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Amur Minerals: does Irosta Trading bid mean time is ripe for nickel play?

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Shares in Amur Minerals Corporation (LON:AMC) skyrocketed last week when the company confirmed that it is in talks to sell its wholly owned subsidiary, Irosta Trading. There is no idea yet on who that might be but with the potential buyer valuing the company at £100 million it’s no surprise that the share price for this base metal exploration company rose around 75% from 2.25GBX to 4.49GBX in one day.

Amur Minerals has had its moment before, reaching 37.25GBX in June 2015 when Russia granted it the mining rights for its Kun-Manie nickel-copper sulphide project located in Amur Oblast, 700 km northeast of the capital city of Blagoveshchensk which is near the Chinese border.

Seven years on, and the Kun-Manie project is Amur Minerals’ principal and only asset. Drill defined resources have been identified within five deposits, all within a 36 square kilometre 20-year production licence which expires in 2035.

Amur Minerals has the right to recover 100% of the contained metal – nickel, copper, cobalt, platinum, palladium, gold and silver. Rights to extend the licence are also included and should additional mineralisation be located outside the licence area, the boundaries can be expanded through the State Licensing Agency.

In June 2021, Amur Minerals announced that RPM Global (ASX:RUL), an independent mining consultancy, had completed an update to the JORC resource estimates including all drilling and trenching. Based on a 0.3% nickel equivalent cut-off grade, the global JORC ore tonnage has increased by 19.2 million tonnes (12.4%) to 174.3 Mt, by 156,000 nickel tonnes (13.5%) to 1.31 Mt of nickel (averaging 0.75% nickel) and by 53,000 copper tonnes (16.6%) to 372,000 copper tonnes (averaging 0.21% copper).

Engineering work also confirms that the mineralisation contains economically recoverable grades that can be mined by both open pit and underground operations, the ore can be processed by classic flotation with the concentrate being suitable for follow on processing and refining.


Ambitions for growth

According to Amur Minerals, as a late-stage exploration project with detailed engineering work being undertaken, Kun-Manie represents one of the largest potential sulphide nickel operations in the world and could place it among the top ten nickel producing companies on an annual basis, the others being Nornickel (MCX:GMKN), Glencore (LON:GLEN), BHP (NYSE:BHP) and Anglo American (LON:AAL).

This, by anyone’s standards is quite ambitious. But with nickel being one of the most corrosion-resistant metals in the world and used for everything from batteries, coins, computers to cutlery, there is certainly scope for Amur Minerals to grow.

Notwithstanding the geopolitical risk, another benefit for Amur Minerals is that the Kun-Manie Project is well-located – near the three largest nickel consuming nations in the world – China, Korea and Japan. Amur Minerals also states that the Kun-Manie project is one of the largest potential economic contributors to the Russian Far East and Arctic’s Far East Concession Programme – up to RUB 500 billion is to be raised over the next five years for social and infrastructure projects in this region.

At this stage, anything can happen; the current offer could open the way for more for example. And while the share price is volatile – at time of writing it is 3.54GBX having dropped back earlier this week to 2.91GBX – with nickel prices at their highest in nearly 10 years, Amur Minerals could be a good buy.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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