Nickel prices remain elevated over pre-COVID levels, and this explorer is wasting no time

Thu 02 Mar 23, 12:11pm (AEST)
Nickel rocks with little miner figurines
Source: iStock

Key Points

  • Sabre Resources has uncovered another massive sulphide target on-site its Sherlock Bay project in WA
  • An existing nickel resource estimate is present for the Discovery Zone target, with the company now looking to expand it
  • Drilling will kick off in the coming weeks and months with a Pre-Feasibility Study to follow, incorporating metallurgical tests

Nickel digger Sabre Resources (ASX: SBR) identified yet another electromagnetic (EM) target on-site its WA Sherlock Bay project near an existing mineralised area within the acreage.

EM surveys can be thought of as similar to metal detectors. Materials which conduct electricity, and/or have magnetic qualities, are detected by machines. Typically, this is the first step in finding a drill target. 

The EM target is located on the southern side of an underground geological intrusive formation, a promising indication a nickel deposit could be present.

Brief explainer

Intrusive formations are a well-known geological phenomena. In short, magma cools to form rocks, and that cooling down (which takes place on the scale of geological time) allows crystallisation. 

Those crystals later form an underground mineral deposit, and with the right properties, these mineral systems can be conducive to an economically viable operation. 

The best-known type of intrusive rock is granite. 

Sherlock Intrusive formation 

The formation, called the Sherlock Intrusive, has previously been tested by Sabre with Diamond Drill (DD) rigs. 

Assays on the resulting cores assayed and confirmed to contain nickel, cobalt, and copper. 

While that drilling was being conducted, Sabre’s geotech team used downhole equipment to identify an EM target which data showed was to the west of the hole. 

That first-stage evidence led the company to keep surveying in a westward direction, ultimately resulting in Thursday’s discovery.

Drilling planned, PFS on horizon

Sabre Resources is now gearing up to prepare the drill rigs for its next exploration activities at Sherlock Bay. Drillers will target the new EM anomaly revealed on Thursday, as well as other targets of interest to the west of the Discovery Zone. 

“The detection of a second strong EM anomaly has further enhanced potential for additional massive sulphides and an upgrade to what is already a substantial Mineral Resource at Sherlock Bay,” Sabre chief Jon Dugdale said.

“This, combined with planned metallurgical studies and further engineering work, will allow the Company to fast-track a pre-feasibility study [PFS] into a major new nickel sulphide development project.”

Sabre is planning to launch both Reverse Circulation (RC) and DD drill rigs at Sherlock in the next stage of its exploration. 

RC drilling uses a bit to collect rock chips from underground, while the more expensive DD drilling rigs return whole cylindrical cores to the surface. 

DD rigs can typically perforate deeper into hard-rock than RC rigs are capable of, giving Sabre the tools it needs to meaningfully map out underground mineralisation in early-stage work. 

Nickel wins Sabre’s favour 

Sabre Metals is effectively a base metals explorer but has pivoted heavily to nickel in recent months as the material appears set for a bull run, based on its inclusion into Electric Vehicle (EV) batteries. 

Nickel mineralisation at Sherlock is defined by sulphide systems underground. Nickel sulphide mineralisation is the gold-standard style of nickel for use in downstream EV supply chains. 

In short, sulphide is easier to refine downstream.

Sabre is preparing sulphide samples at the moment with the intent of determining its quality in metallurgical testwork. 

A second kind of nickel mineralisation, nickel laterite, is more commonly used in the creation of pig iron. 

Management for many nickel explorers on the ASX expect the laterite and sulphide markets to diverge in the coming years as nickel uptake into EV supply chains is set to increase.

Nickel prices also remain elevated with the major London Metal Exchange (LME) benchmark being well above September 2019 levels (though significantly reduced from 1Q CY2022 peaks).

The price of the LME nickel benchmark has had an interesting five years (Source: TradingEconomics)
The price of the LME nickel benchmark has had an interesting five years (Source: TradingEconomics)
Disclaimer: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. Sabre was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice.


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Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication.

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