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Diggers & Dealers 2020: EV growth powers up nickel prospects

Gold has been all the rage this year, and the commodity’s market prominence is no bad thing for a region that identifies itself with the precious metal.

But gold’s poorer cousin has also received a lot of attention in the Goldfields of late.

Nickel might not exude gold’s lustre, but interest in the base metal is ramping up in the region.

Most commonly used in making stainless steel, nickel sulphides are also used in batteries.

In a climate that is seeing heightened interest in the electric vehicle battery market, nickel’s future would appear to be showing some promise.

IGO certainly thinks so.

For a nickel miner, that would be expected.

But IGO is also in the gold business and amid a bullish gold environment, it last month flagged the possible sale of its 30 per cent stake in the Tropicana gold mine.

IGO then revealed it had started a “strategic review” of its options for Tropicana, 330km north-east of Kalgoorlie-Boulder.

Peter Bradford, general manager of Independence Group.
Camera IconPeter Bradford, general manager of Independence Group. Credit: Sharon Smith/Kalgoorlie Miner

The decision followed unsolicited approaches from several parties and a belief shareholder value is not being recognised for IGO’s stake in the 30:70 joint-venture with AngloGold Ashanti.

IGO said it would look at opportunities to enhance the mine’s value through underground development and exploration, but also examine “a full or partial sale” of its holding.

Shunting a stake in a significant WA gold operation would bring in a fair chunk of cash in the current environment.

But IGO, which owns the Nova nickel, copper and cobalt mine in the Fraser Range, is also keen to drive home its green credentials through its base-metals focus.

“Strategically, we are focused on metals required to enable a green-energy future, IGO boss Peter Bradford said in August.

“Our aspiration is to become a globally relevant supplier of those metals, which are critical to enabling increased renewable energy generation.”

By later flagging its stake in Tropicana might up for sale, the miner is walking the walk.

It also says a lot about what the company thinks of nickel’s future. While IGO continues to pump out base metals at Nova, there has been another potentially significant development in the Fraser Range.

Legend Mining had been doggedly scouring the ground for five years at its Rockford project, 225km east of Kalgoorlie-Boulder, with limited success.

That was until it hit promising sulphides at its Mawson discovery announced to the market in December.

Mark Creasy and Legend Mining boss Mark Wilson with Bradford.
Camera IconMark Creasy and Legend Mining boss Mark Wilson with Bradford.

Legend boss Mark Wilson described it as an “outstanding exploration success” and a watershed moment for “all Legend stakeholders and indeed all of the Fraser Range”.

The Mark Creasy and IGO-backed explorer then went on to unearth more promising nickel-sulphides at the prospect that had Mr Wilson drawing parallels with Nova’s discovery in 2012.

That prompted the tenement that had formerly been referred to as Area D to be renamed after legendary Australian explorer Douglas Mawson, whose legacy was celebrated with the plastering of his image on Australian Antarctic Territory postage stamps.

That was before a 12-year run on the Australian $100 note and the explorer’s legacy may yet leave an indelible mark in Goldfields.

But arguably, the most exciting movement in the local nickel space has been spearheaded by Mincor Resources.

The emerging nickel miner last month heralded an “exciting new era” for Kambalda, with the company revealing its nickel mines will come roaring to life from next year. Mincor’s long-awaited final investment decision pointed to 200 long-term jobs with a focus on a residential workforce and local procurement.

It marks a seminal moment for the company and the town after Mincor was forced to put its mines into care and maintenance in 2016 during a sustained downturn in the nickel price.

The decision left a figurative hole in the small community, with the population dwindling and homes left empty.

But with a new offtake agreement under its belt, a new discovery and an improved nickel price, a cashed-up Andrew Forrest and IGO-backed Mincor has a spring in its step.

The company earmarked first production from late next year.

First nickel concentrate is expected in early 2022 with an initial mine life of five years.

Mincor’s long road to recovery has seen the company outline a promising resource at its greenfields Cassini discovery, where it had its first sniff of nickel in 2015.

Four upgrades at the deposit since a maiden resource in 2018 means Cassini now boasts an ore reserve of 1.21 million tonnes at 3.3 per cent nickel for 40,100 tonnes of nickel. With just over half of future production coming from Cassini for the initial five-year life of mine, a discovery hole drilled at Cassini North in August means there could be more to come from the deposit.

There are a host of other nickel-focused Goldfields explorers with a spring in their step. But even if they outline mineable deposits, bringing developments online would depend on the nickel price.

And few commodities have suffered the whims of market speculation more than the base metal.

Nickel secured a foothold in Australia’s mining industry when nickel mines surfaced in Kambalda, Laverton and the Kimberly region in the late 1960s.

The Vietnam War and a shortage of international supply saw the nickel price soar and the commodity’s Australian debut got off to a bright start.

In September 1969, Poseidon Nickel made a major nickel discovery at Mount Windarra, 22km north-west of Laverton.

The reported find fuelled speculation that saw cash from across the world being pumped into the explorer’s penny stock, which soared to a peak of $280 a share in February 1970.

But what became known as the Poseidon Bubble sent mining stock into a tailspin soon after.

So catastrophic was the effect, it prompted the regulation of Australia’s stock markets.

With nickel’s image tarnished, the price crash marched Poseidon towards receivership in 1974.

Nickel has behaved itself a little more since.

And if the commodity’s role as a battery metal in electric vehicle manufacture comes off as some expect, the Goldfields could be shaping up quite well to make the most of it.

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