The First Nickel breakup

Brian Sylvester

Brian Sylvester

A month after hostilities broke out, the dust has finally settled in the boardroom of Sudbury, Ont.-focused junior First Nickel (FNI-T), leaving a few members on the outside looking in, including former president, CEO and co-founder Elizabeth Kirkwood.

Kirkwood remained a token board member until she resigned as director in late July. Exiting with her is COO John Haflidson, who was told his job was redundant with new president and CEO William Anderson at the helm. Director Lynda Bloom resigned a few weeks after Kirkwood’s dismissal, and director Lyle Hepburn decided not to stand for re-election at the company’s annual meeting in June.

The moves come on the heels of a failed merger attempt with cash-rich Canadian nickel junior Jaguar Nickel (jni-t). The new company would have been run by Kirkwood.

Founded by Kirkwood, Anderson and William Brereton, First Nickel went public in June 2004. The company reopened the small but high-grade Lockerby nickel-copper mine, a former producer in the Sudbury basin acquired from Falconbridge (FAL-T, FAL-N) for $1.5 million in cash and 2.2 million First Nickel shares.

While a bargain at the time, those shares in Falco’s hands may have helped to undermine Kirkwood.

As recently as January, First Nickel shares were trading at about $1.80 — just before Falconbridge began flooding the market with its allotment of the junior’s equity. Shares now trade at about 60 each and Falco now owns less than 10% of First Nickel — down from 20%.

“It’s possible that because the share price had been so much higher in January that maybe someone’s head had to roll,” says Bloom. “When the share price was at its highest in January, one of the problems is that Falconbridge started to sell and they were selling quite large volumes and that really spooked the Street.”

With things clearly heading south, Kirkwood made arrangements to resign from the board of Intrepid Mines (IAU-T) and as chairman and CFO of Mountain Province Diamonds (MPV-T) to focus on her duties as president and CEO of First Nickel.

It was too late, though, as a lack of mining expertise (she doesn’t have any formal training in any mining-related disciplines) ultimately contributed to her demise.

“We just wanted the management at the top to be a bit more technical. . . to change horses a little bit going forward to be more focused on what we’re going to do in Sudbury,” says Anderson, who is a professional geoscientist and president of Toronto-based MPH Consulting, a private mining and exploration consulting firm.

He adds: “It was something the board thought needed to be done. (Kirkwood) did a magnificent job bringing First Nickel from scratch to where we were.”

Kirkwood was contacted by The Northern Miner but she said she was not in a position to comment on her dismissal.

Others looking to steady the listing First Nickel ship are: Brereton, a director and now executive vice-president; chairman and Falconbridge alumnus Thomas Pugsley; and director David Comba, another ex-Falco employee.

But couldn’t Kirkwood, as a co-founder and someone who raised about $75 million over the last two years, have been given a meaningful position on the board, perhaps chairman or co-chair?

“(Pugsley) is there not because he’s ex-Falco but because he has a breadth of experience in the business that adds to our weight as a board. Tom wasn’t moving,” says Anderson.

He adds that he will soon make some moves to “bulk up the board.”

As for Haflidson, First Nickel believes there was too much overlap in the expertise of the new CEO and the former COO.

“(Anderson) is a technical guy so you would have had two of them in the company,” says CFO Joe Del Campo, who was hired by Kirkwood about a year ago.

Del Campo says First Nickel has some major financial commitments on the horizon. It has a debenture due in June 2007 for $14.5 million, it needs cash to extend the shafts at its flagship Lockerby mine, and requires another $20 million or so to bring its Premier Ridge (once known as Bowell) property into production by August 2007.

“We don’t need that kind of money right now,” says Anderson. “We’ve got some strong support from our institutional friends that I think will still step up to the plate. The sad truth is it wouldn’t much matter who was running the place, if they’re good projects they’ll get the funding.”

For Bloom, the matter of who was running the place led to her resignation.

“I became very much out of the loop with the rest of the directors. When it’s obvious that your input is not required, and decisions are being made without consultation, there really is no need for you to stay,” says Bloom. “I am definitely an associate of (Kirkwood), and there was probably a division in the board along those lines.”

First Nickel is producing ore from the 61 and 63 levels on the Depth zone at Lockerby. Development work is ongoing, advancing ramps on both the Depth and East zones to access ore below the 63 and 34 levels, respectively. Production in the first half of 2006 ranged from an average of 270 tonnes per day in the first quarter to an average 340 tonnes per day in the second.

During the three months ended March 31, the company trimmed its loss to $842,887 (or a penny a share). 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 stream in the third quarter.

“We didn’t have very good first quarter on production and obviously that share disbursement by Falconbridge didn’t help the picture,” explains Anderson. “But we’ve got to dig out our way back out of that and the best way of doing that is to get ourselves to steady-state production. And with these robust metal prices, this is as good as it gets for a mining company. So we’ll just stick to our knitting.”

Print

Be the first to comment on "The First Nickel breakup"

Leave a comment

Your email address will not be published.


*


By continuing to browse you agree to our use of cookies. To learn more, click more information

Dear user, please be aware that we use cookies to help users navigate our website content and to help us understand how we can improve the user experience. If you have ideas for how we can improve our services, we’d love to hear from you. Click here to email us. By continuing to browse you agree to our use of cookies. Please see our Privacy & Cookie Usage Policy to learn more.

Close