Base metals: Wanna start mining straight away? That’s risky business
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By starting mining operations in the Solomon Islands without doing the usual stuff, like establishing an actual JORC Resource or completing a feasibility study, freshly minted nickel producer Axiom (ASX:AVQ) is taking some huge risks.
Establishing an official mineral resource is important because it tells companies what they have in the ground, with varying levels of geologic knowledge and confidence.
And miners undertake feasibility studies to determine whether or not a resource can be mined economically.
Both these things reduce the chances that everything will go pear-shaped.
Axiom acknowledges as much, but appears confident that a commercial decision to commence mine operations at San Jorge “based upon the circumstances at the time … is an appropriate commercial strategy”.
But a number of factors – some completely out of Axiom’s hands — have led to its first shipment being delayed, once again, until May.
Just after mining commenced in late January the effects of Cyclone Oma hit the Solomon Islands, and disrupted mining operations throughout February.
Then operations were affected by the Solomon Islands general election on April 3, “which significantly reduced the availability of inter-island transport to supply labour, necessary materials and consumables required for operations”, Axiom says.
“The impact of this was greater than originally planned, particularly on Axiom’s ability to recover time lost due to adverse weather events in February and March.”
Most of the workforce is back in action.
But now authorities want Axiom’s first two ore shipments to enter and exit at Honiara Port, rather than accessing San Jorge directly.
“The authorities advised that this is a temporary requirement for administrative reasons and Axiom believes that, after the initial shipments, direct access to San Jorge can occur,” Axiom says.
“This requirement, combined with the recent Easter holiday period (causing limited availability of Government officials), has resulted in a further delay in the first shipment which is now scheduled to occur in May 2019.”
Axiom was contacted for additional comment.
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