I was asked privately, by a friend, if I thought FNI was still a good one to hold. As I prepared an answer, I figured I should write it up and post it.
Lockerby Mine is still operating at a profit. They continue to drill the depth zone. Looking at the sections on the FNI web-site it looks to me that as they continue deeper, below the 2000 el line, the grades of both nickel and copper are getting higher and the intercepts are longer. Wider ore will be cheaper to mine, and higher grade means more dollars of revenue per ton. The other thing I notice is that the cobalt grades have almost doubled in the latest holes. 0.1% cobalt = 2 lbs per ton and at $25 per pound that is an extra $50 (but cobalt recovery is usually low so allow $30). There is still a good chunk of the projected mineralized zone to drill so I expect more good holes to come in the short term.
The Premier Ridge project, the Morgan/Lumsden project, and the Foy Mouth project all on the other side of the Sudbury basin, (North Range) from Lockerby, remain as good exploration plays. They have mined nickel and copper in the Sudbury basin since about 1885. Miners knew that the ni-cu occurs mostly at the contact zone of the SIC- Sudbury Igneous Complex (edge of the meteorite crater), and in the dykes that radially extended out from the crater. Lately, ore has also been found in newly discovered concentric dykes and in the footwall of the crater sides. FNI has acquired interests in Falconbridge (now Xstrata) ground that was originally brought to patent 75 to 100 years ago. Modern geophysics is finding targets to drill in the SIC zone and the dykes. All three of these projects should still generate good news IMO, including the 43-101 report on Premier.
Premier Ridge outcrops on surface. It is probably open pittable. At the least , easily accessed by ramp for underground mining. What are the chances of seeing production here in the short term when nickel is $18? Strathcona mill is only 10 miles or so away. Closer to the mill than Lockerby. 600,000 tonnes @ 1.23% Ni, 0.73% Cu, .37 pgms is about $487 per ton or .76 oz per ton of gold equivalent. What would a production decision do for the share price?
In the past few days, FNI has stalled. I have attributed it to concern that a possible strike at Xstrata will shut down FNI. My opinion was that FNI could continue to produce ore and stockpile it waiting for the strike to end. I have read that FNI has the same union as Xstrata. I do not think they have the same collective agreement, but I do not know this yet.
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