XLR8 Metals is preparing a brew with strong nickel potential in Tanzania and Sweden

Nickel is one of the critical metals which plays an instrumental role in the energy transition and it’s likely that the electrification of transport will see nickel prices remain strong over the coming decades.

The metal’s inclusion in the US critical minerals list, underpinned by the US Government’s Inflation Reduction Act, along with the recently announced Critical Raw Materials Act in the European Union is likely to provide support from supply chain security interests.

This continued belief in the long-term potential of nickel can be seen clearly in Andrew Forrest’s $760m takeover bid for Mincor Resources (ASX:MCR) through his privately-owned vehicle Wyloo Metals.

XLR8 Metals, which is currently finalising an IPO to list on the ASX, is also a firm believer in nickel and has put together a suite of projects in both Tanzania and Sweden that places it in the perfect position to supply nickel into Europe with executive chairman Shannon Green telling Stockhead that the latter presented an enormous opportunity to get deeper into the EV supply chain.

“The EU is at the very advanced stage in the process of bringing in a mandate to cease production of ICE vehicles in the mid 2030s and they are a significant global player in the vehicle manufacturing space and are therefore going to need to source significant long life supplies that are stable and accessible,” he added.

“You always have to look for the silver linings and the opportunity that prevails out of the COVID outbreak for companies such as ourselves and part of how we have developed our company is exactly that opportunity, that the EU will mandate and enforce the supply of critical minerals within their borders.

“This is aimed at mitigating the lessons learned from the global supply chain collapses of an event such as COVID and will likely include grants and other incentives to help fuel that.”

He added that nickel sulphides with the grades and widths to be economic are reasonably difficult to find and the EU doesn’t currently possess plentiful nickel resources, a point that the company’s projects could address.

Tanzania – home of nickel elephants

XLR8 holds 2,162km2 of granted tenements and tenement applications in five separate project locations in Tanzania, which is well known for being home to some truly monstrous nickel projects.

However, the company’s focus is squarely on the Ntaka West and Kabanga North projects – and with good reason.

Ntaka West adjoins Indiana Resources’ (ASX:IDA) Ntaka Hill nickel sulphide project, which is currently the subject of arbitration through the International Centre for Settlement of Investments Disputes.

While its ultimate fate remains unknown, Ntaka Hill’s position as a top tier nickel project is undeniable with an estimated JORC mineral resource of 56.2 million tonnes at 0.63% nickel, 0.14% copper and 0.02% cobalt for 356,380t contained nickel.

Kabanga North is located in equally rich ground, being just 8km from the massive Kabanga deposit, which with a JORC compliant resource of 58Mt at 2.62% nickel is considered to be one of the world’s great undeveloped projects of its kind. Kabanga’s status has been further enhanced by a US$100m investment from BHP for a minority 18% stake in the project.

“When you think about nickel, Tanzania is truly elephant country. It is literally one of the best nickel provinces in the world,” Green noted.

“And we have two very hot positions and three other really good positions in both nickel belts, which gives us a lot of runway for ground and high potential for major discoveries.”

Ntaka West is located within the Mozambique Mobile Belt while Kabanga North sits within the East African Nickel Belt.

He added that the vendor has a complete geological group all ready to go. It has also purchased an infield XRF machine to speed up and reduce the cost of soil geochemistry work in-country.

 

 

Swedish nickel dream

XLR8’s footprint in Sweden is significantly smaller with five tenements – two granted and three in the advanced application stage – covering about 42km2 but which are no less attractive given that they have proven mineralized nickel sulphide systems in the rich Västerbotten nickel zone.

The company had purchased a private company which have 100% rights to the two granted tenements, both of which have historical drilling with nickel sulphide, copper and cobalt intercepts featuring attractive widths and grades.

“This exploration work was done in the late 70s, early 80s. They have done some shallow drilling, so it certainly hasn’t been really well tested, hasn’t had any modern exploration techniques applied,” Green added.

“The three tenements we have applied for came out of our due diligence work so they are in the same region, the Västerbotten nickel belt.

“One of those has historical drilling with proof of nickel sulphide, copper, cobalt and two of them have the same cropping ultramatic which is the essential ingredient for nickel, and generally wherever these cropping ultramafics are found, they generally contain nickel.”

 

 

Notably, the projects are all within what Green describes as “shouting distance” of the EU’s largest battery factory, the Northvolt ETT Gigafactory.

“We couldn’t be better positioned if we tried and we’re well positioned that way because we set out with a business plan and that’s what we have been able to achieve,” he said.

“We certainly have plans to grow that Swedish tenement package, obviously that gives us walk-up drill targets on the ground as soon as we list.”

IPO and exploration plans

To progress its projects, XLR8 plans to raise between $4.5m and $5.5m via the issue of new shares priced at 20c each through its initial public offering.

“Our enterprise value will be $4m with a very tight structure and we will be poised to be drilling very quickly,” Green noted.

“In Tanzania, the strategy is to make a major discovery while in Sweden, we see the opportunity to be a bit more sophisticated, in the sense that we see an enormous opportunity to get deeper into the EV supply chain in the EU.”

He added that once initial work at Ntaka West is completed, the company will move into drilling within a couple of months.

“Simultaneously in Sweden, we’ll be finalising approvals. We’ve got access onto ground immediately and we’re starting the broader exploration work with drilling in areas where we already have known mineralisation,” Green explained.

The company will use modern exploration and drilling to test the original holes as well as carry out geological and exploration work to understand its project as well as search for undiscovered resources.

“One of the opportunities offered is where we are located, there’s a lot of glacial till. This means a lot of the ultramafics are hidden and the work that has been done in Sweden to date has only focused on the outcropping ultramatic,” Green highlighted.

“So we see a huge opportunity to peg significantly more highly prospective ground once we get on the ground and start doing that work.”

Leadership team

While attractive projects are certainly important, companies also need an experienced and capable management team to deliver success.

Green is no stranger to ASX resources space with more than 20 years of experience on the ground from early greenfields all the way through to mine construction, mine operations all over the world.

Importantly, this includes 10 years of on ground experience in Africa including countries such as the Republic of Guinea, Sierra Leone, Cameroon.

Likewise, XLR8 chief financial officer Alisa Osborne also has significant on ground African experience as well, which when combined with Green’s experience – ensures that the leadership team is very well equipped to operate a company in Africa.

“Ian Cameron who is our exploration manager is a pretty senior geologist and geophysicist,” Green added.

“He has operated in remote parts of the world and has held technical roles with companies such as Plutonic Resources, Newcrest Mining and Barrick Gold.

“We know which way is up and what we’re doing, and we’ve previously worked together, so it’s like bringing the band back together if you like, we know how each other ticks, we know how we work and how to get things done,” Green concluded.

 

 

This article was developed in collaboration with XLR8 Metals, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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