Nickel Rush- IGO Rejuvenates West Kimberley JV, MLX Inks Farm-in and Unveils Long-Life Open Pit

  • Jun 13, 2020 AEST
  • Team Kalkine
Nickel Rush- IGO Rejuvenates West Kimberley JV, MLX Inks Farm-in and Unveils Long-Life Open Pit

Summary

  • Nickel prices are under a recovery mode with its near-future contract surging by ~ 20.70 per cent, leading towards a gush in ASX-listed nickel stocks such as IGO Limited (ASX:IGO), Metals X Limited (ASX:MLX).
  • The steel sector in China is anticipated to boom, which coupled with a market deficit of nickel, especially after Indonesia nickel ore export ban, could see further boost in demand for nickel over the long run.
  • While Indonesia is out of the play, leading to a global nickel supply deficit, the world is now turning eyes toward the ASX-listed nickel mining companies due to large nickel deposit across Australia, which could position itself among the top of the nickel supply chain.
  • IGO has restarted the ground field activities at the West Kimberley JV, which is anticipated by the Company to take 4 to 6 weeks before it could move ahead with diamond drilling at identified targets.
  • MLX has inked a $32 million exploration Farm-in and Term Sheet JV with IGO over the Paterson Exploration Project, while completing a scoping study over its Nifty Copper prospect, unveiling and long-life open pit with pre-tax NPV of USD 105 to USD 125 million at a 10 per cent discount rate.

Nickel prices are back in action with nickel futures recovering ~ 20.70 per cent from the level of USD 10,867.50 (intraday low on 23 March 2020) to the present level of USD 13,117.50 (intraday high on 8 July 2020).

While the current COVID-19 outbreak has led to a plunge across the global base metals market; industry experts anticipate that post the nickel export ban by Indonesia, which is one of the largest nickel ore suppliers, the nickel market would witness a supply deficit going forward, while steel and battery-tech sector would keep the demand lit.

To Know More, Do Read: Where Would The Australian Supply Fit in the Projected Global Nickel Deficit Ahead?

The steel market in China is booming again and is further anticipated to grow with steel demand increasing 100 bps across China during the year 2020, which coupled with a projected supply deficit in now turning all eyes toward ASX-listed nickel mining companies such as IGO Limited (ASX:IGO), Metals X Limited (ASX:MLX), and many more.

ASX-listed Nickel Mining Companies

The stock of the Company is under a recovery mode now with prices surging from the level of $3.270 (intraday low on 23 March 2020) to the present high of $5.420 (intraday high on 9 June 2020), which marks a price recovery of ~ 65.74 per cent.

West Kimberley Activities to Restart

IGO notified stakeholders that it anticipates the field program for the West Kimberley JV 2020 field season to recommence in early July 2020. The planned work at the site includes two deep DD holes targeting the gravity high and central Merlin knot at the Merlin and a regional aeromagnetic and radiometric survey over the West Kimberley JV that had started on 1 June 2020, and is expected to get completed in 4 to 6 weeks.

Furthermore, the Company had advised its JV partner Buxton Resources Limited (ASX:BUX) to conduct additional ground electromagnetic and surface mapping in order to prioritise follow-up drilling, which has been approved for EIS funding.

The JV partner has identified 13 EM targets, out of which 2 were modelled outside the area of the existing MLEM survey. Also, IGO’s 2019 Spectrum airborne EM survey had identified additional targets, which would now be earmarked for testing with the ground EM survey.

Once the heritage protection agreements stage is in place, IGO would conduct ground reconnaissance and assess the potential for follow-up ground EM on several high priority targets outside the Quick Shears and Merlin prospects.

The stock of the Company last traded at $5.06 (as on 12 July 2020), down by 1.17 per cent against its previous close on ASX, whereas, the stock of its JV partner- BUX last traded at $0.08, unchanged as compared to its previous close on the exchange.

MLX is showing some promising recovery on the exchange amid of a recovery in nickel prices with the stock of the Company surging from the level of $0.043 (Intraday low on 23 March 2020) to the recent high of $0.105 (intraday high on 11 June 2020), which marks a price gain of ~ 144.18 per cent.

MLX Inks $32 Million Exploration JV with IGO

Recently, the Company announced that that it has executed a Farm-in binding agreement and JV with IGO concerning the Paterson Exploration Project, which surrounds its Nifty Copper Operation. The Nifty Copper Operation was suspended due to unfavourable copper prices in the market, and in the recent past, MLX identified a long-life open pit at the prospect.

To Know More, Do Read: Metals X Updates Nifty Resources While Independence Expands EL at Fraser Range

The Farm-in binding agreement and Term Sheet JV with IGO would now cover the 2,394km2  Paterson Exploration Project (or PEP), in which, MLX would retain 100 per cent rights to Nifty and its associated processing infrastructure, the Maroochydore Project, and a 393km2 exploration tenure.

Furthermore, IGO would solely fund the exploration with an expenditure of $32 million over a tenure of 6.5 years to earn an interest of 70 per cent in the PEP, including a minimum expenditure of $11 million before withdrawal over a tenure of 3.5 years.

Also, upon acquiring 70 per cent of the project, IGO and MLX would form a JV, in which IGO would free-carry MLX to the completion of a PFS over the newly identified minerals after which, both the parties must contribute or dilute based on their percentage interest to maintain their respective interests.

Scoping Study at Nifty Unveils Long-Life Open Pit

Under its Copper Assets Strategic Review, MLX completed a scoping study of the Nifty prospect and identified a 10-year open pit, providing 23 million tonnes of sulphide feed to the existing concentrator with an average grade of 1.24 per cent copper.

 

 

The AISC (all-in sustaining) cost is estimated to stand in the range of $5,400 to $5,800 per tonne with treatment and refining cost of $960 per tonne of copper sold.

The Company anticipates that the pre-production capital would stand in the range of USD 40 to USD 60 million, and considering the current spot of $8,000 per tonne or USD 2.54 per pound; the Company anticipates the total pre-tax net cash flow to stand at USD 285 to USD 315 million, which further translate to a pre-tax NPV of USD 105 to USD 125 million at 10 per cent discount rate.

The stock of the Company last traded at $0.086 (as on 12 June 2020), down by 6.52 per cent against its previous close on ASX.

 


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