Regulatory delays stall McNickel’s work plans

Drilling on the McNickel property, considered the leading prospect in the area, was originally scheduled to begin in June, pending the successful completion of a $3-million underwriting by Merit Investment Corp. of Toronto.

But it now appears that drilling won’t begin until sometime later this month, due to a series of regulatory hold-ups relating to the company’s financing plans.

Regulatory authorities in Ontario have not yet granted their approval for the public offering of McNickel shares and this has forced the company to look at alternative financing options.

McNickel must spend at least $1 million on the property by Sept 30 to earn its initial interest.

“We’re running out of time,” a McNickel spokesman said. “We have exploration work commitments to meet in two months, so we’re looking at the private placement route right now.”

Observers following the situation said the delays being faced by McNickel are a result of several factors, including the broad discretionary powers held by the Ontario Securities Commission (OSC), and concerns relating to dilution and pricing aspects of McNickel’s financing plans.

One source at a Toronto investment firm said: “They (the OSC) have moved the goal posts on McNickel.”

He noted that the far-reaching authority of the OSC and the onerous regulatory climate in Ontario are discouraging junior resource financing in the province.

A spokesman for McNickel said his company is holding meetings and hearings with various levels of the OSC in the hope of gaining approval for its application to do a public financing.

“Although we’ve run up against some problems, we will try to get the offer through,” the spokesman said. “We haven’t lost our interest or energy in the project, despite delays by the regulatory bodies.”

He declined to comment on the specific reasons behind the regulatory hold-ups, noting that the matter is still before the OSC.

“We had planned to close the financing on July 14th but we still don’t have a firm date (from the OSC) to hear our case,” he said. “We can’t wait much longer for regulatory approvals, so we’re looking at financing alternatives.”

The company is planning a private placement of flow-through shares that would raise about $500,000, allowing it to fulfill its initial work commitments on the Lac St. Jean claims.

McNickel holds an option to earn a 60% interest on the property. Vancouver-based St. Philips Resources (VSE) has a 30% carried interest, while sister company Ramcor Resources (VSE) holds the remaining 10% carried interest.

McNickel has about five million shares issued and outstanding, one million of which were issued at a price of 25 cents , through an earlier private placement involving a predecessor company called Perch River Mines. A control block of more than three million shares are held by two company directors.

Meanwhile, several other junior companies are active in the Lac St. Jean play, and are also awaiting drill results from the McNickel property in order to improve their chances of raising additional financing.

Despite its location in a relatively unexplored and untested area of the Grenville geological province, the Lac St. Jean prospect has attracted the attention of nearly 50 junior companies.

Surface trenching on the property last year uncovered widespread copper-nickel mineralization associated with extensive geophysical anomalies, believed to be sulphide related. Prospecting and field crews are currently busy on a number of properties in the area, with most of the work still at the preliminary exploration stage consisting of line cutting, mapping and trenching.

Geological and geophysical crews are following up conductive zones on claims held by Cross Lake Minerals (VSE), Tarzan Gold (ASE) and Glen Auden Resources (TSE). A spokesman for the companies said initial field work is focusing on surface trenching to explore several significant electromagnetic conductors.

On ground immediately north and south of the McNickel property, Ventex Energy (VSE) and Golden Myra Resources (TSE) have prospecting and geological crews at work traversing claim lines on that property. Airborne geophysical surveys are under way and will be completed by month-end, the companies said. Ventex and Golden Myra hold more than 400 claims in the area.

Prospecting crews are also busy on property held by Yellow Band Resources (VSE) following the completion of initial airborne geophysical surveys.

Associated companies Diana Resources (VSE) and Fancamp Resources (VSE) have recently completed an Aerodat geophysical survey covering their 300-claim property in Twp No 335. Grab samples from a surface showing on that property yielded grades up to 1.07% copper, 0.43% nickel and 0.18% cobalt, a company spokesman said. No exploration crews are on that property at present but follow up work is being planned.

Last month, Blue Emerald Resources (VSE) signed a deal giving it the right to earn a 60% interest in 377 claims north of the McNickel ground. Blue Emerald is expected to spend at least $500,000 exploring those claims this year.

]]>