Chalice Mining Ltd (ASX: CHN) shares are having a stunning start to the week.
In morning trade, the ASX mining stock is up 30% to $1.56.
Why is this ASX mining stock surging?
Investors have been scrambling to buy the mineral exploration company's shares this morning after it released an update on Gonneville project.
According to the release, exceptional testwork results demonstrate that two saleable, smelter-grade flotation concentrates can be produced across the entire Gonneville sulphide resource.
In addition, conventional CIL leaching recovers additional palladium and gold from the flotation tails, with recent optimisations resulting in significantly reduced reagent consumption and operating costs relative to the 2023 scoping study.
It highlights that the CIL leach is expected to be eligible expenditure under the recently legislated Critical Minerals Production Tax Incentive. As a result, a 10% tax offset should apply to these operating costs.
Management highlights that this recent breakthrough means the project will not require a hydrometallurgical process for the nickel concentrate, which substantially reduces technical risk, process complexity and, importantly, capital and operating costs.
In light of this, project margins for a bulk open-pit mine plan are expected to improve significantly relative to the 2023 scoping study (using conservative, consistent macro-economic assumptions) as a result of the process flowsheet optimisations.
Testwork and optimisations for the pre-feasibility study (PFS) are continuing through the first quarter, with PFS completion targeted for mid 2025.
A 'step change'
The ASX mining stock's managing director and CEO, Alex Dorsch, said:
The ability to produce a saleable nickel concentrate across the grade spectrum of the entire Gonneville Resource is a major breakthrough and fundamentally simplifies the world-class Gonneville Project. This is the step change we have been hoping for over the last two years.
Dorsch then adds:
Removing the need for a hydrometallurgical process materially reduces both the capital and operating costs and, together with the optimisations being introduced to the flowsheet, is expected to deliver a significant improvement in project margins across all high-grade and low-grade phases of a bulk open-pit mine plan. The simplified flowsheet also has much lower risk profile and gives the Project a smoother and more rapid pathway to development.
This is a significant achievement by Chalice's technical team and supporting laboratories, so I would like to commend and thank all those involved. We knew from the outset that Gonneville is a very unique deposit and it would take some time and a number of iterations to 'crack the code' on the metallurgy. It is also clear that the project continues to improve as we do more testwork.
