Baker Project Overview
Discovery and Exploration
History of the Baker Nickel Deposit
The Baker nickel deposit 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.
HIGH-GRADE, HIGH-QUALITY, SHALLOW, REGULATORY APPROVED
Summary of the Baker Deposit Study Results
On 22/05/2023, the Company announced Pre-Feasibility Study (PFS) results for the Baker Deposit, revealing a Probable Ore Reserve of 612,000 tonnes at 2.86% Ni, totaling 17,500 tonnes of contained nickel.
Subsequent to this, a Scoping Study was completed (21 July 2025) to reflect the fact that in the intervening time, BHP Group Ltd’s, wholly owned subsidiary, Nickel West Pty Ltd, had shut the Kambalda Concentrator and placed it on care and maintenance until at least February 2027. Accordingly, the Company did not declare an Ore Reserve for Baker from that point onwards.
The Scoping Study did include Foster’s Mineral Resource and demonstrated that both mines could operate for between 4 and 4½ years averaging an attributable 3.5kt nickel per annum per mine.
Summary results, underpinned by a combined 7% Measured Resource, 84% Indicated Resource and only 9% Inferred Resource category material, and applying an A$ nickel price of $23,000/t nickel metal were as follows:
- Baker Mine – Production Target of 0.7-0.72Mt @ approximately 3.0% Ni for 21,000t-21,600t of nickel metal;
- Foster Mine – Production Target of 0.7-0.75Mt @ approximately 3.3% Ni for 23,000t-24,000t of nickel metal ;
- Each mine forecast to operate for between 4 and 4½ years averaging an attributable 3.5kt nickel per annum per mine;
- All-in Costs of $390-$400/t ore (Baker) and $490-$500/t ore (Foster);
- Baker generates a pre-tax free cash flow of approximately $70 million and a Net Present Value at an 8% discount rate (NPV8 ) of approximately $50 million and is economic, even at the current nickel price; and
- Foster generates a pre-tax free cash flow of approximately $30 million and a NPV8 of only $4 million, and is therefore break even at the current nickel price.
The material assumptions on which the Production Targets and the forecast financial information were based are detailed in the Scoping Study released on 21 July 2025.
Based on the analysis, management recommended at that time that any future development of Baker and Foster would see Baker developed and mined first, with pre-development activities at Foster commenced on the back of a successful outcome at Baker and based on a continued, supportive nickel price scenario.
Although Baker was (and still is) robust at the nickel price modelled (A$23,000/t Ni), management further recommended that the Base Case price of $27,600/t nickel metal may be considered as a trigger price for any future Financial Investment Decision, subject to a successful resolution of the uncertainty surrounding the processing route.
June 2024 Update to Mineral Resource
The Company updated the Baker Mineral Resource on 11 June 2024. Key highlights of that update were:
- Baker records 1,030,000 tonnes at 3.3% Ni for 33,700 contained nickel tonnes, comprising:
- 110,000 tonnes @ 3.4% Ni for 3,700 nickel tonnes in a first-time Measured Resource;
- 622,000 tonnes @ 3.7% Ni for 22,900 nickel tonnes in Indicated Resource; and
- 298,000 tonnes @ 2.4% Ni for 7,100 nickel tonnes in Inferred Resource.
- pdated Mineral Resource estimate for Baker materially increased to 929,000 tonnes at 3.3% nickel for 30,800 contained nickel tonnes
- The update followed over 6.7km of additional drilling completed since December 2022, primarily focussed on de-risking the deposit, particularly the shallower near-surface portions that would be accessed and mined first in any future development.
- The extra drilling included both reverse circulation and diamond drill programs completed in three main campaigns commencing December 2022, October 2023, and February 2024 (see ASX announcements dated 20 February 2023, 22 January 2024 and 12 April 2024).
- On 13 May 2024, a Mining Proposal for Baker was approved by the Western Australian Department of Energy, Mines, Industry Regulation and Safety.
- The Mining Proposal enables the Company to mine the Baker deposit from underground (with decline access from the West Idough Open Pit) and transport the ore offsite to a third-party concentrator at a time of its choosing.
Baker deposit 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 58,400 nickel tonnes hosted at the Foster Nickel Mine.
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 deposit.
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.
Updated Mineral Resource Estimate
The breakdown of the updated Mineral Resource estimate, as at 11 June 2024, and at 1.0% Ni cut-off grade is as follows.
1,030,000 tonnes at 3.3% Ni for 33,700 contained nickel tonnes
The results reflect a combination of massive nickel sulphide, adjacent matrix and disseminated nickel sulphide mineralisation within each Mineral Resource classification.
Reasonable Prospects for Eventual Economic Extraction (RPEEE)
Despite Baker’s lack of prior mining, the Company’s KGNP features extensive existing mining infrastructure, enhancing the feasibility and reducing the costs of potential future development and mining activities, including at Baker. The project is situated on granted Mining Leases. Development and mining at Baker has been approved under a Mining Proposal/Mine Closure Plan submitted to the Western Australian Department of Mines, Industry Regulation and Safety, accompanied by a comprehensive mine risk assessment.
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, see the conceptual mine design represented above), 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.
Metallurgy
Extensive metallurgical test work has been completed and previously reported at Baker (see the 22 May 2023 PFS announcement and ASX announcements dated 21 July 2023 and 1 August 2023). This test work has demonstrated that in line with the historical metallurgical performance of other nickel deposits previously mined on the Company’s KNP, Baker produces a high-grade, premium nickel sulphide concentrate with excellent copper and cobalt by-product grades and outstanding Fe:MgO ratios (see following Table).
Note: Refer to ASX Announcement dated 22 May 2023 for details of the calculation of PFS Life of Mine (LoM) concentrate quality including contribution to financial results from by-product credits.
There was little to no deleterious arsenic recorded. Accordingly, the Competent Persons considers there are reasonable prospects for the eventual future economic extraction of the Baker nickel deposit.
Mining Proposal
As part of the ongoing de-risking of the path to production at Baker, the Company submitted a Mining Proposal in the December 2023 quarter to the Western Australian Department of Energy, Mines, Industry Regulation and Safety. The Mining Proposal was approved in May 2024, enabling the Company to mine the Baker deposit from underground (with decline access from the West Idough Open Pit) and transport the ore offsite to a third-party concentrator. There are no further compulsory permitting requirements for the development of Baker, noting that the Company continues to seek a Mining Rights Agreement with the Ngadju Native Title Aboriginal Corporation .
In light of current nickel market conditions, the Company reported after March 2024 quarter’s end that it did not intend to proceed with Baker’s development until these conditions improve. The Company recognises that there is significant option value in timing its financial investment decision to maximise the value of Baker and Foster under a more favourable nickel price and equity price scenario. In the meantime, the Company continues to finalise the PFS study and complete the permitting of the Foster deposits, which requires minimal expenditure with the majority of technical data collection and analysis already complete.
Note about the Exploration Target: Baker deposit 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. Although the Baker deposit Mineral Resource now exceeds and has outperformed the original Exploration target, there was nickel mineralisation estimated in the target range for the remainder of the area present on the East Trough and West Trough prospects, both of which are still valid discovery targets.
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