What are the potential risks or uncertainties associated with further drilling phases or resource delineation in the RPM Zone?

Key risks and uncertainties

1. Geological and grade uncertainty – The Phase 2 hole that intersected 447 m at 1.27 % Ni (1.69 % Cr) is a single, widely spaced intercept. The RPM Zone still lacks a dense drill‑grid, so the current model is based on limited data points. Further drilling could reveal that the high‑grade core is narrower or that grade continuity drops off sharply outside the current intercept, which would reduce the tonnage‑grade balance used in the current resource estimate.
   
2. Technical and cost risk – The “deepest‑to‑date” hole pushes the limits of the current drilling rig and requires higher‑cost drilling, more sophisticated logging, and tougher logistics. If deeper or more laterally extensive holes are required to delineate the zone, the cost per metre can rise sharply, eroding the economics of the project, especially if the recoverable rate (81.4 % via DTR) does not scale linearly.
   
3. Regulatory and environmental risk – Additional drilling in the RPM Zone may trigger additional permitting steps (e.g., water‑use permits, land‑use negotiations with local communities or Indigenous groups). Any delay or denial could stall the delineation work and increase financing costs.
   
4. Metallurgical and market risk – The deposit’s primary commodity is an awaruite Ni‑Fe alloy. While the magnetic concentrate shows promising Ni percentages, the processing route for the alloy is still in early evaluation. Unexpected metallurgical behavior (e.g., lower recovery, higher impurity levels) could affect the 81‑% recovery assumption and the overall project cash flow. Additionally, nickel prices remain volatile; a 10 % drop in spot nickel can offset a sizable increase in tonnage, making the project’s NPV highly sensitive to price swings.
   
5. Financing and timing risk – The next resource‑definition report (NI‑43‑101) will likely be the market catalyst. If the report shows a lower‑than‑expected resource or a significant downgrade, the current bullish sentiment (70 % sentiment) could reverse quickly, producing a sharp price correction. Conversely, if the company runs out of cash before completing the delineation, it may have to dilute shareholders or seek higher‑cost financing, both of which would be negative for the share price.

Trading implications

• Short‑term outlook: The initial drill results are already priced in, as seen in the recent price uptick. Traders should treat the next resource update as a binary catalyst: a “beat‑the‑consensus” NI‑43‑101 could push the stock 10‑15 % higher; a “miss‑or‑re‑grade” could trigger a 15‑20 % pull‑back.
  
• Actionable strategy: Keep a tight stop‑loss (5‑7 %) below the current support level and consider buying on a pull‑back if nickel prices stay above US$9.50/mt (the level that sustains current project economics). Simultaneously, hedge exposure with a short‑dated nickel futures contract (or a basket of battery‑metal ETFs) to hedge against price‑shock risk.
  
• Risk management: Monitor drilling‑cost updates, any pending environmental permits, and metallurgical test results. A deteriorating drilling cost or a permit delay should trigger a reassessment of the upside, as the risk‑reward profile would tilt toward downside.
  

In summary, while the Phase 2 intercept is encouraging, the key uncertainties—limited drill coverage, deep‑drill cost escalation, permitting risk, and nickel‑price sensitivity—should be factored into any trading decision. Treat the upcoming NI‑43‑101 resource delineation as the primary catalyst and adjust positions accordingly.