The RPM Zone Rush: Why First Atlantic Nickel’s New Drilling Could Be a Game-Changer

The mining world is buzzing with news of First Atlantic Nickel’s (TSXV:FN) Phase 2 drilling campaign at its RPM Zone discovery in Newfoundland. This isn’t just another drill program—it’s a high-stakes move to unlock a district-scale nickel deposit that could redefine the company’s future. Let’s dive into what’s at stake and whether this is a buy, hold, or walk-away opportunity.

The RPM Zone: A Nickel Powerhouse in the Making

First Atlantic’s RPM Zone, discovered in 2023, has already delivered jaw-dropping intercepts like 1.88% nickel over 32.5 meters (hole RPM-23-04). Phase 2 aims to expand this success by testing strike extensions, depth potential, and infilling gaps in the resource model. With 1,500 meters of drilling planned across 5-6 holes, the focus is on:
- Lateral continuity: Extending the deposit east and west where high-grade zones remain open.
- Depth potential: Probing below the current 300-meter limit, where mineralization could thicken.
- Southern extension: Geophysical data hints at sulfide-rich horizons that could boost resource size.

If successful, this could convert inferred resources to indicated categories—a critical step for future mine feasibility studies. The inclusion of cobalt and PGEs (like palladium and platinum) adds value, as these by-products often sweeten project economics.

Market Dynamics: Nickel & Cobalt’s Double-Edged Sword

While the RPM Zone’s potential is exciting, the metals it produces face significant headwinds:

Nickel’s Oversupply Crisis

• Surplus Alert: The International Nickel Study Group forecasts a 135,000-ton surplus in 2025, driven by Indonesia’s dominance (1.7M tons in 2025).
• Battery Shifts: Lithium iron phosphate (LFP) batteries—nickel-free and cheaper—now account for 34% of global battery production, up from 6% in 2020.
• Price Pressure: LME nickel prices have languished near $16,000/ton, with stocks hitting a four-year high of 163,500 tons in late 2024.

Cobalt’s Volatile Dance

• DRC’s Export Ban: A four-month suspension ended in June 2025, but prices rebounded to $36,262/ton—a two-year high. However, oversupply persists, with global production up 107% since 2020.
• Substitution Surge: Cobalt use per EV has dropped 25% since 2020, as LFP and cobalt-free cathodes gain traction.

Why This Still Could Be a Winner

Despite these challenges, the RPM Zone offers two critical advantages:
1. Geographic Advantage: Located in Canada, it avoids the geopolitical risks of DRC cobalt or Indonesian nickel.
2. Sulfide-rich Ore: Sulfide deposits are cheaper to process than laterite ores, giving FN a cost edge.

Risks to Watch

• Battery Tech Shifts: If LFP adoption accelerates further, nickel and cobalt demand could crater.
• Cost Overruns: Nickel’s low price (vs. $18,000/ton breakeven for many projects) may squeeze margins.
• Permitting Delays: Environmental hurdles in Newfoundland could stall development.

The Bottom Line: A High-Reward, High-Risk Bet

First Atlantic Nickel’s Phase 2 drilling at the RPM Zone is a pivotal moment. Success here could turn FN into a mid-tier nickel player, especially if cobalt and PGE credits add value. However, investors must weigh this against systemic risks like oversupply and battery tech disruption.

The stock has already rallied +40% YTD on exploration optimism, but valuation is still low (FN’s market cap is $350M, vs. a potential $2B+ asset if resources hit 1M tons of nickel-equivalent).

Final Take

This is a speculative buy for aggressive investors, with a $0.50-0.70 target if Phase 2 hits home runs. For the cautious, wait until assay results (expected Q4 2025) and LFP adoption trends clarify. The RPM Zone’s scale and cobalt-rich profile make it a rare opportunity—but only for those willing to stomach volatility.

Risk Rating: 8/10
Upside: 120% (if resources exceed 1.5M tons nickel-equivalent)
Downside: -50% (if cobalt demand collapses or drilling misses targets)

The RPM Zone isn’t just a drill hole—it’s a shot at rewriting First Atlantic’s destiny. Buckle up—it’s going to be a wild ride.