News

May 16, 2008

Belvedere Aims To Produce 10,000 Tonnes Of Nickel Per Year, With Upside In Gold As An Additional Kicker

By Alastair Ford

“I’d prefer the nickel price at US$30,000 rather than US$26,500”, says Harry Dobson, non-executive chairman of Belvedere Resources. On the other hand, as the company is just in the closing stages of signing off a new off-take agreement for the nickel concentrate from its flagship Hitura nickel project in Finland, Mr Dobson says that as far as the outlook for nickel’s concerned, he gets “a good feeling from the price negotiations”. The details of the new agreement will be out shortly, but the context is that it replaces a legacy deal with Norilsk that was signed years ago and in no way reflects the strength of nickel since the boom got underway. According to Belvedere’s chief executive, David Pym, the old deal was costing Belvedere C$20 million per year in lost revenues. That difference will now be made up, although whether Norilsk has been gazumped or not remains to be seen.

What’s not immediately apparent is whether the prospect of this new off-take agreement has already been priced in to Belvedere’s share price, or whether the company is on the cusp of a significant re-rating. As you’d expect, there’s been a steady downward trend on the share price since last summer, when nickel went through US$50,000. But there was a significant uptick along the way in the early part of the winter, when the company announced that it had produced 969 tonnes of nickel in...