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Estrella buoyed by underground nickel mine potential

Updated: Apr 19

Estrella Resources’ proposed site plan for its 5A deposit underground mine. Credit: File

Interim feasibility work by Estrella Resources has confirmed the viability of a simple decline and two-level underground mine for its 5A nickel deposit at the company’s Spargoville project near the Western Australian town of Kambalda.

Management has estimated the mine’s capital and operating costs at $11 million, which can be represented as $US3.20 ($AU5.60) per pound of nickel produced. The current nickel price is hovering at about $US8.30 (AU13.30) per pound.

The study assumes a USD/AUD exchange rate of 0.67, with the current rate sitting at 0.63.

Estrella says it is working towards commercial terms and financing for the Spargoville project. When completed, the numbers will be used to finalise the operation’s economic model and final feasibility.

The deposit holds a mineral resource of 124,000 tonnes grading 1.9 per cent nickel and 0.15 per cent copper for 2370 tonnes of contained nickel and 190 tonnes of copper. The company believes the deposit has a probable reserve of 1043 tones of nickel and 24 tonnes of cobalt.

Management predicts a 10-month project life, including crushing and haulage. The development of the underground mine with long-hole stoping is expected to take about six months.

The decision for underground decline mining comes after bulk samples of high-grade nickel were delivered in February for processing at Glencore’s high-pressure acid leach plant at its Murrin Murrin operation. The company says its samples are performing as expected and provide valuable insights to feed into the decision on which mining option to adopt.

We are excited to continue to develop the opportunity at 5A, particularly given the successful delivery of the metallurgical sample to Glencore. Having confirmed the metallurgical properties of our ore, Estrella has passed a very significant milestone on the way to getting the Spargoville Nickel Project into production. Estrella Resources managing director Chris Daws

The mining lease at the 5A deposit is operated by Maximus Resources, however Estrella holds the nickel rights to the tenement and has agreements in place with the former to operate a mine.

The Spargoville project was discovered in the 1960s and led to the Spargoville Australia Nickel Mine operation. There is one known shaft with a subsurface depth of 388m. Since then, the 1A, 5A, 5B and 5D deposits have been discovered and developed.

Estrella acquired Spargoville when it bought WA Nickel in 2017 and its main interest lies in 5A, with its high-grade body of nickel, copper and cobalt.

Work on 5A’s definitive feasibility study (DFS), which began last year, continues and is based on an underground decline operation, with detailed engineering and geotechnical studies already in motion.

Estrella already has a short-list of preferred contractors selected and work will begin with individual contractors to optimise design and cost parameters to feasibility level.

Management says it is buoyed by strong nickel market forecasts and looks forward to getting the 5A deposit prepared for development. It has concluded from its interim feasibility work that the concept for its project remains strong and has the potential to make a profitable operation if planned and executed carefully, with the right commercial terms governing ore sales.

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