Q+A: Chalice Mining CEO Alex Dorsch on the nickel market, ESG, and hydrogen
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Chalice Mining (ASX:CHN) hit headlines last year following its ‘frontier’ nickel discovery at the Julimar Project, around 70km northeast of Perth.
A maiden four-hole reverse circulation (RC) drilling program kicked off in Q1 2020 “as an initial test” of several high conductance moving-loop electromagnetic (MLEM) targets discovered back in 2019.
What followed stunned the market.
The first drill hole hit 19m at 2.59% nickel, 1.04% copper, 8.37g/t palladium and 1.11g/t platinum from 48m in fresh rock, which included a massive sulphide zone of 13m at 3.15% nickel, 1.19% copper, 8.85g/t palladium and 1.09g/t platinum.
This zone was identified within a broader zone of 25m at 2.02% nickel, 0.88% copper, 8.50g/t palladium and 0.91g/t platinum from 46m – unveiling the Gonneville Intrusion within the Julimar Complex and unlocking the first material discovery of nickel sulphides in the western half of WA.
Fast forward more than a year and a half later to the Australian Nickel Conference in Perth this week and the excitement is not over yet.
Chalice has been one of the standout performers in the sector, hitting up more than 4,000% in total shareholder return (TSR) since the Julimar discovery, with the Gonneville intrusion marking only the first discovery along the 26km intrusive complex.
And more importantly, the explorer has 8,000 sq km of licence in and around Julimar to continue leading the charge in the new mineral province within a matter of weeks at the high priority Hartog target, where all indications suggest a continuation of the mineralisation system.
Stockhead sat down with managing director and CEO Alex Dorsch to discuss the nickel market, ESG, and hydrogen.
I think it’s incredibly strong, that impending shortfall and deficit in the market in 2025–2026 is broadly accepted now that that is going to happen.
It’s an incredibly strong time and I guess one of the key questions around the nickel market now is at what point does sulphide start to get priced differently to the ferro nickel and nickel pig iron (NPI) product. I think that is what everyone is wondering at the moment.
Gonneville is an early-stage, very large scale, intrusion-hosted magmatic sulphide discovery, which has nickel, copper, PGs, cobalt … a bit of gold.
It’s a true polymetallic discovery and the first discovery in a new province.
We were the first ones to find any material discovery in the western part of western Australia and we have all the surrounding ground to explore for similar types of discovery.
There were some historical occurrences dating back to the 1970s such as some drilling around the new Norcia area around 50km north of us but it was never developed into a deposit, so we’ve been the first major nickel discovery in the western part of WA.
I think it’s scale.
There are a lot of small-scale nickel sulphide discoveries in WA and elsewhere around the world, there are a lot of occurrences and smaller discoveries but ours is a standout in terms of scale.
We are pre-resource and will be publishing the resource in about four weeks’ time, but the deposit is about 2km long, 1km wide and at least about 800m deep so it’s a significant size.
I think very much so, and I think the jury is out about what sort of premium we are likely to get but I think it will be an indirect premium in a way.
Part of the industry thinks that it is a good idea, but I don’t know whether the customer – as in the factory, manufacturer or stainless-steel producer – agrees about the premium and I think that’s typically got to do with China, the biggest consumer.
I think equity investment will be more nuanced around ESG and is already nuanced around ESG performance – that will translate into a cost capital for players who have stronger ESG performance. Whether that turns into an actual nickel price difference, the jury is out and we will probably see that happening over the longer term, maybe 5 or 15 years away.
We have a dedicated ESG and sustainability strategy, we have overlaid all ESG elements throughout the business.
It is not enough to try to maximise the value of the discovery or production, you have to look at a broader stakeholder mix and generate value for all stakeholders.
We are active in local community around our discovery, we are providing employment for locals and providing sponsorship opportunities for local causes, and we are aware of our environmental responsibilities.
We are very interested in the hydrogen space, particularly because the palladium and platinum group of elements have a very important role to play.
Everywhere through the hydrogen cycle there is a platinum or palladium step.
We are biased because we are a stakeholder in the hydrogen economy in WA but the other thing is the supply of PGEs come from undesirable jurisdictions such as Russia and South Africa. In terms of how to underpin the long-term success of hydrogen, it requires PGE supply from greener, safer sources and that’s what we are looking into.
Battery electric vehicles is in full swing, but I think hydrogen is the next phase and it’s probably between 5 or 20 years before we see the full-scale deployment of hydrogen technology.
We are an investor in Caspin (ASX:CPN), we own about 10%.
We are a strategic investor and very supportive of what they are doing.
We view their ground position to the north of us as a very attractive, early-stage exploration opportunity and they already have evidence of sulphides that are very, very similar in tenor and type of minerality to what we are seeing in our discovery.