A significant milestone and major step forward for URU Metals with an exciting journey ahead
“…the company has secured new funding, shone further light on the Zebediela Project’s potential scope, and passed regulatory requirements that have taken it to the threshold of drilling…”
Flush with cash following a recent capital raise, URU Metals (AIM:URU) is on the verge of securing long-term Mining Rights at its flagship Zebedielia Project in South Africa. This would secure tenure for the next 30 years and pave the way for accelerated development. Zebedelia is highly prospective for class 1 nickel, a critical component in the production of lithium-ion batteries used in electric vehicles and for meeting the world’s relentless demand for stainless steel.
Recent results from a geophysical survey published earlier this week have reinforced the strong geological potential for abundant nickel, copper and platinum group metals (PGM) resources on the Zebediela Project. The geophysical survey highlighted the presence of structural trap sites and geological channel-like bodies known as “chonoliths” bodies which are ideal for the formation of nickel, copper, PGM and gold mineralisation, characteristic of the country’s Uitkomst Complex, site of the prolific Nkomati Nickel Mine. Exploration efforts conducted this year have further confirmed Zebediela’s potential as one of the few remaining undeveloped resources rich in Class 1 nickel sulphide. URU believes Zebediela has the potential to supply key metals over a 30-year period.
URU’s strategy to unlock Zebediela
The Project, in which URU holds a 75pc interest, is located in South Africa’s Limpopo Province, close to the platinum mining hub Mokopane.
A Preliminary Economic Assessment (PEA) completed in 2012 reported inferred and indicated resources (Non-JORC) of more than 1.5 billion tonnes with an estimated Net Present Value of $317m and a post-tax Internal Rate of Return (IRR) of 18.6pc. The Assessment assumed a post-tax discount rate of 10pc, a nickel price of $8.50 per pound, production of 20,000 tonnes of nickel per year over a 25 year mine life, a total capex cost of $708m, and operating costs of $3.35 per pound of nickel.
Subject to the anticipated granting of Mining Rights, URU plans a drilling programme to improve the grade of the Project’s historical resource estimate, targeting deeper geological zones where the company has encountered additional high-grade nickel, copper, and platinum-group mineralisation. As well as further defining the morphology of the mineralised zones, the programme will assess Zebediela’s potential for an independent gold resource.
URU has designated four mineralised zones or targets for exploration, each related to different styles of mineralisation.
Zone 1 and 2 are respectively focused on nickel sulphide, and nickel, copper and PGM mineralisation in the Project’s Bushveld Complex ultramafic lithologies. Zone 2 exhibits the same mineralisation style as the adjacent Ivanhoe Mines Platreef Project, which is scheduled to begin production this year. With a resource of more than 150 million ounces of PGMs, and major credits from nickel and copper, Platreef Project, once fully developed, is positioned to become one of the world’s largest and lowest-cost producers of PGMs, producing significant amounts of nickel and copper as by-products.
Zone 3 looks at the Project’s wider geological characteristics, assessing their capacity to host high-grade massive sulphide nickel-PGM mineralisation resembling that of the Uitkomst Complex’s Nkomati Nickel Mine. Nkomati hosted a resource of approximately 3.7 million tonnes grading 2.0-2.5pc nickel and 1pc copper, with PGM and cobalt credits. A recent geophysical survey and subsequent geophysical interpretation has confirmed numerous drill targets based on coincident magnetic and gravity anomalies.
Zone 4 focuses on the Project’s prospectivity for gold: URU believes Zebediela’s gold may be related to remobilised gold from the adjacent Pietersburg Greenstone Belt and hydrothermal activity. High-grade gold-rich intervals of up to 9 g/t over 30 meters have been intersected in portions of the Project area.
Moving toward the green light for drilling
Over the past few months URU has taken big strides towards securing the Mining Rights necessary to allow the programme to proceed, and to further clarify the Project’s potential.
Last year the company passed a major regulatory milestone with the granting of an Integrated Environmental Authorisation (IEA) by the South African Department of Minerals and Petroleum Resources, rewarding environmental assessments conducted in and around the project area over several years.
The company took another step forward last month, initiating a share issuance process to comply with South African regulations to allow historically disadvantaged communities to share in the proceeds of local natural resources projects. 10pc of equity will be allocated to an Employee Share Ownership Scheme employees will directly benefit from the company’s growth and success, fostering long-term engagement and inclusivity, and to a newly formed non-profit company that will focus on community development. The issuance of these shares paves the way for the Department to issue the Mining Right.
URU CEO John Zorbas said: ‘We are thrilled to take this significant step towards regulatory compliance and operational progress … This milestone positions us to unlock the immense potential of our project while delivering value to all stakeholders, including our employees and local communities.’
A highly promising geophysical survey
Also this spring, the company summoned the funds it needed for the continued delineation of the Project’s potential, raising a gross £300,000 for geophysical interpretation and other related work to assist with targeting higher grade nickel targets across the licence, and to reinterpret historic drilling results, thus establishing the groundwork for a maiden NI43-101 compliant resource.
Last month URU began putting the funds to use, completing the interpretation of a high-resolution airborne geophysical survey, equipping the company with a dataset confirming key aspects of the Project’s geological model, ‘particularly the presence of a long-lived ultramafic magmatic plumbing system’, and highlighting ‘several major NE-SW fault zones, interpreted to be part of a regional fault network, that likely acted as magma conduits and trap sites for sulphide mineralisation’.
Interviewed by TMS, Richard Montjoie, URU’s Vice President of Exploration, said the ‘beautiful, high resolution airborne geophysical data … consists of magnetics and gravity which allows us to effectively see underground. Think of it as an MRI for the earth.’ Available on the company’s website, the data is accessible to non-specialists, and offers a vivid illustration of URU’s path to commerciality. Mr Montjoie said: ‘Our strategy has always been to improve the grade of the Zebediela Project. And from a geological point of view the project ticks all the boxes for containing all the ingredients that you need to make the nickel sulphide cake. So now we’re well on the way to baking our cake, so let’s get drilling.’
The results of the survey, published earlier this week, identified a series of high-priority drill targets with strong potential to host high-grade nickel-copper-PGE sulphide mineralisation with striking similarities to the conduit-style magmatic sulphide system at Uitkomst Complex.
The survey found multiple drill-ready targets, identifying several strong gravity and magnetic anomalies beneath and adjacent to the Project’s Uitloop I and II intrusions. It confirmed a feeder zone – a key focus for future drilling – a vertically stacked system with a potential conduit linkingthe Uitloop I and II ultramafic bodies. New target zones were identified extending below known mineralisation, with gravity modelling locating dense zones approximately 100 to 800 metres below surface suggesting untested high-grade sulphide potential at depth. Coincident magnetic-gravity anomalies up to a kilometre from known intrusions suggested additional feeder zones or apophyses, enhancing the Project’s district-scale potential.
Mr Montjoie said: ‘This interpretation marks a significant milestone in the development of the Zebediela Project. The newly identified targets validate our model of a dynamic magmatic plumbing system with potential for sulphide accumulation along feeder conduits and in reactive footwall lithologies. These are precisely the kinds of structural and lithological settings associated with high-grade mineralisation at analogous deposits such as Uitkomst and Platreef. The results provide a clear framework to drill both the known nickel-copper-PGE mineralisation in Zone 2 and test new, high-impact massive sulphide targets in what we define as Zone 3.’
URU’s immediate next steps include the integration of the full 3D magnetic and gravity models into the Project’s database; the finalisation of top-priority targets for drilling, focused initially on zones with overlapping gravity and magnetic signatures; and the evaluation of partnerships and funding options to test the high-impact targets identified.
Meeting global demand for high quality nickel
URU has set itself the ambition of becoming ‘the AIM market’s premier nickel supplier into the EV battery market’, playing a major role in meeting the demand for nickel essential for the lithium-ion batteries that electric vehicles depend on.
The nickel market is currently in surplus, principally due to increased production of Class 2 nickel in Indonesia, the world’s leading supplier. A study by Macquarie reports that Indonesia last year accounted for 61pc of the global refined nickel supply, up from just 6pc a decade ago, with market share is expected to grow to 74pc by 2028. Indonesia now controls more of the world’s supply of nickel than OPEC did of crude oil in the 1970s.
URU is positioning itself to benefit from demand for a more diverse supply chain as the west’s supply networks with Asia come under increasing pressure, and for higher long-term demand for the Class 1 nickel sulphide with which Zebediela may be so richly endowed. The company believes that ‘increasing demand, coupled with limited high-grade nickel sulphide supplies, points towards a future where the demand for nickel should outpace supply, leading to potential market deficits by the mid-2020s.’
The International Nickel Study Group predicts demand will rise by a further 5pc this year, and Macquarie that demand will grow at an average of 6pc annually in the years to 2030. Fluctuations in demand for electric vehicles is more than made up for by increasing global consumption of stainless steel, which accounts for two-thirds of nickel demand.
Outlook
URU’s management team includes CEO John Zorbas, who has held senior positions at MGM Productions Group, ZorCorp Capital Holdings, Starline Capital Holdings Infrastructure Fund, Monchhichi, Millennial Esports and Stratton Capital; Non-Executive Chairman Kyle Appleby who has served as CFO several Canadian, US and London-listed companies, and provided accounting and financial services for companies in the cannabis, agriculture, technology, mining, crypto-currency and other sectors; and Non-Executive Director Avi Robinson, who has held senior positions at Servy, Akrone, and Seed Capital Solutions.
URU’s value has risen by 100pc this year as the company has secured new funding, shone further light on the Zebediela Project’s potential scope, and passed regulatory requirements that have taken it to the threshold of drilling. After touching 9p in March the company is currently priced at 4.5p, with a market cap of £2.3m.
