Two
Nickel Explorers
Richard (Rick) Mills
www.aheadoftheherd.com
As a general rule, the most successful man in life
is the man who has the best information
It wasn’t so long ago that the base metals were
some of the most rewarding markets to be involved in during this commodities
bull market. That of course changed drastically when all the base metals were
subjected to very large price drops late in 2008.
It seems like copper, gold and oil have been
hogging the commodity spotlight since then. Those sectors are so well covered
that market interest has neglected other areas in the commodities markets and
in my opinion this neglect has created some potentially lucrative opportunities
for astute investors.
The nickel industry has responded to rising nickel
inventories, and last year’s stock market crash by closing or postponing many
mines – you can see a list here: http://www.estainlesssteel.com/nickelmineclosures.shtml
But at almost $8 per pound most nickel producers
are making money. In fact, nickel began its run to $25 per pound from under $3,
where it had been priced for several years. So $8 is providing a great return
for most of the industry.
Demand will pick back up but the new mines - and
the development and exploration stage, the brown & greenfield stage
projects won’t exist, or the number of projects will be down severely. Your
pipeline of different stage projects from the ground to the mill to market will
have been damaged for quite some time by the cutbacks due to rising inventories
and lowered prices.
This means that any junior exploration companies
that do make a big nickel discovery should get rewarded. But it has been so
long since speculative investors made big money on nickel – the last big one
was when Vale bought Canico Resources’ Onca Puma deposit in Brazil in 2005 for
$20/share - they have forgotten where to look.
Below, I have listed what are arguably two of the
top nickel exploration plays in the world right now, and one junior that is
active near each. The very low price of these two junior stocks tells me they
have likely not been able to finance since the market crash last year, but they
are in two of the world’s best areas for nickel.
Raglan Mine Area, northern Quebec, Canada
Knight Resources (KNP-TSXv - $0.08)
The high grade (>2% nickel) Raglan Mine in
northern Quebec, Canada is the crown jewel of Xstrata’s nickel properties.
Production began at the Raglan Mine in 1997. The current mine life is estimated
at more than 30 years.
It’s mostly underground mining and a fly-in,
fly-out operation. Geologically the deposits all rest in the Raglan formation,
which is the contact point between two geological regions. Xstrata owns a 70 km
stretch of the Raglan formation.
One hundred kilometers west, and along strike,
another mining major, Anglo American, with its partner Knight Resources
(KNP-TSXv; $0.08), jointly owns another 70 km of this same Raglan formation.
And they have had great success in outlining several pods of mineralization
over the last couple of years.
Junior explorer Knight Resources and Anglo
American are joint venture partners. Knight’s management comes from
Falconbridge, and CEO Harvey Keats was also a key member of the team at Diamond
Fields that drilled out the large Voisey Bay nickel deposit in nearby Labrador.
VP Exploration, Robin Adair, also worked for Falconbridge as manager of North
American nickel exploration and was responsible for exploration at Raglan.
The Anglo-Knight team actually drilled some of
their highest grade holes ever in the last program – 28 meters of 3.21% nickel
and 1.1% copper, plus platinum and palladium credits. But the news came out in
November 2008 as the markets were collapsing, and got ignored.
Shares Issued: 90.6 Million
Price - $0.07
Cash: $1.57 million
Kabanga Nickel Belt, Tanzania
Castillian Resources (CT-TSXv: $0.05)
The following comes from Xstrata’s website and
it’s true:
The Kabanga nickel project is among the world’s
most attractive undeveloped nickel sulphide deposits, with a total estimated
Indicated Mineral Resource of 23.23 million tonnes grading 2.64% nickel and a
total estimated Inferred Resource of 28.5 million tonnes grading 2.7%
nickel. It’s a 50-50 joint venture
between Xstrata and Barrick Gold.
Kabanga is big. It’s definitely what you would
consider high grade. And one of juniors working near there is Castillian
Resources. Castillian also has Dave Gower as CEO, who was previously the head
of global nickel exploration at Falconbridge (now Xstrata).
Castillian has the Kagera Nickel Project, a 960
square kilometer land package along trend and the key claims lie within 10 km
of Kabanga. This project has a lot of blue-sky potential; and Gower has said it
is drill ready.
Shares
Issued: 89.1 Million
Price - $0.05
Cash: under $1 million
Conclusion
These two junior companies, Knight &
Castillian, are exploring in two of the top nickel camps in the world,
therefore increasing the opportunity for their shareholders to participate in a
major discovery.
Nickel exploration has completely fallen off
investor’s radar screens, as the low share prices of these junior companies
attest. However, nickel prices remain buoyant; and most producers are still
making money. And that means the market should reward any new discovery.
***
If you're interested in the junior resource market
and would like to learn more please come and visit us at
www.aheadoftheherd.com. If you are interested in becoming an Ahead of the Herd
sponsor please contact Rick via e-mail.
Richard (Rick) Mills
www.aheadoftheherd.com
rick@aheadoftheherd.com
Bio - Richard is host of www.aheadoftheherd.com
and invests in the junior resource sector. His articles have been published on
over 60 websites including - Wall Street Journal, Financial Post, 321Gold,
Kitco, USAToday, SafeHaven, Stockhouse, Casey Research, The Gold/Energy Reports,
Gold-Eagle, Market Oracle and Financial Sense.
***
Legal Notice / Disclaimer This document is not and
should not be construed as an offer to sell or the solicitation of an offer to
purchase or subscribe for any investment. Richard Mills has based this document
on information obtained from sources he believes to be reliable but which has
not been independently verified; Richard Mills makes no guarantee,
representation or warranty and accepts no responsibility or liability as to its
accuracy or completeness. Expressions of opinion are those of Richard Mills
only and are subject to change without notice. Richard Mills assumes no
warranty, liability or guarantee for the current relevance, correctness or
completeness of any information provided within this Report and will not be
held liable for the consequence of reliance upon any opinion or statement
contained herein or any omission. Furthermore, I, Richard Mills, assume no
liability for any direct or indirect loss or damage or, in particular, for lost
profit, which you may incur as a result of the use and existence of the
information provided within this Report.
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