Nickel 28's Governance and Operational Fortitude Position It as a Nickel-Cobalt Bargain

The recent shareholder meeting of Nickel 28 Capital Corp. (TSXV: NKL) underscored a critical truth in the resource sector: strong governance and operational resilience are the bedrock of long-term value creation. With overwhelming shareholder approval for its leadership and auditors, coupled with a robust performance from its flagship asset—the Ramu Nickel-Cobalt Operation—Nickel 28 emerges as a compelling play on the soaring demand for battery metals. Here's why investors should take notice now.

Governance: A Resounding Vote of Confidence

At its June 24, 2025 annual general meeting, Nickel 28's directors received over 64% support on average, with Craig Lennon securing an astonishing 99.93% approval, signaling shareholder trust in the company's leadership. Even more telling, the reappointment of auditor Baker Tilly WM LLP passed with 74.69% support, a stark contrast to the governance challenges seen at peers like First Quantum Minerals or Glencore. This consensus reflects investors' belief that management is navigating risks—legal disputes, commodity price volatility, and operational hiccups—effectively.

Operational Resilience: Ramu's Unwavering Cash Machine

The Ramu project, Nickel 28's 8.56%-owned joint venture, remains the crown jewel. Despite a first-quarter production setback caused by an acid plant outage, the mine rebounded strongly, achieving record performance levels by quarter's end. Q1 2025 saw 6,970 tonnes of nickel production, with inventory building ahead of maintenance in Q2. Critically, Ramu's cash distributions to Nickel 88 remain reliable: a $1.2 million payout for 2024 surpluses arrived on schedule, and full-year production targets of 32,000 tonnes of nickel are still within reach.

The mine's low-cost structure—with production costs at $3.21/lb nickel (excluding legal and transactional expenses)—gives it a 25% cost advantage over global averages. Even after the acid plant repairs, costs rose only modestly to $3.61/lb, a testament to management's ability to control expenses. This resilience positions Ramu as one of the cheapest nickel producers globally, a critical edge as battery demand soars.

Strategic Moves: Cutting Costs, Buying Back Shares

Nickel 88 isn't just relying on Ramu's cash flows—it's actively shrinking its balance sheet risks. By April 2025, it had repurchased 3.1 million shares under its NCIB at an average price of $0.75/share, signaling confidence in its undervalued stock. With $8.6 million in cash and construction debt reduced to $37 million, the company has $11 million in liquidity headroom to weather commodity dips. Management's $2.5 million annual cost target for 2026 (excluding litigation) further reinforces its focus on shareholder value.

The Undervalued Catalyst: Nickel-Cobalt Demand

The case for Nickel 28 hinges on two unstoppable trends:
1. EV Growth: Nickel's role in high-energy-density batteries (e.g., Tesla's 4680 cells) ensures demand will outstrip supply through 2030.
2. Cobalt's Criticality: Despite efforts to reduce cobalt in batteries, 60% of global supply comes from politically unstable regions like the DRC. Ramu's cobalt-rich MHP gives Nickel 28 a strategic hedge against supply bottlenecks.

At current prices, the market is pricing in $1.30/lb nickel into Nickel 28's valuation. But with LME nickel averaging $7.06/lb this year and long-term forecasts above $10/lb, the stock is grossly undervalued.

Risks to Consider

• Legal Battles: Ongoing disputes with former executives could drain resources.
• Commodity Volatility: Nickel prices fell 6% in Q1 2025, though long-term trends remain bullish.
• PNG Regulatory Risks: While Ramu's contracts are grandfathered, any Mining Act revisions could introduce uncertainty.

Investment Thesis: A Buy at Current Levels

Nickel 28 offers three pillars of value:
1. Governance: A leadership team with shareholder support and a track record of prudent capital allocation.
2. Operational Strength: Ramu's low-cost, high-margin production model.
3. Valuation: Trading at a 40% discount to its net asset value, with leverage to rising nickel prices.

Investors should buy on dips below $0.80/share, with a target of $1.20/share by end-2025 as EV demand accelerates. This is a high-conviction, long-term holding for portfolios needing exposure to battery metals without the volatility of pure-play miners.

In a sector littered with governance scandals and overhyped projects, Nickel 28's pragmatic leadership and asset quality stand out. With Ramu's cash distributions and cost discipline, this is a rare resource stock where value and resilience align.

Disclosure: The author holds no position in Nickel 28 Capital Corp. at the time of writing.