Nickel has been the star performer in the opening months of the new financial year.

It has left the other base metals in its wake by popping 42 per cent higher than its June half average to $US8.12/lb ($12.05/lb).

Uncertainty around Indonesia’s exports bans, and expectations that battery demand will eventually account for half of total nickel demand from 5 per cent currently, has been behind the price surge.

Add in the fall in the exchange rate to below 70 US cents, and nickel’s Aussie dollar price of $12.05/lb means happy days are here again for the nickel producers after they spent several years in the wilderness.

Today’s interest though is in the nickel explorers. The price surge for the most volatile of metals means the explorers can expect a leveraged response to decent nickel exploration results.

Now if you look across the Australian nickel exploration scene, Western Australia’s Fraser Range continues to rate as the hotspot thanks to the 2012 discovery of the Nova nickel-copper-cobalt deposit by the Sirius Resources/Mark Creasy joint venture.

Nova is now owned by Independence Group (ASX:IGO) following its $1.8 billion takeover of Sirius in 2015 (Creasy took stock making him IGO’s biggest shareholder with 15.4 per cent).

Nova is just hitting its straps as a great mine, generating $251m in free cash flow in the FY19 despite the much weaker nickel price, and the hunt to find the next Nova in the remote region is as intense as ever.

Three group’s pretty much control the belt – IGO, Creasy in a private capacity on a 100 per cent basis and through multiple equity positions and joint venture arrangements, and Legend Mining (ASX:LEG).

Legend is today’s interest. It is trading at 3.5c for a market value of about $80m and its status as the premier junior explorer in the Fraser Range was recently confirmed in a three-way deal cut with IGO and Creasy.

The deals, including an above market placement to IGO and tenement acquisitions from Creasy (already Legend’s biggest shareholder) are subject to shareholder approval on September 27 but there is no reason to think there will be any dramas.

At the end of the day, Legend will be owned 14.2 per cent by IGO and 26.8 per cent by Creasy.

More importantly, Legend is on its way to holding some $14m in cash (including a final $3m payment from a previous iron ore asset sale), giving it the firepower to hit the ground hard over the next three years or so.

That ground position has been substantially upgraded thanks to the deals including a new joint venture with Creasy covering two tenements that are contiguous with Legend’s existing Rockford project tenure, and a joint venture deal with IGO over the northern Rockford tenements of Legend and Creasy.

The two Creasy tenements – the Ponton project – cover 709sq km and contain the Octagonal and Magnus prospects on which Creasy has spent close to $15m in a private capacity.

Both prospects have all the characteristics of Nova, with Octagonal in particular one to watch. IGO in its recent investor briefings classified it as the third example of massive nickel-copper mineralisation in the Fraser Range.

The first was the Nova, and the second was Creasy’s privately owned Silver Knight discovery last year.

Creasy’s discovery of Silver Knight means that while Octagonal is promising, his efforts need to be focused on Silver Knight, initially reported as a low grade oxide find but with the big-time hard-rock potential remaining to be tested.

Funnily enough, switching Octagonal out to Legend so he can focus on Silver Knight is a repeat of the situation four years ago when Creasy passed Rockford across to Legend to focus on Octagonal.

There is plenty of drilling activity to come from Legend. It has a diamond drill rig booked for October to test prospects in its Area D ground, and targets at Octagonal and Magnus will be refined for likely drilling next year.

Drilling at Octagonal will include a deep 2km hole that Creasy made a condition of the new joint venture agreement. It will be one to watch.

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