The S&P/TSX Venture Composite Index (INDEXTSI:JX) gained 14.25 points last week to close at 595.95 while shares of a nickel exploration company Power Nickel (TSXV:PNPN) jumped 70% in the five trading sessions.
Nickel is an important metal that plays a key role in a variety of industrial applications and battery technology. But nickel prices have been relatively flat lately, so what exactly is driving the stock’s sharp share price rise?
Power Nickel is a Canadian nickel exploration company currently focused on the development of the Nisk nickel-copper project in the James Bay region of Eeyou Istchee, Quebec, Canada. The project consists of 90 claims covering 4,589 hectares, with significant exploration taking place between 2021 and 2024.
According to an initial resource estimate released by the company in November 2023, the Nisk project has an indicated resource of 5.43 million metric tonnes at a nickel equivalent weighted average grade of 1.05% and an inferred resource of 1.79 million metric tonnes at a nickel equivalent grade of 1.35%.
Power Nickel had announced on 24 April that it had entered into an earn-in agreement with Critical Elements Lithium (TSXV:CRE,OTCQX:CRECF), for an 80% stake in the Nisk project. Power Nickel acquired the final 30 per cent interest after Critical Elements accepted its technical report completed in the first quarter.
Last Friday (10 May), Power Nickel issued an updated press release stating that drilling continued to expand high-grade copper, platinum, palladium, gold and silver mineralization in an area close to surface, 5km northeast of the main Nisk deposit. Drilling results included a 5-metre interval grading 1.76 g/t gold, 102.9 g/t silver, 12.7% copper, 20.87 g/t palladium, 1.02 g/t platinum and 0.4% nickel.
Resource stocks on the TSXV often soar on the announcement of positive exploration and drilling results. For Power Nickel, the recent strong performance of copper prices has also contributed to investor interest in the stock.
Copper prices have risen 17.5% so far this year, following a 2.0% rise in 2023, as major mine closures and production disruptions could lead to a tightening of global copper supply in 2024. Moreover, copper demand is expected to remain strong as the global energy transition and growing demand for artificial intelligence support further copper price gains.
