Nickel junior cuts deal for lucrative deposits

BASE metals junior Sirius Resources has taken full ownership of its Nova and Bollinger deposits, after negotiating a $210 million acquisition deal with 30 per cent company shareholder Mark Creasy. The company entered a binding agreement with Mr Creasy – Australia’s richest mining prospector – via his company Ponton Minerals in mid February, to gain full proprietary of exploration licences across the nickel-rich Fraser Range in WA’s Yilgarn Craton – including Sirius’ famed Nova-Bollinger tenements.
The acquisition, which remains conditional on shareholder approval, comprises 70.6 million fully paid, ordinary Sirius shares exchanged for $28 million in cash, and a 0.5 per cent net smelter royalty payable on production made from any future discoveries within the region. Royalty payments exclude any throughput from the existing Nova-Bollinger tenements.
Sirius said it would fund cash component using its existing $104 million cash reserves.
“Sirius expects to derive significant financial and timing benefits from having 100 per cent control of the development of Nova-Bollinger, and to achieve further operational cost savings by avoiding the need for a production joint venture,” the company said in an ASX release.
Sirius’ Nova deposit was discovered in July 2012 and is widely recognised as the most exciting discovery in the Australian mining industry in recent years.
The nickel-copper-cobalt deposit saved the company from the brink of bankruptcy, raising the company’s shares 4000 per cent from $0.05 to $5.00 per share.
The undeveloped Nova-Bollinger project resources comprise 14.6 million tonnes of ore grading 2.2 per cent nickel, 0.9 per cent copper and 0.08 per cent cobalt for 325,000t of nickel, 134,000t of copper and 11,000t cobalt.
Sirius managing director Mark Bennett said the size and quality of the deposits forecasted significant cash flow into the future, which the company intended to capitalise upon.
“Reaching agreement to consolidate 100 per cent ownership of what we believe will emerge as one of Australia’s leading nickel mines is an important milestone for Sirius and its shareholders.
“The agreement has been structured in a manner which delivers Sirius 100 per cent ownership yet leaves us with a significant cash position to complete the definitive feasibility study and continue with an aggressive exploration program.”