St George Mining (ASX:SGQ) has now wrapped up the 100% acquisition of the Hawaii and Mt Alexander North nickel sulphide exploration projects, which importantly includes all technical and exploration data.
The acquisition was made from BHP Billiton Nickel West Pty Ltd.
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.
These highly prospective projects are located south-west of the Agnew-Wiluna belt in Western Australia which hosts numerous world class nickel and gold deposits.
John Prineas, executive chairman, commented:
“The exploration at these projects to date has confirmed their potential, and we now have a tremendous opportunity to deliver a discovery through systematic and technically driven exploration.
“In addition to acquiring the existing database from Nickel West, our Exploration Manager – Matthew McCarthy – worked on these projects when he was at that company.
"This allows us to hit the ground running and to fast-track exploration.
“At Hawaii, we have already commenced on-ground exploration with a moving loop electromagnetic survey, to be followed by a maiden reverse circulation drilling program later this month."
Hawaii Project
The Hawaii Project is located 55 kilometres west of the Sinclair Nickel Project and 90 kilometres southwest of Cosmos.
Both of these projects are undergoing major new exploration programs, reflecting the increased focus on nickel sulphide exploration in the area.
St George has acquired exploration licence E36/741 from Nickel West, which covers 211.34 square kilometres.
In addition, St George has lodged an application for exploration licence E36/851 which covers 86.42 square kilometres.
Reconnaissance shallow aircore drilling completed by Nickel West at the Hawaii Project in 2012 discovered over 5 kilometres of moderate to high MgO ultramafics that are adjacent to the Ida Fault.
St George is planning the first ever reverse circulation drilling to test the bedrock geology.
Mt Alexander North Project
The Mt Alexander North Project is located 120 kilometres southwest of Leinster, the centre of Nickel West’s operations in the Agnew‐Wiluna belt.
St George has acquired exploration licence E29/548 from Nickel West which covers 45.12 square kilometres, and in addition has lodged an application for exploration licence E29/954.
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.
With drilling this month at both East Laverton and Hawaii, and assay results to follow soon, St George will have very strong news flow heading up to the end of 2015 and into the New Year.
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