June 28th, 2023 | 08:05 CEST
Hydrogen vs battery shares: From Plug Power to Standard Lithium and Power Nickel?
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"[...] China has become the manufacturing capital of the World, and because of its infrastructure, expertise and capabilities, Silkroad Nickel has strategically positioned itself to partner with Chinese companies in the Stainless Steel and EV industries [...]" Jerre Foo, Corporate Development Executive, Silkroad Nickel
Power Nickel: Drilling results convincing and spark interest in resource estimate
In addition to lithium, a successful transition to e-mobility also requires nickel. The problem is that nickel is already in high demand by other industries. Around 85% of global production is used to manufacture stainless steel and alloys. Now there is also demand for battery production. Already in 2025, up to 21% of global nickel production is expected to flow into battery production. As the battery industry is currently being massively promoted in the US, the demand for nickel in the region will also increase. And this is where Power Nickel becomes interesting for investors: the exploration company's most important project is the development of the first nickel mine in Canada. Not only is this a high-grade deposit, but it is also set to become the country's first carbon-neutral nickel mine. This should be of interest to partners all along the value chain, right up to the e-car manufacturers, as their ESG responsibilities for supply chains are becoming increasingly stringent.
Recently, Power Nickel released new promising drill results for NISK. These included 0.6% nickel, 0.39% copper, 0.5 g/t palladium and 0.11 g/t platinum. The results are part of a comprehensive drill program to update the resource estimate in the third quarter of this year. Power Nickel CEO Terry Lynch states: "Another strong result from our main NISK deposit. This brings to a close an amazing drilling season for us at NISK. We look forward to incorporating drill results from more than 15,000 m of drilling into our long-awaited maiden NI 43-101 mineral resource estimate, which we expect to deliver late in the third quarter." The historical estimate at NISK is for about 3 million tonnes of nickel. Lynch had previously expressed optimism that it could triple the estimate. This would make Power Nickel a potential acquisition target for large mining companies. Therefore, investors can look forward to exciting news in the near future.
Power Nickel's gold and copper activities in Canada and Chile offer additional price fantasy. An IPO is still on the cards. If this happens, the attractiveness of the Power Nickel share should increase again.
Standard Lithium: 100 % share price potential
The aforementioned strong establishment of battery producers in the US naturally increases the demand for regional lithium. Currently, only 1% of global lithium is produced in the US. Therefore, lithium explorers are the focus of stock exchange traders. The closer the Company gets to production, the more takeover fantasy there is. On the way to commercializing the first project, Standard Lithium recently brought the bank BNP Paribas on board. The French bank was mandated as the exclusive financial advisor for debt capital for the Lanxess 1A project in the southern US state of Arkansas.
Dr. Andy Robinson, President of Standard Lithium: "We are very pleased to begin this collaboration with BNP Paribas. Standard Lithium is in the final stages of completing the Definitive Feasibility Study (DFS) for our first commercial project. As we progress towards commercialization, we have established the necessary financial processes to secure the most capital-efficient way of financing our first major project. BNP has an excellent track record in advising on and securing debt financing for similar sustainable, battery-powered and critical minerals projects. We look forward to working closely with them as we seek to secure project financing for the anticipated start of construction next year."
Eight Capital analysts expect the Lanxess 1A project feasibility study to be completed soon. Looking at the lithium price, the experts expect the project to be highly profitable. Therefore, they recommend the Standard Lithium share as a buy, with a price target of CAD 12. Currently, the share is trading at around CAD 6.
Plug Power: In the shadow of Nucera IPO
Plug Power shareholders need strong nerves at the moment. With surprisingly strong figures and an increase in the forecast behind them, the share price increased by more than 40% from mid-May to mid-June. But in the past 5 days alone, the share has lost almost 13% in value. But there is positive news from the hydrogen specialist. The Company is to develop a 10 MW electrolyser for the "HOPE" project in the North Sea. "HOPE" (Hydrogen Offshore Production for Europe) is a large-scale hydrogen project off the Belgian coast. Offshore wind turbines are to produce up to four tonnes of green hydrogen per day there. The consortium includes the French hydrogen producer Lhyfe and the offshore wind power world market leader, Ørsted, from Denmark. The European Commission is funding the project with a total of EUR 20 million. The feasibility study is currently underway, and commissioning is planned for 2026.
In the hydrogen sector, attention is currently focused on Nucera's IPO. Top dogs like Nel and Plug Power are in the shadows. At Standard Lithium, shareholders are eagerly awaiting the results of the feasibility study. At Power Nickel, recent drill results have been convincing. If the resource estimate is tripled during the year, Power Nickel would be a clear takeover candidate.
Conflict of interest
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