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Lunnon Metals Limited (ASX: LM8) (the Company or Lunnon Metals) is pleased to announce the completion of the Preliminary Feasibility Study( PFS) and the initial Probable Ore Reserve for the Baker deposit of 612,000 tonnes at 2.86% Ni for 17,500 contained nickel tonnes1.
KEY POINTS
- Strong financial returns with low start-up capital requirements.
- Initial Probable Ore Reserve of 612kt averaging 2.86% Ni for 17.5kt contained nickel1.
- Indicated Mineral Resource converted 73% to Ore Reserve.
- Pre-tax and post-tax free cash flow generation of $196 million and $145 million.
- Pre-tax NPV8% of $164 million and 324% internal rate of return (IRR).
- Pre-production capex of $18.6 million, maximum cash drawdown of $26.4 million including working capital.
- A premium sulphide concentrate, averaging ~14.6% Ni, Fe:MgO ratio of ~18.8 and low arsenic of ~440ppm.
- Detailed offtake discussions can now commence for Baker’s high grade nickel sulphide ore.
- Significant upside potential from the initial base case outlined in the PFS:
- No Inferred Mineral Resources included in PFS
- Likely future extensions to Baker with the deposit remaining open down plunge
- Potential contribution from East Trough deposit (approx. 450m from Baker)
- Scale and synergies with Foster’s Mineral Resources.
The PFS confirms that the Baker Project is a commercially robust high-grade nickel sulphide orebody (2.86% Ni), with a modest pre-production capital cost ($18.6 million), located in a Tier 1 jurisdiction in the heart of Kambalda, Western Australia. The PFS also confirms that Baker will produce a premium nickel concentrate, the results of which now enable detailed offtake discussions for the Project. The PFS leaves significant future upside potential, with a depth of mining of less than 200m below surface and the deposit remaining open down plunge. Lunnon Metals will now continue further studies (including reviewing scale and synergy benefits with Foster’s Mineral Resources), as the Company looks to build on its initial Ore Reserve for the Kambalda Nickel Project, which comes less than two years since listing and 18 months after Baker’s discovery.
Key PFS Outcomes and Assumptions
A summary of the initial physical and financial evaluation of the Project is shown in Table A, with additional details provided in the PFS Executive Summary.
1 Refer to Section 7 of the Preliminary Feasibility Study – Executive Summary below for a full breakdown of the Ore Reserve.
Table A: Key Production and Financial Outcomes and Assumptions
Notes:
1: Life of Mine is calculated from first stope ore, being approximately four months into Project commencement.
2: C1 Cash Costs includes Operating Costs, including mining, processing (excluding penalties), surface haulage, G&A, less by-products, divided by ore tonnes for processing. Excludes pre-production and sustaining capital expenditure, rehabilitation cost and royalties.
3: Gross Revenue excludes deduction of penalties from revenue and excludes revenue credits to Pre-Production Capital. 4: Pre-Production Capital Expenditure is to first stope ore, not commercial production.
5: Total LOM Expenditure includes Operating Costs, Royalties, Sustaining Capital, Closure Costs and Pre-Production Capital.
It excludes any by-product or revenue credits.
6: Free Cash Flow is Gross Revenue (less penalties) minus Operating Costs, Capital Expenditure (pre-production and sustaining), Royalties, and Closure Costs.
7: Post-Tax includes an assumption of $30 million in accumulated tax losses to 31 March 2024 and 30% Corporate Tax Rate.
8: NPV is based on real cash flow forecasts and represents value as at projected start date of 1 April 2024.
9: Corporate Tax Rate may be less, with a tax rate of 25% if aggregated turnover is less than $50 million in any financial year.
Managing Director, Ed Ainscough, commenting said:
“Kambalda has been one of Australia’s most prolific nickel production centres for over 55 years. Despite this long history, the district is still a globally relevant nickel belt and remains an important strategic source of high-grade, premium quality nickel sulphides. Baker continues this proud Kambalda tradition and the Company is likewise proud to report the results for that deposit’s PFS and initial Ore Reserve. These impressive results come within two years of listing on the ASX and at a time when Kambalda is once again in the headlines, this time as a sought after key production centre driven by its many positive attributes including its high-grade, superior concentrate quality and consequent low energy and capital intensity to exploit.
I would like to thank the Lunnon Metals’ team who have worked to deliver these outcomes over the past two years. They more than anyone know that this is just the start, these are very much initial results, with plenty more to come from our growing Mineral Resource base already defined at Baker and Foster but also from the many exciting exploration programs across the rest of our portfolio. To have access to such high-quality tenure in the heart of Kambalda is truly amazing and sets the Company and its shareholders up for a bright future.”
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Unconformity Uranium Drill Targets Identified from 2024 Geophysical Data
Key Highlights
- Final data received and interpretation completed for the ground electromagnetic geophysical surveys from the winter 2024 program at the Marshall and North Millennium projects.
- Several conductive anomalies identified at Marshall, located above and below the unconformity, consistent with regional exploration model.
- Stacked anomalies concurrently with multigenerational geophysical data provides a base to assess the exploration targets and refine drillhole targets.
- The projects are located 15 kilometres from the majority Cameco owned Millennium deposit, and just 40km from the world class McArthur River mine.
- Basin remains funded for the next round of field exploration.
The ground electromagnetic successfully identified 3 main targets which confirms the geological and exploration model. Of note is Target 1 (Figure 1), where modelled EM plates below the unconformity align with a sandstone ZTEM anomaly, which is interpreted to be alteration within sandstone. The identification of these targets is encouraging and consistent with regional trends in the southeastern Athabasca and provides increased confidence in drill hole targeting. Basin is currently reviewing options and priorities of how to progress exploration of these confirmed targets.
Basin’s Managing Director, Pete Moorhouse, commented:
“Conducting ground geophysical surveys on Marshall and North Millennium was a milestone in advancing these underexplored projects in Basin’s uranium portfolio. The form of these anomalies is highly encouraging given the proximity to some of the world’s largest uranium deposits.”
Key results
Following the encouraging conductive anomalism highlighted by the 2023 3D inversion of two historic airborne Electromagnetics (Z‐Tipper Axis) (“ZTEM”) datasets partially covering the current North Millennium and Marshall projects3,4, Basin contracted Discovery International Geophysics5 to carry out ground Stepwise Moving Loop Transient Electromagnetic (‘Ground EM’) surveys on areas of immediate interest within the Projects.
Figure 1 Three main anomalies shown from 2024 ground EM, in plan view (top diagrams) and cross- section looking northeast (bottom diagram). The ground EM anomalies are displayed with the modelled plates against the historical ZTEM data.
The 2024 Ground EM survey data returned six conductive anomaly picks producing three main target areas (Figure 1). The anomalies correlate strongly with the southern edge of the circular ZTEM conductive anomaly at Marshall and the interpreted northern edge of the circular anomaly identified in the historic data. A weaker EM pick was also interpreted centred between the two prominent ZTEM conductivity anomalies.
Three-dimensional modelling using Maxwell produced six electromagnetic conductive plates within the basement stratigraphy, all below the unconformity (Figure 1). The two southeastern plates are clearly aligning with a conductive sandstone ZTEM anomaly identified from the historic data, which is above the interpreted unconformity. This is interpreted as potential basal sandstone alteration proximal to the EM anomalies and constitutes a high-priority drill target area, refer figure 2.
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Airborne EM over Multiple Targets on Ti-Tree Project
- Augustus Minerals has contracted UTS Geophysics to conduct a VTEM Max survey over several Copper, Cu-Ni-PGE, Zn-Pb-Ag and Uranium targets along the money Intrusion and within proximity of the prospective 85k long Ti-Tree Shear.
- The surveys will cover:
- The Money Intrusion, prospective for Cu-Ni-PGE mineralisation.
- Copper Ridge and Nics Bore over anomalous Copper Drilling results
- The Coo Creek prospect where drilling by Augustus in 2023 identified strongly anomalous Zn-Pb-Ag mineralisation.
- The Munaballya Well North area which shows potential for economic Uranium mineralisation.
- The surveys will help to advance the untapped potential of the Ti-Tree project to host economic mineralisation of multiple commodities.
Andrew Ford, GM Exploration
“The VTEM survey will provide key targeting data over three highly prospective and different prospects with potential for multiple commodities. Whilst the high prospectivity for copper mineralisation has been well documented, the addition of uranium and Broken Hill base metal style mineralisation highlights the quality of the underexplored Ti-Tree project”.
VTEM
UTS Geophysics has been engaged to conduct a helicopter borne VTEM Max survey comprising 646-line km over three separate survey areas. The system is excellent for locating discrete conductive anomalies as well as mapping lateral and vertical variations in resistivity which helps map structure, alteration and rock type. The system also collects magnetic data through a caesium magnetometer. The transmitter/receiver loop is suspended on a cable approximately 40m below the helicopter (Figure 1).
Figure 1 VTEM Max helicopter deployed electromagnetic survey arrangement.
Figure 2 Prospects and VTEM Survey areas.
Money Intrusion
The Money Intrusion, which has proven potential to host Ni-Cu-Co-PGE (platinum group elements), is part of the regional Mundine Well Dolerite Suite, a regionally extensive dolerite (strike length >80km). This extensive mafic intrusion, which is comprised of a variety of lithologies, including gabbro in the core, olivine dolerite on the chilled lower contact or keel and fine-grained dolerite on the outer edges. Mapping, aeromagnetics and multi-spectral imagery show that the Money Intrusion within the Ti-Tree Project covers a strike length greater than 16km, reaching widths >600m in the north of E09/23241.
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Latest Kameelburg Assays Up To 10.38% Nb2o5 and 9.89% TREO
Highlights
- A total of 74 highly prospective rock samples recently collected from various beforsite and mafic dykes
- Most notable assays reveal up to 10.38% Nb2O5 and 9.89% TREO
- Large scale geological mapping of Kameelberg carbonatite is nearing completion
- Track access clearance & preparation for underground water supplies underway for upcoming maiden diamond drilling programme
Results from recently collected seventy-four (74) samples were received and highlighted the REE rich nature of the carbonatite with TREO(+Y) assays ranging from 1.16 to 9.89%, refer to Figure 1 for samples locations and Table 1 for results.
Figure 1: Southern Carbonatite Margin Geological mapping area with rock chip samples
Niobium Results Along Mafic Dykes
In addition to sampling the carbonatite plug, a further four (4) samples were collected across the Nb dyke zone on the southwest flank of the carbonatite. Results for these samples ranged from 5.44% to 10.38% Nb2O5. This provides additional confidence to previous niobium findings (see announcements dated 28 February 2024 and 27 December 2023). Table 2 compiles the Nb results with Figure 2 depicting recent sample locations in relation to the previous Nb2O5 results.
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This article includes content from Aldoro Resources, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.