Excerpt from “The History of Mining: The events, technology and people involved in the industry that forged the modern world” – by Michael Coulson

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The Australian mining boom of the late 1960s was given the generic title of the nickel boom, although it can be argued that nickel was, in economic terms, a relatively minor part of a period of exploration and new discoveries that saw the genesis of the giant iron ore industry in the northern part of Western Australia and the discovery of uranium in the Northern Territories.

In terms of nickel there were three major events – the discovery of nickel by Western Mining at Kambalda in Western Australia in 1966, the sensational but ultimately disappointing Poseidon discovery at Windarra to the north of Kambalda in 1969, and in 1971 the Selection Trust group’s Agnew nickel discovery, which was further north still.


Although Australia had spawned a number of mining booms in its past, the 1960s boom at times was as much a financial event as a mining event. As far as stock market activity was concerned, the surge of interest in Australian mining shares followed an extended worldwide boom in industrial, technology and financial shares, and was symptomatic of an era when confidence was high and investors, buoyed by profits elsewhere, were in the mood for speculation.

The boom itself was precipitated by strengthening metal prices and in the case of nickel by an extended strike by Canadian miners in 1968, which pushed the metal’s price to record levels as shortages bit. An extended economic upturn stimulated by US deficit financing to accommodate accelerating spending on the Vietnam War and a consumer boom underpinned rising metal demand.

Inflation too was in the air as the American economy geared up to provide both guns and butter, putting an increasing strain on price levels, thus inadvertently laying the ground for the revival of gold in the 1970s, and extending investment interest in hard assets (commodities) for a further decade. In addition to the war in Vietnam there was another key event that drove metal demand; the phenomenal expansion of the Japanese economy.

In 1952 Japan languished as a defeated and, in economic terms, lesser-developed country; 20 years later after two decades of 8% annual growth it was amongst the most powerful economies in the world. Such growth, mirroring that of China today, spawned a large and rising demand for raw materials, thereby creating the climate for an expansion in Australia’s then ageing mining industry. Given the size of the Australian iron ore industry of today it is extraordinary to think that before the discovery of the Pilbara mines Australia actually operated an export ban on iron ore, so limited it was thought were indigenous supplies.


Whilst the Aussie boom can be said to have started with the Kambalda nickel discovery in 1966, prospectors in Australia had been busy since the 1950s and with some considerable success. Indeed the successes of the earlier years almost certainly whet the appetite of nascent mining entrepreneurs, providing the impetus for the late 1960s frenzy that was most famously exemplified by Poseidon. In the early 1950s tungsten ore (scheelite) was discovered at King Island off Tasmania. The Mary Kathleen uranium deposit near Mount Isa was found in 1954. Huge bauxite deposits were discovered in 1957 in Western Australia, allowing Australia to cease importing the mineral for the Bell Bay aluminium smelter.

This was followed by the Weipa bauxite discovery in the early 1960s, about the same time as the giant Pilbara iron ore region was being opened up. By the mid- 1960s the Queensland coal basin was under development. Other large bulk mineral deposits were discovered around the same time, such as manganese in the Gulf of Carpentaria and the Duchess phosphate deposit in western Queensland. It is little wonder then that these local successes attracted the attention of increasing numbers of international mining groups, large and small alike, and from metal processors such as US Steel, Sumitomo Metals and Union Miniere.

As we have seen, nickel was not always a desirable metal to find and was often cursed by old prospectors. However by the 1960s its use in stainless steel making and other technologically advanced applications had transformed its image – it was highly sought after and Australia did not have the metal. Western Mining, incorporated in 1933 to search for gold in Western Australia, had become a sizeable gold producer around Kalgoorlie, but by the 1950s the industry was in rapid decline and Western Mining began to diversify its metal interests. It had some considerable luck in that regard, discovering the Darling Range bauxite deposits near Perth and also the Koolanooka iron ore mine near Geraldton, Western Australia.

The company’s discovery of nickel near Kambalda, south of Kalgoorlie, was, however, something of a fluke. In the early 1960s Western Mining was involved in a regional mapping exercise, mainly but not exclusively for gold, and by 1964 was working around Kambalda. This led an old prospector, John Morgan, who had himself been working in the area 20 years beforehand, to show Western Mining some old samples from a dark gossan outcrop which, whilst containing no gold, had shown some anomalous nickel values on earlier examination at the Kalgoorlie School of Mines. After conducting a surface exploration programme in 1965 Western Mining commenced a drilling programme at Lake Lefroy and in January 1966 struck nickel, to be precise 10 feet of 8.3% nickel at 500 feet. The Australian nickel boom had been ignited.


Western Mining’s initial success was followed by a number of other discoveries and indeed, though there have been major corporate developments concerning nickel mining in Western Australia over the last five years or so, new nickel deposits continue to be found today. The Kambalda nickel deposits are sulphide in nature, high grade, often quite shallow, and usually formed as lenses and thus mineable by decline methods. Their relative shallowness and high grade enabled Western Mining to develop mining operations at Kambalda rapidly.

From the initial Lake Lefroy discovery in early 1966 it took a mere 13 months for the company to produce its first ore from the Lunnon Shoot. Thereafter other shoots were discovered including the Fisher, Juan, Otter, Durkin and Long Shoots; some of these operations are still producing today although WMC, as it became known, exited mining in Kambalda in the early years of the new millennium. Production levels climbed above 50,000 tonnes in the 1980s and 1990s although they only represented around 10% of world output at best and were a quarter of the production levels of Canadian giant Inco.

Nevertheless the Western Mining discoveries were important from both a geological and historical point of view.
The discoveries were even more important for their impact on the Australian stockmarket, for Western Mining entered the sixties with its shares trading listlessly at around A$1.20 (15 shillings in old money converted at the current sterling/A$ rate). By the time the Kambalda discoveries had begun to produce, and Western Mining had been able to re-start dividend payments at the end of the decade, the share price had already peaked at A$95. This was a stupendous performance, but one that was comfortably topped, and in a much shorter period, by arguably the most phenomenal mining share of the 20th century – Poseidon. Although Canadians might argue for their own champion, the late 1990s shooting star Bre-X.


The great Poseidon was a classic example of a company being in the right place at the right time, and with the right product, or in its case the right prospect. The story itself can be told relatively quickly, although in due course it probably deserves a book all to itself so stunning was its impact on the securities markets of the UK and Australia. Poseidon NL, which was named after a famous Australian racehorse rather than the mythical King of the Sea, had started as a wolfram producer in 1952.

By the time Western Mining began to uncover the Kambalda nickel deposits in 1966 Poseidon was destitute and its shares traded at 2c(A). The Kambalda discoveries alerted a number of Australian entrepreneurs to the possibilities of the mining sector as a source of opportunity. Poseidon, quite inadvertently, attracted the attention of two separate players, Boris Ganke and Norman Shierlaw. Ganke had built up a 25% holding in Poseidon in 1967 but was diluted down when Shierlaw vended the Bindi Bindi nickel prospect in Western Australia into the company. Bindi Bindi proved interesting but was not big enough or rich enough to be economic and it was dropped. However those in Poseidon at that time saw their shares rise from 10c(A) in 1967 to a 1968 peak of A$3.45.

Poseidon, during this run, had hired Ken Shirley, an experienced prospector and friend of Shierlaw’s, to look for other prospects for the company, and he came across some interesting ground at Mount Windarra northwest of Laverton in Western Australia. An attempt was made to joint venture the ground with Consolidated Gold Fields of Australia but they thought it held little promise and declined. Poseidon then decided to seek the view of its consulting geologists, Burrill and Associates. Burrill, in contrast to CGFA, liked what they saw and with Shierlaw’s permission bought Poseidon shares at around 60c(A) in April 1969.

The shares doubled but then sank back to 80c(A) following the release of Burrill’s positive report. Poseidon then commissioned an exploration programme on Windarra in August, and in September began percussion drilling. The rest, as they say, is history, and dramatic history at that as the share price rose from 80c(A) in September to A$280 five months later.

At the beginning of October the first Windarra drilling results were announced and they included a 40-foot intersection assaying 3.56% nickel starting at 145 feet – a relatively shallow level – with lower grade intersections above, all the way to the surface. Later on considerable doubt was thrown on the accuracy of these figures but in anticipation insiders had been buying the shares aggressively. With the announcement Poseidon moved up to A$12 but its run had hardly started.

A week later they had reached A$20 and as October wore on the market began to be influenced by London interest and by the end of that month the shares had reached A$37. In mid-month there had been some disappointing results from two other holes and the shares had temporarily stalled, but the market had the bit between its teeth and was not going to let a good story spoil. At the same time the excitement generated by Poseidon infected the rest of the Australian mining sector, and mining shares, particularly junior explorers, rose across the board.

In the middle of November Poseidon made another announcement. Though the orebody was growing in size there was no repeat of the earlier 3.56% grade. The average nickel grades came in between 2% and 2.5% and there was copper and even some platinum and palladium. Poseidon’s shares took heart and by the end of November stood at A$57. Poseidon was also being supported by a rocketing nickel price, stimulated by a labour strike at Inco’s giant nickel mine in Sudbury, Canada.
December saw Poseidon’s share price continue to progress, and by mid-month it had reached A$84 in anticipation of the AGM when further drilling news was expected.

By the time of the AGM on 19 December, attended despite its closeness to Christmas by investors and analysts from all over the world, the share price had reached A$110. Curiously the main issue at the AGM was a long and at times angry debate about an earlier placement of Poseidon shares at a price way below A$110. Shareholders had to wait two hours for news of progress at Windarra, but seemed well pleased by confirmation of the 2% plus grade and the enthusiasm of the board concerning prospects for the continuing drilling programme.