Baker Shoot

Project Overview

The Baker nickel shoot was discovered by Lunnon Metals. The area in which it is hosted, termed East Cooee, had been drilled historically by WMC however, despite a broadly spaced grid of diamond drilling, WMC did not progress the identified nickel mineralisation at the base of the second flow unit of the hanging wall Kambalda Komatiite. Accordingly, there has been no historical production from the area.

Blue Spec Drilling's Graeme Baker, RC driller who first intersected high grade nickel mineralisation at East Cooee and after whom the Baker Shoot is named.

An Exploration Target range for East Cooee area that covered the Baker Shoot was estimated by the Company in 2020 in accordance with the guidelines of the JORC Code 2012 and contained in its Prospectus at the Initial Public Offering of Lunnon Metals.  This work identified multiple mineralised surfaces in basalt-ultramafic contact trough locations, contact flanking locations, footwall positions and extensive hanging wall surfaces. Lunnon Metals budgeted for drilling in its Prospectus to test the Exploration Target within 18 months of listing. This drilling led directly to the discovery of Baker.

Baker Shoot is over 2.5km distance from the Foster Nickel Mine (straight line) and between 3.10km to 4.75km when measured along the prospective komatiite-basalt contact (subject to depth on this contact) and as such represents a completely separate mineralised position from the Company’s existing JORC 2012 compliant Mineral Resource of 48,500 nickel tonnes.

Geology

The Baker nickel mineralisation is part of an extensive perched hanging wall position historically drilled by WMC on a broad spacing and now in-filled to close spacing by Lunnon Metals. The Company’s exploration programme since its IPO in June 2021 has delivered a significant increase in drill coverage (36 RC holes and three diamond drill holes, all completed in 2021) which has allowed for a greatly improved geological model and understanding of the controls to mineralisation. Importantly, this drilling has identified thicker, higher grade nickel mineralisation which defines the Baker Shoot.

The majority of the mineralisation is interpreted to be hosted at the base of a hanging wall komatiite flow located 30 to 50 metres above the more traditionally prospective basal komatiite flow in contact with the Lunnon Basalt footwall. Two late east-dipping steeper structures are identified which crosscut, offset, and structurally thicken the base of flow mineralisation locally.

The western one, which hosts significant re-mobilised massive nickel sulphide itself, has a dip of 42⁰ towards 066⁰. The structure is identified as a steep conductive surface in both Down Hole Transient Electromagnetic and surface Fixed Loop Electromagnetic surveys during exploration by Lunnon Metals.

First-time Mineral Resource

The breakdown of the Mineral Resource estimate, on 14 June 2022, and at 1.0% Ni cut-off grade is as follows. The results reflect a combination of massive nickel sulphide, adjacent matrix and disseminated nickel sulphide mineralisation within each Mineral Resource classification.

First time Baker Shoot Mineral Resource (June 2022)
Isometric view of the Baker mineralised surfaces looking north-west - coloured solids represent modelled sub-domains

Reasonable Prospects for Eventual Economic Extraction (RPEEE)

Although Baker has not previously been mined, the Company’s KNP is host to extensive supporting mining infrastructure that, when considering potential future development and mining at the KNP (including at Baker), facilitates the planning and minimises the cost of such scenarios. The project is located on granted Mining Leases. Prior to any development or mining of Baker, a Mining Proposal/Mine Closure Plan is required to be submitted to the Western Australian Department of Mines, Industry Regulation and Safety along with a Project Management Plan. This first-time Baker Mineral Resource is a key input into the technical assessment required to commence these submissions.

The grades and geometry of Baker’s nickel mineralisation are amenable to small-scale underground mining. Many nickel surfaces mined historically in the immediate vicinity of Baker exploited similar style mineralisation hosted at the same stratigraphic position i.e., the base of the second ultramafic flow (e.g. at Jan Shoot, 2.6km to the south, production 1972-1986 1.07Mt @ 2.8% Ni for 30.3kt nickel metal). It is assumed that the Baker Mineral Resource could be mined via underground methods. Potential dilution and ore loss during future underground mining have been considered in application of the reporting cut-off of 1.0% Ni.

Presently, it is forecast that no processing capital will be required as future nickel ore would likely be sent to the nearby BHP Nickel West Kambalda Nickel Concentrator with that company retaining a right of pre-emption in relation to any proposal by Lunnon Metals to enter into any sales contract or other sales arrangement to realise any revenue or other benefit from the treatment or sale of nickel ore.

In light of the generally shallow nature of the Baker Mineral Resource and its proximity to the nearby West Idough open pit (likely underground access point), future mine development and start-up capital costs are considered to be modest. In regard to operating costs, publicly available data for recent feasibility studies for similar projects (e.g., Mincor Resources Kambalda Nickel Project, Mincor, 2020) assumed operating and sustaining capital costs of approximately AUD 250 per tonne. Combining such estimates with theoretical diluted nickel production from a future Baker nickel mining scenario and then applying the current nickel price in AUD terms generates positive notional cash flows at Baker assuming metallurgical plant recoveries and nickel payability terms recorded in the local district with the likes of BHP Nickel West or others.

Metallurgical analysis is still ongoing however there is no data at this stage (June 2022) to indicate that the historical metallurgical performance of the nearby Jan Shoot nickel mine and Foster nickel mine, will not be replicated by future exploitation of the Baker Shoot. Accordingly, in reporting the first-time Mineral Resource, the Competent Person considered there are reasonable prospects for the eventual future economic extraction of the Baker nickel shoot.

Note about the Exploration Target: Baker Shoot originally fell within the broader East Cooee Exploration Target reported in the Company’s Prospectus lodged on 11th June 2021. The combined tonnage and grade potential of the Exploration Target was estimated to be in the range of 500 kt to 750 kt with an average grade of 1.25% to 2.5% nickel. The nickel mineralisation estimated in this target range for the remainder of the area is present on the East Trough and West Trough prospects, both still valid discovery targets.

Lunnon Metals highlights that the potential quantity and grade of the Exploration Target is conceptual in nature, that prior to the reporting of the first-time Baker Mineral Resource figure, that there had been insufficient exploration to estimate a Mineral Resource. At the time of the IPO it was uncertain if further exploration would result in the estimation of a Mineral Resource.

crossmenu linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram