Estrella Resources hits more high-grade nickel in WA ahead of bulk sampling in October

Estrella Resources (ASX:ESR) has good reason to be excited for its ongoing operations at the Spargoville open pit nickel mine near Kambalda WA with dewatering works ongoing; a turkeys nest dam approved for construction; and bulk sampling to occur in October. 

Estrella has today hit another batch of high-grade nickel assay results from Spargoville, the third lot it has received this year.

Water that has accumulated at the base of Spargoville as part of drilling will likely be removed by early September and pit-floor cleanup is to commence afterwards. 

By October, the bulk sample will have been sent off to a laboratory, which will provide the company with the geological data it needs to work towards a production schedule. 

What has Estrella Resources found? 

On top of the operational works developing on-site, the company has also detected numerous hits of high-grade nickel in its most recent assay results received. 

Investor information provider Undervalued Equity notes nickel concentrations over 2% in ore samples are considered 'high-grade.' 

Compare that to the following from Estrella today:

• 6.80m @ 4.40% Nickel from 66.2m depth 

• 4.05m @ 3.05% Nickel from 79.6m depth 

• 03.0m @ 1.15% Nickel from 23.3m depth 

• 19.0m @ 0.74% Nickel from 36.0m depth 

Shareholders should note the company has not yet provided meaningful information on how it intends to access depths of up to 80m.

Couldn’t be a better time: management 

“As expected, we continue to see very high-grade assays returned from recent diamond drilling of the 5A nickel deposit,” Estrella Resources MD Chris Daws said.

“Planning for the extraction of the bulk sample has progressed significantly and I look forward to updating shareholders on how, where and when we are able to deliver these nickel tonnes for processing.” 

“Outlook for nickel prices continue to look very favourable and now couldn’t be a better time to plan and develop a nickel mining operation.” 

Open pit hasn’t hit the bottom yet 

Estrella acquired Spargoville when it bought out WA Nickel Pty Ltd. With the nickel play came attached voluminous information on existing drillholes, surface samples, and underground sampling. 

The 5A open pit target has been proven to contain high grade nickel as well as sulphide intercepts, and is also prospective for platinum group elements (PGEs) and cobalt. 

Today’s latest assay data, the second last batch the company will receive, ultimately adds confidence to the geotech’s already-established intentions to move ahead to production. 

Are investors overlooking Estrella?

Despite a fairly positive announcement and its ownership of a near-production nickel mine in a tier-1 jurisdiction, Estrella has been slammed by risk-off sentiment this year. 

This is perhaps counterintuitive when one considers nickel’s role as an emerging battery metal, with BloombergNEF forecasting solid demand for at least the next decade.

On the 1st of June 2022, the company sat at 2.8c; it is now worth 1.7c, though, investors should note the low share price value is more susceptible to volatility. 

At any rate, a surface look at performance shows the following data points:

• Year to date (YTD) performance down -32% 

• One year returns down -55.26% 

The company has a market cap of $22.5m and is ranked 508 of 912 materials sector constituents. 

The company finished the June quarter with only $721,000 in cash. It last conducted a share placement in July. 

A look at Estrella's six month charts