At first, it looked like the Nickel Mines Ltd (ASX: NIC) share price wasn't going anywhere for the rest of Wednesday.
The company requested a trading halt during mid-afternoon trade following the tanking of its shares.
However, towards the back end of the day, Nickel Mines provided an update.
At market close, the low-cost nickel producer's shares finished down 4.75% to $1.405 apiece. That's in sharp contrast to the 22.71% in the red that Nickel shares were at before being halted, at $1.14.
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Why were Nickel Mines shares put into a trading halt?
Following the dramatic turn in the Nickel share price, the company's latest statement answered some questions relating to the trading halt.
Nickel Mines advised it is not aware of any information that could explain why the recent trading in its shares has been volatile.
However, the company did note that it recognised recent press speculation regarding a short position in the London Metal Exchange (LME) nickel held by Tsingshan group, and the implications this had on global markets.
Nonetheless, Nickel Mines pointed out the following to reassure shareholders:
- Operations at the Hengjaya Nickel and Ranger Nickel projects are unaffected, as is commissioning at the Angel Nickel project and construction at the Oracle Nickel project.
- Tsingshan has firmly assured Nickel Mines that it has no intention of selling any shares that it holds.
- There has been no change in Tsingshan's undertaking to purchase all of the nickel pig iron produced by the company's RKEF operations.
- There has been no impact on Tsingshan's intention to receive Nickel Mines shares in the conditional placement for the company to acquire a 70% interest in the Oracle Nickel Project.
As my Motley Fool colleague Mitch Lawler pointed out, the nickel price accelerated to a record high of US$43 per kilogram overnight. This represents a mammoth 70% increase since the start of this month.
As a result, the LME decided to halt nickel trading and cancel trades last night.
The shock move came as government sanctions around the world have threatened to block the supply from key producer Russia.
Nickel is a key component in lithium-ion batteries, which is used in generating power for electric vehicles. It is able to produce a lot more energy into batteries than using cobalt. The latter is considered a more expensive metal and has fewer purposes across industries.
Nickel Mines share price summary
Over the past 12 months, the Nickel Mines share price has gained more than 4%.
Although, when looking at year to date, the company's shares are down by almost 2%.
Nickel Mines presides a market capitalisation of roughly $3.86 billion with approximately 2.62 billion shares on its registry.
