Ongoing DKM Discussion, page-13

Take 2


Flying under the radar
Duketon has been flying below most investor radar screens, despite having its foot on some of the most prospective tenements in the northeast goldfields region of WA.

The region is home to a number of big nickel projects, including Glencore’s Murrin Murrin mine and BHP’s Leinster operations.

But that could change as Duketon moves closer to making a fast start on mining the relatively small Rosie nickel, copper, and platinum discovery.

Rosie could be a profitable starter project leading to something bigger as exploration continues over Duketon’s large land package.

The basic parameters of Rosie are of a steeply dipping structure (a komatiite on its side) containing an estimated 87,100t of nickel, 12,900t of copper and 230,000 ounces of platinum group metals.

A scoping study has shown that the resource is good enough to sustain a mine with an eight-year life producing ore grading 2.1% nickel equivalent (nickel plus other metals). Net present value of the project was estimated in the study at $161 million, assuming a nickel price of US$8 a pound (US$17,600/t).

Marginal to most investors Harmanis saw value in Rosie and Duketon, doubling his stake in the stock from 9.4% to 18.5% in a mid-year deal where which he bought most of the shares held by St Barbara Mines.

Rosie will probably never be a big project. The orebody is too narrow, and the steep plunge means it will only be developed as a narrow underground mine.

Key to unlocking Rosie
But there is a key to unlocking value in Rosie and that’s the super-low pre-production capital cost estimate of just $18 million, a number which underlines the simplicity of the mine and the plan to truck ore to a nearby concentrator (probably at BHP’s Leinster nickel project) where Duketon’s ore would be toll treated.

Ongoing exploration is adding confidence to Rosie being bigger than shown in the scoping study, especially when it comes to platinum and copper, with the latest drill results topped by 6.48m at 3.92% nickel equivalent.

Nickel small cap prices on the rise
With a handy $30 million in cash, Duketon shares, which last traded at $0.41, have a backing of $0.25.

Euroz Hartleys, a Perth stockbroking firm, rates the stock a speculative buy with a price target of $0.70.

Duketon is not alone at the small end of the nickel sector where a large number of explorers are following in the footsteps of established miners such as Western Areas which has seen its share price rise by $0.33 (11%) over the past month to $3.35, while Mincor (ASX: MCR)is up $0.10 to $1.38 and Poseidon (ASX: POS), up $0.022 to $0.24.

Further down the nickel pecking order are explorers with potential, including: Azure Minerals (ASX: AZS), Impact Minerals (ASX: IPT), Western Mines (ASX: WMG), Tambourah Metals (ASX: TMB), Nickel X (ASX: NKL), OZZ Resources (ASX: OZZ) and Dundas Minerals (a new float).