Chalice said it was officially on the hunt for a mining and operating partner in light of the growing scale and continued strong strategic interest in its platinum group elements (PGE) Julimar Project, which takes in Gonneville.
In a much-anticipated resource update on Tuesday, Chalice said the size of Gonneville had increased 50 per cent to 3 million tonnes of nickel equivalent. Its shares surged as much as 12.1 per cent in early trade on the update before closing up 8.9 per cent.
Gina Rinehart’s Hancock Prospecting had built a 4.6 per cent stake in Chalice by the end of last month. WA is also home to BHP’s Nickel West mining and downstream processing assets.
Chalice said it had already been in talks with a range of downstream, trading and end-user parties interested in a potential minority joint venture partnership.
It said those talks would be expanded to include potential mining/operating partners with “a broad range of transactions with aim of maximising shareholder value” up for discussion.
Gonneville sits on Chalice-owned farmland about 70 kilometres north-east of Perth and is part of the wider Julimar project.
A total of 260 new drill holes have been incorporated into the resource update, the first since July 2022, with the results showing potential to focus on higher grade targets within the deposit.
Chalice chief executive Alex Dorsch said the board had opted to start a formal hunt for a strategic partner after the “sheer size and quality of the resource” sparked a lot of interest from downstream, trading and end-user parties.
Mr Dorsch suggested Chalice could sell down stakes in Julimar to more than one partner and that interest to date included “major mining houses”, including some with experience in PGE deposits.
“This process will consider a broad range of potential transactions with the aim of maximising shareholder value and will continue in parallel with the ongoing scoping study,” he said.
“It is also evident from recent exploration results that there is enormous growth potential both at depth at Gonneville and along the effectively untested Julimar Complex to the north.”
Mr Dorsch said Chalice had the biggest undeveloped nickel sulphide asset in Australia behind West Musgrave, which BHP will absorb as part of its OZ Minerals takeover.
He said Chalice had given high-level consideration to the potential for processing at BHP’s nickel smelter at Kalgoorlie, about 500 kilometres from Gonneville, while also looking at options that did not involve smelting.
The Chalice sell-down became official a week after Andrew Forrest’s privately owned Wyloo Metals launched a $760 million takeover bid for WA nickel producer Mincor Resources.
Mincor is an important supplier to BHP through its two underground nickel sulphide mines.
Chalice flagged seeking a strategic partner in Julimar last October after noting a spike in interest following the passing of the Inflation Reduction Act in the US.
The company is understood to favour a partner with deep pockets, technical expertise and market familiarity to develop Gonneville into a mine.