Another exit from the Australian gold industry is underway with Mincor looking to get rid of its assets to concentrate on nickel after winning a big supply contract with BHP’s Nickel West.
That contract, revealed several months ago is enough for Mincor to look to quit gold, long the mainstay of small and medium WA miners and hopefuls.
Iron ore, the centrepiece of the last mining boom is now a mature, low-cost operation dominated by BHP, Rio, and Fortescue.
Now the likes of lithium (already oversupplied and heading for a shakeout), nickel, cobalt, and copper are in vogue.
And gold is on the back burner as producers switch overseas (Newcrest, St Barbara, Evolution Mining, Saracen and Northern Star Resources) primarily to the US (Alaska) and Canada.
And those at home are facing a rising list of problems – the last month has seen Gascoyne Resources collapse thanks to problems with a new gold mine and St Barbara and Dacian face a similar situation.
It’s not that gold is unwanted – Rio Tinto has made what looks like being an enormous low-grade copper, gold silver discovery at Winu in the Eastern Pilbara – near the existing Telfer and Nifty copper-gold mines. Several other companies have made strikes in the same area.
But the decision by tiddler Mincor well illustrates the changing priorities of Australian mining – it will shut and sell its Widgiemooltha gold project as it continues to pivot back to nickel mining at Kambalda.
The company announced late last week that it would cease mining at Widgiemooltha, 40 kilometres south of Kambalda, from August 1 and begin a sale process for the operation, which would include its gold rights at Bluebush and Jeffreys Find, near of Norseman.
Mincor also revealed it had struck bonanza grades of gold while drilling for nickel at its emerging Cassini prospect south of Widgiemooltha. That will no doubt help the sale process.
The company said a drill core, which contained visible gold, returned an assay of 1.45 metres at 1,045 grams a tonne from 416 metres, including 0.21 metres at 7,610g/t.
Mincor said it was assessing the nature of the intersection and its geological model to ascertain its next steps, given the significance of the intersection.
“The company believes this outstanding result clearly demonstrates the immense potential for high-grade and significant gold endowment in the Widgiemooltha Dome region, which may be available for a focused gold company,” it said in the statement.
Since appointing former Western Areas executive David Southam as its CEO this year, Mincor has reached a new offtake agreement with BHP’s Nickel West division and moved to consolidate its position in the Kambalda nickel belt with the purchase of the old Long mine from Independence Group.
BHP’s decision to retain and expand Nickel West has been several years in the making with a new nickel project announced, new refining capacity and other spending as the giant looks to use copper to play in the rising electric vehicle future.
That in itself signals the changing face of the WA mining sector.
Minor closed its nickel mines in 2016 because of weak prices and a clouded outlook. That also helped drive BHP’s unsuccessful attempts to sell Nickel West. But there were no bites at the sort of prices BHP was reportedly looking for.
So it was forced to retain an investment in the business to keep it attractive and now the surging rise in electric vehicles, batteries etc (which is behind the explosive surge in the WA lithium industry to top spot in global rankings) has seen BHP make nickel one of its main metals for the future, along with copper (and of course iron ore).
Investors like the new approach – the shares are up 23% so far this year against the 16% rise in the ASX 200. They peaked at 50.5 cents in early April – jumping from 36 cents in March when it started talking about the nickel switch. They traded around 43 cents yesterday.