NIA bought the ex-WMC/BHPB Windarra nickel mine near Laverton, similar kind of deal to Mincor, Independence, Reliance etc. Indicated JORC nickel resources are
4.1Mt @ 1.4% Ni for 54,400t Ni Metal (Mt Windarra 3.50Mt @ 1.40% for 49.0Kt and Windarra Sth. 0.60Mt @ 0.90% for 5.4Kt). Current nickel price is 32,000 USD/t.
The project consists of Mt Windarra and Windarra South. These 2 mines are 20km apart along the same geological horizon. Historic WMC drilling indicates that mineralisation extends to 1000m vertical depth. An updated resource calculation will be undertaken once the company has finished digitising all the historical WMC paper-based drilling data. 820 holes were entered into the database as of the 14/12/06 announcement, with 450 remaining to be entered. The company is doing metallurgical testwork to allow the processing of 1-2Mt @ 1% Ni nickel sulphide stockpiles at the minesite via atmospheric heap-leach. They have entered into an option agreement with Goldfields to purchase a winder and ore-haulage system for use at the Windarra underground workings. A study by WMC indentified 100KOz of gold in tailings that could be perhaps economically extracted via reprocessing the tailings. There are also additional stockpiles of 1% oxide nickel ore which was not able to be processed before the development of hydrometallurgical techniques such as acid leaching.
In the acquisition announcment the company states that "In the last twenty years geophysical methods and geological concepts have developed considerably enabling geologists and geophysicists to 'explore with a new set of eyes'. Although explored extensively after discovery in 1969 Windarra can be regarded as essentially a greenfields project". (company announcement of 8/12/05).
Exploration - WA Nickel
The company is doing DHEM (downhole electromagnetics, a geophysical technique to detect off-hole conductive bodies such as nickel sulphides), surface TEM (a surface geophysical technique). They are also doing wedge holes from existing diamond drill holes (the drill rod is forced to deviate from the existing drillhole, creating a new hole branching off the existing one. Saves drilling a complete new hole from the surface). The aim of this is to test for Ni resources below the current workings. Highest grade hit so far is 17% nickel over 0.4m from 794.8m at Denny Bore. Denny bore is 10km from the existing mine. This intersection is being followed up by more drilling. Below the existing workings:
NMD0001E
11.0m at 1.26% Ni (621 - 632m) downhole and
2.95m at 2.99% Ni (646.15 - 649.10m) downhole including
0.71m at 7.20% Ni (647.54 - 648.25m) downhole
WA - Lead-Zinc
Downhole clearing of a historic WMC drillhole (WED13) intersected high grade base metals from 682m downhole. WED13 is approx 4km from the Windarra minesite. The intersection is 0.3m thick and contains grades such as
1. 20.97% Zn + 4.91% Pb + 124 g/t Ag
2. 15.06% Zn + 2.82% Pb + 55 g/t Ag
3. 35.59% Zn + 3.31% Pb + 236 g/t Ag
4. 26.80% ZN + 10.40% Pb + 211 g/t Ag
5. 36.38% Zn + 14.36% Pb + 538 g/t Ag
6. 17.29% Zn + 3.84% Pb + 72 g/t Ag
Note: These assays are from a handheld XRF machine. The photograph in the announcement shows the core has been cut, so presumably the other half has been sent to an assay lab for conventional chemical analysis. The company is planning DHEM to locate the source of the mineralisation and site more drillholes. For comparison, CBH is currently mining an orebody of 6.8% Zn, 4.1% Pb and 51g/t Ag.
Ghana
RSG Global is managing a programme of RC drilling to test for extensions of a 900,000 Oz gold resource into NIA's ground. This resource is currently undergoing a BFS by Adamus resources.
Corporate
232m shares * 27c = 62.6m market cap. There is a broker's research report on the company's website dated 29/9/06 -
www.niagaramining.com.au
Summary
There appear to be several ways that NIA can generate early value from this project. These include
1) reprocessing the tailings to extract 100KOz of gold;
2) processing the low-grade sulphide and/or oxide nickel stockpiles;
3) exploration success. The potential for discovering extensions to the nickel mineralisation below the mine, or "blind" discoveries which were missed by old prospecting techniques seems high;
4) Newly discovered Pb-Zn intersection.