Resources Top 5: Another ASX nickel stock bags on big drilling results
Here are the biggest small cap resources winners in early trade, Tuesday June 2.
ADD has drilled into 4.15m of massive nickel sulphides at the Kabanga Jirani project, adjacent to the Tier-1, high grade Kabanga deposit in Tanzania.
“We are delighted with this drill result,” ADD technical director John Hicks says.
“It validates Adavale’s exploration strategy and builds confidence in the prospectivity of our other priority target areas within the Luhuma Trend.
“With a second diamond drilling rig currently being mobilised to site, Adavale is well positioned to advance drilling its priority targets.
“Two follow up drillholes will now be drilled around this massive sulphide intersection.”
Neighbouring Kabanga is one of the largest undeveloped nickel sulphide projects in the world.
It contains 58Mt of resources at an average nickel grade of 2.62%, up to an even higher equivalent of 3.14% when copper and cobalt credits are included.
Major miners Glencore and Barrick previously spent hundreds of millions on exploration and predevelopment at Kabanga, which was put in mothballs when nickel prices took a dive.
It is now part owned by BHP (ASX:BHP). Development of a 30-year, 65,000tpa ni eq operation is underway, with first production anticipated in 2025.
ADD is the second nickel junior to bag in two days after Resources & Energy Group (ASX:REZ) yesterday announced a “large and shallow nickel deposit with prospects for open cut development” at the East Menzies project in WA.
Perth broker Jason Peterson has bolstered his stake in the junior explorer from 9.18% to 10.389%.
His firm CPS Capital Group recently led a nil discount $2m placement for former shell BLZ, which is buying the 340sqkm greenfields North Spirit lithium project in Ontario.
North Spirit is 30km along strike from the 50Mt PAK and Spark projects, where owner Frontier Lithium (TSX.V:FL) recently pulled up an eyewatering 398m @ 1.88% Li2O1, including 23m @ 3.12% Li2O2 in one drillhole.
It is also in the same neighbourhood as recently listed Patriot Lithium (ASX:PAT).
The acquisition will cost BLZ an initial $100,000 cash and $550,000 worth of shares (55m shares at 1c). The company will then pay an additional $2.65m cash and $5.95m shares in staged payments right up to the release of a mining feasibility study.
The vendor will also retain a 2% net smelter royalty (NSR) should the project enter production.
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Advanced project developer MIO hit the skids alongside the iron ore price in 2022, and never really recovered.
According to a feasibility study released March last year, the flagship Lake Giles project in WA would produce 3mpta of high-grade concentrate over a 25-year life.
The giant magnetite project will cost ~$800m to build.
MIO is forecasting a post-tax NPV of $US315m and IRR of 13%, based on a long-term China sales price of $US131.40/t for its 66.1% Fe concentrate product.
The company is now dabbling in nickel exploration at Lake Giles, where it has identified 319 historical drill holes with highly anomalous nickel 0.1% or greater.
“Since the completion of the Lake Giles Iron Project Feasibility Study, the company has been actively assessing the nickel prospectivity of the project area and has identified seven nickel prospects within our Lake Giles project,” MIO chairman Cameron McCall says.
“The region is currently undergoing extensive nickel exploration, with Dreadnought Resources active in the surrounding area.
“The Yerilgee Greenstones are unique as they remain the only untested Greenstone belt in the Yilgarn Craton for nickel sulphides.”
MIO also owns 21.64% of WA lithium-gold spinout Infinity Mining (ASX:IMI).
DTM has almost wrapped up a 3000m drilling program at the Dorchap lithium project in Victoria, where exploration is fully funded by JV partner and major producer SQM under a $12m, six-year earn-in agreement.
SQM is one of the big three in the lithium business, best known for its JV with Wesfarmers (ASX:WES) in the integrated Mt Holland lithium project development in WA.
The phase 1 drilling program targeted four primary lithium mineralised dykes, called Eagle, Fergusson’s, Blair’s, Rhoda Creek, and Boone’s.
“All nine holes completed to date have encountered pegmatite dyke(s), with the final hole currently underway at Boone’s,” DTM said 30 May.
“It should be noted that the presence of pegmatite, as has been determined by visual inspection of the core, does not necessarily indicate the presence of lithium mineralisation.
“Core from three holes has been logged and dispatched for assay and analysis, and the company awaits the results.”
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The minnow is picking high grade lithium, REEs, copper and niobium in rock chips all over the joint.
Rock chip and soil sampling is an early-stage exploration technique used to dial in on targets for drilling.
While high grades don’t necessarily reflect of what lies beneath, they are promising.
In mid-May it picked up rock chips grading ~2.3% lithium right under the armpit of Delta Lithium’s (ASX:DLI) potentially large discovery at Yinnetharra in WA.
This is promising, the company says, especially as it only had time to target a small percentage of the total outcropping pegmatites across its project area (rock that can contain lithium).
On 1 June, eluvial samples near Yinnetharra unsurfaced an astonishing 14.3% niobium pentoxide (Nb2O5) 6.7% tantalum (Ta2O5) 3689 parts per million (ppm) total rare earth oxides (TREO) with 70.3% heavy rare earth oxides (HREO).
RR1 will get the drills spinning on key targets during Q3 this year.