FNI-lots of speculation from stockhouse
"Tuesday, March 27, 2007
With LionOre Mining International going to Xstrata plc, the world is now speculating over which nickel producer will be next go on the block.
According to some it’s FNX Mining Company (FNX : TSX : $24.83), with 2007 production guidance of 900,000 tonnes of ore and 12.7 million pounds of payable nickel production, plus 29,500 ounces of PGMs which is nothing to sneeze at. Incidentally, it’s worth noting that FNX relies on milling facilities owned by CVRD (nee Inco) at the Clarabelle Mill in Sudbury, and does not have its own.
Overall, it has cash operating costs of approximately US$120/tonne. It plans to spend $173 million Cdn on production and exploration this year.
Coming up the inside is First Nickel (FNI.TSX), trading at $1.20 Cdn per share, with ’07 production estimated at 152,042 tonnes yielding about 4.7 million pounds payable nickel.
My quick math shows that’s about a third of FNX’s nickel production from one seventh as much ore. And First Nickel has a fraction of their market cap, which looks very attractive.
There are some large caveats however. First Nickel has not disclosed the operating costs per tonne at its Lockerby Mine located 30 kilometers from Sudbury, so that’s a big question mark.
This forces us to do a little guesswork based on what we do know, such as the astonishing increase in their resource categories of 475%. That is grounds for a lot of excitement going forward. Moreover, the Lockerby Mine remains open at depth and to the east, where even higher grades were reported last month.
What we need is revised production guidance from First Nickel based on what the costs of mining that new nickel will be, and at what rate they can be fed to the mill. And when. Those are the big questions.
What First Nickel does not have going for it, and FNX has, is institutional support. As we all know there is more to mining than mining. There is also (wait for it!) promotion!
And there is one other question …
During my previous conversations with management they appeared to be very high on the Premiere Ridge project, a near surface deposit in Sudbury with about $20 million worth of ore. In subsequent conversations they weren’t as keen.
Hmmm…
I don’t think this means they’ve lost confidence in the project: it merely means they are focused elsewhere in their exploration portfolio. I’m hoping they’re onto something big.
I’d give a nickel to know what that is.
Kb
NewsBlast Sign-Up
StockHouse NewsBlast: Receive company sponsored news and information via email.
« Previous Message Next Message »
This message (Post #14725767) has been viewed 189 times
Report a BullBoards Violation Ignore sammey Post Reply View Threads
Go to
BullBoard: Symbol Company Name
Search by
Post ID:
9 Red Flags to Help Spot Message Board Scammers | BullBoards Abbreviations
Quotes Portfolio BullBoards News Markets Mutual Funds Commodities Products & Services The StockHouse
Network:
Copyright 2007 Stockgroup Media Inc. All Rights Reserved.
Disclaimer / Terms of Use - Privacy Policy |
