumdar said much the same. “There is little evidence that a premium for ‘green nickel’ producers or developers has much momentum, although an operation with low carbon emissions may have a better chance of getting funding from institutional investors in western countries,” he noted.
Even though there might not be much interest in green nickel on the LME, there are vocal proponents, including Wyloo’s CEO, Luca Giacovazzi. He sees the premium as being essential for the industry, and has said participants should be looking for a new marketplace if the LME is unwilling to pursue a separate listing for green nickel.
The calls for a premium have largely come from western producers that incur higher labor and production costs to meet ESG initiatives, which is happening less amongst their counterparts in China, Indonesia and Russia.
Western producers were caught off guard early in March as PT CNGR Ding Xing New Energy, a joint venture between China’s CNGR Advanced Material (SHA:300919) and Indonesia’s Rigqueza International, applied to be listed as a “good delivery brand” on the LME. The designation would allow the company, which produces Class 1 nickel, to be recognized as meeting responsible sourcing guidelines set by the LME.
If it is approved, which is considered likely, the company would be the first Indonesian firm to be represented on the LME. There has been pushback from western miners on the basis of ESG and responsible resourcing challenges.
Investor takeaway
As the nickel market faces strong production from Indonesia, experts expect more of the same for prices.
“Looking ahead, we believe nickel prices are likely to remain under pressure, at least in the near term, amid a weak macro picture and a sustained market surplus,” Manthey said. The continued surplus may provide some opportunities for investors looking to get into a critical minerals play at a lower cost, but a reversal may take some time.
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Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
