Axiom Mining’s ability to build strong relationships with the community and industry is paying off as it moves to start production just months after establishing the maiden resource at its flagship Isabel nickel project.

The company announced a $A15 million deal in November to fund the initial stage of mining at Isabel and is on track to produce its first trial shipment of direct shipping ore (DSO) in December.

The funding and strategic partnership with InCoR and its 70%-owned subsidiary InCoR Technologies (InTech) will also give Axiom exclusive access to InTech’s Starved Acid Leach Technology (SALT), which could substantially improve the value of Isabel’s sub-economic ore – of which Axiom originally was going to consider waste.

This provides more options to a project with already robust economics. Isabel’s maiden JORC resource estimate from the Kolosori tenement of 4.8 million tonnes at 1.3% nickel and 0.08% cobalt was announced in the September quarter.

It was established in about 10% of the known prospective area and did not include Isabel’s South San Jorge tenement or historic data from previous explorers.

The 42sq.km Isabel nickel project is a joint venture between Axiom (80%) and the Kolosori and South San Jorge customary landowners (20%).

On the eve of Axiom’s $15 million announcement, chief executive Ryan Mount was a six-hour boat ride away from his Honiara office, attending an important community leader’s funeral – a vivid example of the company’s commitment to local stakeholders and the mutual respect given to Axiom.

Mount believes there are two aspects that set Axiom apart in securing the partnership to kick off mining at Isabel.

“Firstly, there’s the lack of access to high quality nickel laterite available in the Pacific,” he said.

“Secondly, InCoR spent a significant amount of time in the Solomon Islands doing due diligence and they recognise the strong position we have in country and also particularly, the systems and processes we’ve put in place for mining operations next year.”

The $15 million convertible note facility will be drawn down in three tranches with an exercise price of 37c, a premium to the share price at the time of the deal.

“We think it’s a very good deal – they are European and Canadian based, very experienced in mining investment and have exceptionally strong technical capabilities,” Mount said.

“The SALT technology will potentially allow us to extract further value from Isabel by applying it to the ore we had not initially considered as value in our modelling of the project.

“SALT is designed to produce a mixed hydroxide product containing approximately 30% nickel from 1% nickel ore.”

The simple design of SALT is low cost and environmentally friendly and will permit rapid ramp up of the nickel recovery plant. But this is all still subject to testing, the cost of which is mainly borne by InCor. 

Axiom will have exclusive rights in the Solomon Islands to SALT as well as a 10-year first mover world-wide advantage on nickel product sales using SALT.

Mount noted the company was bucking the trend as the currently subdued nickel price was adversely affecting other miners.

“Even at today’s nickel prices we’ll have a profitable mine, whereas very few around the world can at this stage of the cycle,” he said.

The company’s development at Isabel was previously on hold for over three years due to legal action by SMM Solomon, a subsidiary of Japanese giant Sumitomo. 

Sumitomo’s case was dismissed by the Solomon Islands’ High Court in September 2014 and labelled an abuse of the court’s process, and the injunction on Axiom’s activities at Isabel was lifted.

Sumitomo’s appeal of the September decision was heard in April 2015 and although the judgement was still pending at the time of going to press, Mount said Axiom remained confident of its prospects and that his team was operating efficiently within the constraints that such litigation puts on a company of Axiom’s size.

The Solomon Islands government recently announced a review of its mines and minerals legislation to prevent future legal troubles.

“We’re very confident about operating in the Solomon Islands,” Mount said.

“We think regular review of legislation and tightening controls and regulations is very important and are supportive of such measures. We feel well-placed with that review.”

The company has made a number of key appointments in recent months, recruiting systematically and strategically for every level of the business.

Jeremy Gray was appointed to the board, bringing extensive mining investment experience including roles as the head of mining research at both Credit Suisse and Morgan Stanley in London, and global head of basic materials at Standard Chartered Bank.

Paul Frederiks brings more than 30 years’ experience in corporate governance to his role as company secretary.

Juan Jeffery was named the executive general manager of mining operations after his previous work leading the commissioning of the Ravensthorpe nickel mine for First Quantum Minerals and senior roles with Rio Tinto and BHP Billiton, including a decade working in Papua New Guinea.

The former Solomon Islands Prime Minister’s special secretary, Dr Philip Tagini, was appointed as Axiom’s general manager of sustainable development.

“He’s a published author in relation to mining law and mining in the Solomon Islands, previously reported directly to the Prime Minister and was principally in charge of national mining policy,” Mount said.

“We think we’ve got a good skill set for the first phase of mine development.

“Coupled with InCoR’s strategic partnership, we now have access to an exceptional array of world leading mining and nickel processing technicians which will complement us very well for the longer term.”

Axiom is focused on further resource definition drilling at Isabel and preparing for its first DSO shipment. 

The company plans to start work at the San Jorge tenement in December and has reassessed its exploration targets for 2016 at its wholly owned 485sq.km copper-gold West Guadalcanal project.

Mount said Axiom had achieved every milestone to date and would continue to work strategically to progress future development.

“We’ve been able to raise a significant amount of capital at attractive prices and we’ve been able to attract and develop strong regional relationships– our major shareholder is Anitua, (the Lihir Island landowners) – and with industry, being InCoR,” he said.

“We’ve achieved everything in our business plan this year and we’re on track for our first trial shipment of DSO in December.

“I anticipate we’ll have off-take/sales or marketing agreements in place in the coming weeks as well.

“We’ll also investment in local communities to ensure they benefit from our continual presence in Solomon Islands.”