Nexus Minerals (ASX:NXM) has marked encouraging results with the completion of its first drilling program at the Pinnacles gold project in Western Australia, where the company is farming in via a joint venture agreement with mid-tier gold producer Saracen Mineral Holdings (ASX:SAR).
This preliminary encouragement follows 2000 metres of reverse circulation drilling over seven holes at the project and is expected to be further defined by assay results in January 2016.
The campaign was successful in intersecting the target zones where anticipated and has set up Nexus for positive newsflow as the results are published.
The tenement has been significantly underexplored considering its proximity to the multi-million ounce gold camp at Carosue Dam, which holds more than 4 million resource ounces of gold.
Pinnacles is located in WA's Eastern Goldfields, some 100 kilometres northeast of Kalgoorlie-Boulder.
The project has an existing 28,000 gold ounce resource, access to haul roads and infrastructure, and is surrounded by Nexus tenements - providing the company with economies of scale.
Ore agreement
Importantly, the joint venture with Saracen also includes an Ore Sale & Purchase clause – to process potential ore at Carosue Dam, located 13 kilometres to the north.
This reduces significantly any project capital requirements, and has the potential to transition Nexus to a self-funded explorer.
The agreement not only removes the CAPEX requirement but also allows Nexus access to the mill and also to other Saracen mine infrastructure including workshops, camp and haul roads.
Analysis
Nexus is in a good position to benefit from near-term momentum at Pinnacles, with drill samples having already been submitted for analysis and results expected after the Christmas period in early-mid January 2016.
The potential price catalysts associated with Nexus’ ongoing farm-in activities at the site benefit from the project’s proximity to the Carosue Dam Mine facilities, infrastructure and access roads.
The ability to access the Carosue Dam processing facility via the ore agreement, in particular, is a critical component of the agreement for Nexus.
Nexus shares have improved 25% over the past three months as work on the Pinnacles joint venture has progressed.
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