What: Shares in exploration company Sirius Resources N.L. (ASX: SIR) have exploded upwards today, trading as much as 19% higher to $4.10, before settling back to be trading at $3.91. The company is focused on discovering gold, nickel and base metals.
The rise came after the company released a presentation clarifying results of a definitive feasibility study (DFS) for the Nova Nickel Project. However, the main kicker is from the revelation that exploration has delivered another exciting discovery at the Taipan prospect called Polar Bear.
So what for Polar Bear: The exploration upside is evidenced by:
1. In the very first drill hole, high grade massive nickel sulphide mineralisation was discovered.
2. There is another 10km of untested trend.
3. Gold discoveries are highly prospective as well.
So What for Nova: As a result of the DFS the following points were made by management:
1. Nova is a low-risk, highly profitable project.
2. It has a mine life of 10 years and forecast production makes Sirius a significant global nickel producer.
3. All-in sustaining cash costs of A$2.32/lb. nickel (US$2.09), position Nova as a robust lowest-cost quartile producer. This was substantially better than expected from the prior scoping study.
4. Very strong interest from financiers and customers place Sirius in a strong position to fund development at the appropriate time.
5. Should Polar progress to mining, as it is only 80km from Polar Bear, then this could significantly enhance the value of Nova via increased levels of production and / or extended mine life.
To compare: The performance of other mining stocks today.
Independence Group NL (ASX: IGO), Rio Tinto Limited (ASX: RIO) and BHP Billiton Limited (ASX: BHP) are up 0.4%, 1.33% and 0.38%, while Western Areas Limited (ASX: WSA) is currently nearly 1% weaker.
Now What: According to management, Sirius owns the best undeveloped nickel sulphide project in the world. It's not surprising that the shares have leapt given the prospective new discovery at Polar Bear and some positive surprises from the DFS for Nova.
As an investor, one needs to be cognisant of future demands for capital to develop these projects. However, should you have planned to allocate a portion of your funds to riskier investments appropriate to your risk profile, then Sirius appears to be a very exciting prospect.
