Premium Nickel eyes 2025 prefeasibility at Selebi mine in Botswana

Results from infill drilling at Premium Nickel Resources’ (TSXV: PNRL) past-producing Selebi North mine in Botswana continues to build confidence, less than a month after the company posted an initial resource for the project.

Hole SNUG-24-106 in the South Limb target returned 26.3 metres of 1.09% copper, 1.56% nickel, and 0.08% cobalt  from 515.7 metres depth, including 16.1 metres of 1.54% copper, 2.1% nickel and 0.11% cobalt, the company reported Thursday. The infill drilling is aimed at upgrading  inferred resources, part of a 20,000-metre underground drill program whose assays weren’t included in the new resource.

Another highlight hole SNUG-24-107 cut 8.4 metres grading 2.64% copper, 2.13% nickel and 0.11% cobalt from 521.2 metres depth.  

“When we acquired these permitted projects in January 2022, our strategy was to recharacterize the remaining resources, achieve NI 43-101 compliance and advance to a pre-feasibility study as part of an accelerated path to production,” Keith Morrison, Premium Nickel CEO said. “This release highlights the successful exploration strategy that has further extended the mineralization at Selebi North beyond the (resource estimate).”

Tonnage growth

While the company’s stock price gained 3.7% to 56¢ apiece on Friday morning in Toronto, the shares are down 37% since Premium posted its first resource, reflecting weakness in the nickel price (now under US$7.50 per pound).

Cormark Securities mining analyst Stefan Ioannou wrote in a note on Friday that the drill results help support the company’s efforts to move the project toward a preliminary feasibility study. They also help extend the limits of the deposit’s mineralized envelope. 

For the Selebi Main deposit, the August resource outlined 18.9 million inferred tonnes at 0.88% nickel and 1.69% copper for 165,000 tonnes of nickel and 319,000 tonnes of copper. That represents a 67% increase in tonnage over the deposit’s historic resource, due to higher resource thickness and inclusion of a separate lower domain. That deposit is located about 6 km from Selebi North.

The North deposit hosts 3 million indicated tonnes grading 0.98% nickel and 0.9% copper for 29,500 tonnes contained nickel and 27,100 tonnes copper. It also holds 5.8 million inferred tonnes at 1.07% nickel and 0.9% copper for 62,400 tonnes of nickel and 52,500 tonnes of copper. That’s a 90% improvement in tonnage over the historic estimate, attributed to Premium’s drilling that extended mineralization beyond the limits of the previous resource.

More drilling could help the company advance to a preliminary feasibility study at Selebi by the middle of 2025.

Resource could double

Ioannou said the estimate doesn’t disappoint and exceeded expectations by several million tonnes. If indicated and inferred resources are combined, Ioannou noted the “ultimate upside” of the project could exceed 50 million tonnes, which he expects would draw major attention.

“Bottom line, Premium offers exposure to (historic) high(er)-grade nickel sulphide mines/resources of scale in Botswana—an ‘asset class’ highly coveted by the greater market in the wake of the EV-battery revolution,” he said. 

Mining started in 1980 at Selebi and ended in 2016, when operations were put on care and maintenance due to a failure in the offsite Phikwe processing plant. Premium acquired Selebi in 2022. Premium Nickel has a market cap of $102.1 million. Its shares have traded in a 52-week range of 54¢ to $1.82.