Bonanza nickel grades continue for Xstrata’s Cosmos project

The purchase of Australia’s richest grade nickel operations by Xstrata plc (LSE: XTE) was achieved during a strong price phase for nickel metal and while the commodity price hit a year low during Diggers & Dealers the news for the big global mining house was good.

PERTH -

Delegates attending this year's Diggers & Dealers Forum in Kalgoorlie went away shaking their heads at the ongoing spectacular exploration results from the Cosmos nickel project in Western Australia's north eastern goldfields.

Xstrata had purchased these properties and corporate assets of Jubilee Mines late last year for $A3.1 billion ($US2.76 B), a deal that earned Jubilee's CEO Kerry Harmanis this year's Dealers award at the Kalgoorlie conference.

While hindsight would say it was a high price, there were few experienced market analysts and nickel miners believe the dip in the nickel price to near $US8/lb during the conference was little more than a short-term aberration - aided in part with the slow down in nickel imports to China during the Olympics.

But any reservations about Xstrata's buy was counter-weighted by results released by Xstrata Nickel Australasia's chief financial officer Shaun Usmar and geology and business manager Peter Langworthy's conference finale presentation.

Delegates were told that the exploration and resource development budget at the operations at Cosmos, Sinclair, Cunyu and other joint ventures this year would total $A50 M ($US44.6 M) and the exploration blueprint for the next four to five years would see $A200 M ($US178.4 M) spent - "one of the largest exploration programmes in the Australian mining industry."

Drilling below the established and planned mine developments at Cosmos has shown up a series of new orebodies and the drill hits in one zone included 10 metres grading 8.5% nickel, 4.5m @ 8.7% Ni and 28m @ 9.5% Ni, while to the west the drill hits included 17m @ 3.4% Ni.

In the AM5 zone a high grade disseminated target will soon have a resource estimate. Latest bit hits included 78m @ 2.5% Ni and 138m @ 2.6% Ni.

This was, said Shaun Usmar, the heart of one of Australia's most prospective and productive nickel sulphide regions that was a "relatively immature province versus other world class nickel camps such as Norilsk and Sudbury."

There was 15 kilometres strike of prospective ultramafic. with opportunities for high tenor-high grade deposits as well as opportunities for bulk, low-grade deposits.

Further south, the Sinclair deposit has 1.9 million tonnes @ 2.5% Ni and this is advancing to a September commissioning. The Sinclair leases take in 40 km of ultramafic belt that is largely untested and two discoveries south of Sinclair - Skye and Stirling - are showing both near surface and significant plunge potential.

Well north of Cosmos, and north of the Wiluna gold mining camp, Xstrata Nickel is exploring the Cunyu prospect which is seen as a Voisey's Bay style mafic intrusive for nickel-copper and platinum group metals.

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not sure what other "corporate assets" were included in the purchase price noted above.

most educational i do believe.

regards,

jsq