Nickel Asia Mining Corporation

Nickel Asia Mining Corporation (NIKL) has been reporting revenues and net income by leaps and bounds. During the first quarter of 2021, its revenues soared 43.4% versus the same period last year and

registered a net income of P584,097,000 versus a net loss of P89,341,000 in the same period of last year, which was caused by the lockdown due to the pandemic. Its stellar performance continued on to the second quarter

as it reported an increase both in revenues and net income of 77.42% and 437% respectively versus the same period last year. In my opinion, these records of huge growth could not be attributed to a low-base effect

alone. A low-base effect means a company that experienced a poor performance due to a one-time event (ex. lockdown due to pandemic) will experience a significant positive change when the one-time event has been over.

A large part of why NIKL has been outperforming lately is because nickel prices in the London Metal Exchange has significantly been going up. Last March 2021, nickel prices averaged at $15K/ton. As of this writing, its price is

now $20,216/ton. The price increase of nickel can’t be attributed to the re-opening of the world economy alone. Although China is still significantly importing nickel ores for stainless steel production, the demand for the metal

continues to grow further. Worldwide, there is a clamor for green technology. Climate activists have been pushing for a shift in lifestyle and conducting business towards a greener way. In some countries, there are already policies in place to enforce incentivize

companies that help the environment or to lessen carbon footprint. In my opinion, this is a trend that is just starting and will snowball further over the years to come. Experts say that commodities such as nickel and copper are predicted to enter

a Supercycle – a Supercycle is a long period of time wherein prices continuously go up due to overwhelming demand while supply tries to catch up until an equilibrium point has been reached. Why would there be a strong demand for

copper and nickel? It’s because they are the necessary raw materials to achieve green technology. A lot of green technology requires copper and high-grade nickel. High-grade nickel is a raw material to eventually produce the batteries

that electric vehicles use. The electric vehicle market is expected to grow by more than 20% compounded annually. Other essential materials needed for green technology are rare earth elements. Unfortunately, NIKL, the Philippine’s

top producer of nickel ore only has a 10% stake each on 2 downstream processing plants namely Taganito HPAL plant and Coral Bay plant that can process nickel ore and extract rare earth elements that can be sold

in the market at a significantly higher price. These downstream processing plants are also part of the value chain in producing the battery for electric vehicles as their finished products are Nickel-Cobalt Sulfide. Moving forward, I think

the nickel and copper mining industries have a lot of potential to earn significantly in the coming years. In addition, the Philippine government also lifted the ban on issuing new mining permits, which means mining companies will look for

projects that can be profitable for their companies. The current price of NIKL is at P5.56. It has a support at P5-P5.20. At these prices, you can easily get more than 4% dividend yield. It has been ranging sideways between P4.80-P6.41, but any

price within that range is a good chance to accumulate the stock and to hold onto it for the long-term. Afterall, the narrative behind nickel ore sounds promising.