Auroch eyes untapped potential in historic nickel project deal
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Special Report: Auroch Minerals looks set to revive the iconic Nepean nickel project near Coolgardie in Western Australia, following a binding agreement to acquire an 80% stake in the highly prospective historic site.
Under the terms of the agreement announced today, Auroch (ASX:AOU) will acquire the majority stake in Eastern Coolgardie Goldfields – the joint venture company which will hold the high-grade nickel sulphide project. The remaining 20% will be acquired by Goldfellas, a recently incorporated private company of gold prospectors, resource industry executives, stockbrokers, lawyers and investor relation consultants.
The deal will come at a total cost of $4 million in cash and scrip.
The acquisition of Nepean and the surrounding tenements represents a new chapter in the storied history of the Australia’s second nickel mine, which produced more than 1.1 million tonnes of ore for 17 years from 1970 for 32,202 tonnes of nickel metal at an average recovery rate of 2.99% nickel.
The ore was treated at the Kambalda processing facilities owned by Western Mining Corporation – now BHP – until the project’s closure in 1987 on the back of low nickel prices.
That closure left significant nickel sulphide resources unmined – a JORC 2004-compliant mineral resource estimate released by previous owner Focus Minerals in 2007 estimated a remnant inferred mineral resource of some 13,250t contained nickel at 2.2%.
Little work has been carried out since.
Auroch managing director Aidan Platel said the project would be a significant addition to the company’s portfolio of WA nickel assets.
“We are thrilled to be adding the Nepean nickel project to our existing portfolio of high-grade, high potential nickel sulphide projects in Western Australia,” he said.
“The high-grade Nepean nickel mine is an integral part of the history of nickel mining in Australia, and with the remnant resources and strong near-mine potential to find further massive nickel sulphide mineralisation we believe that it has a big role to play.”
The known mineralisation at Nepean is contained in typically massive to semi-massive sulphides with a very high nickel tenor. The area is cross-cut by pegmatite veins including one large pegmatite which cuts across the stratigraphy at depth beneath the existing mine.
Mr Platel likened the project to Western Areas’ Flying Fox nickel project – a mine with historic production of around 8,000 tonnes of nickel thought at time of acquisition to have been constrained at depth by a granite dyke.
“Western Areas (WSA) subsequently drilled below the granite and discovered significantly more high-grade nickel sulphide mineralisation, and has since produced over 100,000 tonnes of contained nickel from the Flying Fox mine,” he said.
“WSA’s later discovery of the Spotted Quoll nickel sulphide deposit along strike from the Flying Fox mine adds further weight to the analogy, with the Nepean nickel project containing over 10km of strike of mine sequence stratigraphy that has seen very little historic drilling below the weathered profile.”
Auroch will be hoping to follow the WSA example at Nepean.
Auroch has planned its next steps at Nepean, with plans in place to immediately begin exploration on the 3128-hectare package.
The company has hole planning and permit applications for a maiden drilling campaign underway, with a program of around 3000m of drilling intended to test priority targets along strike from the Nepean nickel mine.
Mr Platel said the company was thrilled to add the exploration program to those at its existing nickel projects in the region.
“We are very excited by the enormous potential of the Nepean nickel project and are eager to commence our initial exploration programs,” he said.
“It is the perfect complement to our existing Leinster and Saints Nickel Projects, and we look forward to progressing all three projects in parallel.”
In Goldfellas, Mr Platel said Auroch had an experienced and knowledgeable joint venture partner.
“Goldfellas bring a large network of knowledge and experience in the resources sector to the partnership, and we look forward to working closely together with them in the Nepean nickel project,” he said.
In addition to its WA nickel interests, Auroch is also currently exploring copper projects in South Australia.
This article was developed in collaboration with Auroch Minerals, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.