Nickel Industries Limited (Nickel Industries) announced the signing of binding acquisition agreements for the Sampala Project in September 2024. The Sampala Project consists of three highly prospective, advanced and contiguous nickel-cobalt projects covering 6,654 hectares (ha), with an initial JORC-compliant Mineral Resource of 187 million dry metric tonnes (dmt) at 1.2% nickel and 0.09% cobalt (containing 2.3 million tonnes of nickel and 0.2 million tonnes of cobalt) covering just 900 ha.
Map showing the close proximity of the Sampala Project to the Company’s existing RKEF and HPAL operations. Image Credit: Nickel Industries Limited
The IUPs are located in close proximity (just 36.9 km) to the Company’s existing rotary kiln electric furnace (RKEF) and high-pressure acid leach (HPAL) operations within the Indonesia Morowali Industrial Park (IMIP), and immediately north of Sulawesi Cahaya Minerals, which is 49% owned by the Company’s largest shareholder, Shanghai Decent, and has reported resources of 1,139 million dmt at 1.2% nickel for 13.9 million tonnes of contained nickel metal, making it one of the world’s largest known nickel resources.
Since September, the Company has executed an aggressive drilling program, with the results consistently returning long, high grade saprolite and limonite intercepts across the IUPs. Development of the Sampala Project will allow the Company to become self-sufficient in nickel ore supply for its IMIP downstream operations.
Commenting on the Sampala Project exploration update, Managing Director Justin Werner said:
“We are extremely pleased to provide an exploration and development update on the Sampala Project. The consistent, long, high-grade saprolite and limonite intercepts build on the existing JORC Resource of 187 million dmt at 1.2% nickel for 2.3 million tonnes of contained nickel metal, within just 900 ha of a 4,700 ha mapped prospective laterite area.
In 2024, we executed a successful drilling campaign, completing over 45,000 m of drilling across an additional 1,600 ha. This campaign returned exceptional grades of up to 7.41% nickel and 1.37% cobalt. With an identified Exploration Target ranging from 350 million dmt to 700 million dmt, at 0.9% to 1.1% nickel, in addition to the existing Resource of 187 million dmt at 1.2% nickel, the Sampala Project has the potential to become one of the largest nickel deposits globally. This positions Nickel Industries as one of world’s largest holders of contained nickel metal.
The commercial terms are extremely compelling – they allow for an 18-month period from signing of the agreements for the Resource to be defined and calculated, after which Nickel Industries will pay an acquisition price of US$2.50 for every dmt of 1.7% nickel (or above). Therefore, a significant portion of the contained metal in the deposit will effectively be acquired for “nil” consideration.
With current nickel ore prices of US$45/wmt for 1.6% saprolite and US$20/wmt for 1.2% limonite, coupled with our Hengjaya Mine reporting average margins of US$12/wmt throughout 2024, the Sampala Project has the potential to become a significant future EBITDA contributor, whilst at a low capital development cost of approximately US$50 million.
The completion of geotechnical drilling has enabled the finalization of mine plans, with an initial target of 6 million wmt per annum, ramping up to 20 million wmt per annum. With the submission of our feasibility study and AMDAL (environmental application), we remain focused on bringing the Sampala Project into production as swiftly as possible. This will ensure a secure, long-term, high-quality ore supply for our processing operations at the IMIP.”
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