BHP has a new exploration neighbour in Tanzania: Adavale eyes nickel potential at Luhuma

Adavale (ASX: ADD) has secured a new exploration licence in Tanzania – named the Luhuma Central Project – which boasts historic drill results of 1.14% nickel over 8.4 metres and located along strike of BHP’s (ASX: BHP) Kabanga Nickel Deposit. The company’s shares rallied 22% to a 3-month high of 2.2 cents as the market opened.

“The Company recognised Luhuma Central as a coveted area, being within favourable lithologies and with demonstrable nickel sulphide mineralisation. It will play a key role in our broader exploration success,” said Adavale’s Chairman, Grant Pierce.

The tenement covers an area of 3.74km² within Adavale’s Kabanga Jirani Nickel Project Licence areas. Despite its small size, the company considers it “geologically and technically significant” given historic magnetic and gravity anomalies identified by BHP in the 1990s.

“The granting of Luhuma Central is opportune timing as Adavale has recently recommenced drilling, being a ~5,000m program and Luhuma Central will definitely feature in this program,” said Pierce.

Earlier this month, Adavale recommenced drilling on high priority targets at Kabanga Jirani, with diamond drilling and reverse circulation rigs already mobilised at the Luhuma trend location.

High-impact drilling

The ~5,000m program seeks to target two priority areas within the Luhuma trend:

• ~15 km of prospective strike that were defined by copper, nickel and cobalt soil anomalies 

•  Anomalies within seven nickel target areas identified by Heli-bourne electromagnetic surveys 

Adavale considers these priority areas as significant given that the neighbouring Kabanga deposit owned by BHP contains a globally significant resource of 58Mt at nickel grades of 2.62%. In early 2022, BHP agreed to invest up to US$100 million in the project.

In terms of the new Luhuma Central prospect, Adavale plans to first drill a new hole that is parallel to the historic discovery. They will then use two types of surveys – Downhole Electromagnetics and Audio Magnetotelluric surveys – which will help the company understand the extent and orientation of the nickel mineralisation.

Adavale says it will update the market during the course of the current exploration program, which can include catalysts such as initial pXRF assessments and assay results.

Adavale 12-month price chart (Source: Market Index)