Neometals (NMT.AX) released more drill results from the Armstrong deposit on the Mt Edwards nickel project earlier this quarter, and some of the encountered intervals are quite interesting. With 34 meters of 1.94% nickel and 24 meters containing 1.13% nickel below the past producing pit, Neometals can be satisfied with its drill results.

A total of 11 holes were drilled and 8 of those were completed on a newly acquired tenement which is directly adjacent to the Cassini resource, owned by Mincor (MCR.AX). Those holes were targeting geophysics anomalies but no significant mineralization was encountered (unlike at the Armstrong zone).

Despite the uninspiring drill results on the new tenements, Neometals should continue to work on the greater Mt Edwards project which now contains almost 8 million tonnes at 1.7% nickel for a total of almost 300 million pounds of nickel in 11 separate deposits. The Armstrong zone contains just 320,000 tonnes at an average grade of 2.6% nickel which results in less than 20 million pounds of nickel in an in-situ resource, so Neometals should focus on rapid resource expansion on this zone to make the whole project more attractive as a nickel play. The Cassini project owned by Mincor is nearby and combining both projects could make a lot of sense to unlock potential synergy benefits, but the 1.25 million tonnes containing around 110 million pounds of nickel may be too small for Neometals.

A wider regional alliance could make even more sense as Mincor’s total inventory has increased to almost 5 million tonnes at 3.8% nickel for 188,000 tonnes of nickel metal (about 400 million pounds). A good case could be made for both companies to pool their resources together and have one district play which already includes 700 million pounds of nickel in all resource categories.

Disclosure: The author has no position in Neometals.

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