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Corporate Spotlight

The Mt Alexander Project is close to existing infrastructure and plants in the nearby Agnew-Wiluna Belt providing low cost options to fast-track the Project into production. SGQ is positioned for a major share price re-rating as the nickel price surges with a clear upswing in the cycle underway.
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Interview with John Prineas, St George Mining

THE EXPLORERS

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The Explorers: St George Mining’s John Prineas on why BHP has no chance of getting its ‘freakish’ nickel belt back

9 August 2019 


In 2015/2016, an ailing BHP Nickel West sold its Mt Alexander nickel tenements to young explorer St George Mining (ASX:SGQ)for just $300,000.


Now, with the nickel price cycle in the upswing phase, we reckon a rejuvenated and nickel-hungry BHP would take the WA-based project back in a heartbeat.


That’s because shallow, high-grade nickel and copper sulphides have now been intersected across a 4.5km strike zone at the project’s 16km ‘Cathedrals Belt’.


But there’s a lot more where that came from, former bank exec John Prineas says — the potential scale of this “freakish” and “bizarre” nickel belt is only just starting to emerge.

 

Why the career move from banking to mineral exploration?

“Banking was good to me, but it was time for a career change. I seemed like a good time to get into exploration just after the GFC when nickel asset prices were quite low.


“Exploration is very hard, but the rewards are phenomenal. We had [banking] clients who were with explorer Jubilee Mines when they discovered the Cosmos deposit.


“Jubilee had a market cap of about $20m [~1997] and went on to be sold at the peak of the last nickel boom for $3.1 billion.

“We also saw it more recently with Sirius and the Nova discovery.


“Exploration can create amazing shareholder wealth.


“Me and a couple of banking colleagues started St George [in 2009], putting in our own money along the way – probably about $3m each by now.”

 

So, for St George it’s about buying low, (hopefully) selling high?

“Yes, roughly speaking. When the nickel price is low, it’s a great time to buy assets. But not every exploration project is going to yield the results that you want.


“Our first asset was the East Laverton project. We actually had BHP Nickel West farm-in on that asset.


“They spent $3m on exploration, made a discovery and said ‘Yep, we want to continue the program and earn a 70 per cent interest’. And a few months later then their budget got cut to zero and handed the project back to us.


“Mt Alexander is our second asset, and the one that has really delivered the goods.


“BHP Nickel West were under a cloud and had been divesting non-core projects. There were doubts as to whether they would even survive back in 2015.


“We picked up this Mt Alexander-Cathedrals ground from Nickel West for $300,000 [in early 2016].


“I’d like to say it was a very astute thinking on our part, but we were very lucky. The project has probably added $30m to our market cap so far, and we think much more is coming.”

 

I’m guessing BHP want those projects back now.

“I’m sure they would take it if we gave it back — but that’s obviously not going to happen. They would certainly love to get the ore.”

 

St George seem quite methodical to the point of being slow – you haven’t even got a resource estimate out for the Cathedrals Belt yet.


Go home Cathedrals, you’re drunk.


“There are probably a few factors that are driving that. Firstly, this is very, very unique mineralisation in a unique geological setting.


“All the ultramafic belts in the Yilgarn which have nickel sulphides are north-south trending. This particular belt that we are exploring – the Cathedrals Belt – is east-west orientated. Straight away, it’s completely different to anything anyone has ever seen before.


“We even called experienced geologist Dr Roy Woodall, the discoverer of the Kambalda nickel field, to have a look. He said ‘I can’t work out what’s going on here. But what you have is geologically significant, it’s economically significant – keep going, you’ll work it out’.


“So that’s what we’re doing.


“There is no exploration analogue to help us drill this project out quickly. We just have to go along and try work it out as we go.

“But we are very lucky at Cathedrals. It’s a little similar to [Glencore’s] Raglan mine in Canada, which is made up of 140 orebodies, or massive sulphide lenses across a wide strike.


“We don’t have one big ‘blob’ of a deposit, like Nova. We have a lot of electromagnetic (EM) conductors – and every single conductor we pick up in the belt ends up being nickel sulphide mineralisation.”

 

Is that bizarre? That sounds bizarre.

“Absolutely bizarre. It is freakish. A 100 per cent hit rate. In any other belt you will probably get an almost 99.9 per cent failure rate.


“In the Cathedrals Belt every conductor we’ve picked up – and we’ve drilled 51 so far – has been nickel sulphide mineralisation. It’s a fantastic tool for us here.


“We’ve hit a lot of economic widths at wonderful grades – 6 to 8 per cent nickel, 2-3 per cent copper, 0.2 per cent cobalt, 5-7g/t PGEs – and it starts at 30m below surface. In some areas they are quite large, well defined massive sulphide lenses.


“We know that we can mine that and make money, but we would love to find the bigger stuff as we go deeper.”


The strong anomalies are red/pink colours. 100 per cent hit rate.


There’s more nickel underneath these shallow, high grade lenses?

“We believe this is an intrusive system, which means a lot of the mineralisation hasn’t come to the surface.


“Somewhere along the way it has gone sideways, or just stopped and accumulated. That’s your classic intrusive system.


“The theory is that somewhere – at 500m depth, 800m depth – there could be a far larger accumulation of nickel sulphides. So, while we are drilling the shallow conductors right in front of us, we are also stepping down plunge and testing deeper areas.”

 

It sounds potentially gigantic.

“There is certainty potential for Cathedrals to be significant. We have done our own internal modelling as to what could be there because we have really only scratched the surface.


“The whole Cathedrals belt is 16km wide on our tenement package. We have only drilled along a 4.5km stretch – we still have to test the down plunge, and we also have to test extensions to the east and west. But the scale is starting to emerge.


‘It is freakish. A 100 per cent hit rate. In any other belt you will probably get an almost 99.9 per cent failure rate’


“The Investigators prospect, which is the largest one so far, is 1.5km wide. There’s a lot of discontinuity at the moment, but the more we drill, the more nickel we find.


“We’ve extended that so far 380m down plunge – but that is only a fraction of where we think [Investigators] can go.”

 

Have you been under any pressure from shareholders or potential investors to fast-track a resource or mining study?

“Seeing a resource will help people value us. But the nickel price is nowhere near where we think it is going to be, so there is no real rush to commercialise this.


“We can take a little bit more time to do this properly.


“It doesn’t necessarily fit in with the timeframe of some of our investors, unfortunately, but it is the best way to maximise the value of this asset.”

 

Is there a danger a miner could buy you cheaply at your current market cap?

“Very much so. We are being watched by all our peers; I have no doubt about that.


“We would make an obvious bolt-on acquisition for a number of the existing nickel producers.


“They are probably waiting for us to announce a resource so they can responsibly value us, go back to their board and say ‘OK, we can see 100,000t of nickel, that means this company is worth x dollars — let’s bid x dollars’.


“But from a lowball offer, from a hostile offer we are pretty safe. Myself and my business partners that set up St George are still the largest shareholders. Together with friends and family we probably speak for over 20 per cent of the company.”


You appear to have a supportive shareholder base. Even fellow explorers like Moho Resources are on board, and they would know better than most what you’re trying to achieve.

It’s great support from Moho (ASX:MOH). They have some excellent geologists who know their stuff, and of course they have Terry Streeter as their chairman who has made a fortune – twice – from nickel exploration.


“A very good, intuitive investment from them, I think, and a validation of the project’s potential.


“We also had several institutions come on board in our last capital raising. They could see that we are on the cusp of a re-rating as we continue to prove up the resource’s potential.”

 

Countless miners and explorers have referenced nickel’s role in the emerging electric vehicle thematic. Was there a moment where you thought ‘this demand is real’?

“There is a lot of forecasts and projections, and some of them you have to be a little sceptical about. But it hit home for me when BHP Nickel West announced that they were going to sell 90 per cent of their nickel production to EV battery manufacturers.


“Five years ago, that would’ve been nothing or a very small fraction; now it’s pretty much all their production.


“We have also had battery manufacturers come to us direct asking ‘can we made an investment in St George; we want to secure long-term supply’. They can obviously see a supply crunch coming.”

 

They’ve come to you already?

“They’ve come to us already, yes.”

 

Why should people invest in St George?

“One, we have just made a nickel sulphide discovery; now, it’s a matter of seeing how big it’s going to get.


“I think there is zero downside for our stock at the moment; we have a market cap of $46m, which is only a fraction of where it’s going to be once we prove up the scale of this resource.


“The second reason is that the nickel cycle is most certainly in the upswing phase.


“Experienced predictors like Wood Mackenzie have a long-term price target of $US21,000/t. I’ve got no doubt that will be revised upwards as we go along.”



SPONSORED ARTICLE

BEGINS AT MT ALEXANDER

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DRILLING OF NICKEL-COPPER SULPHIDE TARGETS BEGINS AT MT ALEXANDER 

ASX Announcement 31 July 2019 


HIGHLIGHTS

Major Drill Programme has commenced: 

  • Diamond drilling of electromagnetic (EM) conductors is underway with 42 EM conductors prioritised for drilling 
  • First target is an EM conductor at the Investigators Prospect with modelled conductivity of 82,000 Siemens 
  • All EM conductors tested in the Cathedrals Belt to date have been confirmed as nickelcopper sulphides 
  • Quantity and location of the EM conductors supports the potential to significantly increase the volume of high-grade mineralisation at Mt Alexander 


EM surveys in progress at the Cathedrals Belt: 

  • Extensive EM surveys are ongoing at the Cathedrals Belt with potential to locate additional areas of high-grade nickel-copper sulphides 
  • EM surveys in areas of conductive cover have recorded several anomalous responses, which are being reviewed ahead of being prioritised for drilling 
  • High-powered EM survey over the northern section of the Cathedrals Belt has been completed with new data being reviewed 
  • EM survey is being fast-tracked for the Fish Hook Prospect where a very strong nickel and copper soil anomaly has been identified


Growth focused Western Australian nickel company St George Mining Limited (ASX: SGQ) (“St George” or “the Company”) is pleased to announce that drilling of nickel-copper sulphide targets has commenced at the Mt Alexander Project, located in the north eastern Goldfields.


Diamond drilling has commenced on a continuous 24 hour basis with two 12 hour shifts per day. More than 6,000m of drilling is planned with additional targets expected to be added to the programme as results from ongoing EM surveys are reviewed.


John Prineas, St George Mining’s Executive Chairman said: 

“With a large number of high priority EM targets to test, this is the most exciting drill programme we have launched at Mt Alexander to date.


“Many of the EM conductors to be drilled represent a large step out from known massive sulphide mineralisation, so there is excellent potential for this programme to significantly extend the footprint of high-grade nickel-copper sulphide mineralisation. 


“In addition, ongoing EM surveys are identifying new EM targets in underexplored areas of the Cathedrals Belt – providing further support to the emerging large scale mineral potential at Mt Alexander.”


DIAMOND DRILLING OF EM CONDUCTORS 

The first three EM conductors scheduled for drilling are located at Investigators and are listed in Table 1.


The collars for the drill holes that will test these targets are shown in Figure 1, along with the location of other EM plates at Investigators. 


The EM conductors all have electrical signatures that are consistent with massive nickel-copper sulphides, and are located in an area of the Cathedrals Belt where all EM conductors tested by drilling have been confirmed to be nickel-copper sulphide mineralisation.


The first EM conductor to be drilled is located approximately 50m to the north of the nickel-copper sulphides intersected in MAD45 – representing a large step-out to the known mineralised zone. This EM conductor has a strike length of 30m and conductivity of 82,000 Siemens.


The drill hole underway is modelled to intersect the EM conductor at 200m downhole.


Figure 1 – plan view of Investigators Prospect with drill hole collar locations over SAM (MMC) survey data. Untested EM plates exist proximal to known nickel-copper sulphides and in locations which are large stepouts from the known mineralisation. The first three targets to be drilled in the current programme are highlighted. 


Click here to view the full announcement

COMPLETES FUNDING

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ST GEORGE COMPLETES FUNDING FOR NICKEL‐COPPER SULPHIDE DRILLING   AT HIGH‐GRADE MT ALEXANDER PROJECT

ASX Announcement 29 July 2019 


HIGHLIGHTS

  • Institutional‐led placement completed with the allotment of new shares   
  • New funding will support an expansion of exploration programmes at the Mt Alexander Project 
  • Diamond drilling of high‐grade nickel‐copper sulphide targets is scheduled to commence this week


Growth‐focused nickel company St George Mining Limited (ASX: SGQ) (“St George” or “the Company”) is pleased to confirm that, further to the ASX Release dated 19 July 2019, it has completed an institutional‐ led placement that has raised additional  funding  for its high‐grade nickel‐copper sulphide project at Mt Alexander located in the north‐eastern Goldfields of Western Australia.   


The Company has issued 33,000,000 fully paid ordinary shares at $0.10 per share to raise $3,300,000 (the “Placement”).


John Prineas, St George Mining’s Executive Chairman said: 

“We appreciate the backing of new and existing shareholders for our upcoming exploration programmes at Mt Alexander – programmes which have the potential to be significant near‐term value drivers.


“A diamond drill rig has arrived at Mt Alexander and drilling of a large number of electromagnetic (EM) conductors will start this week. We are confident that this major drill programme will identify additional high‐grade  mineralisation  that  could  significantly  increase  the  resource  potential  at  our  advanced prospects in the Cathedrals Belt. 


“Exploration at earlier stage targets will also be accelerated – with a focus on the Fish Hook Prospect in the underexplored eastern extension of the Cathedrals Belt and the West End Prospect near the Ida Fault – both of which offer excellent potential for a new greenfields discovery.  


“Its  an  exciting  time  to  be  expanding  exploration  activities  at  Mt  Alexander  with  heightened  investor interest in the nickel sulphide market.”


After the issue of the above securities, the Company has the following listed securities on issue:  


Fully Paid Ordinary Shares              368,307,665 

Listed Options exercisable at $0.20 on or before 30 September 2019      24,579,714


The shares issued under the Placement were issued pursuant to the Company’s 15% placement capacity under ASX Listing Rule 7.1, and were placed pursuant to Section 708 of the Corporations Act 2001 (“the Act”).


Figure 1 – a map (set against RTB magnetic data) of the Mt Alexander tenement package. 42 EM conductors have been prioritised for drilling at the advanced prospects in the Cathedrals Belt – at Investigators, Stricklands and Cathedrals.

Exploration at earlier stage targets at Fish Hook and West End are also being accelerated with potential to further extend the strike of mineralisation along the 16km Cathedrals Belt. 


Click here to view the full announcement 

RAISES $4M

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ST GEORGE RAISES $4M FROM JMEI PLACEMENT 

ASX Announcement 20 June 2019


HIGHLIGHTS

  • Placement undertaken by St George to utilise Junior Mineral Exploration Incentive (JMEI) benefits to raise $4 million   
  • Strong support from existing shareholders and new investors 
  • Proceeds  to  fund  Phase  2  of  the  2019  exploration  programme  at Mt  Alexander  nickel‐ copper sulphide project 
  • Phase 2 to include drilling of multiple EM targets generated by Phase 1 to expand the scale of the high‐grade sulphide mineralisation at Mt Alexander 
  • Drill programme targets to be announced shortly, with drilling to resume next month


Growth‐focused Western Australian nickel company St George Mining Limited (ASX: SGQ) (“St George” or “the Company”) is pleased to announce that it has successfully received firm commitments from investors for a placement to raise $4 million at an issue price of $0.11 per share (“Placement”).


The Placement was undertaken by the Company to utilise its Junior Mineral Exploration Incentive (“JMEI”) benefits, which expire on 30 June 2019, and was well supported by St George’s existing shareholders and new investors.  


The Placement was undertaken by the Company to utilise its Junior Mineral Exploration Incentive (“JMEI”) benefits, which expire on 30 June 2019, and was well supported by St George’s existing shareholders and new investors.   


The Placement will enable St George to further advance the 2019 exploration programme at its high‐grade Mt  Alexander  nickel‐copper  sulphide  project,  located  near  Leonora  in  the  north‐eastern  Goldfields  of Western Australia.


St George’s upcoming Phase 2 drill programme will build on the recently completed and successful Phase 1 programme, which was designed to generate multiple new EM targets to expand the potential scale of mineralisation at Mt Alexander both laterally and at depth.  


Modelling of drill targets for Phase 2 is being completed and details will be announced shortly. Phase 2 drilling is expected to commence in the middle of next month.   


Following  completion  of  the  Placement,  St George  will  cancel  its  unsecured US$4 million  standby  loan facility which remains undrawn.  


St George Mining’s Executive Chairman, John Prineas, said: 

“The new funds raised under the Placement have strengthened our balance sheet ahead of commencing the exciting Phase 2 of our 2019 drill programme at Mt Alexander. 


“Phase 2 will test a number of EM conductors, many of which were generated from the successful Phase 1 programme completed earlier this year. 


“We have established a strong foundation from which to further grow the scale of the high‐grade nickel‐ copper sulphide discoveries at Mt Alexander.”   


Under the JMEI placement the Company will issue approximately 36,363,637 shares. The Placement was undertaken  utilising  St George’s existing  placement  capacity  under ASX  Listing  Rule  7.1  (approximately 6,552,017 shares to be issued under 7.1) and 7.1A (approximately 29,811,620 to be issued under 7.1A). All of the shares issued under the Placement will rank pari passu with existing ordinary shares.


Argonaut was Lead Manager to the Placement.  


Click here to view the full announcement

Interview with John Prineas

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