Concept is slowly becoming reality at First Point Minerals' (FPX-V) unusual nickel project in central B.C., with encouraging metallurgical results giving the company its latest boost.
Metallurgical testing shows that the company could produce a concentrate grading 2.6% nickel from the project, which First Point's president and CEO Peter Bradshaw hails as a milestone.
For most sulphide- or laterite-based nickel projects, a 2.6% nickel grade would hardly be groundbreaking. But it is groundbreaking for First Point's Decar project, since the deposit is neither of those types.
Instead, Decar hosts a significant amount of nickel in a widely disseminated nickel-iron alloy called awaruite that is void of sulphides and highly magnetic. The company refers to it as naturally occurring stainless steel.
The result is that the company could theoretically produce concentrate through simple grinding and magnetic separation, and skip smelting altogether. The recent testing is a big step in proving it is physically and economically possible to do so.
The testing used a 1-tonne composite sample from nine drill holes with a grade of 0.14% nickel in the form of an alloy, and 0.22% nickel overall. The resulting concentrate contained 2.6% nickel grade as well as 52% iron as magnetite, and 2.2% chromite, with an 80% recovery of the alloy. Testing also showed that nickel grades of 4% could be achieved with "minor loss in nickel recovery."
For First Point, the tests are another step in a long process to proving Decar could work.
Ron Britten, First Point's vice-president of exploration, explained in a recent meeting with The Northern Miner that the company first came across the project as far back as 1997, and he was intrigued by the parallels the nickel project showed to copper porphyry deposits. The company thought Decar could be developed as a bulk-tonnage target, but the fine-grained mineralization was difficult to detect, and there wasn't a way to tell how much of the total nickel occurred in the alloy.
"The thought made sense, but you couldn't see anything and you couldn't quantify it at that time," Britten said. With nickel selling at around US$3.50 per lb., the company dropped the project, and wouldn't return for a decade.
When nickel prices shot up in 2007, the company looked back into Decar, and spent the next two years developing ways to recognize the material and quantify it using a selective extraction method.
Once they had the basic techniques and tools established, they shopped around for a partner. This proved difficult, because most had never heard of the material, and were wary of the 0.1%-0.2% nickel-in-alloy grades the company was hitting. The saw Decar more as a research project.
"There was a lot of interest at the geological level, geologists were intrigued by the whole concept," Britten said. "But to move it forward in the higher echelons of their companies was very difficult."
The company found a welcome partner with Cliffs Natural Resources (CLF-N) in late 2009, which signed a deal to earn 51% by spending US$4.5 million on the property over four years, and 75% by completing a feasibility study.
Britten said Cliffs was an excellent match. It had extensive experience working with mechanical processing and magnetic separation, it wanted large-scale projects and it wanted to get into nickel. The deal was also good for First Point.
"When Cliffs came on board, the market really started to pay attention to the whole story," Britten said. "They liked the story, but they wanted some confirmation. And that's where Cliffs coming on board gives it more credibility."
Cliffs has since spent about US$2 million on exploration and development, and plans to conduct at least 4,000 metres of drilling on the project this year.
Commenting in a recent investor presentation, Cliffs' senior vice-president of global business development, Clifford Smith, highlighted that the Decar project does not have the problems associated with high-pressure, acid leach systems used elsewhere in the world. Smith says it becomes apparent the company can produce ferronickel in a concentrate.
"The Decar project is something that we're very excited about," Smith said. "It's going to be our first major discovery as we move forward."
For Britten, the deal with Cliffs, the development of measuring tools and the metallurgical testing are all part of a long process to expand a new type of deposit that sounds interesting, but still has to be proven.
"When you list all the characteristics of the mineralogy, the target type and so on, it's doable, probably, we've just got to prove it. And that's where we're at right now."
First Point's shares closed up 6¢ at 99¢, one day after the latest news. The company has a 52-week shares price range between 42¢ and $1.06, and has 90.4 million shares outstanding.
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