under the nickel radar

Good chance of a re-rating over medium term if you like emerging nickel oxide plays.

GME
302M Shares
A$1M cash


Nickel oxide focused company in WA with deposit close to MRE's Murrin Murrin plant. One deposit borders MRE pit.

Preferred development option is heap leach instead of HPAL which is gaining more acceptance with European Nickel and MRE heap leach trials. Not suited to all nickel ores but likely lower capex and risk compared to HPAL.

Resources are large (1Mt of contained nickel) at moderate to high grades, updated resource report incorporating 2010 drilling results is awaited.

Nickel price moving higher and finding support above $8-$10/lb price range.

Bench scale tests completed confirms nickel recoveries.

MRE is actively seeking projects in nickel oxide and sulphide sector. Potential is there to joint venture with GME but only if GME's resources have a market advantage over MRE's current inventory. (MRE is not short on nickel ore but may seek higher grade/lower opex ore for HPAL or heap leach operations from GME).

Sp peaked at just over $1 during prior to GFC.

Directors own ~15%.

Possible re-rating is if GME can attract a major nickel company to complete feasibility studies/mine development over the medium term. Reminds me alot of HRR few years back with a similar story, however needs to tick both technology and nickel price boxes.


Negatives/Risks

Low cash, will need continued finance to move to small scale production at Hempi.

Limited production and market acceptance of nickel heap leach

Pig iron production using low grade nickel ores capping price

Likely exposure to higher sulphur prices

Unique acid circuit, may require further work.


Comparison to Wingellina (MLX)

1.8Mt of Nickel resource base
Production 40,000 tpa Nickel and 3000 tpa Co
Capex A$2.2B, opex US$3.34 including cobalt.
Remote in terms of infrastructure and water

http://www.asx.com.au/asxpdf/20080912/pdf/31c8qj9smft3bh.pdf


GME
1Mt of Nickel resource base
Production 30,000tpa Nickel plus 1400 tpa Co
Capex US$620M, Opex US$3.30/lb without Co credits
Very close to second largest nickel producer
Recovery ~75-80%