Galileo Mining (ASX: GAL) shares are up 40% today. That brings the GAL share price loss so far this year down to only 50%. So we’ve a bit of swings and roundabouts here. The issue is that yes, they’ve found something of interest but they’ve also spent a lot of time and money in finding it. Sure, that’s the way mining exploration goes but it’s not yet certain that what’s been found is wholly worth what has been spent. That’s why the share price is still down on the year of course. This could reverse but it’ll require more proof of the mineral deposit perhaps before it does.
The announcement today: “MAIDEN MINERAL RESOURCE AT CALLISTO MARKS NEW PROVINCE Highlights • First discovery of “Platreef” style PGE-gold-nickel-copper deposit in Australia • Maiden Indicated and Inferred Mineral Resource Estimate calculated for the Callisto Pd–Pt–Au–Rh–Ni–Cu sulphide deposit; o 17.5 Mt @ 1.04g/t 4E1, 0.20% Ni, 0.16% Cu (2.3g/t PdEq2 or 0.52% NiEq3) o Contained metal includes 585,000oz 4E, 35kt Ni and 28kt Cu (~1.27Moz PdEq or ~91,000t NiEq) o ~8Mt (46%) of the resource is inside the indicated category with a 2.5g/t PdEq grade or 0.58% NiEq (metal content within indicated resource category of ~639,000oz PdEq or ~45,800t NiEq)”
Well, claiming that it’s a new province is possibly a bit ambitious. We’d need to see further proof of the extent of the find before we wholly agreed with that.
As we can see the GAL share price has been falling as they explore this find. As we’ve said about Galileo Mining: “The background here is that Galileo has a JORC compliant nickel laterite resource. OK, it's well known how to mine nickel laterites, they contain nickel and cobalt, if there's enough there to cover the overheads of mining and a processing plant then that's a thing of value. Of course, as a resource, not a reserve, this hasn't been fully proven as yet. There's considerable work still to be done to do that proving. So Galileo's valuation is not settled - we cannot say here're the metals prices, subtract the costs of mining and there we are, the value. There is still uncertainty that is - because not all resources do then get proved up to reserves which are then really worth mining.” The uncertainty reduces as a result of this announcement but there’s still some there.
What may well be limiting the valuation here as well is that the nickel price isn’t all that attractive at present. Yes, we all know, lots more required for the electric revolution but lots more also seems to be being found. And those pgms, the biggest use is in catalytic convertors - by far the biggest use in fact. And those EVs don’t use them so there’s a thought that in years and decades to come prices are going to plunge. The valuation of a deposit depends, of course, on likely prices of the mined metals at the time they are mined.
Yes, it could well be a good deposit and there may well be extensions leading to that idea of a new province being true. But it’s not obvious that nickel and pgms are going to be hugely valuable in the future.
