Instead of getting a Decar program underway during Q2 of 2014, Cliffs management has wasted millions trying to keep Casablanca from securing control and proceeding with a dismantlement of Cliffs as a company. First Point management, realizing that if no program is started in 2014 Cliffs cannot possibly meet the PFS 2015 deadline, tried to negotiate an alternative arrangement but found Cliffs management too distracted by the proxy battle. At the July 29 annual meeting, Casablanca, although owning only 5.2% of Cliffs, appears to have gained control of the board, setting the stage for executing a game plan seemingly hatched while reading Viking Raid, Matthew McCleery's yarn about Wall Street and global shipping. Given that Casablanca has no interest in Cliff's vision of supplying the North American steel industry with all the critical inputs sourced in North America, it is safe to say that Cliffs will not provide any further funding for the Decar nickel project. Although bad news for First Point in the short term, it is overall good news because Cliffs' blunder acquiring the Bloom Lake iron deposit in northern Quebec and its bobbling of the chromite project in Ontario's Ring of Fire had hamstrung the company for the foreseeable future, longer if the threatened iron ore surplus takes seaborne iron to $80 per tonne or lower. In fact, one of Casablanca's complaints was that the iron ore bears had used Bloom Lake to turn Cliffs into a short selling proxy for the iron ore sector. Instead of a Cliffs management victory scenario where Cliffs would be preoccupied keeping its sinking ship afloat during an iron ore bear market, the Casablanca victory scenario promises a rapid salvage operation that could quickly put Decar's destiny back in First Point's hands.

Casablanca's plan is to put Cliffs' American iron ore assets into a master limited partnership paying a high dividend, for which there should be plenty of appetite as long as interest rates remain low, and float all the "international" and non-core assets, among which it includes Bloom Lake and the Ring of Fire chromite project, into a separate company to be called "Cliffs International" that targets "growth-oriented natural resources investors". Yes, Casablanca does indeed have in mind a nearly extinct class of investors, and therein lies the potential good news for First Point.

As it now stands, Cliffs, after spending $22 million on Decar and delivering a PEA in 2013, is the operator with a 60% interest. It has the choice of doing nothing until the end of 2015 when it will be deemed to have not earned 65% for failing to fund and deliver a PFS, conceding that failure immediately and proposing a program to which First Point must contribute 40% now, or selling the 60% back to First Point or a third party.

In the first scenario First Point treads water until the end of 2015 and tries to shift the market valuation focus to the 100% owned Mich project in the Yukon. First Point still has over $3 million working capital, and would at most spend $500,000 on target development at Mich during 2014, setting the stage for a $1 million drilling campaign in 2015. Since the objective is an at surface multi-billion tonne deposit similar to Decar's Baptiste zone where the abundance of coarse awaruite grains is sufficient to support a Davis Tube derived grade of 0.1% plus recoverable nickel, success in 2014 at Mich would raise hopes that a grid of vertical holes in 2015 would quickly delineate a large low grade ultramafic hosted nickel deposit that lends itself to the same simple gravity-magnetic separation flowsheet as Decar with no sulphide related environmental issues. Consistent and continuous coarse grained awaruite mineralization is critical for the large 100,000 tpd type of operation proposed for Decar whose concentrates can be fed directly into stainless steel mills. During the past two years while Cliffs worked on Decar First Point focused on the promising Wale project in northern British Columbia. But Wale has dropped in importance because grain coarseness lacked the consistency and continuity it has at Decar. Surface sampling at Mich shows better promise for a duplication of Decar. If Decar ends up at the back of the disposal queue for Casablanca, First Point can reduce the value of Decar as defined by its own market valuation by advancing the 100% owned Mich to a stage where the market can see a similar deposit taking shape. This scenario suggests patient bottom-fishing for First Point during the next 12 months.

The second scenario where Cliffs proposes a $20 million PFS program to which First Point must suddenly contribute $8 million can only happen in anticipation of the 2015 exploration season which starts in May-June. This is unlikely to happen until Casablanca has floated "Cliffs International" whose priority in any case is likely to be Bloom Lake or the Ring of Fire chromite project. Since the market will assign zero valuation to Cliffs International's 60% stake in Decar, Casablanca is more likely to seek early monetization of the Decar stake by selling it back to First Point for a combination of royalty, cash and stock or to a third party offering cash. The problem for First Point is that it does not have a right of first refusal, but it would retain the 1% NSR on all of Decar, which it can use as a bargaining tool if competition knocks at Casablanca's door. So for Spec Value Hunters the next important milestone will be a deal whereby Cliffs sells back its 60% Decar stake to First Point on terms that allow First Point to fund a PFS on a 100% ownership basis, or swing a farmout with a new partner capable of funding the $1.4 billion CapEx indicated by the PEA. Because First Point's valuation will reflect a market discount for its minority stake in Decar, a deal that gives First Point 100% control should provide an immediate boost to the stock price, and attract an audience focused on rapid advancement of Decar. This third scenario is the one that begs for aggressive accumulation by Spec Value Hunters below $0.20 during the next couple months while we await the return of Decar, which is why I am maintaining my recommendation of First Point Minerals Corp as a Good Relative Spec Value Buy at $0.14. The "relative'" would become "absolute" once Decar's destiny is in the hands of a party determined to turn this nickel story into a success.

Ironically, a return to weakness in the nickel price would be good news for First Point because according to the March 2013 PEA produced by Cliffs the proposed 114,000 tpd operation needed a $9.39/lb nickel base case price to achieve a 17% IRR and an after-tax NPV of $630 million at a 10% discount rate. Those are not overly impressive numbers, and at the current $8.54/lb nickel price the IRR is only 10% and NPV $311 million. At the $6/lb level threatened by unlimited Indonesian exports of nickel saprolite ore to China for its nickel pig iron furnaces Decar is worthless. As I argue in SVH Comment: March 22, 2013, I believe Cliffs was overly conservative in its PEA assumptions, but I suspect that Casablanca will take its cue from Bloom Lake and dismiss the PEA as yet another example of excessive optimism by the old Cliffs' management. Unless Casablanca thinks it can get away with applying an awful lot of lipstick to the "pigs" it claims Cliffs management assembled, it should be happy to do a deal which enables a good management team to take a decent shot at turning Decar into a success story in whose upside Casablanca participates.

The after-tax NPV sensitivity chart above shows how the 100% NPV behaves at various nickel prices, and the one below shows how First Point's 40% stake translates into a per share price. If First Point gets Decar back 100% on good terms, it will likely postpone a full-blown PFS until 2016, spending 2015 instead on a $1-$1.5 million drill program designed to delineate the open higher grade southern extent of the Baptiste zone. Cliffs' PEA did not attempt to optimize the pit around higher grade zones. First Point also plans to continue metallurgical and marketing work on the concentrate, which work done since the PEA indicates could achieve a better payability than the 75% assumed by Cliffs. If Spec Value Hunters are concerned that the resource juniors will still be stuck in a bear market next year, a plausible concern given the experience of the past four years, they do not have to worry that First Point will need to blow up its capital structure to fund the next step of added value during another weak market year. The main uncertainty is the timing and terms of regaining 100% of Decar.

I regard First Point as a solid long term buy because its success is premised on developing a mine from a style of mineralization never before commercially exploited, in a context of a long term stabilization of nickel in the $8-$12/lb range. The wild card is that some of the worst case supply deficit projections related to Indonesia's export bans become reality, leading to a nickel price above $15 per lb. The price of nickel rallied this year when it became apparent that Indonesia was not wavering on its ban on unprocessed ore, set in the case of nickel as material grading below 4%, a grade the saprolite ore mined in Indonesia never reaches. Chinese stainless steel makers have been running down their stockpiles of nickel ore and boosting the import of lower grade limonite ore from the Philippines, which has prevented the nickel stockpiles in the LME warehouse from dropping. The rise in the spot price is thus driven in part by speculators expecting a supply squeeze, which may not happen as stainless steel consumption shifts to chromium as the key input. A pullback during the next few months might be helpful to First Point as it negotiates to regain Cliffs' 60% in Decar, while continuing strength in the nickel market could delay a deal or generate unreasonable terms. Perverse as this may sound, First Point shareholders should be hoping for an interim pullback in the nickel price as the key to getting a decent deal done on regaining 100% of Decar. While the market is focused on ramped up supply from the Philippines whose output stalled last year while Indonesian output jumped ahead of the expected export ban, nobody is yet thinking that the situation between Russia and the Ukraine could hit a critical mass which jeopardizes output from Noril'sk, whose nickel supply puts Russia in third place. Nobody wants a disruption of Russian nickel supply, but if it happens, the LME stockpile will drop like a rock, recreating the conditions of 2006-2007. Ideally this happens after First Point has regained 100% control of Decar.

Cliffs, which optioned Decar in November 2009, earned a 60% interest by spending $22 million to deliver a PEA on March 22, 2013 and planned to deliver a PFS by the end of 2015 to boost its stake to 65%, which would put it on track to earning 75% by completing a bankable feasibility study. The PEA proposed a 114,000 tpd open-pit mine that would produce 37,000 tonnes of nickel annually over a 24 year mine life with a CAPEX of $1.4 billion and OPEX of $6.91/t (USD figures). At a base case price of $9.39/lb nickel Decar generated an after-tax NPV (at 8%) of $579 million and IRR of 13% from a resource of 925 million tonnes at 0.12% nickel. These numbers fall short of the development hurdles of NPV matching or exceeding CAPEX and the IRR being at least 15%. However, Cliffs was willing to proceed because the PEA had conservative assumptions that could benefit from optimization and because the project's cost structure hinged less on the main cost drivers of nickel output from laterite and sulphide mines. In other words, Decar's profit margin would expand if higher energy input costs for laterite and sulphide mines spurred higher nickel prices.

The mining proposal is radical in that the grade is 10% that of the lowest grade laterite and sulphide mines that churned out 2.4 million tonnes in 2014. But it is plausible because the host rock is a simple ultramafic rock whose metamorphic history created a natural stainless steel alloy that occurs as grains of a mineral called awaruite. The paltry 0.12% grade is not a conventional fire assay that measures all the nickel content, including the nickel hopelessly trapped in the olivine lattice, but rather a Davis Tube assay which only measures the amount of nickel recoverable through magnetic separation down to a minimum grain size. The coarseness and consistency of the awaruite grains are critical to the bulk tonnage economics of this deposit type. The concept developed by First Point management was that these very large deposits could be developed as relatively low cost mines with minimal reagent consumption and energy costs limited to crushing, grinding and gravity-magnetic separation. A key requirement was the absence of sulphides so that the waste rock would be benign as far as environmental consequences are concerned.

The concept caught the attention of Cliffs which had a strategic goal to develop a cost stable, geopolitically safe supply of the main raw materials required by the North American steel-making industry. The Black Thor chromite project in Ontario's Ring of Fire was one pillar, while the Decar nickel project in British Columbia was another pillar. While Cliffs worked on Decar, First Point scoured the globe for similar deposits on the premise of creating a lock on the best deposits with this never before commercially exploited style of nickel mineralization. First Point has determined that deposits like Decar are in fact quite rare, and has ended up with only one other similar candidate called Mich located in northern British Columbia.

What looked like a win-win relationship with Cliffs has soured for First Point because Cliffs has fallen victim to human folly and the collapse of iron ore prices. It is impossible for Cliffs to deliver a PFS by the end of 2015 because no work has been done on Decar since Cliffs' management came under attack in 2013 from a disgruntled New York "event driven and activist" hedge fund called Casablanca Capital LP unhappy with the Bloom Lake cost overruns. Casablanca won a proxy battle in mid 2014, though it was a pyrrhic victory because by then Cliffs' entire business was under siege due to collapsing iron ore prices. Casablanca is now trying to reorganize Cliffs by turning the iron cash flow into a dividend paying master limited partnership and by shedding non-core assets that include the 60% Decar stake. That has left the Decar project as effectively a 60:40 joint venture with Cliffs as the lame-duck operator. Casablanca, which apparently has not noticed that the nickel spot price is well below the $9.39/lb PEA base case price, is trying to sell the 60% stake on unrealistic investment recovery terms. As the after-tax NPV sensitivity chart above demonstrates, Decar is worthless below $8/lb nickel though there is substantial upside leverage above $10/lb.

First Point does not have a right of first refusal, but it does own an uncapped 1% NSR that is substantially more valuable than the current $6-$7 million market cap if a new group takes over operatorship of Decar. An obvious way for Cliffs to monetize its $22 million Decar investment would be to swap the 60% Decar stake to First Point in exchange for the 1% NSR and enough stock to bring its equity stake in First Point to 19.9%. If First Point regained 100% of Decar on non-dilutionary terms, shifting the destiny of Decar out of the hands of financial wizards into resource developers, the market would revalue First Point sharply upwards, and this story would be rolling again. Within a couple years Cliffs would be able to sell its First Point equity stake and 1% Decar NSR for considerably more than the $22 million sunk cost which it cannot recover from First Point directly nor likely from a third party unless nickel soars above $10/lb. The graphic above shows how the 1% NSR value varies with nickel price and with a seven year startup discount. First Point has made its own proposal to Cliffs, but has not had a formal response. For Spec Value Hunters First Point is a bet that Casablanca will succumb to a win-win deal, ideally before August 2015 so that First Point can conduct its SE Extension drilling program this year.

But what if a deal is reached on terms that leave First Point with 100% control of Decar? The junior headed by Jim Gilbert, Peter Bradshaw and Ron Britten would like to delineate the Southeast Extension of the Baptiste deposit where better grades and location would allow optimization of the mining plan. Management estimates it would cost about $3 million for this drilling and additional processing of 10-20 tonnes of material from existing drill holes to create a representative bulk sample. Not only would this "bulk sample" deliver the next metallurgical milestone of what is the optimal concentrate grade, but it would also provide concentrate sample material for steelmakers to evaluate as potential feedstock and set the stage for future off-take agreements. The 2013 PEA was conservative in that its ore schedule consisted of life-of-mine average grade, a hefty 25% payability discount for the nickel content, and a high contingency cost for what is a fairly simple flow-sheet of crushing-grinding and gravity-magnetic separation. Management also thinks that a mapping program aimed at outlining the barren dykes within the Baptiste deposit could allow diversion of this material to the waste dump and thus avoid the dilution assumed by the PEA.

First Point has about $2 million working capital left, so it would need to raise additional funds to complete this program which could result in the delivery of an updated PEA in 2016, which is why management would prefer a non-cash deal with Cliffs. If the updated PEA can end up with a $6.50/lb nickel base case price that allows the after-tax NPV and IRR to match or exceed standard development hurdles, First Point would be in a strong position to raise the $10-$20 million needed to complete a PFS which may require a pilot plant study. The graphic above shows the after-tax NPV per share for a 40% and 100% stake using a 10% discount rate. First Point's immediate goal would be to lift the 100% ownership NPV curve so that Decar is in the money at $6.50 nickel. Any upwards price movement by nickel would translate into a substantially higher NPV per share outcome.

Nickel confounded the market in 2006-2007 with its spectacular price rise to $24/lb after several years of record low nickel warehouse stocks. As the annual supply chart above shows, speculators had the right idea, for nickel output has grown 49% from a 1,763,000 tonne peak in 2007 to a 2,630,000 tonne peak in 2013. What speculators did not understand was that China had figured out a way to make a lower quality stainless steel by feeding their mills with nickel-pig-iron rather than the refined nickel produced by laterite and sulphide derived nickel producers. The Chinese also happened to have spare blast furnace capacity and figured out that if raw laterite ore were imported from Indonesia and the Philippines they could cheaply produce nickel pig iron. The result was a dramatic surge of nickel production that put Indonesia and Philippines into first and second place, displacing Russia, Canada, Australia and New Caledonia. The party ended in 2014 when Indonesia went through with a ban on the export of raw ore that resulted in a 50% decline in Indonesia nickel production during 2014. Nickel prices initially surged in 2014, but settled down as LME warehouse stocks climbed to record levels. One would have expected nickel prices to fall further, but underlying demand growth is strong, and the destocking of raw laterite ore that China had piled up ahead of 2014 is expected to end in 2015. There is also concern that the Philippines may also introduce an export ban, though a more likelier scenario is that the Philippines' supply growth has stalled, in part because of concern that saprolite strip mining is having a negative environmental impact. The consensus among nickel market forecasters is that by 2018 the nickel market will be in deficit again and the world poised for a repeat of the 2006-2007 nickel price spike. Unlike the copper situation where there is an inventory of large copper deposits with a grade that is marginal at today's copper price, there is not a large inventory of big laterite or sulphide nickel deposits that could be quickly pushed into production. The supply growth will have to come from smaller deposits or big low grade deposits such as Decar. Weak nickel prices during the next six months will be good for First Point if that enables getting a win-win deal done with Cliffs. In an ideal scenario First Point gets a deal done by May, smart investors clean up the market into the $0.20-$0.30 range, and First Point raises $5 million from institutional investors that allows it to execute on the goal of drilling the Baptiste Extension during 2015 and delivering an updated PEA in 2016, with much of that work contributing to what is needed for a PFS. Spec Value Hunters should treat First Point Minerals Corp as a near term bet on a deal breakthrough and a long term leveraged option on higher nickel prices.

What makes Decar interesting is that its host rock is a simple, homogenous ultramafic rock whose metamorphic history created a natural stainless steel alloy that occurs as grains of a mineral called awaruite. The paltry 0.12% grade is not a conventional fire assay that measures all the nickel content, including the nickel hopelessly trapped in the olivine lattice, but rather a Davis Tube assay which only measures the amount of nickel recoverable through magnetic separation down to a minimum grain size. The coarseness and consistency of the awaruite grains are critical to the bulk tonnage economics of this deposit type. The concept developed by First Point management was that these very large deposits could be developed as relatively low cost mines with minimal reagent consumption, and energy costs limited to crushing, grinding and gravity-magnetic separation. A key requirement was the absence of sulphides so that the voluminous waste rock and tailings would be environmentally benign, an important hurdle for permitting in secure western jurisdictions. Since 2009 First Point has engaged in a worldwide review of potential similar deposits, and while it found a few candidates in British Columbia and Yukon which proved not as good as Decar, other regions with similar ultramafic settings disappointed management. The good news was that deposits like Decar are very rare, and First Point does not need to worry about a supply glut arising from an abundance of similar deposits owned by others.

The "awaruite" concept attracted the attention of Cliffs Natural Resources Inc which optioned the project in late 2009 through a deal that enabled it to earn up to 75% by delivering a bankable feasibility study. It twinned with management's goal of establishing itself as a supplier to the North American stainless steel industry of key stainless steel inputs (iron, chromium, nickel) from North American sources. Cliffs spent $22 million to deliver a PEA in February 2013, earning 60%, and elected to proceed with a PFS. But Cliffs' plans were derailed when the iron ore producer came under attack from a hedge fund that ousted Cliffs management in mid 2014 abolished the strategic goal and went to work liquidating non-core assets. First Point secured a deal on September 8, 2015 to acquire Cliffs' Decar interest for US $4.75 million, which it funded by granting a 1% NSR to a third party in exchange for a five year fully secured USD $5 million loan (see SVH Tracker: September 10, 2015 for an analysis of the deal). Cliffs also sold its 14,353,190 share block at $0.0515 to a group of friendly investors rounded up by First Point management, thus removing an onerous overhang from the market. The loan comes due in November 2020, which gives First Point plenty of time to boost its valuation through a positive revision of the PEA or by securing a long term development partner.

Cliffs delivered a PEA on Mar 22, 2013 that proposed a 114,000 tpd open-pit mine that would produce 39,000 tonnes of nickel annually over a 24 year mine life with a CAPEX of $1.4 billion and OPEX of $6.91/t (USD figures). At a base case price of $9.39/lb nickel Decar generated an after-tax NPV (at 8%) of $579 million and IRR of 13% from a resource of 925 million tonnes at 0.12% nickel, below the hurdle thresholds generally required for mine development. The PEA was conservative in that its ore schedule consisted of life-of-mine average grade, a hefty 25% payability discount for the nickel content, and a high contingency cost for what is a fairly simple flow-sheet of crushing-grinding and gravity-magnetic separation. Management thinks that a mapping program aimed at outlining the barren dykes within the Baptiste deposit could allow diversion of this material to the waste dump and thus avoid the 8% dilution assumed by the PEA. A drill program planned for the higher grade Southeast Extension of the Baptiste Zone could translate into a better starter pit location. With regard to the 75% payability assumed by Cliffs (applied after an 82% processing recovery), management thinks that additional metallurgical work on 10-20 tonnes of material from existing core could lead to a better nickel concentrate grade that improves payability into the 85%-90% range. The concentrate resulting from the testwork could also be sent to potential end-users as sample material. This work about cost about $2-$3 million which First Point does not currently have and is reluctant to raise at the SVH recommended stock price. The plan, however, offers a good bang for initial dollars spent by a big company willing to do a deal while nickel prices continue to stink. A revised PEA based on these changes will not make Decar feasible at nickel below $4/lb; the goal is to make it feasible in the $6-$8/lb range.

I constructed an after-tax sensitivity DCF model based on the PEA except for using the current 1.35 CAD:USD exchange rate instead of the near parity assumed by the PEA. Because capital and operating costs were all sourced in Canada as Canadian dollar denominated costs, they are unlikely to have changed. If anything, they will have decreased somewhat in absolute terms in light of the resource sector bear market. Initial CAD CapEx of $1,384,000,000, sustaining CapEx of $763,000,000, and an OpEx of $6.90 per tonne milled become in USD terms respectively $1,025,000,000, $565,185,000 and $5.11 per tonne. The NPV graph above shows how the after-tax NPV varies at 5% and 10% discount rates at different nickel prices with the currency adjusted costs. The chart shows that Decar is very feasible at the $9.50/lb nickel price, and even interesting in the $6-$8/lb range. The challenge for First Point is to demonstrate that Decar is very interesting in the $6-$8/lb range, and then wait for nickel to rise back into that range. At $8/lb Decar with the currency adjusted PEA assumptions has an after-tax NPV range of USD $700 million to $1.9 billion (10% to 5% discount rate) and an IRR of 21%. That translates into a $5.92 to $11.74 per share target based on 100% net interest and 118 million fully diluted shares. If First Point does a 25% net farmout deal, the target prices become $1.48-$2.94 per share.

First Point and a partner have a very good chance of achieving mining plan improvements that make Decar robust in the $6-$8/lb nickel price range. But will nickel achieve long term price stability in this range? Wood McKenzie's nickel specialist Andrew Mitchell gave perhaps the gloomiest of all the commodity talks during the Sunday afternoon session at PDAC on March 6, 2016. He pointed out that warehouse stocks exceed 1 million tonnes (LME plus China warehouses and in stockpiled nickel pig iron), about 40% of the 2,530,000 tonnes the USGS has estimated for 2015 global mine supply. Mitchell pointed out that this is half of global consumption, which suggests a monstrous surplus of about 500,000 tonnes. Where did that surplus come from when nickel touched $25/lb in 2007 as warehouse stocks dropped towards zero? The answer lies with a Chinese innovation that enabled Chinese steelmakers to feed a crude product called "nickel pig iron" into their furnaces to make a stainless steel acceptable to Chinese standards. Where did the Chinese get their nickel pig iron? It came from lower grade laterite deposits in Indonesia and the Philippines that were not suitable for HPAL operations such as those operated in New Caledonia and Australia. This ore was strip mined and direct shipped as raw ore to China where it was fed initially into legacy blast furnaces and then later into new furnaces optimized for nickel pig iron production. The nickel pig iron innovation saved China's bacon.

Indonesia's output went from 157,000 tonnes in 2006 to a peak of 440,000 tonnes in 2013. Since then Indonesian output has dropped to 170,000 tonnes after the government in 2014 imposed a ban on the export of raw ore. The Chinese have since build smelters in Indonesia to handle this laterite ore representing 260,000 tonnes of capacity, but it is not clear when these smelters will be turned on, in part because of Indonesia's stretched energy grid. The Philippines went from 65,000 tonnes in 2006 to an all time annual high for any nation of 530,000 tonnes in 2015. Predictions that the Philippines will encounter environmental opposition or run out of ore have not become reality. The conventional laterite and sulphide nickel producers have refrained from cutting back production on the assumption that the nickel pig iron related supply surge is peaking and will in fact soon subside. The elephant in the nickel room is the relentless supply growth of nickel pig iron destined laterite ore, a situation that will worsen if Indonesia gives up on its export ban. Mitchell estimated that 60%-70% of the nickel production industry is cash negative at current nickel prices below $4/lb. He indicated that no additional nickel output is needed until 2021, and that based on demand projections, if no new supply is mobilized, the annual deficit will reach 475,000 tonnes by 2030 and support a $9.50-$10.00/lb nickel price. At the start of his talk Mitchell pointed out that the nickel pig iron revolution was created by the supply squeeze in 2007 that in turn was caused by the clash between short term planning and the long term investment nature of nickel production. He did not offer any ideas on how long the NPI destined laterite supply from the Philippines and Indonesia can last before decline sets in, but he did warn that the assumption that nickel pig iron is a high cost source of nickel is false. The nickel industry is engaged in a game of chicken between the conventional nickel laterite and sulphide producers, and the nickel pig iron destined laterite producers; who will cut supplies first? First Point's awaruite based Decar nickel project does not have a depletion problem as may be the case with Filipino and Indonesian NPI ore, and it does not have the energy price sensitive cost structure that characterizes conventional laterite and sulphide nickel supply. No matter who wins this game of chicken, Decar stands to benefit, which is a good reason Spec Value Hunters should accumulate First Point before a potential strategic partner figures out what First Point management is talking about. The nasty nickel warehouse chart and general ignorance about the nature of Decar are the reasons First Point is such a cheap security of supply bet on nickel. The main nickel producers are not going to rush to mobilize new supply when that mountain starts to decline and nickel prices inch higher. But somebody is going to grab Decar and fast-track its development for 2021 and beyond when the battle between nickel pig iron and refined nickel is over.