Ground Breakers: Chalice shoots into the stratosphere with maiden Julimar resource
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It is a story that has enchanted the market for more than 18 months, and now Chalice Mining (ASX:CHN) has finally delivered the pay off.
It’s been more than a year and a half since CHN dazzled with the discovery hole at the Gonneville nickel-copper and platinum group elements find at its Julimar project north of Perth, increasing the value of its stock 50 times over since March 2020.
Those investors, it seems, were not at all disappointed after Chalice announced what it declared the largest nickel sulphide discovery globally in 20 years, and the largest PGE discovery in Australian history.
Gonneville’s maiden resource, 45% of it in the indicated category, came in at 330Mt of ore at 0.94g/t platinum, palladium and gold, 0.16% nickel, 0.1% copper and 0.016% cobalt (0.58% nickel equivalent or 1.6g/t palladium equivalent).
In total that makes 10Moz of Pd-Pt-Au, 530,000t of nickel, 330,000t of copper and 53,000t of cobalt, the equivalent of 1.9Mt of nickel or 17Moz of palladium.
Shares in Chalice were up by around 20% this morning to ~$8 at 12.15 AEDT, giving the explorer a market cap of $2.8 billion. Talk about a company maker.
Chalice MD Alex Dorsch said the discovery came off the back of 175,000m of diamond and RC drilling and there remains way more to find, with just 7% of Julimar’s 26km strike-length covered by the enormous resource.
“The Resource confirms that Gonneville is the largest nickel sulphide discovery globally in over two decades, and the largest PGE discovery in Australia’s history – a remarkable achievement considering that this is the first discovery in what we consider to be an entirely new district, Julimar, within a new nickel-copper-PGE province, the West Yilgarn,” he said.
“Given its sheer scale, the attractive suite of six payable metals it contains and its premier location close to world-class infrastructure and services in Perth, Chalice clearly has the potential to become a leading global player in the green metals space.”
Chalice has also outlined a higher grade component at Gonneville consisting of 74Mt at 1.8g/t Pd-Pt-Au, 0.22% nickel, 0.21% copper, 0.021% cobalt at 1% nickel or 2.8g/t palladium equivalent.
That comes in at 4.2Moz of Pd-Pt-Au, 160,000t of nickel, 150,000t of copper and 15,000t of cobalt or 760,000t NiEq and 6.6Moz PdEq in contained metal.
Chalice views this component of the deposit, which covers a 1.9km by 900m area on farmland owned by Chalice and remains open beyond a depth of 630m, as a way to potentially maximise returns in the early stages of the development.
A scoping study on mine development options is expected to be completed in the second quarter of 2022.
Drilling remains ongoing, with assays pending for 160 drill holes and five rigs testing for extensions to high grade mineralisation of what is emerging as a Tier-1 base metals project.
Chalice is aiming to receive final clearances to start a ‘low impact’ drilling program in the Julimar State Forest.
“In the meantime, we are continuing to test the extent of the high-grade sulphide zones with step-out drilling down-plunge, and we continue to see strong potential for underground development in the longer term,” Dorsch said.
“The Scoping Study for Gonneville is progressing well and is on track to be completed in the second quarter of next year,” he added.
“We are continuing to consult closely with local communities as well as governments at both the State and Federal level, to ensure we build trust and secure our social licence to operate.”
“We consider it very important that the broader project stakeholders understand the project and the immense opportunity in front of us.”
Chalice’s success has drawn a rush of juniors into the region and sparked a pegging rush and IPO glut on the western margins of the Yilgarn Craton, where mining and exploration has been largely focused in the past in the Eastern Goldfields.
The company believes the new mineral region could extend for as much as 1200km along this western margin.
Its discovery has been a shock for many in the mining game, given it has gone largely untested for years until Chalice came along, despite sitting just 70km north-east of Perth.
Newcrest Mining (ASX:NCM) will spend US$2.8 billion comprising a 50-50 mix of cash and shares to acquire Canada’s Pretium Resources.
Conducted at a 22.5% premium to the company’s last closing price, it is a move that will see Newcrest immediately extend its gap on the chasing pack of Northern Star (ASX:NST) and Evolution (ASX:EVN) to maintain its status as Australia’s biggest gold miner.
The 2Mozpa major will immediately add more than 300,000ozpa with the acquisition of Pretium and its Brucejack mine in British Columbia.
The project is located around 140km from Newcrest’s Red Chris operations and makes the company the dominant player in Canada’s “Golden Triangle”.
Unlike Red Chris, where Newcrest will be working for years to bolster its production profile and convert the asset into a Tier-1 mine, Brucejack has been at full-scale commercial production since 2017 and is expected to produce 311,000ozpa at an all-in sustaining cost of US$723/oz over a 13 year mine life.
It produced 348,000oz at US$981/oz in 2020, generating US$269 million in free cash flow, around 16% of what Newcrest produced across its portfolio in 2020.
Another benefit of the acquisition will be that 65% of its gold production will now be in Canada and Australia, regarded as ‘Tier-1 jurisdictions’, reducing the impact of any future hiccups at the Lihir mine in Papua New Guinea.
It will also see Newcrest bolster its gold production profile to more than 2Mozpa beyond 2030, but Newcrest boss Sandeep Biswas said on a conference call today that quality was the focus when it came to assets.
“We want to assemble a portfolio of quality assets and if you look at all our mines — and Brucejack is an example here — it ticks every box on quality that you can think of,” he told analysts and investors.
“And that’s what we focus on. Over time, quality always wins out.”
“That’s been our focus, we haven’t been distracted on other things and what have you, it’s about really sticking to our strategy, both in terms of the quality of deposit, the life, the cost, jurisdiction as well. And that’s why we think it’s such a great fit into the business.”