Post on NabTrade today, "top 4 miners to watch 2020"
Mincor Resources (MCR:ASX)Market capitalisation: $198 million
Three-year return: 25.4% a year
Analysts’ consensus valuation: 85 cents (Thomson Reuters)In another re-opening – albeit with a much shorter hiatus than the gold mines of Barra and Ausmex – Mincor Resources looks likely to soon push the button on re-starting nickel production at Kambalda in WA, which it mothballed in 2016 at a time of historically low nickel prices. Prior to that, the company had produced some 180,000 tonnes of nickel metal in ore over a successful 14-year period as a profitable, dividend-paying mining company – and investors would be hoping for a return to that status.
Mincor’s plans to re-start at Kambalda received a shot in the arm last month with outstanding drilling results at its Cassini project, most notably intersections of 12.3 metres at a grade of 5.1% nickel, including a sulphide core of 9.7 metres at 6% nickel. Mincor chief executive David Southam said this was one of the most exciting new base metal discoveries for at least 20 years.
Earlier this month, Mincor lifted the mineral resource at Cassini by 33%, to 1.254 million tonnes at 4.0% nickel, for 50,400 nickel tonnes. That was after a 52% resource boost flagged in April and another 33% lift reported in August.
The stunning results at Cassini augur well for the restart strategy, in which the new discovery is seen as one of four key production hubs at Kambalda, along with Durkin North, Ken/McMahon and Miitel/Burnett. Development studies are underway on each of these deposits to put together a production schedule for the district. Mincor’s total Kambalda mineral resource now stands at 4.9 million tonnes at 3.8% nickel, for 187,900 tonnes of nickel metal, with 84% of that in the ‘indicated/measured’ category. A maiden ore reserve is expected to be announced around the same time as the definitive feasibility study (DFS) is released, in the March 2020 quarter.
This will also include the Long nickel operation, which Mincor bought from Independence Group in May, and which has an existing high-grade resource of 750,000 tonnes at 4.2% nickel, for 32,000 tonnes of nickel metal – and which also offers near-term production potential.
As well, in FY19 Mincor signed a binding ore tolling and concentrate purchase agreement with BHP Billiton Nickel West Pty Ltd, giving the company both a processing and sales route. In short, Kambalda should be back in the nickel business very soon – and well-placed to capitalise on the strong long-term nickel market outlook.
