Karora completes PEA for nickel resources at Beta Hunt mine

Karora Resources (TSX: KRR; US-OTC: KRRGF) says a preliminary economic assessment for the nickel resources at its Beta Hunt mine in Western Australia has outlined a low capex project with strong leverage to rising metal prices.

The operating gold mine, 600 km from Perth, is home to a deposit that hosts both gold and nickel in adjacent discrete mineralized zones, which the company describes as a “very rare feature”.

“In my view, the PEA is an excellent starting point for realizing the full potential for a revitalized nickel production plan at Beta Hunt,” CEO Paul Huet stated in a press release, noting that Beta Hunt was a nickel mine for 40 years and produced over 60,000 tonnes of nickel.

“I believe we are just scratching the surface of what I expect will be a growing by-product credit contribution from nickel production at Beta Hunt for many years to come,” Huet said.

Underground drilling at Karora Resources’ Beta Hunt mine in Australia. Credit: Karora Resources

The PEA, released on Aug. 12 and using a base case nickel price of US$19,500 per tonne, forecasts a pre-tax net present value of A$57 million (US$40.5 million) and an internal rate of return of 105%.

Those numbers would increase to a pre-tax NPV of A$111 million (US$78.9 million) and IRR of 232% at a nickel price of US$25,000 per tonne.

The study estimates base case net all-in sustaining costs (AISCs) of A$16,946 per tonne.

Accessing the main zones of nickel mineralization envisioned in the early stage study would be via the existing main decline, which means very little additional development would be needed, the company says.

As of January 2022, Beta Hunt’s measured and indicated nickel resources stand at 692,000 tonnes grading 2.8% nickel for 19,600 tonnes of contained nickel. Inferred resources total 492,000 tonnes grading 2.7% nickel for 13,200 tonnes of metal.

Nickel resources occur in two main blocks – Beta and Gamma – amd the company says it believes there is “significant” exploration potential.

In terms of gold, the company says it’s focused on boosting gold production at Beta Hunt to a range of 185,000-205,000 ounces by 2024.

During the first six months of this year, the mine produced 58,141 oz. gold and the company said it is on track to deliver on its 2022 full year guidance of 120,000 to 135,000 ounces.

Full year AISC costs are forecast to fall in a range of US$1,100-US$1,200 per oz. sold.

Over the last year in Toronto, Karora has traded in a range of $2.53 and $7.55 per share and at presstime were at $3.10 per share. The company has about 170 million common shares outstanding for a market cap of $566 million.