Mincor takes Long view with pivotal nickel buy
Mincor is positioning to cash-in on the lithium battery boom as a supplier of the nickel which is crucial to battery production. Plus, investors’ eyes turn to PolarX as Alaska’s new field season beckons.
The Kambalda nickel camp is stirring again, some 53 years after WMC (acquired by BHP in 2005) drilled the KD1 discovery hole, with Mincor boss David Southam positioning the company to be in the thick of things.
The Vietnam War and prolonged nickel mine strikes in Canada underpinned the nickel price spurt which led to WMC’s breakthrough discovery at Kambalda, 60km south of Kalgoorlie.
This time around it is the electrical vehicle revolution that is expected to lead to a breakout to the upside in the nickel price. It hasn’t happened just yet, but as BHP said in Barcelona last week, and in Melbourne this week, it is coming, particularly for the nickel sulphide material preferred by battery makers.
WMC shunted off its various nickel mines at Kambalda to various juniors in the early 2000s, figuring they were too small for a company of its scale. A bunch of juniors prospered as result, sending their nickel concentrates up the road to WMC’s Kambalda concentrator.
One of them was Mincor (MCR), and another was Independence Group (IGO). The sharp fall in nickel prices in 2012, and the tepid recovery to date notwithstanding the battery thematic, saw both companies put their Kambalda nickel operations on care and maintenance, Mincor in 2016, and IGO last year.
It is kind of neat then that under a deal announced on Thursday, the nickel mine that gave IGO its start, WMC’s former Long operation, is to be acquired by Mincor – which got its start with WMC’s former Miitel mine - for $9.5m in cash and shares.
It is to be wrapped in to a bigger and better Mincor restart strategy.
IGO is now a $2.8 billion company on the strength of its Nova nickel-copper mine and its stake in the Tropicana gold mine, both in the Albany-Fraser province. While Long gave IGO its start, it is no longer a core asset as it works away at making more Tier 1-type Nova discoveries along the Albany-Fraser belt.
It is a different story for the $100m Mincor which has stayed true to its Kambalda roots. The Long acquisition juices up its restart plans.
Expected to cost about $5m to refurbish, Long was a consistent and low-cost producer in the 16 years of IGO ownership (about 10,000tpa) and comes with a 32,000t resource grading a very handy 4.2 per cent nickel.
It is also neatly located near Mincor’s Durkin and Ken/McMahon deposits, with Long’s existing decline providing lower cost access to Durkin.
“Long also offers exciting near-mine resource and exploration opportunities including potential extensions of the high-grade nickel channels such as Moran South, Victor and Gibb, and a new lightly drilled upper channel position which may be contiguous with our Durkin project area,’’ Southam said.
“We intend to pursue these opportunities to grow the resource base in the highly prospective and under-explored area adjacent to IGO’s and Mincor’s tenement boundaries, leveraging off underground exploration platforms that can be established with any development drives to access Durkin North from Long.”
All in all, it is a sensible consolidation in which IGO continues to participate through the share component of the deal, and its $1.5m involvement in the circa $22m equity raising Mincor is looking to put away to give the Kambalda restart plans some grunt.
A definitive feasibility study in to the restart plan – Mincor’s Cassini deposit is the key - is expected in the December quarter and is likely to include Long’s mining inventory, as well as synergy benefits from the consolidation. So Mincor’s restart plan just got bigger and better.
It has been a nice but unusual effort by Alaskan copper-gold explorer PolarX (PXX) to cop an Appendix 5B cash query from the ASX when it was trading at 7.1c, then promptly head off to Thursday’s 9.9c.
The cash query followed the release of PolarX’s March quarter cash statement which showed cash on hand of $814,000 against a projected cashflow outflow for the current June quarter of $802,000.
PolarX told the ASX it need not worry, it was an exploration company after all, with the ability to raise equity funds or pull the hand brake if need be.
It’s not pulling the handbrake as the projected $802,000 expenditure demonstrates. It is more a case of moving on the bears and moose so PolarX can get cracking on its 2019 field season as the things thaw out.
As mentioned here on March 15 when PolarX was trading at 5.9c, the 2019 field season at the company’s Alaska Range is set to be closely watched.
It’s all about expanding the Zackly skarn deposit (3.4mt grading a handy 1.2% copper and 2g/t gold), as well as chasing the big-time potential of its Saturn and Mars porphyry targets.
They porphyry targets sit at either end of a 12km long mineralised corridor, with Zackly roughly in the middle.
Mars and Saturn have never been drilled and of the two, Mars is the most advanced in terms of establishing its credentials as a legitimate porphyry target some 6km west-north-west of the Zackly skarn.
But there is some real excitement about Saturn which is a “blind” target under glacial till and with a magnetic signature consistent with it being a porphyry system which has fed the Zackly system.
PolarX has not made any secret of the fact that major mining have been watching closely.
Back in March, PolarX managing director Frazer Tabeart mentioned that the major companies had been calling wanting to have a “look at our data under confidentially agreements with a view to potentially investing in this project”.
“So the mining companies out there get this. They can see the information we are presenting is entirely consistent with more than one porphyry copper target,” Tabeart said at the time.
That was taken to mean that PolarX would look to cut a funding deal with a major at Alaska Range, preferably through a cornerstone placement like BHP and Newcrest have done with SolGold for its Cascabel porphyry in Ecuador.
PolarX’s rising share price could be a reflection of investor expectations that a deal could be close, or simply positioning ahead of the company’s 2019 field season getting in to full swing.
Either way, the 67% share price gain since being mentioned here on March 15 is ample demonstration that technically focussed juniors with quality projects will always get the money they need to keep going, notwithstanding Appendix 5B queries.
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One of Australia’s leading business journalists, Barry FitzGerald, highlights the issues, opportunities and challenges for small and mid-cap resources stocks, and most recently penned his column for The Australian newspaper.