There are three worthwhile tests for an investor to consider before taking a punt on a small mining company: the commodity it’s looking for, recent exploration results, and the quality of its share register — and on those it’s awfully hard to go past Mincor Resources (ASX:MCR).

Not only is it heavily exposed to nickel, the hottest of the base metals, but it’s just released a peach of a drill result and has one of Australia’s richest people, Andrew Forrest, as a major shareholder.

Not a new player in the mining game, Mincor has a history dating back to 1999 when it fiddled around with an assortment of gold assets in Africa (while known as Africwest Gold) before buying the Reko Diq copper prospect in western Pakistan – and then selling it.

The big move by Mincor was the acquisition of nickel mines offloaded in the year 2000 by Western Mining Corporation (WMC), including the partly developed Miitel project near the WA ghost town of Widgiemooltha, about 65km south of the Australian nickel mining capital, Kambalda.

History looks like it’s about to repeat with Mincor returning to a geological structure known as the Widgiemooltha Dome which hosted the now depleted Miitel orebody.

The new target, called Cassini, is at the southern end of the Widgiemooltha Dome, about 25km south of Miitel where the Mincor story began – and where it looks like being refreshed, especially if nickel performs as strongly as some investment banks expect.

Classified as a “blind” target because there is no surface outcrop, Cassini is showing the signs of being a classic “komatiite” orebody, like Miitel and most of the other nickel deposits mined in the Kambalda and Widgiemooltha region over the past 50 years.

The highlight of the latest drill result released by Mincor on Monday was a 17.6m intersection assaying 5 per cent nickel – world class by any measure – with a core of 13m grading an even better 6.5 per cent nickel.

More importantly, the latest drilling result comes from a section which is 115m below previous high-grade intercepts that have formed the basis of a mineral resource calculated late last year at 50,400 tonnes of nickel metal.


Major resource upgrade on the cards

It doesn’t require much imagination to see the next phase of drilling targeted to fill in that 115m gap with the results going into what is likely to be a major resource upgrade announcement sometime in April, when Mincor expects to release a definitive feasibility study which will clear the way for a mining start at Cassini.

Given the past history of Komatiite orebodies in the Kambalda and Widgiemooltha region it is also likely that the Cassini structure continues beyond the recent drill intercept – it’s really just a question of chasing old lava flows around the edge of the domes.

Mincor’s return to a site not far from Miitel and its ability to make an early and significant discovery explains why professional investors were quick to support a $35m capital raising in November.

Existing major shareholders, including Independence Group (ASX:IGO) with a 4.41 per cent stake and the Forrest-controlled Squadron Resources with a 7.7 per cent interest, took up their entitlements in the issue of new shares at 60c – which means they’ve already made a reasonable paper-profit given Mincor’s latest share price of 71c.

The next few months should see Mincor continue to expand its understanding of Cassini, and other targets at the southern end of the Widgiemooltha Dome, including a Cassini lookalike called Juno.

Work is also progressing on restoring operations at the Long-Durkin project on the Kambalda Dome as part of a company-wide nickel restart strategy.

By the end of 2020, or soon after, Mincor could be back operating two nickel mines with all material earmarked for delivery to BHP (ASX:BHP), which operates refining and smelting facilities near Kalgoorlie and at Kwinana south of Perth.

Rising demand from battery makers has changed BHP’s view of nickel, with assets once earmarked for sale now seen as having growth potential – as well as delaying costly environmental clean-up obligations.

Because of its checkered history over the past few years as management tried to switch from nickel to gold, Mincor has faded from most investment bank radar screens with limited research publicly available.

That will change because at its latest share price Mincor has shaken off the tag of a nickel business which lost its way as it dabbled in gold.

Armed with fresh capital and high-quality exploration results Mincor is poised to make a return as a significant nickel producer.

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