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The 5A nickel mine.

Resource confirmation drilling has kicked off at Estrella Resources’ 5A nickel mine within the Spargoville Nickel Rights Project, to aid in completion of a Definitive Feasibility Study for the site.

Managing director Christoper J Daws said recent strength and the robust outlook for the nickel market had caused the company to re-evaluate its strategy for Spargoville, located only 20 kilometres from the pre-eminent nickel sulphide district at Kambalda, Western Australia.

Estrella withdrew the project for sale after the receipt of serval offers were made and a formal sale process was being undertaken, as the price of nickel appreciated to levels not seen for more than 15 years.

“5A represents an early nickel producing opportunity for Estrella via an extremely simple SMP open pit cut-back operation accessing valuable nickel tonnes,” he said.

“With the re-start of the Kambalda Nickel Concentrator at Kambalda by BHP Billiton to treat third-party ores, the location and timing of developing 5A is obvious.

“Our relationships with drilling and mine service groups are aiding in our efforts to make the most of what we have in the backdrop of an incredible nickel market.”

At current nickel prices , income could then be utilised for the development of the Carr Boyd nickel mine, T5 resource expansion/definition drilling, and to progress the 5B nickel mine, 1A nickel mine and the Andrews nickel mine development at Spargoville.

An important feature of the nickel right assets at Spargoville is that they are free of third-party royalties (other than the State Government royalty on nickel) that impact most of the nickel sulphide assets in the Widgiemooltha and Kambalda district.

“Thus, timing of profitable development comes much earlier than assets which are impeded by such onerous and heavy royalties applied to many of those deposits,” Daws said.

“Although not all the 5A resource will be able to be mined and recovered within the open pit cutback, the company believes that a substantial portion will fall into the economic category of the DFS to be mined, processed and sold.”

Estrella will be completing about 17 diamond holes into the 5A mine resource area which will aid in final ore reserve calculations, metallurgical characteristics and final mine design parameters.

Drilling is expected to take up to six weeks to complete, with assays for nickel intersections fast-tracked through the laboratory to aid in the speed of the completion of the DFS, mine planning and permitting.