First Nickel jumps on Lockerby extensions

Shares in First Nickel (FNI-T, FNKLF-O) jumped 18% to $1.18 in heavy morning trade in Toronto on May 29, after the junior producer reported some high-grade extensions to the producing Depth zone at the Lockerby mine, near Sudbury, Ont.

Results from the latest bout of underground drilling is highlighted by:

• Hole 6304 — 12.3 metres grading 3.2% nickel and 1.97% copper;
• Hole 6306 — 66.2 metres running 1.4% nickel and 1.16% copper;
• Hole 6309 — 39.2 metres of 1.41% nickel and 0.58% copper; and
• Hole 6310 — 21.7 metres at 3.2% nickel and 1.03% copper.

The intervals are not true widths.

First Nickel says the drilling has extended the Depth zone nickel-copper sulphide mineralization some 75 metres along strike and down-plunge of the current model. The zone remains open to the west and down-plunge, and First Nickel says there is good exploration potential above the 63 level along strike of the mined-out portions of the deposit.

The Depth zone and East zone (around 1.5 km to the east) contain measured and indicated resources totalling 174,000 tonnes grading 2.6% nickel and 1.3% copper. The inferred resource category is home to another 892,000 tonnes averaging 2.2% nickel and 1.4% copper.

The zones were the main sources of ore for former owner Falconbridge towards the end of the mine’s 27-year life. Through the end of 2003, the Main, Depth and East zones produced 8.3 million tonnes averaging 1.79% nickel and 1.07% copper.

An updated resource estimate for the Depth zone is scheduled for the fourth quarter.

During the three months ended March 31, the company trimmed its loss to $842,887 (or a penny a share) as it continued to transition to producer status. The company did not record any revenues owing to the timing of the settlement of the value of the metal content in the ore treated by Falconbridge.

During the quarter, Lockerby processed 24,167 tonnes of ore from The Depth zone running 1.96% nickel and 1.04% copper to produce 337 tonnes of nickel and 191 tonnes of copper. The company hopes to produce 2,721 tonnes of nickel and 1,814 tonnes of copper in 2006, with the East zone slated to come on line in the third quarter.

At quarter’s end, First Nickel had $1 million in working capital, and long-term debt totalling $19.4 million.

On the merger front, First Nickel and cash-rich Jaguar Nickel (JNI-T, JGNKF-O) continue due diligence studies in anticipation of a previously announced friendly share-swap deal that would see First Nickel issue to Jaguar shareholders one share for every 3.5 Jaguar shares tendered.

Aside from due diligence, the deal is subject to negotiation of a definitive agreement, and approval by regulators and Jaguar’s shareholders. It is expected to close before August 2006.