Estrella Resources Limited (ASX: ESR) is seeking to transition its Spargoville nickel sulphide project in Western Australia to production following a major appreciation in the global nickel price.
The Spargoville nickel sulphide project is located approximately 20km South-West of Kambalda and was acquired by Estrella via the purchase of WA Nickel Pty Ltd in September 2017.
Nickel sulphides were first discovered in the area by Selcast Exploration in the late 1960s. Since then, the 1A, 5A, 5B, and 5D deposits were discovered and partially developed on two of the three mining leases for which the Nickel Rights were purchased. All these mines have remnant nickel sulphide mineralisation left behind and extensive exploration potential at depth.
Within the Spargoville area, three ultramafic units can be mapped. Mining Leases 15/395 and 15/703 lie over these ultramafic units which are separated by basalts and graphitic shales. Within the ultramafic units, Kambalda-style channels have formed in which nickel sulphides have been deposited. Historical ore zones have consisted of significantly high nickel tenor.
Arsenic and gold can also occur within the nickel mineralisation. It is expected that significant advances in the treatment of arsenic-nickel ores will assist the Company to realise the current value of the remaining deposits.
Timing is everything and the time is right for Estrella to kick-off development activities for our Spargoville nickel sulphide assets. Estrella bought the rights to mine and explore four nickel sulphide deposits, located 20km South-West of Kambalda, when nickel projects were out of favour,” Managing Director, Chris Daws, said.
“Nickel prices are now at high levels that provide strong financial metrics to warrant mine development. In response, we have put together an experienced team of mining professionals to assist the company transition through to producer status. It is a very exciting development, with drilling and a number of technical studies set to get underway which hold the potential to fast-track access to early cashflow and place Estrella as the next nickel producer in Australia.”
5A Nickel Deposit
The company’s initial focus will be on the remaining resource at the 5A Nickel Deposit. The mineralisation at 5A consists of a 30m deep Oxide Zone, which was mined in an open pit by Amalg Resources NL in 1996- 1997.
Beneath this, and which will be the focus of the DFS, remains a 20m thick Transitional Zone (dominated by the nickel mineral violarite), underlain by another 30m of Fresh Sulphides (dominated by pentlandite).
5A Deposit Metallurgical Drilling and Testing – Impact on the DFS
The planned diamond drilling programme to commence shortly will accomplish several aims, including updating the Oct 2019 Resource estimate. The major objective is to confirm the metallurgical “Top of Fresh” zone for the DFS. This depth, where the Transitional Zone ends, and Fresh mineralisation starts is critical to the final economics of the project.
Fresh Zone Sulphides
Fresh mineralisation is dominated by two minerals, pyrrhotite (iron sulphide) and pentlandite (nickel sulphide). The combination of these two minerals in a nickel concentrate is important for both the flotation and recovery of nickel, and for the smelt-ability of the concentrate.
As such, off-take and payment terms are derived from the quality of the concentrate, whilst the quantity of nickel is a function of recovery and grade. These have a direct effect on the revenue from the project. It is therefore necessary to estimate the amount of nickel in the Fresh Zone to a high degree of certainty to de-risk the project.
These variables along with their associated positive or negative influences on revenue will impact the final optimised pit size and shape in the DFS. As a necessary step in the DFS process, the company will utilise mineralised core from the Fresh Zone blended from across the length of the deposit to estimate concentrator recoveries and monitor potential deleterious elements such as arsenic and magnesium.
Optimum crush and grind size and power consumption will also be studied. The results will then be supplied to potential buyers of the ore and resulting concentrate for indicative payment terms.
Transitional Zone Sulphides
The Transitional Zone occurs from partial weathering of fresh sulphides near to the surface. Sulphide mineralogy at 5A is dominated by pyrite (iron sulphide) and violarite (nickel sulphide) as well as pyrrhotite and pentlandite.
As the name suggests, the deposit mineralogy is transitioning from Oxide near surface to Fresh some 50m to 60m below surface, and its composition will vary (transition) with depth.
The composition of the Transitional Zone is important for metallurgical testwork. Whilst pyrite will float well through a traditional nickel circuit, violarite flotation can be inhibited by the surface properties of the mineral.
A resulting, “traditionally floated” concentrate from Transition Zone feed could therefore be lower in nickel, impacting recovery. Core from the Transition Zone will undergo testing to ascertain the level below surface where “traditional flotation” becomes profitable through improved nickel recovery, and this potential feed can then be included in the mining schedule to add to projected sales revenue.
Additional test material will be supplied to third parties or potential buyers of the Transitional Zone material prior to mining of the Fresh Zone.