Attached thought this might be of interest to you guys,
it's also shows that they also agree West Guadacanal is a company maker on its own.
interesting read firstly.....2ndly good to See SMM having a hard time in the local press.
COMMODITY CORNER | 25 SEP 2014 REORIENT SALES COMMENTARY Axiom Mining: Victory in Isabel Nickel battle The Salomon Islands High Court has ruled in favour of Australian-based Axiom Mining (AVQ AU) over prospecting rights to the big Isabel Nickel deposit, which has been tied up in a legal dispute with Japan’s Sumitomo Metal Mining (SMM) since July 2011. SMM announced yesterday afternoon that High Court Judge John Brown announced his decision in which he rejected all of SMM Solomon’s claims. SMM said it would examine the decision and consider it’s next steps. The outcome is very positive for Axiom Mining and now sets the scene for them to focus on commissioning a 2 million tonne per annum DSO nickel ore operation within 12-18 month from now (pending some drilling to prove up the high grade zones and gaining a Mining permit from the Salomon Island Government). Axiom said they will pursue damages from SMM for the legal costs incurred over the last 3 years. Axiom is also expected to receive a windfall cash injection from the exercise of the outstanding 566 million options that it has granted over the last three years financing it’s legal battle with SMM. These options are likely to give the group funding for another $10 million. In reality, if Axiom receive damages from SMM and the options are exercised then the project could be fully funded near term. Unlike the deep level sulphide producers in Australia, capex for DSO wet nickel ore operations are a fraction of their WA cousins. Axiom Mining holds 80% of Isabel and it’s adjoining brother San Jorge. The remaining 20% is own by local Kolosori and Bungusule landowner groups. Yesterday, Chariman of the Kolosori Trustees, Mr Elliot Corrtez said in the Salomon Star Newspaper : “We are very pleased that we have been able to successfully defend our rights – it has been a long, difficult journey for us. We thank Axiom for standing by us through this difficult time”. Isabel Nickel project is world class With the Indonesian nickel ore export ban in place, Axiom Mining is ideally positioned to sell its ore into the Chinese NPI market which is currently relying heavily on increased Philippine’s production. The Isabel Nickel deposit boasts a Non JORC resource of 1.59 million tonnes of contained nickel. INCO discovered Isabel in 1956 and during 1957-75, INCO undertook extensive exploration – predominantly from 4,000 bulk sample pits and 1,500 auger drill holes. INCO’s work, which included feasibility studies on project development was validated 16 years later, by Kaiser Engineers and led to the a non-JORC resource of 159mt grading 1.045% nickel and 0.06% cobalt over the two separate deposits, to a depth of around 6 metres. Further drilling down to 10-15 metres is likely to lead to a substantial increase in resource as it explores the potentially higher grade saprolitic laterite ore zone. Assuming Axiom is valued at 1% of the current in the ground non- JORC resource, this implies a market capitalization of some $250 million or 7.4 cents per share after dilution from the exercise of options (last price 1.7 cents). Another strength of the Isabel project is its proximity to a deep water port. The deposit runs right to the beach and the ore is likely to be barged out and loaded on Handymax ships bound for the Chinese market. The value of Isabel’s ore has risen some four times since the Indonesian ban was announced on January 12 and explains why these projects have such a fast payback on investment at current ore prices of $100-$110 per tonne. At current prices, Isabel is a bit like an iron ore project right next to the sea at a $200 per tonne iron ore price. That is the attraction of this type of deposit because of it’s ease to mine (down to 10 metres) and then load onto truck and barge. The ability to expand Isabel in a modular fashion to 4 or 6 million tonnes per annum will be dependant more on market conditions than logistical/financing issues, in our view. Nickel Asia (NIKL PM) is Axiom’s best comparable peer that currently produces 12 million tonnes per annum and has a market capitalisation of $2.4 billion. Nickel Asia is obviously a much more mature company with extensive JV relations with Japanese smelters, but it does have an aging ore body. One potential outcome for Axiom is that they will become subject to takeover activity because wet laterites of this size near port are very rare. West Guadalcanal a potential large scale copper gold porphyry In addition to the Isabel Nickel project, Axiom hold a 100% interest in the exciting copper gold porphyry West Guadalcanal on an island to the south of Isabel. West Guadalcanal was previously owned by Xstrata but during the Glencore restructuring of legacy copper/gold assets was divested in 2013 (along with other deposits like Frieda River in the PNG). The deposit lies on a crustal feature related to two colliding Pacific rim tectonic plates. This feature also hosts the neighbouring Panguna copper/gold mine on Bougainville Island, PNG and the giant Lihir Gold mine. It is in elephant country and West Guadalcanal has the potential to be another elephant. Initial trenching work produced 130 metres @ 0.58 grams/tonne, including 10 metres @ 3.44 grams. Axiom are currently spending $3 million on a drilling programme targeting large scale gold anomalies. West Gaudalcanal would typically be a company making asset alone, but the court case over Isabel has perhaps over shadowed it’s potential. Axiom Mining has a large retail following in Australia. The court case has been a real David and Goliath battle. We will need to see Sumitomo’s response if any. A Court of Appeal in the Salomon Islands typically occurs every November and April of each year and would be overheard by 3 International judges that will only review the findings of the case handed down by Australian Judge Brown yesterday. Such an appeal should Sumitomo Metal Mining decide to appeal will typically last 3-5 days. REORIENT Group recently helped Axiom Mining raise $2 million dollars at 1.5 cents a share with a 1 for 2 option at 2 cents. REORIENT is a shareholder of Axiom Mining. ANALYST JEREMY GRAY
