TORONTO (miningweekly.com) – TSX-listed First Nickel on Wednesday said that recent nickel price increases and improved price forecasts, based on industry feedback from the Prospectors and Developers Association of Canada’s (PDAC) conference held last week, in Toronto, had positioned it well to take advantage of the rising trend.

Global energy, metals and mining research and consultancy group Wood Mackenzie's principal nickel analyst Andrew Mitchell, presented analysis regarding nickel production and demand growth at the PDAC and provided a rosy long-term price outlook.

His assessment included an increase in the long-term price of nickel related to the Indonesian ban and an earlier-than-expected supply shortfall. He stated that he believed an incentive price of $11.10/lb of nickel was required to justify further profitable investments in new nickel projects, and that the supply of nickel was expected to fall short of demand and could be in a deficit of close to 600 000 t by 2030.

Nickel has increased in value by about 12%, from $6.32/lb on December 31, to $7.07/lb on Tuesday. The improvement in the price, combined with the weakening of the Canadian dollar by about 4% in the same period, represented a significant improvement in the price of nickel in Canadian dollar terms.

First Nickel is Canada's only publicly traded producing junior nickel mining company, having successfully achieved 2013 nickel production targets at the Lockerby mine, located in Ontario's Sudbury basin, and it expected to lift nickel output by between 5% and 17% in 2014.

The company in January said it expected output of between 13.5-million and 15.1-million pounds of contained nickel and 7.2-million to 8-million pounds of contained copper.

First Nickel said that it had positioned itself to draw increased benefit from the expected higher metal prices as a result of the cost-saving measures and improved efficiencies that were implemented in 2013, and which continued to be a central focus at the Lockerby mine.

Mining and development at the Lockerby deposit, which was acquired from Falconbridge in 2005, were ongoing and in 2013, the company produced about 12.8-million pounds of contained nickel and 7.5-million pounds of contained copper. The Lockerby mine is one of the highest-grade nickel operations currently in production in the Sudbury basin.

"Improving nickel market dynamics are positive for First Nickel. Higher prices result in higher revenue and an improved price outlook allows the company to consider options to extend mine life at Lockerby. The company continues to focus on its key objectives, which include maximising the value of the Lockerby mine, protecting balance sheet liquidity, and building the asset base through acquisitions of base metal assets with the support of our major shareholders, Resource Capital Funds and West Face Capital,” president and CEO Thomas Boehlert said.

Last year was rough on the miner, having been battered by weak nickel prices and high debt.

First Nickel managed to amend its processing agreement with Glencore Canada, resulting in ore sales based on the gross metal value of ore shipped, net of a specified percentage.

The company believed that the amended agreement would allow the Lockerby mine to achieve improved operating margins, and that it would reduce the volatility of First Nickel’s earnings and increase the predictability of its cash flows in the future.