SIRIUS RESOURCES NL Bollinger – Champagne “Supernova” in the “Eye” Sirius Resources NL (“Sirius”, “SIR”, “Company”) has now completed four drill holes to follow-up the new Bollinger discovery, located to the east of Nova, part of the Fraser Range project (SIR 70%). The Company has intersected more substantial nickel and copper mineralisation in two holes drilled ~60m to the west and ~100m to the east of the discovery hole confirming Bollinger’s potential of being a significant new deposit with the scale-potential to match and possibly exceed Nova. Over 40m of massive and breccia sulphides, from a mineralised intercept of over 55m was intersected in the western hole and 30m of disseminated to stringer sulphides, from a thicker 118m zone of (trace to stringer) sulphide mineralisation encountered in the eastern hole, from depths of ~430m, highlighting the flat-lying nature of this new deposit. Assays are pending. Sirius has also completed two holes into the feeder zone confirming the connection of the Nova and Bollinger (magma) chambers. The feeder zone remains mineralised with breccia and stringer sulphide (up to 32m thick), stringer and disseminated sulphides (up to 21.5m thick) with massive sulphides (2.5m thick) encountered. A fifth hole located ~150m south east of Bollinger has intersected only weak mineralisation but completed DHEM has identified a strong off-hole conductor (Conductor 6) to the south east of the hole which remains a priority target that will be tested soon. Mineralisation at Bollinger may also extend north to Conductor 5 further enhancing exploration potential. Importantly, mineralisation remains open in all directions and exploration has been accelerated, with 6 rigs now actively drilling. Bollinger is Potentially Larger than Nova Sirius already has the one of most significant undeveloped nickel deposits in Australia (if not the world), in Nova, with Bollinger now adding a new dimension to the project. Not only has exploration upside been substantially enhanced, with large gravity and EM anomalies yet to be tested, we suspect the scale of the future operation has been significantly increased. Our updated modelling now assumes a mining inventory of ~15Mt (which is potentially very conservative) and we have increased mine production to 1.5Mtpa (from 1.0Mtpa), allowing for an initial mine life of 10 years. Our estimate for pre-production capital costs have increased to $520m (on a 100% basis or $360m for SIR’s 70% component). We maintain high recoveries for both the nickel and copper and good payabilities for average nickel production of ~23Ktpa (16Ktpa attr. Ni SIR) and average copper production of ~13Ktpa (9Kpta Cu attr. SIR). Our updated project valuation for Nova-Bollinger is now $3.56/s (up from $2.87/s), with our sum of parts valuation improving to $4.11/s (up from $2.97/s). We maintain our Speculative Buy recommendation, with an updated Price Target of $4.83/s (up from $3.56/s). Key risks include resource/ore reserve definition and progressing development studies towards construction of Nova-Bollinger (and the other targets). We expect the project to be feasible, but significant funding will be required, which adds more risk to the potential development.
SIR Price at posting:
$4.01 Sentiment: LT Buy Disclosure: Held