Western Mines (ASX:WMG) - Growing Australia's Largest Nickel Deposit

Interview with Caedmon Marriott, Managing Director of Western Mines Group

Our previous interview: https://www.cruxinvestor.com/posts/western-mines-asxwmg-building-australias-next-major-nickel-resource-6328

Recording date: 28th July 2025

Western Mines Group presents a compelling investment opportunity in the nickel sector, combining world-class resource scale with strategic market positioning as the commodity establishes a price floor. The company's Mulga Tank project near Kalgoorlie hosts Australia's largest nickel sulfide deposit, containing 5.3 million tons of nickel across a nearly 2 billion ton resource with 0.27% nickel grades. This positions Western Mines among the world's top 10 nickel deposits by contained metal.

The investment thesis centers on three key pillars: exceptional resource quality, strategic timing, and significant exploration upside. The deposit demonstrates superior metallurgical characteristics with four times the sulfur content of comparable Canadian projects and grades 25% higher than peer operations. This sulfur-to-nickel ratio approaching pentlandite composition, combined with enrichment in chalcophile and platinum group elements, supports enhanced processing efficiency and recovery rates. The company's conservative approach using a 0.2% nickel cutoff—double the threshold employed by many competitors—demonstrates disciplined resource estimation practices.

Market dynamics strongly favor Western sulfide producers like Western Mines. The nickel price has established a durable floor at $15,000 per ton, with Managing Director Caedmon Marriott noting that "absolutely nobody is making money at these prices," including large-scale Indonesian and Chinese producers. This supply discipline, combined with robust demand growth of 6-7% annually in stainless steel and over 10% in defense applications, creates favorable conditions for price recovery. The battery sector maintains 25-30% growth trajectories in Western markets, supporting long-term structural demand.

Environmental regulations are creating additional advantages for Western producers. European battery passport requirements mandate detailed CO2 accounting, with nickel representing 30-35% of an electric vehicle's carbon budget. Western Mines' sulfide operation positions it at the bottom of the CO2 intensity curve, benefiting from increasing preference for "green nickel" and supply chain security considerations as buyers diversify away from Chinese-controlled Indonesian operations.

The exploration upside provides significant optionality beyond the established resource. Recent drilling has identified 91 occurrences of massive sulfide evidence, including large immiscible sulfide globules described as "tennis ball-sized." This statistical abundance across limited drilling suggests a substantial massive sulfide system at depth. If Western Mines delineates a "Perseverance-style" deposit of 50 million tons at 2% nickel, it would dramatically accelerate development timelines and enhance project economics. Such a discovery would transform the project from a large-scale, low-grade operation into a hybrid system capable of supporting both high-grade standalone developments and integrated large-scale processing.

Operational advantages include Western Australia's stable jurisdiction with established mining infrastructure and government support through exploration incentive schemes totaling $220,000 in recent grants. The deposit's shallow nature, with mineralization beginning at 50-60 meters below surface, and anticipated low strip ratios under 2:1 support cost-effective mining scenarios. The modular development approach, potentially scaling from 10 million to 40 million tons annually, offers risk-managed capital deployment.

Current drilling programs focus on resource extension and massive sulfide targeting, with results expected to feed into metallurgical testing and scoping studies in early 2025. Western Mines represents a rare opportunity to access a world-class nickel asset at attractive valuations while the sector remains distressed, positioning investors for significant revaluation as market fundamentals improve and the energy transition accelerates demand for critical battery materials.

View Western Mines Group's company profile: https://www.cruxinvestor.com/companies/western-mines-group

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