RESOURCESTOCKS

RMC opts for PNG nickel

JUNIOR explorer Resource Mining has altered its focus to reap the benefits of high nickel prices. <b>By Wally Graham - <i>RESOURCESTOCKS*</i></b>

MiningNews.Net
RMC opts for PNG nickel

Demand for nickel has reached record levels and interest in worldwide nickel deposits, especially new ones, has risen as a consequence.

Resource Mining Corporation (RMC) has been quick to recognise the benefit this interest could have to its operations. At its annual general meeting in November last year, the company announced that the board had completely reviewed the position of its projects and rearranged its priorities.

Executive chairman John Leach told shareholders that the Wowo Gap nickel laterite project, located 200km east of Port Moresby in Papua New Guinea, offered an important opportunity to increase the value of the company. As a result, the company would now be focusing its attentions there, beginning with an exploration program of ground penetrating radar (GPR) combined with a diamond drilling program, which got underway in April.

In the past, the main focus for RMC has been its Argyle iron ore project, 120km south of Kununurra in the eastern Kimberley of Western Australia.
Although it is now paying more attention to Wowo Gap, RMC is still fully dedicated to the Argyle project and acknowledges its value to the company. RMC is currently in discussions with a number of groups regarding Argyle, including Chinese interests, and the company will continue to actively seek joint venture partners to assist with its evaluation and feasibility studies.

"We believe that we have a good quality, significantly sized nickel resource at Wowo Gap," RMC executive director Warwick Davies told RESOURCESTOCKS.

"It is our aim to prove up that resource and, the value of the nickel in the ground at today's prices, will be in the billions of dollars."

Previous work at the site included that which was carried out between 1968 and 1973 involving pitting, augering and diamond drilling, which provided information used by RMC to carry out a tonnage calculation. The inferred resource at the time was calculated at 49 million tonnes with grading of 1.22% nickel and 0.08% cobalt.

Last year, RMC commissioned a "Competent Person" in John Wyatt to review all of the previous exploration data undertaken on the Wowo Gap project. The result of the review carried out by Wyatt saw a revised JORC-compliant inferred resource estimate of 120Mt at 1.2% nickel and 0.1% cobalt.

"The next stage, for us, is to add value to the company in terms of the improved level of confidence in that resource estimation," Davies said.

"We are looking to increase that level of confidence substantially, which then hopefully will flow back into the market where the value of the company will be seen as significantly enhanced for all our shareholders."

Previous drilling work on the Wowo Gap project was a combination of diamond and wacker drilling, an old-fashioned hand-held technique where a drill is literally "whacked" into the ground in a fashion similar to that a farmer uses when driving in fence stakes.

"It is able to do only one thing and that is to drill to the length of the rod that can be attached to the device," Davies said.

"So all that it was able to drill through was the overlaying volcanic ash layer and into the limonite.
"If it hit saprolite, which is a rockier material, it just stopped."

Previous exploration at the site was also not carried out in a defined north/south/east/west grid pattern but instead has followed where the local topography would allow regular movement.

This means the earlier assays are incomplete and thus RMC needs more data to improve levels of confidence in the resource estimation.

"That's what this drilling program is designed to do," Davies indicated.

"The diamond drill is capable of drilling through into the saprolite and the drilling program is on a defined north/south grid pattern.

"We plan to drill somewhere between 75-100 holes. Fortunately for us, the nickel profile on the side of the mountain is relatively shallow so most of the holes will only be around 20m."

Through the use of the GPR technology, RMC will be able to define the contours of the varying layers beneath the surface. The technology is capable of showing, quite accurately, the interfaces between the volcanic material and the limonite, then the saprolite and beneath the saprolite, the bedrock.

What that does is eliminate the guess work between drillholes and improves the level of confidence in the volume estimation. Then using the bulk density from the core from the diamond drilling, the geologist is able to determine what the tonnage in that volume is.

The use of GPR in resource estimation, particularly in nickel laterites, is well established. It is increasing in its sophistication as more and more is learnt and it is a good way of providing the definition of what actually lies beneath the surface.

"We will be using all of this combined information for targeting our drilling program," Davies said.

The move to development phase is difficult for small companies such as RMC but it is strongly convinced that the potential development opportunity Wowo Gap presents will gain the attention of major players in the nickel industry who are looking around.

"We are looking at progressing Wowo Gap to a level of confidence where we can talk seriously to these potential partners."

At the same time, RMC still has the Argyle iron ore project up in the Kimberley where the level of potential Chinese investment interest has increased and discussions are ongoing.

RMC made the decision not to proceed with the completion of a diamond drilling program at Argyle to allow it to direct available funds toward exploration of Wowo Gap, where the prize is significantly greater.

"Argyle still remains an interesting proposition and it is interesting from a couple of angles," Davies said.

"One is that it is a low-phosphorous ore body. Phosphorous levels in iron ores from the Pilbara are on their way up, which is inevitable because Rio Tinto and BHP Billiton will be increasingly mining marra mamba as the haematites are depleted.

"Generally speaking, the higher the phosphorous the less desirable the ore because it's difficult to remove.

"The low-phosphorous ore body such as this does have a value and what RMC is doing is we are talking to a variety of Chinese parties about potential participation in its development."

Nickel and iron ore look set to continue stimulating worldwide speculation and maintaining their positive prices.

With the exploration of the Wowo Gap nickel laterite project in full swing and interest in securing a joint venture for the Argyle iron ore project moving steadily towards being a done deal, 2007 is shaping up as an exciting and successful year for RMC.

 

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