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Axiom Mining releases high grade sampling results

Published 26-APR-2017 11:01 A.M.


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The impressive fundamentals supporting Axiom Mining’s (ASX: AVQ) position as one of the better emerging nickel producers continued to build on Monday after the company announced further high-grade results from a rock chip sampling program at its San Jorge tenement in the Solomon Islands.

As part of ongoing reconnaissance activity, a high grade area of mineralisation was uncovered only 500 metres south-east of the recently completed phase I drilling area.

Targeting an exposed area of saprolite occurring close to surface, a program of rock chip sampling was undertaken, delivering grades of between 2% and 3.58% nickel.

Axiom’s shares surge on back of sampling results

These results proved to be the catalyst for a substantial surge in the company’s share price as it increased nearly 20% from the previous day’s close of 11 cents to hit an intraday high of 13 cents before closing at 12 cents.

However, it is worth noting that the consensus 12 month price target for the near term nickel producer is 35.3 cents, suggesting there could be more upside to come, particularly as the transition to production draws closer.

San Jorge is part of the Isabel nickel project which analysts at Wilsons Advisory and Stockbroking anticipate will produce 2 million tonnes of ore in fiscal 2018.

The broker has been bullish on the stock, having placed a buy recommendation on the company with a 12 month price target of 40 cents in December, implying significant upside to Monday’s closing price of 12 cents.

It should be noted that broker projections and price targets are only estimates and may not be met. Also, historical data in terms of earnings performance and/or share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.

It is worth noting that this week’s announcement regarding the identification of robust nickel grades from rock chip sampling come on the back of an extensive phase I drilling program which featured the following results.

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Brokers bullish on Axiom’s outlook based on near-term reduction and profitability

Given Wilson Advisory analyst, Philip Chippendale, was already upbeat regarding the identification of near surface results such as 10.3 metres grading 1.55% nickel and 5.4 metres grading 2% nickel, the latest drilling program along with high grade rock chip sampling returns makes the project look even more compelling.

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Ahead of these recent results, Wilsons provided the following forecasts based on its assumptions.

Charles Long from Beaufort Securities also views AVQ as a promising story. In January, Long said, “The Isabel nickel project is probably the most important (large, high grade) unmined nickel laterite deposit in the Pacific with an historic non-JORC resource of 159 million tonnes grading 1.05% nickel from the shallow grade limonite zone (INCO mainly drilled to 6 metres)”.

Long highlighted at the time that deeper drilling on elevation highs demonstrated very widespread high grade saprolite mineralisation between 1.5% and 3% nickel. Long’s assessment has been confirmed with this most recent identification of high grade mineralisation delineated from rock chip sampling delivering grades between 2% and 3.5%.

Long highlighted at the time that AVQ was well-positioned to fund modest capital expenditure of circa $20 million.

Focusing on the near term, Long said, “We anticipate a transformational 12 months for Axiom, with several material catalysts culminating in the first production shipment this year and we initiate coverage with a buy recommendation and a target price of 31 cents.”

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