Race to NCM precursor: while six drill rigs are still currently spinning, Blackstone Minerals Limited released a stepping stone scoping study focused on the Ban Phuc disseminated sulphide mineralisation recently discovered at the Ta Khoa project in Vietnam, with an vertically integrated project including the refining of nickel-cobalt concentrate into a NCM precursor to satisfy the demand of its strategic partner Ecopro and potentially other battery manufacturers.
Mineral Resource: Indicated 44.3Mt @ 0.52% Ni for 229,000t Ni and Inferred of 14.3Mt @ 0.35% Ni for 50,000t Ni. The maiden mineral resource is at the upper end of our exploration target defined 10 months ago: 20-50 Mt @ 0.5- 0.6% Ni for 100,000 to 300,000 t Ni. We expect this to increase by 20-40% as two rigs continue to drill Ban Phuc. Furthermore, a maiden mineral resource can be expected for Ban Chang within the next six months.
Company Strategy: we see BSX medium-term strategy as follows:- Increase the mineral resource at the Ban Phuc disseminated sulphide deposit in preparation for the Pre-Feasibility Study to support the development of a new 4 or 6 Mtpa plant
- Drill test and develop massive and semi-massive sulphide veins to justify an early restart of the existing plant (best suited for high grade mineralisation). Such restart will bring cash flow to assist in the financing of the downstream processing (step 1) and the larger concentrator (step 2)
The strategy has been highly successful so far and BSX is intensifying the exploration programmes on various prospects thanks to its own geophysical team and six drill rigs including four owed by BSX. This report is focused on the results of the scoping study the Ta Khoa project.
Multi-levers Value-Add from Downstream Processing: the production of NCM precursor adds significant value far beyond the refining step as the payability typically (70-80%) affecting the sale of nickel concentrates becomes irrelevant and BSX eliminates the Vietnamese tariffs applied to the export of nickel concentrates.
BSX Valuation: Our speculative value currently stands at A$312 million or $0.95 per share. Cashed up, BSX has the opportunity to increase further its exploration and development momentum, discovering new MSV sulphide deposits such as Ban Chang. Those deposits can be quickly developed with ore treated at the existing 450 ktpa concentrator generating cash flows to assist in the financing of the value-add downstream processing and a second 4 Mtpa or 6 Mtpa concentrator.
