Estrella Resources has signed an offtake and ore processing agreement with Glencore subsidiary Murrin Murrin Operations for 2000 to 4000 tonnes of bulk metallurgical sample from its 5A nickel mine near Kambalda.
The company says a positive process outcome from the bulk metallurgical sample will give Estrella a strong base from which to fully develop the 5A nickel mine using simple pit cutback methods.
Whilst the commercial terms of the offtake agreement remain confidential, Estrella says it expects to see a positive financial return from the sample at current nickel prices. Shares in Estrella jumped more than 50 per cent on the back of today’s announcement during intraday trading before settling at around 0.014c.
The 5A deposit’s total mineral resource sits at 124,000 tonnes going 1.9 per cent nickel for 2370 tonnes nickel and 190 tonnes copper. The site forms part of the company’s greater Spargoville project.
Estrella has been busy preparing for the extraction process at 5A with staff and contractors mobilised to the operation. Bulk sample laydown areas have been prepared whilst pit access and rehabilitation of the open pit ramp is complete. The first of the heavy equipment is on-site to commence sample extraction and from there it will be crushed and screened to size at the bulk sample laydown area before being loaded and trucked to Murrin Murrin for processing.
Spargoville is approximately 20km south-west of Kambalda, Western Australia and was first discovered by Selcast Exploration in the late 1960s.
Since then, the 1A, 5A, 5B and 5D deposits have been discovered and developed. Estrella acquired the project in 2017 when the company bought WA Nickel. The 5A deposit was mined as an open pit for a short period in the 1990s. The company says a high-grade body of nickel, copper and cobalt was left behind and is located directly below the old pit floor.
In June assays from a hole drilled at the operation returned a 3.4m intersection recording 8.2 per cent nickel, 0.6 per cent copper, 0.2 per cent cobalt and 21.5 per cent sulphur from 65.16m. The intersection contains a 2.66m section going 10.34 per cent nickel, 0.79 per cent copper, 2195 parts-per-million cobalt and 27.1 per cent sulphur from 65.64m.
In August the company received assays including a 6.8m hit going 4.4 per cent nickel from 66.2m containing 1.76m at 10.21 per cent. A second hole recording a 4.05m section reading 3.05 per cent nickel from 76.9m including a 1.28m hit at 7.28 per cent.
Whilst nickel prices have dipped over the past couple of days, the resource is still up more than 20 per cent for the month meaning it could be a great time for Estrella to start the move into production at the A5 deposit.
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