St George Mining – (ASX: SGQ, Share Price: $0.22, Market Cap: $55m, coverage initiated @ $0.175 in May 2016 – current gain of 26%).
Drilling at Mt Alexander project set to resume, with focus on Cathedrals Belt where recurrent high-grade nickel-copper-cobalt-PGE sulphide mineralisation has been intersected over a 4km strike.
Along with our fellow Portfolio stock Legend Mining (ASX: LEG), SGQ was of the two best-performing nickel exploration plays of 2018. Like LEG, which has an exclusive regional focus on WA’s Fraser Range province, SGQ too maintains a regional focus on its Mt Alexander project in WA’s goldfields region.
SGQ set the market alight during late 2017 (as can be seen clearly in the graphic above), with exciting high-grade drilling results that comprised nickel-copper-cobalt-PGE sulphides – with assays including 17.45m @ 3.01% Ni, 1.31% Cu, 0.13% Co and 1.68g/t Total PGEs from 37.45m depth. They represent the best results achieved so far from Mt Alexander, with the key aspects being the strong tenor and near-surface nature of the mineralisation, which are important from a commercial mining perspective.
SGQ’s exploration success and strong share price performance has coincided with a significant corresponding lift in the LME spot price of nickel, as evidenced in the graphic below. Nickel was in fact the best-performer in the base metals sector during Q4 2017, firming by 15.4% – whilst it managed a 21.9% gain during calendar 2017.
When it comes to nickel, iron ore and steel demand are key factors, as continued improvements in global economic conditions should continue to lift the price of the metal. LME inventories are also continuing to decline, which is a positive – as the burgeoning EV revolution motivates investors to look at this essential component in batteries. I expect prices to consolidate above $5.50/lb during 2018.
SGQ has announced that it will this week resume its much-anticipated drilling program at Mt Alexander, with the diamond/RC program set to involve 20 planned drill-holes for 2,510m of drilling. The majority of the planned drill-holes are at the Stricklands Prospect, where drill-hole MAD71 (outlined above) has returned the best intersection to date, with drilling also to be conducted at the Investigators Prospect.
The results in MAD71 were significant, with thick widths of high-grade mineralisation at shallow depths that contain robust mineralisation. We will certainly be keeping a keen eye on the progress of SGQ’s 2018 drilling program. SGQ will remain firmly held within our Portfolio.