NC1 starts infill drilling at giant WA nickel-cobalt project

Our Investment Nico Resources (ASX: NC1) just started drilling its Nickel-Cobalt Project in WA.

NC1’s project is one of the four largest undeveloped nickel projects in the world (ex-Indonesia).

Of those four, it's got the highest grade:

(source)

NC1’s project is advanced stage too with a Pre Feasibility Study (PFS) completed on it back in December 2022.

That PFS delivered the following numbers:

1. Post-tax NPV of A$3.34BN (using a US$21,472/t nickel price)
2. IRR of 18.02% and a 4.9 year payback
3. ~40,000t of nickel and ~3,000t of cobalt per year for 42+ years

Today NC1 kicked off a 6,000m, 94 hole RC drilling program, aiming at upgrading the confidence in the projects resource.

Basically, drilling to make sure the resource estimates are as accurate as possible.

The drilling will initially focus on the South Domain of the resource area:

(source)

This drilling matters because a higher confidence resource feeds into development studies, so projects studies resemble more accurately real life mining conditions.

It also allows the studies to target more profitable ore in early production, to pay back any potential debt financing quickly and build cash reserves.

Higher confidence typically = lower risk, making potential financing terms more attractive.

See our educational article on resource categories here: What is a JORC resource? How does a company define a resource? 🎓

And now the drilling is underway: (source)

What does NC1 have?

NC1 has one of the highest grade, large scale nickel resources globally:

(source)

the total grade and size of the resource sits at:

(source)

More recently back in May it signed a MoU with Pure Battery Technologies where it is investigating a collaboration to look into creating a nickel and cobalt refining platform for Western countries.

This also included looking into using Pure’s tech on NC1’s resource to produce a Mixed Hydroxide Precipitate (“MHP”) and NMC battery precursor cathode active material (“pCAM”).

(MHP is a solid intermediate product containing a mix of nickel and cobalt, pCAM is the chemical mixture of nickel, cobalt, and manganese required to manufacture a battery cathode).

You can see our coverage on this here: NC1 signs MOU with Pure Battery Technologies, aiming to close the gap from nickel intermediate to battery grade product

What do we want to see NC1 do next?

NC1 just put out its March quarterly report a few days ago (see it in full here). NC1 ended the quarter with $4.9M in cash.

Over the next few months the two main things we want to see NC1 do are:

🔄 Drill out and upgrade defined resources

NC1 mentioned in the quarterly that to upgrade the current resource in full into the measured category, it would need to do ~200,000m of RC drilling.

But, the focus would be on the highest grade parts of the resource first to get that upgraded.

We want to see NC1 drill out and upgrade its current resources.

Here are the milestones we will be tracking:

✅ Drilling commences (Announced today) (source)

🔲 Drilling completed

🔲 Resource upgrade completed

🔄 Progress on MoU with Pure Battery Technologies to produce pCAM (battery feedstock).

In May NC1 signed an MoU (Memorandum of Understanding) with Pure Battery Technologies (PBT) that will look into developing an integrated supply chain.

This is from NC1’s in ground resource that has a PFS where it can produce a MHP (Mixed Hydroxide Precipitate) product which PBT could then turn into battery ready nickel product pCAM (pre cursor cathode active material).

So we hope to see this progress further because it could open up additional funding and developmental pathways that could make financing easier to obtain and increase revenues due to the integration and end product produced.