Leading investors provide seed capital to McNickel

Thanks to a $250,000 private placement of shares made earlier this year, investors with a stake in McNickel now include several prominent investment newsletter editors, gold fund managers and some leading mining industry analysts in both Europe and North America.

A routine Ontario Securities Commission report on a private placement of shares by Perch River Mines, a predecessor of McNickel, lists 25 well-known mining industry personalities as buyers. OSC regulations require that those shares not be sold for at least one year after the date of purchase.

The 25 investors acquired share positions averaging about 40,000 shares each at a price of 25 cents per share. Perch River, a private company, was later amalgamated with Hanson Mineral Exploration to form McNickel which currently trades at about $3.50 on COATS. While five Hanson Mineral shares were exchanged for each McNickel share, Perch River shares were exchanged for McNickel on a one- for-one basis. Hanson shares were trading at about 40 cents -50 cents at the time of the amalgamation.

McNickel’s Lac St. Jean copper- nickel prospect has been hailed as one of the hottest new base metal exploration plays to come along in many years. However, drilling has yet to confirm the potential of the discovery.

The Perch River private placement involved one million shares and was closed just prior to the formation of McNickel earlier this year.

Among the purchasers were several prominent industry players and investors including: Robert Bishop, editor of the Gold Mining Stock Report; Ian McAvity, president of MVP Capital; Douglas Casey, editor of Investing in Crisis; and William Trebilcock, a well-known advisor to some of the largest gold investment funds in the United States, a director of Corona Corp., and senior mining analyst with Van Eck Management.

The April issue of Robert Bishop’s Gold Mining Stock Report carried an interview with Trebilcock in which he stated, “I think (McNickel) is a very interesting discovery * * * * They have yet to prove any ore, but it certainly is a very enticing prospect.”

Others on the buying side included employees of Merit Investments, the underwriter of McNickel’s share offering the preliminary prospectus for which has been filed with the OSC, and a number of New York and London- based mining analysts. A large block of 100,000 shares was sold to the Texas-based mutual fund known as the Prospector Fund.

The largest sale in the private placement involved 170,000 shares which went to a numbered Ontario company.

Perch River and Hanson Mineral Exploration, amalgamated on March 21 to form McNickel. Both juniors were controlled by John McAdam and Terrence Flanagan — the current president and vice- president of McNickel. Flanagan and McAdam control more than 60% of McNickel’s tightly held shares.

Commenting on the 25 cents per share pricing in the March private placement, a spokesman for McNickel said: “We had no idea at the time (of the private placement) that the shares of McNickel would go up as high as they are now.”

He said the company wanted to get the support of serious investors who would be willing to take the risk involved in a raw exploration prospect, and at the same time would “add something to the situation.”

Most seed capital financings tend to involve a networking situation in which a junior company tries to interest investors who are “plugged- in” and can continue to give their support as the project develops.

“We brought the 25 investors in cheap (at 25 cents per share), because we’re hoping they’ll stick with us and be around in the future if we need them,” he added. “Most seed capital financings work this way.”

]]>