Estrella wraps up mining phase of nickel sulphide extraction play

ASX listed Estrella Resources has completed the mining and crushing phase of its nickel sulphide extraction program using ore from its 5A nickel mine near Kambalda in WA. The company plans to treat the high-grade material at Glencore’s Murrin Murrin facility after sealing an offtake and processing agreement late last year.

Despite the commercial parameters of the offtake deal being kept under wraps, Estrella envisions it will deliver a sound financial return under the current nickel price of US$30,000 per tonne.

Having reached its milestone, Estrella will now truck about 2500 tonnes of nickel to Glencore’s Murrin Murrin High Pressure Acid Leaching, or “HPAL” facility later this month.

The company says laboratory analysis is also underway to establish the grade and moisture content of the delivered ore.

Estrella plans to keep hold of an additional 1000 tonnes of low-grade nickel sulphide material for further metallurgical test work. The samples will be used to develop a revised process flowsheet to treat its 1A, 5A, 5B and 5D nickel sulphide deposits in WA.

The overall mineral resource for the 5A deposit weighs in at 124,000 tonnes at 1.9 per cent nickel for 2370 tonnes of nickel and 190 tonnes of copper. The operation forms a key cog in the company's larger Spargoville nickel project, which was first uncovered by Selcast Exploration in the late 1960s.

Estrella picked up the asset in 2017 when it acquired explorer WA Nickel. The 5A deposit was initially worked as an open pit mining operation in the 1990s and Estrella believes a portion of the site’s high-grade nickel, copper and cobalt mineralisation was left behind. Management deems the remaining ore to be located directly beneath the historical pit’s floor.

Following a major appreciation in the price of nickel in May last year Estrella announced its intention to rapidly transition Spargoville’s premier 5A deposit into a producing asset.

Given the commodity’s price is currently hovering at about US$30,000 per tonne, similar figures to those observed at the time of the declaration, Estrella’s decision to work up the asset could prove decisive.

According to Estrella, a favourable conclusion for the bulk metallurgical sampling program could provide it with a solid foundation to fully develop its 5A nickel mine using simple pit cutback methods. In addition, the company says the play could allow it to expand its Andrews, 5B, and 1A nickel discoveries.

Management plans to continue developing Spargoville alongside its ongoing exploration work at Carr Boyd, an asset it acquired shortly after the Spargoville purchase in 2017. The Carr Boyd nickel project is located about 80 kilometres north-east of Kalgoorlie and has now been positioned as Estrella’s premier project.

Estrella has defined a maiden inferred mineral resource estimate of 860,000 tonnes at 0.66 per cent nickel and 0.42 per cent copper at its T5 deposit, an asset that sits inside the larger Carr Boyd nickel project.

After touching astronomical highs of US$100,000 per tonne in early March last year the metal dove to $19,000 per tonne in July before again climbing to its current level.  The ongoing reliance of nickel in the production of lithium-ion batteries means the company’s operations are still very much in vogue.

According to the International Energy Agency, global demand for nickel could exceed six million tonnes by 2040, about double that of today’s figures.

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