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St George Mining has 2019 catalysts as it aims at battery metals in WA

The company hopes to establish a nickel development on Cathedrals Belt, an exploration area it majority owns.
St George Mining has 2019 catalysts as it aims at battery metals in WA
OVERVIEW: SGQ The Big Picture
The Stricklands prospect where drilling increased high-value nickel-copper-cobalt-PGE mineralisation

St George Mining Ltd (ASX:SGQ) plans to spin the drill bit again at its flagship Mt Alexander project near Leonora in Western Australia this year after it increased the footprint of the shallow, high-value nickel-copper-cobalt-PGE mineralisation last year.

Mt Alexander ore falls into the class 1 nickel category, meaning the nickel sulphide can be used for electric vehicle (EV) batteries.

READ: St George Mining retains speculative buy recommendation from Bell Potter

St George's assets northeast of the Western Australian Goldfields lie along the Ida Fault

St George's assets northeast of the Western Australian Goldfields lie along the Ida Fault

St George hopes to move towards a nickel development at its 75%-owned Cathedrals Belt joint venture at the Mt Alexander project.

Western Areas Ltd (ASX:WSA) (FRA:FX9) (OTCMKTS:WNARF) holds the remaining 25%, with both party’s stakes being housed in a joint venture that owns the exploration licence for the belt.

St George is project manager.

Cathedrals Belt plays host to the Cathedrals, Investigators and Stricklands prospects with indications being they have what Bell Potter Securities this month called “meaningful connectivity”.

St George drilled the belt last year, within a 4.5-kilometre stretch of high-grade nickel-copper sulphide discoveries, and plans to return to the field there this year.

St George's drill plan showed off the prospectivity of Cathedrals belt, a nickel development focus at St George’s Mt Alexander project

St George's drill plan showed off the prospectivity of Cathedrals belt, a nickel development focus at St George’s Mt Alexander project

The company reported results in late November and the third week of December in 2018.

Among the results were the intersected massive sulphide mineralisation or prospective ultramafics in five drill hole assays received in December, confirming extensions to known zones of mineralisation.

Assays received for MAD126 and MAD127 at the Investigators Prospect

Assays received for MAD126 and MAD127 at the Investigators Prospect

Interestingly, more than 80% of the PGEs (platinum group elements) are palladium, which has been trading at historically high market prices.

READ: St George Mining continues to deliver strong drill results from Mt Alexander project

St George executive chairman John Prineas said on December 20, 2018: “The latest drilling has continued to expand the envelope of nickel-copper sulphide mineralisation within the Cathedrals Belt.

“New zones of mineralisation have been identified in the northerly down-dip direction at both Investigators and Stricklands.

“Infill and extensional drilling along the east-west strike of the mineralised corridor has also identified further sulphide mineralisation, increasing the potential scale of the discoveries and giving confidence that ongoing drilling could identify additional nickel-copper massive sulphides.”

St George Mining assays confirm best ever nickel-copper sulphide intersections

Prineas believed downhole electromagnetics were “providing outstanding new drill targets.

“With an enviable 100% success record of testing EM conductors in the Cathedrals Belt, we believe these new targets are associated with massive sulphide mineralisation and look forward to drill testing in early 2019.”

Prineas highlighted the high grades the company had received in intersections in an interview with Proactive Investors’ Stocktube video channel in November 2018, confirming grade was ‘king’ for field efforts.

These intersections included laboratory assays from Investigators prospect which confirmed the presence of high-grade nickel-copper with 7.86 metres at 5.70% nickel, 2.11% copper and 0.18% cobalt from 185 metres in MAD126; and MAD127 which assayed 8.49 metres at 5.78% nickel, 2.64% copper and 0.18% cobalt from 183.9 metres.

Prineas had spoken to Stocktube a month earlier during LME Week and highlighted in both interviews the length of strike encountered at Investigators — 1.5 kilometres.

He had said: “We're currently drilling at the Investigators prospect which has a 1.5-kilometre strike ... we have massive nickel sulphides all along that strike”.

Brokerage firm Bell Potter’s summary valuation of St George earlier this month

Brokerage firm Bell Potter’s summary valuation of St George earlier this month

Bell Potter, which maintained its speculative buy rating on the stock earlier this month, tipped St George’s three prospects on Cathedrals Belt “constitute an economically attractive, high-value opportunity that warrants more detailed investigation”.

 

People power

St George recruited a new non-executive director to its board this month, pulling out a seat at the boardroom table for experienced mining sector figure of more than 30 years, John Dawson.

Dawson held very senior roles with global investment banks such as Goldman Sachs and Dresdner Kleinwort Wasserstein.

Among these roles was a posting as managing director of FICC (Fixed Income, Currency and Commodities) in Australia for Goldman Sachs.

At Dresdner Kleinwort Wasserstein, Dawson was global commodities head and Australian country head.

READ: St George drills best ever nickel-copper sulphide intersection at Investigators

St George executive chairman John Prineas said: “Mr Dawson has extensive experience in the financing of mining projects internationally and has a deep knowledge of global commodities markets.

“This is a valuable skillset as St George continues to drill-out the discovery at the Mt Alexander project and begins to consider development options.

“We welcome Mr Dawson to the board as we build St George into a nickel sulphide company of world-class significance.”

Executive chairman Prineas himself has more than 25 years experience in the banking and legal sectors, and headed up Dresdner Bank AG in Australia.

Early in his career, he was a lawyer at Allen, Allen & Hemsley, gaining extensive experience in commercial transactions and corporate advice, in Australia and the Asia-Pacific.

Bell Potter took the appointment of nickel sulphide expert Dave O’Neill as exploration manager as a signal that St George planned to escalate exploration activity at Mt Alexander, including definition drilling along Cathedrals Belt, and to initiate regional exploration on underexplored areas such as the wider region of the Mt Alexander Greenstone Belt.

O’Neill has more than 20 years experience and previously held senior roles with WMC Resources, BHP and Western Areas.

Chartered accountant and St George company secretary of seven years Sarah Shipway is also on the board of directors, as a non-executive director.

Shipway joined the board in 2015 and has extensive experience in advising on equity and debt funding, corporate planning, financial reporting and ASX company listings.

 

Nickel supply and demand

The company has previously flagged an expected 1 million tonne deficit of nickel sulphide by 2025 would lead to price pressure on the battery input.

Benchmark nickel on the London Metal Exchange reached a 10-week high of $11,770 last Friday before closing down 0.4 per cent to USD$11,630 a tonne.

Citibank analyst Oliver Nugent has predicted US$11,500 a tonne prices by the end of 2019.

The per pound price for nickel was about US$5.30 a few weeks ago.

A surge last week came from cash nickel buys rather than longer-term contracts, suggesting a shortage.

The LME nickel price in US dollars, from 2017 to 2019

The LME nickel price in US dollars, from 2017 to 2019

Nickel stocks at LME-registered warehouses have dwindled to 200,000 tonnes, their lowest levels since mid-2013.

Bell Potter wrote this month an ongoing production deficit of more than 110,000 tonnes per annum was likely to stay around that level for the next few years even with further increases in Asian nickel pig iron lateritic nickel output and the planned increase in high-purity material from several major sulphide producers.

BHP Group Ltd (ASX:BHP) (NYSE:BHP) (SWX:BHP) (BMV:BHPN) has previously shared it expects 90% of nickel sulphide will be sold for use in batteries by this year to meet EV battery manufacturer demand.

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