Perth broker says this junior represents “the deepest value” in the ASX nickel space
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Special Report: Centaurus Metals (ASX: CTM) has been rated as one of the “deepest value” and “highest potential” nickel developers on the ASX by a leading Australian broking firm.
According to a desk-note from Perth-based Argonaut Securities, the $42m junior has well and truly caught the eye of experienced Argonaut resource analyst Matt Keane on the back of a bullish announcement about its expansive work program for 2020.
Centaurus acquired the large-scale Jaguar nickel sulphide project from global miner Vale in August last year and has wasted no time in launching a 10,000m drilling campaign aimed at defining a JORC Resource by mid-year.
The company recently told the ASX it had increased drilling capacity with three diamond rigs operating at the site in northern Brazil on double-shift.
Jaguar already hosts a non-JORC compliant “foreign” resource based on some 55,000m of diamond drilling conducted by Vale of 40.4 million tonnes at 0.78 per cent nickel for a total of 315,000 tonnes of contained nickel metal.
Centaurus’ aim is to focus on the higher-grade zones within this bigger bulk resource envelope and turn it into a high-grade JORC compliant resource by mid-year.
“Centaurus has defined its works program for the newly-acquired Jaguar project,” Keane wrote.
“A third diamond drill rig has been mobilised to site with all three rigs operating on double-shift.”
“Drilling is currently focused on the Jaguar South and Onça-Preta deposits to extend known high-grade mineralisation and identify new high-grade zones, with exploration to start at other deposits and new prospects over the coming months.”
Centaurus unveiled its first batch of assay results from this major drilling push in early December – and they didn’t disappoint.
The first holes into the Jaguar South deposit returned intercepts such as 12.4m grading 1.95 per cent nickel and 40.9m at 1.4 per cent nickel with each hole also returning significant copper and cobalt values.
At Onça-Preta, the first holes returned best assay results of 6.2m at 1.9 per cent nickel, 7.9m at 1.58 per cent nickel and 10.2m at 1.2 per cent nickel.
Earlier this morning, Centaurus announced a second batch of results – with drilling at Jaguar South returning more consistent hits such as 11.9m at 1.43 per cent nickel and 10.7m at 0.99 per cent nickel and at Onça-Preta intercepts of 5.4m at 1.45 per cent nickel, 7.7m at 1.16 per cent nickel and 8.4m at 1.06 per cent nickel.
“Consistency is an important part of any successful exploration effort, and we are certainly seeing consistent results coming from our drilling when compared to the historical drilling undertaken by Vale – and that’s a real positive for the project,” Centaurus managing director Darren Gordon said.
“We are intersecting strong zones of mineralisation where we expect to, as guided by the geophysical database and historical drilling.
“The level of activity on site is building nicely with a third diamond drill rig now operating on double-shift and we are looking forward to ongoing drilling success as we continue to infill the known higher-grade zones of mineralisation.”
Centaurus attributes its decade-long presence in the Brazilian mining industry (between 2009 and 2013 it brought the large Jambreiro iron ore project to the cusp of development) and a growing depth of relations with Vale as the keys to securing the Jaguar project.
The acquisition involved an asset swap on Centaurus’ strategic Salobo West exploration project, $US250,000 ($365,321) in upfront cash and $US6.75m in deferred payments (most of this payable on the start of commercial production) and a production royalty.
Vale was aiming to delineate a Tier-1, bulk tonnage nickel deposit. While the project may not have quite met the lofty scale requirements of Vale, it is still of a scale that could be a genuine company-maker for a junior with mid-tier aspirations, like Centaurus.
“It’s worth remembering that Australia’s mid-tier nickel sector got going in the 1990s by purchasing mines in the Kambalda district from Western Mining Corporation,” Gordon says.
“These mines were not considered big enough for a major but they were certainly large enough to spawn several sizeable companies – Independence Group, Panoramic and Mincor to name a few.
“If we can replicate the success of these companies, we’ll be pretty happy.”
Centaurus’ exploration plan is relatively simple. It aims to focus in on the high-grade massive to semi-massive sulphide zones, which yielded encouraging historical high-grade intersections such as 34m at 3.31 per cent nickel from 56m, and drill out a smaller tonnage, but higher-grade resource.
The company raised $10m in September, attracting the support of a number of institutional investors including affiliates of the Sprott Group, and is rapidly getting on with the job.