Barry FitzGerald: Nickel explorers firmly on investors’ radars after uncovering potentially big finds
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Nickel exploration has emerged as a bright spot among the coronavirus-induced gloom thanks to a number of exciting drilling results in Western Australia.
The exploration results — and what might come from the ongoing programs — have created a bit of a buzz across the sector.
That is being reflected in the against-the-trend share price improvement for the nickel explorers involved, including the spectacular 175 per cent gain by Chalice Gold Mines (ASX:CHN) last week in response to its Julimar discovery, 70km northeast of Perth.
Given the 20 per cent slump in the US dollar nickel price from last year’s annual average, and the smashing of equity markets caused by the global economic lockdown to fight the virus, the against-the-trend performance has been a good effort by the nickel explorers.
It reflects the power of share price leverage to the upside that explorers of all descriptions have from their potential to make game-changing discoveries.
It is not easy to make such a discovery, but when a significant find does come along, the upside for the junior can easily swamp the downside pessimism brought on by share market and commodity sell-offs like that being seen now.
As it takes years to develop a discovery, the idea is that today’s significant find is all about future value, not the here and now. It requires optimism that a health and economic crisis like COVID-19 will eventually pass, as it surely will.
As might be suspected, Chalice’s 175 per cent gain last week from 16c to 44c is a prime example of that thematic.
Chalice was best known up until last week for the success it is having in its hunt for a new Fosterville gold discovery beneath cover to the north of Bendigo.
The Victorian hunt continues, and based on some high-grade hits on virgin ground, it could well generate some excitement in coming months.
Julimar now competes for the same attention thanks to the special intersection reported from the first hole drilled at what was an old vanadium exploration property — 13m at 3.15 per cent nickel, 1.19 per cent copper, 8.85 grams per tonne (g/t) palladium and 1.09g/t platinum from 48m.
The result prompted comparisons with Independence Group’s (ASX:IGO) Nova-Bollinger deposit in the Fraser Range (acquired by IGO in 2015 for $1.8 billion through the takeover of Sirius Resources), and suggestions that Chalice could be onto a new nickel province in the making.
There is lots of work to do before Julimar can take its place as a game-changing discovery but there is no doubt it is off to a good start.
Some of the Julimar cheer spread to Cassini Resources (ASX:CZI) last week, with its shares rising 17 per cent to 6.9c.
It has just completed a drilling program at its Yarawindah nickel-copper project, 40km to the north of Julimar and where it is drilling the same magmatic intrusives.
First results have provided encouragement (5.97 per cent nickel with copper and platinum group metals over a narrow 0.12m was the highlight), and some assays from the completed holes remain to be reported.
Cassini reckons the results to date support its exploration “model’’ that the project has the potential to “host multiple nickel-copper magmatic sulphide deposits’’.
It’s a project tied to the projected rise in battery material demand from the electric vehicle and renewable energy storage revolution which could well accelerate in a post-coronavirus world, with health issues (like clean air) set to become the subject of a greater global focus.
Meanwhile, Mark Creasy-backed Legend Mining (ASX:LEG) is another nickel explorer that could excite in coming days.
It went into a trading halt last week pending the release of results from the first follow-up drill hole to last year’s Mawson nickel-copper discovery at its Rochford project in the Fraser Range.
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