Estrella enjoys a happy Friday as Glencore subsidiary formalises WA nickel sulphide offtake

Estrella Resources (ASX:ESR) is catching eyes on the bourse heading into mid-afternoon trades as the company reveals a subsidiary of mining giant Glencore has formally signed an offtake agreement for nickel from Estrella’s ‘5A’ mine, part of its WA Spargoville Nickel Project. 

Now that a buyer is locked in for what the ore will become, Estrella can economically move ahead with the refining process needed to turn ore from its 5A mine into nickel sulphide. 

For clarity, that’s nickel sulphide ore, and not ingots of nickel itself.  

Nickel sulphide is the style of nickel mineralisation widely desired for its cleaner reputation and better attractiveness to EV battery supply chain proponents. 

Murrin Murrin Operations Pty Ltd, an Australian-registered child entity of Glencore, will be the offtaking body. 

Ore processing and offtake agreement, to be exact

The ore processing and offtake agreement now allows Estrella to move ahead with the bulk metallurgical extraction of up to 4,000 tonnes of nickel sulphide ore from 5A. 

Estrella has not advised the market how much money was involved in the deal in either direction, and no exact indication was given by the company today as to whether Murrin Murrin will offtake up to 4,000 tonnes of nickel sulphide ore; or if the financials of the agreement allows Estrella to ramp up processing work. 

The company has left one tantalising hint, noting “[Estrella] expects a positive financial return from the extraction of the sample at current high nickel prices.” 

Bustling on the ground 

Estrella currently has staff and contractors alike at the site of the 5A open pit mine preparing for the extraction work to commence. 

Activities the company notes today include rehabilitation of key mine haul roads and maintenance to pit access infrastructure. 

Processing circuit machinery is being delivered to 5A in sections; Estrella notes the overall timeframes attached to the extraction process are short in nature. 

Should all cards land in order, the company believes it will thereby acquire a “strong basis” to fully develop the 5A nickel mine with further open pit expansion mining; as well as works at the Andrews, 5B and 1A deposits, also part of Spargoville. 

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