WMG 5.3Mt contained nickel resource points to vast open pit potential
After a thin few weeks for notable drill intercepts on the ASX, Bulls N’ Bears Big Hits digs deep into another kind of Big Hit: Western Mines Group’s eye-watering 5.3 million tonnes of contained nickel metal within the company’s maiden mineral resource estimate for its Mulga Tank project in Western Australia’s Eastern Goldfields.
The company’s sensational maiden resource is bound to be just a small part of an even bigger story to come.
For good measure, we have also thrown in one drill hole hit from WMG’s most recent - and deepest - diamond drill hole in the centre of its Mulga Creek resource.
Let’s dive in.
Western Mines Group (ASX: WMG)
Mulga Tank nickel sulphide project,
Minigwal Greenstone Belt,
190km northeast of Kalgoorlie.
Hit: JORC compliant mineral resource estimate of 5.3 million tonnes of sulphide-hosted contained nickel metal.
WMG delivered an eye-watering 5.3 million tonnes of sulphide-hosted nickel metal in its maiden mineral resource for its flagship Mulga Tank nickel project, 190 kilometres northeast of Kalgoorlie.
The company believes the Mulga Tank resource could easily be among Australia’s biggest nickel sulphide deposits - and potentially the biggest - and puts the project in the league of the world’s Top 10 nickel deposits.
This stunning, globally significant resource in WA’s Eastern Goldfields also contains 257,000t of cobalt, 161,000t of copper and 1.1M ounces of combined platinum and palladium.
At a 0.20 per cent nickel cut-off, the indicated resource is estimated at 565Mt at 0.28 per cent nickel, 134 parts per million (ppm) cobalt, 104ppm copper and 18 parts per billion (ppb) of the combined platinum and palladium group elements (PGE).
An additional inferred resource is estimated at 1403Mt at 0.27 per cent nickel, 129ppm cobalt, 73ppm copper and 17ppb combined PGE.
Those numbers bring WMG’s total combined indicated and inferred resource for Mulga Tank to just shy of 2 billion tonnes at a dizzying 1968Mt at 0.27 per cent nickel, 131ppm cobalt, 82ppm copper and 17ppb combined platinum and palladium.
This heady result means Mulga Tank has three times more contained nickel metal than Australia’s other big-name sulphide-hosted nickel deposits.
Other metals in the estimate include 257,000t of cobalt and 161,000t of copper - and 1.1M ounces of combined platinum and palladium are the cherry on top.
BHP owns Australia’s current top three nickel sulphide deposits in terms of contained nickel metal. The WA-based operations include Yakabindie, which has a total 2.06Mt resource, Leinster with a total of 1.63Mt and Honeymoon Well with a total of 1.21Mt of contained nickel.
Tuesday’s London Metal Exchange price per tonne of nickel is US$14,364 (A$23,729), US$33,700 ($A55,672) for cobalt and US$8732 (A$14,425) for copper. Platinum is currently worth US$926 (A$1531) per ounce and palladium is US$910 (A$1504) per ounce.
Mulga Tank is within the ancient Yilgarn Craton, which contains some world-class examples of komatiite-hosted nickel deposits, including the historic Kambalda, Perseverance and Mt Keith operations.
Western Mines Group has delivered a sensational mineral resource estimate for its Mulga Tank project of 5.3Mt of nickel metal, which could make it the biggest nickel sulphide deposit in Australia. Credit: File
WMG listed on the ASX in 2021 and at Mulga Tank, the company has since undertaken geochemical sampling, drilled 18 diamond holes for 13,446m and 63 reverse circulation holes for just under 20,000m, assayed 20,330 samples and recorded more than 24,000 core analyses by portable XRF.
That massive undertaking was accompanied by downhole and moving loop electromagnetic geophysics, ground-based gravity and airborne mobile magneto-telluric surveys.
The work has been rewarded with the discovery of an extensive magmatic nickel sulphide system within the Mulga Tank ultramafic complex, which lies fully within WMG’s tenure.
Within the project area, the Archaean bedrock is obscured by up to 70m of sand cover. The company’s tenure encloses the Mulga Tank ultramafic complex, which has been interpreted from a major regional magnetic high and historical drilling.
The magnetic high has been shown by drill testing to be a lopolith-shaped dunite intrusion that has been extensively altered in places.
Long, narrow arcuate magnetic features radiating from the dunite are interpreted as komatiite channel flows, which the company recently confirmed in its first regional reverse circulation drill program.
The surrounding footwall of the dunite and komatiite channels consists of basalt and interbedded chert and sulphidic black shales.
In April last year, WMG kicked off a third deep diamond drill hole, MTD029 (EIS3), which was co-funded by a $220,000 grant from the WA Government’s Exploration Incentive Scheme (EIS).
The hole was designed to serve multiple purposes. WMG wanted to infill the reverse circulation drill hole pattern in an area of greatest interest and to test a conductive anomaly about 1200m below surface. The company also wanted to test close to the basal contact, which has strong potential to sniff out a sulphide-enriched keel in the deepest part of the complex.
The upper portion of the hole was drilled with a bigger diamond core to provide an additional 70 kilograms of sample material for initial metallurgical test work of the shallower disseminated mineralisation.
This precaution proved insightful and was particularly relevant to the company’s maiden disseminated resource, which was mostly defined by the reverse circulation drill testing.
The near-vertical diamond hole – run at about 85 degrees – terminated at a depth of 1722m. This was the company’s deepest diamond hole.
The hole bored out about 1600m of high magnesium dunite containing disseminated magmatic sulphides from trace to 2 per cent, which coalesce in some places into interstitial sulphite blebs, with intercepts through nickel-rich sulphide veinlets and segregations.
The results clearly show evidence of an extensive magmatic nickel-sulphide system throughout most of the core, which shows elevated nickel and sulphur coinciding with highly anomalous copper, combined platinum group elements and some disseminated sulphides.
That near-continuous mineralisation is defined down the hole through various geochemical indicators and cut-off grades, with only minimal inclusion of unmineralised material below mineable thicknesses.
Sensationally, the hole delivered four broad zones of disseminated nickel sulphide mineralisation for a cumulative 1247m averaging 0.28 per cent nickel, 134ppm cobalt, 76ppm copper and 24ppb combined platinum and palladium from 108m, with an overall 1.0 sulphur to nickel ratio.
Looking at nickel alone, those zones include 689m at 0.27 per cent nickel from 108m, 168m at 0.23 per cent nickel from 866m, 266m at 0.34 per cent nickel from 1192m and 124m at 0.32 per cent nickel from 1534m.
The results also extended the uppermost, shallow, disseminated zone from its previously reported interim interpretation of 494m to 689m at 0.27 per cent nickel, further amplifying the depth of the zone of potentially open-pittable nickel mineralisation.
The uppermost part of this disseminated zone produced an intercept of 58m at 0.34 per cent nickel from 204m, including 8m at 0.48 per cent nickel from 210m, including 10m at 0.40 per cent nickel from 232m, highlighting the zone as being no slouch in the grade department.
The high-grade intercept is reinforced by a second separate run of 19m assaying 0.44 per cent nickel from 378m, including 8m at 0.54 per cent nickel from 389m and a highlight 1m at 1.56 per cent nickel from 395m.
A deep run of 126m assayed 0.42 per cent nickel from 1326m, including 12m at 0.57 per cent nickel from 1326m, with a highlight 2m running 1.09 per cent nickel from 1334m and another 34m at 0.50 per cent nickel from 1416m.
The 1.09 per cent nickel result was further spiced up with 2m at 0.3g/t combined PGE from 1334m.
The bottom runs in the hole jagged intercepts of 20m at 0.46 per cent nickel from 1550m and 13m at 0.41 per cent nickel from 1639m.
Adding to the project’s already impressive resume, the almost 2 billion tonne Mulga Tank resource is derived from a shallow disseminated nickel sulphide mineralised zone in the centre of the complex’s main body.
WMG’s maiden mineral resource model is constrained within the depth and lateral extent of the company’s higher-density area of drill testing within the shallow disseminated zone.
Broadly, the company’s resource model uses data from within a rectangle measuring about 3km east-west by almost 1.8km north-south in the centre of the more extensive oval magnetic signature defining the greater extent of the ultramafic body, which measures about 4.5km by 2.9km.
This maiden resource can be extended laterally into adjacent zones, which have already been scouted using a more open hole spacing.
These holes were shown to also carry disseminated nickel but require further infill and extension drill testing to bring them up to at least an inferred resource status.
A vast potential and only thinly tested disseminated and massive nickel sulphide resource also lies below the current shallow maiden disseminated resource block. Only limited work has been undertaken with deep diamond holes to explore the potential of the “keel” of the intrusive for massive nickel sulphides.
Other work undertaken throughout the past year included an initial scout investigation of elongate arcuate bodies emanating up to 15km northwest and north from the main dunite body that are interpreted as komatiitic channel flows.
This interpretation has been confirmed by the first recent regional drilling program of four government-funded EIS reverse circulation holes, a fifth reverse circulation hole and four diamond drill holes to a maximum depth in one hole of 388m.
Analyses confirm highly prospective high-magnesium komatiite lithologies with fertile nickel, sulphur and chalcophile elements, supported by microscope investigation of two EIS holes. The holes revealed abundant visible disseminated nickel sulphide mineralisation as the main nickel mineral pentlandite, a nickel iron sulphide, with minor iron sulphides pyrrhotite and pyrite also observed.
The holes also confirm the interpreted geology, with olivine cumulate/dunite and komatiite lithologies encountered in four of the holes and visible sulphide mineralisation seen in two EIS reverse circulation holes, confirming the existence of a belt-scale nickel mineralised system.
This additional prospectivity for nickel sulphide mineralisation within high-magnesium komatiite flows offers an additional exciting dimension to the resource potential of the entire assemblage of nickeliferous bodies within WMG’s Mulga Tank project.
The potential channel bodies could represent other long suites of targets extending for at least 15km along strike from the main dunite body.
The main dunite intrusive exhibits extensive intercumulus sulphide blebs, mainly of nickel sulphide mineral pentlandite, which are considered typical of Type-2 nickel sulphide systems, such as at the Mt Keith deposit.
Drilling has also encountered intersections of nickel-rich massive sulphide veins less than 20 centimetres thick and immiscible sulphide globules which, combined with the intercumulus sulphides, point to Mulga Tank being a hybrid nickel system featuring two distinct mechanisms of sulphide precipitation and gravity settling.
WMG believes this hybridism provides for significant basal accumulations of massive and matrix sulphides, which significantly increase the system’s prospectivity.
WMG envisages a modern, large, open pit operation to mine and process between 30Mt and 40Mt of ore per year, which would offer the company considerable economies of scale.
Given the shallow nature of the mineralisation, modelled to a limit of about 400m below surface, the ore would likely be processed onsite by conventional flotation mineral beneficiation methods to produce a saleable nickel sulphide concentrate.
WMG believes from its broad calculations that the Mulga Tank deposit has very reasonable prospects for eventual economic extraction, which is why it has continued to explore and advance the project even during the current downturn in the nickel price cycle.
The maiden resource represents a significant milestone for the project and the company is planning and developing further exploration programs for 2025.
Management believes it has assembled enough potential ore to work on for an earliest-possible start to mining and can now focus on refining the current resource, while continuing to quietly evaluate the potential lateral extensions and regional channel bodies.
Given the current scale and shallow depth of the resource estimate and the potential to move to early open pit mining of the resource, WMG’s short to medium-term focus will be on defining cohesive zones of higher-grade material within its existing model.
These include several zones with grades of up to 4.5 per cent nickel and 4.8 per cent copper.
The company’s diamond drilling program is ongoing to evaluate deeper targets for basal massive nickel sulphides and to increase its understanding of the deeper massive sulphide potential.
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