We Increased our Holdings in GAL - while we wait for next piece of news
5 minute read
Galileo Mining Ltd (ASX:GAL) is edging closer to a major drilling event at its Fraser Range Nickel Project in WA.
GAL is a $37M capped explorer chasing a big nickel discovery in the Fraser Range region - home to the $1.8BN Nova-Bollinger discovery.
Fin Review rich lister Mark Creasy, the man behind the Nova-Bollinger discovery is the biggest shareholder of GAL, having vended his private project into GAL.
While we wait for Fraser Range nickel drilling, we have started to take some more notice of its palladium project, as the palladium price continues to rise.
Why we invested in GAL - and recently increased our holdings
We are long term holders of GAL and we are invested for its nickel discovery potential, with the Fraser Range widely tipped to deliver the next major nickel discovery in Australia.
GAL has a history of running 4-5 drill programmes a year since its 2018 IPO with the aim of making a large nickel discovery.
With five months left to go in 2021, we are expecting GAL to run multiple drilling events before the end of the year.
Whilst metals exploration is risky, GAL’s exploration success would deliver a return of many multiples of our original investment.
Right now we think that GAL has a “pre-discovery valuation” and is highly leveraged to exploration success, with increasing demand for clean energy metals and a 12-month price increase in nickel, copper, cobalt & palladium all working in GAL’s favour.
We like GAL’s methodical approach to metals exploration and its tight capital structure.
We have observed the GAL share price can move pretty quickly (up OR down) in the lead up and anticipation of drilling and the subsequent results. Due to the tight shareholder base, the share price seems to handle negative results very well.
GAL is planning to drill its next set of nickel targets, via a 1,000m diamond drill programme aiming for two highly conductive targets - positive results would see GAL trading at multiples of where it currently is.
GAL’s drill rig is sitting in Kalgoorlie and prepared to mobilise, with drilling “close to commencing”. So we are hoping in the coming weeks we will get confirmation of drilling beginning .
We are anticipating that when drilling actually commences, there will be increased interest in GAL. At this stage it's fairly quiet, with GAL trading around the 26-27c price range.
This is our favourite time to increase our position in explorers - when it's fairly quiet ahead of lots of drilling related newsflow. We did just that recently at around the 29c mark.
With a forecast step change in demand for EV battery technology (nickel is vital to this) and limited new mine development for key commodities, we are excited by GAL’s potential.
GAL looks well funded with $6.1M in cash, enough money for multiple drilling programs.
In the meantime - GAL’s palladium play is getting interesting
As the palladium price keeps rising, a few days ago GAL updated the market on its WA palladium project.
Most of the world’s annual palladium supply comes from South Africa (38%) and Russia (40%). Both countries have not been able to increase production to meet growing demand for anti-pollution applications.
In 2012 the palladium price was $700/oz - in recent weeks it almost hit $3,000/oz.
GAL has started soil sampling at its palladium project, with over 500 samples collected from an 1,800-sample program.
Here’s what we know so far:
- Previous drilling intercepted over 4 g/tonne palladium, with thicker intercepts of up to 27m averaged 0.58 g/t palladium.
- Current soil sampling is along strike to two already highly prospective zones that have maximum soil assays of 0.31 g/t and 0.16 g/t palladium.
- The latest batch of 500 samples is now at the laboratory with assays pending.
- The remaining samples still to collect cover additional areas at the project with potential for nickel sulphide and other metals.
- A 10,000 metre aircore drilling program is planned to follow up existing palladium and nickel targets
- More sampling is expected to generate further targets for drilling at the same time.
- RC and/or diamond drilling will be undertaken after the completion of aircore drilling.
Next set of GAL palladium news:
- Late August: Assay results from the soil sampling are expected in late August
- September / October: Aircore drilling anticipated to begin in September/October.
Nickel drilling in the Fraser Range - the main event
GAL will be drilling two highly conductive EM targets at its Delta Blues prospect, with results expected to follow three weeks later.
The high priority nickel targets called DB1 and DB2 will be tested via 1,000 metres of diamond drilling.
Two drill holes are planned at the DB2 prospect and one hole planned at the DB1 prospect as a first pass test.
GAL has generated these targets through electromagnetic (EM) surveying, aircore drilling, magnetic modelling, and gravity interpretation.
EM surveying is a key technique used in undercover nickel exploration as massive nickel sulphide deposits often exhibit a strongly conductive signature. The prospective geology of the Fraser Range means that any conductive anomalies identified in the surveying will represent high priority nickel sulphide targets. GAL will drill more targets as and where required.
We are looking out for the next piece of news confirming drilling has begun...
We are following the major GAL holders here
Mark Creasy is the largest GAL shareholder, owning 26.1%. Mark Creasy discovered the first giant nickel discovery in the Fraser Range - Nova-Bollinger. We are willing to bet that he will have a role to play in the next Fraser Range nickel discovery. Hopefully it's via GAL.
The second largest holder of GAL shares is IGO Ltd (8.9%) - a $5.5BN company that purchased Nova-Bollinger for $1.8BN and now runs the nickel mine.
GAL’s biggest shareholders have invested in GAL for the long term in order to hit another large nickel payday. We are happy to ride along with them here.