FNI write up from SH?? Stuff I didn't know-lol
Resource Report: Nickel for Your Thoughts
Tuesday, January 2, 2007
By Resourcex
First Nickel is looking for an upbeat feasibility study in January
Not all emerging companies are listed on the TSX Venture Exchange. First Nickel Inc. (TSX: T.FNI, BullBoards) has been listed on the TSE since the company went public in June 2004, yet it remains a bargain (approx 60 cents a share) as the emerging nickel producer and explorer regains its footing. After suffering the rigors of 2006's growing pains, including Falconbridge dumping FNI shares en masse (which precipitated a massive devaluation of FNI's market cap), a failed merger with Jaguar Nickel (TSX: T.JNI, BullBoards), and the ousting of co-founder and CEO Elizabeth Kirkwood, First Nickel is now beginning to enjoy a well-earned (and much deserved) recovery.
Between November 2005 and September 2006, First Nickel shed about $1.50 per share (a drop of 83%), finally reaching lows of 30 cents per share. In more ways than one, the company's stock slide makes little sense, and suggests an undervalued investment. After all, exploration efforts on the company's multiple properties between its 2004 IPO until the present continue to grow its resource base with high-grade nickel, copper and gold assays.
Moreover, the company has one producing nickel mine (Lockerby, with 4.7 million lbs nickel, 3.2 million lbs copper and 86,000 lbs cobalt forecast for 2007), and another property (Premiere Ridge) as little as 12 months from production with 1.6 million tonnes grading 1.36% nickel and 0.52% copper. First Nickel last year hired Roscoe Postle Associates Inc. (RPA) to prepare a National Instrument 43-101 compliant feasibility study on Premiere Ridge, which First Nickel has promised to deliver by January 31st, 2007.
Investor sentiment finally seems to be turning back in First Nickel's favour. Regular press releases have helped, particularly with reports like "First Nickel earns $1.42-million in Q3" in early November 2006, "First Nickel Lockerby data increase resource potential" on October 10th and "First Nickel drills 28.96 m of 2.34% Ni at Lockerby" on November 30th. Junior resource companies that can sustain this kind of positive media blitz inevitably win over coveted investor confidence - as long as they deliver on their promises, which FNI has, to date, succeeded in doing. A positive feasibility study before January 31st will go a long way to continuing improvement in investor relations.
Here's a little forward thinking that tickles my nickel: If First Nickel Inc. stays on track with its own 2007 production estimates (see above), and with nickel at $15/lb and copper at $2.90/lb, FNI gross revenues could total about US $80 million in 2007. Judging by the company's revenue growth since it found a home on the TSE and its track record for staying on task, this is perhaps not such a stretch.
In 2005, the company reported a loss of 9 cents per share or slightly more than $4 million for the 14-month period. Earnings of $1.43 million for the third quarter of 2006 will offset the year's first 6 month losses of $1.392 million and set the company up for its first significant revenues since its IPO. The chart below may best explain my enthusiasm for First Nickel.
If you are as interested as I am in the ongoing nickel bull market, you may also want to look into URSA Major (TSXV: V.UMJ, BullBoards) and Franconia (TSXV: V.FRA, BullBoards). Both these companies look quite promising on paper, with charts and news that make you want to jump right in (particularly with nickel at US $15/lb). As always, however, remember that due diligence is your greatest asset as an investor in any company.
Happy New Year from Resourcex.com!
By Doug Hadfield
Doug Hadfield is the Chief Editor of the Resourcex Investor, an internationally distributed newsletter specializing in identifying as-yet-undiscovered resource companies representing the best in their class. For more information, visit the website www.resourcexinvestor.com.
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