Former Nickel Player Targets Quick Production Win Through Gold Strategy Pivot

• Win Metals pivoted from nickel to gold in 2024 due to declining nickel prices
• Acquired Butchers Creek gold project in late 2024 with 357,000 oz resource at attractive price
• Completed 75,000m drill program with positive infill and extensional results
• Considering toll milling and alluvial mining options to avoid significant capex
• Goal to potentially be in gold production within 18 months

ASX-listed mining company Win Metals (ASX:WIN) is repositioning itself for growth by pivoting from its nickel roots to a promising new gold project. With nickel prices languishing, the company sees more near-term potential in the resurgent gold market. Its acquisition of the Butchers Creek gold project in Western Australia positions Win to capitalize on record high gold prices through near-term production.

From Nickel to Gold 

Win listed on the ASX in 2021 as a pure-play nickel company. However, as managing director Steve Norregaard explains, declining nickel prices and sentiment forced a strategic shift in 2024.

The nickel price and the sentiment towards nickel has gone backwards. The company during the course of last year has made a pivot and pivoted into gold whilst retaining its exposure to the nickel project sitting dormant now.

While Win still sees long-term value in its nickel asset, with a market cap exceeding $160 million less than two years ago, the company decided to diversify into gold. Nickel prices likely need to reach US$20,000/t again before Win resumes active nickel exploration and development.

Butchers Creek Acquisition 

The centerpiece of Win's gold strategy is the Butchers Creek project, acquired in November 2024. At an attractive price of under A$10 per resource ounce, the project hosts a substantial 357,000 oz gold resource. Butchers Creek previously operated in the 1990s but has seen limited activity since then, providing ample opportunity for resource expansion and re-start.

The entry price in terms of acquiring the project was very attractive. It's sub A$10 an ounce in terms of upfront consideration. All in all, wonderful wonderful outcome.

Positive Drill Results 

Win has moved quickly to advance Butchers Creek, completing a 75,000m drill program in late 2024. The drilling yielded positive infill and extensional results which are expected to grow the resource size and confidence.

Notably, extensional drilling confirmed that mineralization extends at least 250m beyond the current 1km-long resource, demonstrating the potential for significant resource growth. Infill drilling is also expected to upgrade a substantial portion of the resource to the higher-confidence Indicated category, further de-risking the project.

We had some phenomenal hits, some very very large intercepts which we're very very happy with. We've demonstrated that the resource has the potential to grow well beyond its current levels.

Interview with MD Steve Norregaard

Fast-Track to Production 

To minimize capex and accelerate the path to production and cash flow, Win is evaluating toll milling and alluvial mining opportunities at Butchers Creek.

Toll milling ore at nearby third-party processing plants could allow Win to commence gold production and boost its cash reserves without the capex and lead time of building its own plant. This could serve as a stepping stone to an eventual larger-scale standalone operation.

Building cash reserves is something that's always first and foremost on a managing director's horizon. Our ability in the short term to bolster our cash reserves without having to issue capital is something that we would be keenly pursuing.

Win is also considering the potential for low-cost alluvial gold mining at Butchers Creek, given the region's history of alluvial production. The current high gold price environment may enable mining of lower-grade alluvial material at attractive margins. An ongoing exploration program will evaluate this upside opportunity.

Standalone Potential 

Longer-term, Win sees strong potential to develop Butchers Creek into a standalone gold mining operation. The project benefits from extensive existing infrastructure including a TSF, water supply, and proximity to the town of Halls Creek.

Importantly, Butchers Creek hosts broad, highly continuous mineralization that is amenable to efficient bulk mining methods. This should translate to low unit mining costs, enhancing project economics. With additional drilling, Win sees potential for Butchers Creek to grow into a long-life, highly profitable gold mine.

What we have now versus what ultimately we had - there's a big disparity there. If we see the nickel price recover, the value that we say is latent now will come to the fore. Wonderful situation.

The Path Forward 

Over the coming months, Win plans to update the Butchers Creek resource estimate based on the recent drilling, substantially growing the resource and converting more ounces to Indicated status. This will feed into a scoping study to evaluate development options.

Continued exploration and infill drilling will aim to further expand the near-surface resource to support a potential open-pit operation. Deeper drilling may be deferred in favor of lower-cost mine life extension from shallower mineralization.

In a bullish case, Win could commence gold production via toll milling within 18 months, quickly bolstering its cash position. Cash flow could then fund ongoing exploration and studies to grow Butchers Creek into a robust standalone project.

With a market capitalization of just $10 million, Win Metals appears significantly undervalued based on the Butchers Creek project alone. The latent value in Win's nickel assets provides additional upside optionality.

The Investment Thesis for Win Metals:

• Exposure to record high gold prices through the advanced, underexplored Butchers Creek project
• 357,000 oz resource acquired at ~A$10/oz with strong growth potential
• Positive infill and extensional drilling expected to significantly grow the resource
• Potential for near-term production and cash flow via toll milling with minimal capex
• Alluvial mining potential offers additional low-cost production upside
• Attributes in place for an eventual large, low-cost standalone mining operation
• Latent value in the company's nickel assets once prices recover

Macro Thematic Analysis

Gold is shining brighter than ever as a haven investment amidst global economic uncertainty. Historically high inflation, geopolitical tensions, and the specter of recession have ignited gold prices to all-time highs above US$2800 per ounce.

Central banks themselves are betting big on gold, with many developed economies repatriating their gold reserves and developing countries adding more gold to their coffers. This reflects gold's enduring value and its role as the ultimate safe haven asset.

The current macro environment appears highly supportive of a sustained strong gold price. Interest rates, while rising, remain low in absolute and real terms, reducing the opportunity cost of holding gold. Elevated inflation could prove sticky, further enhancing gold's appeal as a store of value. Heightened geopolitical risks, from the Ukraine war to US-China tensions, should also continue to underpin demand for gold as a insurance policy.

The upshot is that gold miners are enjoying some of the fattest margins in history, with the spread between their costs and the gold price near record levels. In this environment, companies with high-quality, undervalued gold assets are perfectly placed to outperform. Win Metals, with its transformational Butchers Creek acquisition, appears to fit this bill.

As managing director Steve Norregaard sums it up:

We've taken a bitter pill seeing the value in the company erode, but we're certainly primed now with a wonderful opportunity with a company at an equity value of about $10 million. Given the asset base, you turn around and say, well, this thing at in the right environment and at the right time will go gangbusters.