Nickel Industries’ Sampala Project Faces Resource Uncertainty Despite Promising Grades
Nickel Industries reveals a substantial Exploration Target of 350 to 700 million dry metric tonnes at 0.9% to 1.1% nickel for its Sampala Project, complementing an existing 187 million dmt resource. The company has initiated mine development and haul road construction, positioning itself for a secure nickel supply chain.
- Exploration Target of 350–700 million dmt at 0.9%–1.1% nickel alongside 187 million dmt existing resource
- 2024 drilling campaign completed 48,646 metres across 1,600ha with peak grades of 7.41% nickel and 1.37% cobalt
- Mine development and 22 km main haul road construction underway, targeting 6 to 20 million wmt annual production
- Acquisition terms link price to nickel grade, enabling significant contained metal acquisition at minimal upfront cost
- Project located near existing IMIP processing facilities, aiming for self-sufficiency in nickel ore supply
Exploration Breakthrough at Sampala
Nickel Industries Limited (ASX:NIC) has delivered a compelling update on its Sampala Project in Central Sulawesi, Indonesia, unveiling an Exploration Target ranging from 350 to 700 million dry metric tonnes (dmt) of laterite ore grading between 0.9% and 1.1% nickel. This target sits atop an already substantial JORC-compliant Mineral Resource of 187 million dmt at 1.2% nickel, underscoring the project's potential to become one of the world's largest nickel deposits.
The 2024 drilling program was extensive, with nearly 49,000 metres drilled across 1,600 hectares, adding to a total of 95,630 metres drilled over 2,500 hectares. The results have been encouraging, featuring high-grade intercepts including a peak assay of 7.41% nickel and 1.37% cobalt. These grades are particularly significant given the growing demand for nickel and cobalt in electric vehicle (EV) battery supply chains.
Strategic Location and Development Progress
The Sampala Project's proximity, just 36.9 kilometres, to Nickel Industries' existing rotary kiln electric furnace (RKEF) and high-pressure acid leach (HPAL) operations within the Indonesia Morowali Industrial Park (IMIP) offers a strategic advantage. This closeness facilitates efficient logistics and integration into the company's downstream processing facilities, enhancing operational synergies.
Mine development is already underway, with geotechnical drilling completed to finalize mine plans targeting an initial production of 6 million wet metric tonnes (wmt) per annum, scaling up to 20 million wmt. Construction of a 22-kilometre main haul road commenced in early 2025, alongside infrastructure development including a bridge, camp facilities, and workshops. The capital expenditure is estimated at approximately US$50 million, reflecting a relatively low-cost development compared to the project's scale.
Commercial Terms and Market Context
Nickel Industries has structured the acquisition of the Sampala Project with commercial terms that link the purchase price to the nickel grade, specifically US$2.50 per dmt of ore containing 1.7% nickel or above. Given the Exploration Target's grade range is below this threshold, a significant portion of the contained nickel metal will effectively be acquired at minimal upfront cost, enhancing the project's economic attractiveness.
Current market prices for saprolite and limonite ores stand at approximately US$45 and US$20 per wet metric tonne respectively, with the company's Hengjaya Mine reporting average margins of US$12 per wmt in 2024. These figures suggest that Sampala could become a meaningful EBITDA contributor once operational, supporting Nickel Industries' goal of securing a long-term, high-quality nickel ore supply for its IMIP processing operations.
Outlook and Industry Positioning
Managing Director Justin Werner highlighted the project's transformative potential, emphasizing the consistent high-grade intercepts and the scale of the Exploration Target. The development aligns with Nickel Industries' strategic pivot towards the EV battery supply chain, complementing its existing nickel matte and nickel pig iron production.
While the Exploration Target remains conceptual pending further drilling and resource definition, the aggressive exploration program and early development activities signal strong commitment. The project’s advancement will be closely watched by investors and industry observers as nickel demand dynamics evolve amid the global energy transition.
Bottom Line?
Sampala’s scale and strategic integration could redefine Nickel Industries’ nickel supply security and market standing.
Questions in the middle?
- Will further drilling upgrade the Exploration Target to a JORC Mineral Resource, and on what timeline?
- How will nickel price volatility impact the economics of the acquisition and development phases?
- What are the key environmental and regulatory hurdles remaining for Sampala’s production ramp-up?
