Posted By: Northern Miner Staff
April 5, 2007
While the fourteenth week of 2007 was shortened to four trading days owing to the Good Friday holiday, there was plenty of sizzling stock action for investors in the mining sector.
Nickel was the week’s star performer, rising to a new record spot price of US$23.76 per lb. — a figure described as “lunatic” by one analyst — and driving a surge of trading in nickel miners and explorers. The bottom line: if you were long nickel stocks this week, you made money.
Diamond hunter GGL Diamonds (GGL-V) proved to be a single-day ten-bagger for a few moments, as it released news Wednesday that it had come across nickel showings in the Northwest Territories’ Winter Lake area in the midst of its gem hunt late last year. Its stock to surged from 13 to a high of $1.50 with more than 52 million shares changing hands, and has since settled into the 75-range.
We spent time with GGL on Thursday and, albeit early-stage, GGL has definitely tied up the better part of a favourable trend for nickel mineralization.
The news of a diamond explorer stumbling across a nickel find naturally sparked comparisons to Diamond Fields Voiseys Bay discovery of the mid-1990s.
Other strong nickel performers on the week included Brilliant Mining (BMC-V) gaining 40% to touch a new high of $2.63 per share on strong results from its Lanfranchi project in Western Australia; shares of Hard Creek Nickel (HNC-V) soaring to new highs of $3.26 on optimism at its large Turnagain project in northern B.C.; Dumont Nickel (DNI-V) soared as much as 200% on strong volume but had no reason to offer when queried by the Venture Exchange; Mustang Minerals (MUM-V) put in a very strong performance on commencement of a feasibility study at its Maskwa nickel project in southeastern Manitoba; and newly-listed Mirabela Nickel (MNB-T) took off out of the gates gaining about 30% in its first week after tabling long nickel intercepts from its Brazilian projects.
Dollarwise, the biggest nickel event of the week was Lundin Mining‘s (LUN-T, LMC-X) inspired, friendly $993-million takeover bid for Rio Narcea Gold Mines (RNG-T, RNO-X), in a three-way arrangement that would see Lundin take Rio Narcea’s Aguablanca nickel-copper mine in southern Spain and unload Rio’s gold assets onto Red Back Mining (RBI-T) for US$225 million in cash and the assumption of $42.5 million in debt.
Rio Narceas always been a bit of an oddball, schizophrenic company; This deal will put the Aguablanca assets in stronger hands, and operations there should benefit by being so close to Lundin’s existing base metal operations in Portugal, which include the Neves-Corvo copper and Aljustrel zinc/lead mines.
Going in the other direction this week was Shore Gold (SGF-T, SHGDF-O), which plummeted 17% in the last half hour of trading on April 3rd as it announced terrible results from the Orion North kimberlite in Saskatchewan. Shares dropped $1.29 to $6.37, wiping about $227 million of Shore Golds market capitalization, which now stands at just over $1.1 billion.The results were so discouraging it’s remarkable the shares held up so well: The sample run recovered 100.03 carats of diamonds from 3,403.65 dry tonnes of kimberlite extracted from an initial nine holes of a 20-hole large diameter (1.2 metre) drill program. The average grade comes in at 2.94 carats-per-hundred-tonnes.
The Orion North kimberlite is part of the Forte a la Corne joint venture (FALC-JV) owned 60% by Shore Gold and 40% by Newmont Mining‘s (NMC-T, NEM-N) Canadian subsidiary.
Don’t feel left out gold bugs: GFMS came out on Wednesday with its definitive Gold Survey 2007, which shows that gold mine production fell 3% in 2006 to a 10-year low, despite the furious drive to bring on new gold production in light of higher gold prices.
Gold producers feeling the squeeze from escalating costs won’t be surprised by GFMS’s findings that cash costs rose US$45 per oz. globally in 2006, up roughly double from each of the previous two years.
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