Next Investors logo grey

AOU is Drilling a High Priority Nickel Target Now

Published 06-MAY-2021 12:06 P.M.


3 minute read

Auroch Minerals (ASX: AOU) is exploring for nickel underneath a historically producing nickel mine in WA.

We invested in AOU as we think the world is going to need more nickel over the coming decade, and we think AOU is well positioned to grow a large nickel resource inventory close to existing infrastructure.

AOU owns 80% of a historical nickel mine that used to directly supply BHP’s nickel smelter in Kambalda ... and we know that BHP is planning to re-start this smelter with feed from " third parties ".

Today AOU confirmed it has identified a high priority nickel target just 1km south of its historic nickel mine, and is starting diamond drilling immediately.

It is an exciting time for any nickel explorer when it’s time to drill a high priority target - a strong nickel intercept could re-rate the company’s share price.

Our take on today’s news:

AOU started a ground electro magnetic (EM) survey last week.

The goal with EM surveys is to locate conductive bodies that may represent significant nickel sulphide mineralisation - once located, the idea is to drill down to where the conductor is modelled, and confirm the presence or otherwise of nickel.

AOU just identified a strong EM conductor, only 1km south of the historic Nepean Nickel Mine, and 250m below the surface.

The conductor response is typical of semi-massive to massive sulphides.

A historic drill-hole 50m north of the modelled conductor hit nickel sulphides.

These are all encouraging signs, and explain why AOU has immediately moved to drill test this target, with a rig having just arrived on site.

Drill testing will start immediately.

The hole will be a 350-400m drill hole designed to intercept the modelled conductive plate at a down-hole depth of ~290 - 300m.

Why we invested in AOU

Nickel shortage to be driven by electric vehicle batteries demand. A global nickel shortage is expected this decade. BHP is predicting nickel demand to surge in the mid-late 2020s and is preparing for this.

Many years ago, AOU’s nickel mine used to feed a local smelter owned by mining giant BHP. It was shut down when the nickel price plunged. The nickel price is now up – a lot.

BHP wants to ramp up nickel production. In the same region as AOU’s historical mine... with a view to sell to battery makers like Tesla. So BHP is going to need a lot more nickel from nearby, and wants to get it from third parties.

Here is why we like AOU:

Unlocking a much larger nickel resource. Successful exploration below/along strike to an old nickel mine has happened before in WA – Western Areas is the case study here, and shareholders were hugely rewarded.

AOU continues to deliver impressive drill results. Confirming thick, high grade nickel at shallow depths at its historical nickel mine.

AOU has a number of options that exercise at 10c that have been converting into shares over recent months. This is good in that it brings funds into the company without having to tap the broader market, however it is worth noting that this can also soften upward momentum in the share price. The company had $4.39M at March 31st 2021.

AOU is aiming to build over 100kt of nickel resources. AOU has multiple nickel exploration projects – we like the scale of the company’s goal.

Drilling a high priority target right now. Lots of newflow is expected over the coming weeks, in addition to the current drilling.

What’s next for AOU at its historic nickel mine:

  • High-powered ground MLEM survey to test critical areas of the 10km of prospective strike of the Nepean ultramafics – ongoing
  • Diamond drill programme testing high-priority EM targets – ongoing
  • Second phase of RC drilling to test geochemical and geophysical targets along the historic mine strike – starts late May/June.

What’s next for AOU at its other projects:

AOU is also actively exploring other nickel projects in the same region, with:

  • a diamond drill programme - ongoing ,
  • DHEM surveys of completed drilling holes - ongoing ,
  • a RC drill programme - starts mid-May .

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.