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[Ferro-Alloys.com]Axiom Mining (ASX:AVQ) is edging closer to a milestone first shipment of nickel ore form the Isabel project in the Solomon Islands during Q1 2016 as a A$10 million financing facility and long-term offtake deal unfold.
Planning, design and development work at the project with an eye on this near-term export scenario has paralleled a due diligence process with global independent trading house Gunvor Singapore for financing and offtake continues.
This follows from an initial offtake agreement for 500,000 tonnes of nickel ore and A$5 million ore pre-payment facility executed with Gunvor in December 2015.
Other recent activities at Isabel have included several ecological surveys, environmental fieldwork and the completion of both a development strategy for a life-of-mine pit and a field component of social impact assessment.
Negotiations with key suppliers of marine services, vessels and heavy machinery are completed and they are on standby to move into production.
Ongoing infrastructure development includes camp upgrade, laboratory, roads, barge ramp and stockpile areas.
Preliminary work on San Jorge Island includes survey and environmental baseline monitoring.
Axiom, its landowner partners and the Solomon Islands government secured a definitive victory against Japanese major Sumitomo in the Solomon Islands High Court in 2014.
The subsequent appeal by Sumitomo was completed in June 2015 and a decision is expected to be delivered shortly.
Updated resource
Imminent production at Isabel also follows on the establishment of new resources at the site, defining tonnages able to support the first five years of nickel production.
At the project's Kolosori tenement, the high-grade saprolite total resource tonnage doubled to 3.9 million dry tonnes at 1.7% nickel.
The limonite total resource increased to 8.4 million tonnes at 1.0% nickel and 0.11% cobalt.
These increases are interpreted as further indications of Isabel's status as a world-class nickel asset.
Analysis
The nearing of export activities from Isabel nickel heightens investor anticipation for an increase to the market valuation of Axiom as a much-needed Pacific region supplier of good quality laterite ore.
This anticipation is being underlined by a high level of interest from Gunvor.
The Gunvor investment and offtake, although still subject to due diligence, illustrate the high quality of the Isabel project and the strong economic fundamentals of Isabel and the Axiom strategy.
As global nickel demand continues to grow, few new projects are development ready.
While there is no official date for delivery of judgment, the Court of Appeal decision in relation to the Isabel Nickel Project is expected shortly. Clearly, this would provide a big launch pad for a share price re-rating greater than at present as well as the ramp up to first shipments.
Other potential price catalysts for Axiom as Isabel comes on stream include plans for new drilling early this year as well as an upcoming European and U.S. investor roadshow.
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- [Editor:Sophie]
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