St George Mining (ASX:SGQ) is acquiring the Hawaii and Mt Alexander North nickel projects in the world class Agnew-Wiluna belt, Western Australia, from BHP Billiton (ASX:BHP).
These will neatly complement St George's flagship East Laverton Project and also increases the probability of making an additional nickel sulphide discovery.
Upfront cash costs of $40,000 are minimal with a royalty payable to BHP only on successful mineral production, allowing the company to dedicate resources to exploration work.
Agnew-Wiluna hosts numerous globally large nickel and gold deposits such as Honeymoon Well, Mount Keith, Cosmos, and Perseverance.
Notably, Cosmos, with a resource of over 500,000 tonnes of contained nickel, includes one of the highest grade nickel mines ever discovered. It was recently acquired by Western Areas (ASX:WSA) for $24.5 million.
The projects to be acquired have been held by BHP for about 7 years.
They are located on the Ida Fault, a fundamental structure that links with the Mt Goode Rift that hosts the high grade Cosmos nickel sulphide deposits.
Adding interest, both projects have drill ready targets and the company plans to start drilling at the Hawaii Project next month.
St George is also on track to start drilling at its flagship East Laverton Project next month.
John Prineas, executive chairman, commented:
“The Hawaii and Mt Alexander North projects are underexplored but located within an area that has an excellent history of major nickel sulphide discoveries.
“This acquisition is consistent with our strategy of identifying early stage projects, like at East Laverton, and creating substantial value through systematic and technically driven exploration.
“We will ramp up exploration activity at these new projects while continuing our extensive exploration program at the East Laverton Project.
“St George has substantially increased its already attractive exploration portfolio with multiple high quality opportunities for a significant discovery.”
Acquisition Projects
The Hawaii and Mt Alexander North Projects are located along the Ida Fault, a significant Craton‐scale structure that marks the boundary between the Eastern Goldfields Superterrane to the east and the Youanmi Terrane to the west.
The Mt Goode Rift that hosts the high grade Cosmos nickel complex to the north is interpreted to be a splay off the Ida Fault.
Geology at Hawaii and Mt Alexander North could be contiguous with the stratigraphy that hosts Cosmos, which is not currently in production.
Hawaii Project
The Hawaii Project (E36/741) covers 211.34 square kilometres and is located approximately 70 kilometres southwest of Leinster, the centre of BHP Billiton Nickel West’s nickel activities in the Agnew-Wiluna belt.
In addition, St George has lodged an application for exploration licence E36/851 which covers 86.42 square kilometres and takes the total project area to 297.76 square kilometres.
Reconnaissance shallow aircore drilling at the Hawaii Project in 2012 discovered over 5 kilometres of moderate to high MgO ultramafics adjacent to the Ida Fault in an area long considered to be barren granitoids.
St George is planning a deep reverse circulation drilling program at Hawaii next month, which will be the first bedrock test of the ultramafic rocks and other targets.
Mt Alexander North Project
Mt Alexander North (E29/548) covers 45.12 square kilometres and is located approximately 120 kilometres southwest of Leinster.
The company has also lodged an application for exploration licence E29/954 which covers 41.72 square kilometres, increasing total project area to 86.84 square kilometres.
Tenement E29/548 is immediately north of the Mt Alexander Project in E29/638 which is currently held in joint venture by Nickel West (75%) and Western Areas (25%).
High grade nickel-copper sulphides were discovered at the Cathedrals prospect at the Mt Alexander Project in 2008 with intersections including 4 metres at 4.9% nickel, 1.7% copper and 3.9 grams per tonne total PGEs from 91.4 metres and 3 metres at 3.8% nickel, 1.6% copper and 2.7g/t total PGEs from 56.3 metres.
Transaction Terms
Besides the initial cash consideration of $40,000, the other key commercial terms of the transaction are:
- Nickel West has offtake rights to any nickel produced from the acquired tenements;
- Nickel West may charge a base royalty of 1% of the proceeds from any mineral production at a tenement; and
- Nickel West may charge an additional royalty of 1% of the proceeds of any nickel produced from a tenement provided that the additional royalty is only payable if a minimum Measured and Indicated JORC resource of at least 25,000 tonnes of contained nickel is defined at the relevant tenement and payments of the additional royalty start 12 months after commercial production from the relevant tenement.
Analysis
The acquisition of the Hawaii and Mt Alexander North projects complement St George's flagship East Laverton Project and increase the likelihood of the company making further nickel sulphide discoveries.
It is worth noting that both projects meet BHP’s rigorous technical standards for potential large scale mineralisation and were sold due to cuts in the mining giant’s exploration budget.
Further de-risking the projects, the Agnew-Wiluna hosts numerous globally large nickel and gold deposits including Cosmos, one of the highest grade nickel mines ever discovered with a resource of over 500,000 tonnes of contained nickel.
With existing drill targets in place, the company is off to a running start with plans to start drilling at the Hawaii Project in October.
Other news flow ahead includes the start of drilling at East Laverton next month.
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