Zinc and copper producer Kagara Ltd says it has found an intersection of "massive and semi massive" nickel sulphides at the Lounge Lizard deposit in West Australia.

    "To Kagara's knowledge this intersection is the best in terms of contained nickel drilled, either historically or in recent times, in the Forrestania region and will result in a significant increase in the Lounge Lizard resource," it said.

    The intersection comprises three zones of massive sulphide with an aggregate drilled width of 33.46 metres within a 76.50 metre section.

    Kagara said the intersection lies approximately 150 metres up from its previously announced indicated resource of 5.7 million tonnes, which includes an indicated high grade resource of 263,000 tonnes at 6.42 per cent nickel.

    Kagara shares were down five cents at $3.12 at 1032 AEST Friday.