Junior explorer Estrella Resources witnessed a nice surge in its share price today after telling investors it had returned “spectacular” high-grade nickel sulphide hits from a project called “Spargoville”.

Recent drilling delivered nickel grades of up to 12.9 per cent from just 69m down. Grades of as high as 10.45 per cent were found just 20m down.

High-grade nickel is anything from about 3 per cent upwards.

“These nickel results are some of the best nickel sulphide intercepts that I have seen in my 14 years exploring nickel sulphide orebodies in Western Australia,” chief Christopher Daws said.

“The outlook for nickel is bullish with the forecast of large supply deficits and the need to provide quality nickel stocks to the EV/battery storage manufacturing industries.”

Investors piled into Estrella (ASX:ESR), driving shares up 65 per cent to an intra-day peak of 3.3c. More than 38 million shares worth about $1.1m had changed hands just before midday AEDT.

Estrella Resources (ASX:ESR) shares over the past year.
Estrella Resources (ASX:ESR) shares over the past year.

Nickel is usually found in two main ore types – sulphide or laterite.

Laterites are harder and more expensive to mine and process, whereas sulphides are much cheaper to turn into battery grade nickel sulphate and will fetch a premium price.

Mr Daws says the current market reminds him a lot of the early stages of the nickel boom of 2007.

Nickel prices have been weaker than expected in recent months, but UBS sees demand growing and prices rising over the next two to three years.

Demand predictions out to 2030 indicate there is going to be a big step change in demand for nickel used in batteries — driven by a global push by battery makers to use less cobalt and more nickel.

“Demand for nickel in lithium-ion batteries will soon make batteries the second-largest end-use application for nickel,” Roskill says.

Batteries with higher nickel content are cheaper and longer-lasting because they can store and produce more energy.

Roskill forecasts total, primary use of nickel in batteries will increase 10-fold to 2030.