It seems a Western Australian nickel sulphide explorer is trying to make one point clear – there is still plenty of life in the old Kambalda war horse.
And, to prove its point, the junior has prioritised two major development options as it patiently builds its inventory in the historic WA mining district.
Earlier this month Lunnon Metals Ltd announced the first mineral resource estimate (MRE) for the S16C and N14C surfaces, located at its historic Foster nickel mine, which sits within the 47 square kilometre Kambalda Nickel Project (KNP).
This new MRE comprises 64,000 tonnes at 5.7 per cent nickel for 3,700 contained nickel tonnes in Inferred Resource.
The result increased Lunnon’s global MRE across the KNP to 2.64 million tonnes at 3.1 per cent nickel for 83,000 contained nickel tonnes ‒ a 112.8% increase in contained metal since it listed on the Australian bourse during June 2021.
According to the WA-based junior, the total MRE that is accessible from the Foster mine decline now stands at 1.7 Mt at 3 per cent nickel for 52,200 contained nickel tonnes, and complements the recently upgraded Baker deposit.
Baker, which like the rest of the KNP is located around 20 kilometres south east of BHP Ltd’s Kambalda nickel concentrator (or 50-70 km south-southwest of Kalgoorlie-Boulder), was already a definite target of interest when it was subjected to a first pass RC drilling program between July and October last year.
Since then the company (via its December quarterly) has described the ore body as its “cornerstone asset”.
As it stands Baker now has an MRE of 929,000t at 3.3 per cent nickel for 30,800 contained nickel tonnes ‒ comprising 638,000t at 3.8 per cent nickel for 24,000 nickel tonnes in Indicated Resource on top of 291,000t at 2.3 per cent nickel for 6,800 nickel tonnes in the Inferred category.
It enjoys the reputation of being the first deposit found in the immediate Kambalda area since 2008, and its existence proves that Western Mining (WMC) – which discovered what has become one of the world’s largest nickel provinces in 1966 (remarkably with its first drill hole) – did leave some wealth in the ground when it withdrew from the area circa 2001.
Lunnon said the updated MRE positioned the company to fast track Baker by starting mine design and scheduling during the March 2023 quarter.
The company has already finalised commercial terms for ore tolling and a concentrate purchase agreement. Regulatory approval to start development at Baker has also been granted.
Meanwhile, metallurgical and geotechnical studies are ongoing.
Overall, Lunnon controls the Silver Lake-Fisher and Foster-Baker areas, which host so-called Kambalda-style komatiitic nickel sulphide mineralisation.
Interestingly, the company’s current upside does not end with Baker or Fosterville.
In its December quarterly the junior also sang the praises of the Warren Shoot, with the junior attempting to prove throughout 2022 that this separate channel had the potential to host substantially more than its current MRE of 6,400t of nickel.
The company has targeted the prospective nickel contact between the very broad drill spacing left by WMC when the mine closed in 1994. It now believes success at Warren may enable it to extend its grade estimation, with the objective being to link up and join areas already reported in the MRE with those currently being successfully tested.
Also during the December quarter – as part of the Warren 1 Down-Plunge Drill Program – seven further diamond drill were completed, with the latest polymetallic results (using a 1 per cent nickel cut-off) revealing 7.48m at 4.46 per cent nickel, 0.44 per cent copper, 0.09 per cent cobalt, 1.71 grams/t palladium and 0.58g/t platinum (from 482.84m); 4.35m at 1.24 per cent nickel, 0.14 per cent copper, 0.03 per cent cobalt, 0.44g/t palladium and 0.19g/t platinum (503.55m); 2.5m at 1.75 per cent nickel, 0.19 per cent copper, 0.04 per cent cobalt, 0.85g/t palladium and 0.17g/t platinum (485.5m); 1.55m at 2.95 per cent nickel, 0.23 per cent copper, 0.06 per cent cobalt, 0.98g/t palladium and 0.37g/t platinum (499.45m), and; 1.3m at 1.5 per cent nickel, 0.17 per cent copper, 0.03 per cent cobalt, 0.54g/t palladium and 0.26g/t platinum (489m).
Importantly for Lunnon, these new results include a further significant nickel sulphide intercept directly atop the sediment-covered footwall basalt contact on the down-dip (or down-flank) side of the main interpreted channel position.
This, the junior said, “has the potential to open up a significant new exploration space for the company as historically these positions were not considered to be prospective for nickel”.
During its December AGM, Lunnon managing director Edmund Ainslough indicated the company had some definite plans for the coming 12 months.
It would, he said, progress technical studies at Baker with a view to reporting first ore reserves, advance the permitting of a potential future Baker development along with the dewatering of the Foster mine to enable underground exploration, work with potential off-take partners to negotiate future ore tolling and concentrate purchase terms for potential future production from its assets, as well as start exploration on the new nickel rights areas at the historical Silver Lake and Fisher mines, which have “seen no meaningful exploration for over 30 years”.
Moreover, within 42 months (according to Lunnon’s December quarterly), the junior was aiming to achieve an absolute yearly total shareholder return equivalent to 20 per cent or better, a relative total shareholder return at the 75th percentile or better (to be assessed against a minimum 10 strong peer group of ASX-listed companies), an annualised company production rate of at least 10,000t nickel metal as well as delineate over 150kt of contained nickel metal (above a 1 per cent cut-off) in total mineral resources following any depletion.
