Red: Financial Post "HOT STOCK" Coverage - NUINSCO
nationalpost.com
Thursday, February 18, 1999
Nuinsco investors gamble on motherlode
Keith Damsell
Financial Post
It's deja vu time in the junior mining sector: hints of a major nickel
discovery are prompting a land-staking rush in Canada's frozen
north.
With fingers crossed, investors and prospectors alike are hoping
Nuinsco Resources Ltd. could be the next Diamond Fields
Resources Inc. In 1994, Vancouver-based Diamond Fields
stumbled upon the Voisey's Bay nickel deposit, a spectacular find
sold two years later to Inco Ltd. for $4.3-billion.
On Jan. 21, little-known Nuinsco released partial drill results from
its promising Lac Rocher property in northwestern Quebec. The
year's first drill hole on the property intersected 37 meters of
massive sulphides grading 2.47% nickel. One 3.2 metre section
graded an impressive 10.8% nickel. The results are remarkably
similar to the data pulled from Diamond Fields' discovery holes in
November, 1994.
Not surprisingly, the news sent the shares of the Etobicoke,
Ont.-based junior soaring 181%. The stock (NWI/TSE) climbed
$1.36 to close at $2.11 on Jan. 21 and peaked at $2.61 Feb. 9.
They have fallen a little since, closing yesterday down 4¢ at $2.38.
In December, Nuinsco shares could have been acquired for as little
as 22¢. In less than two months, the company's market
capitalization has risen from less than $10-million to about
$100-million.
"There certainly is the potential there for a world-class deposit,"
said John Kilburn, an analyst at the Vancouver office of Goepel
McDermid Securities Ltd. But like several analysts interviewed,
Mr. Kilburn stressed Nuinsco is for aggressive investors only.
Further drilling is required to determine if a mineable nickel resource
exists, he said. "I still really like this play but its not for widows and
orphans," the analyst said.
The parallels between Lac Rocher and Voisey's Bay are
compelling. Much like the Diamond Fields team surveying Labrador
five years ago, prospector Pierre Gervais and his partners were
exploring the Lac Rocher region near the tip of James Bay with
hopes of finding diamond-bearing kimberlite pipes. Instead,
geophysical surveys found a raw mineral occurrence with magnetic
features. The data caught the attention of Nuinsco, a small junior
with exploration properties across northwestern Ontario. The
company snapped up the claims a year ago and later expanded its
position to control about 54 square kilometres in the region.
Further surveying defined a magnetic anomaly about one kilometre
in length. Ten holes drilled in 1997 found encouraging widths of
low-grade nickel at the surface. In January, a second round of
drilling resumed. The first of three new holes proved to be the
blockbuster.
The past few weeks have seen a whirlwind of activity on Bay Street
and in northern Quebec.
Nuinsco moved quickly to secure financing while interest was hot,
raising $10-million through the sale of five million special warrants at
$2 each on Feb. 11. The money will finance the next two years of
exploration.
Meanwhile, recent Nuinsco information sessions in Toronto and
Vancouver have attracted standing room only crowds.
Douglas Hume, the company's soft-spoken president, reports "all
the major companies have been around" to take at look at the drill
core from hole 99-1 and are "keeping in touch to see how this
develops."
And like Voisey's Bay in 1994, several companies have announced
land and claim acquisitions or planned acquisitions near Lac
Rocher, including Moss Resources Inc. of Toronto and NovaWest
Resources Inc. of Vancouver. Locals report more than a dozen
helicopters are surveying the region.
Analysts say everything rests with the next round of drilling results.
"We're very anxious to get back in," said George Archibald,
vice-president of exploration. Drilling is expected to resume in the
next few weeks with results likely to be released late March.
The Nuinsco buzz, along with Argentina Gold Corp.'s South
American gold find and strong sample results from diamond play
Winspear Resources Ltd., have helped create some much-needed
excitement in the moribund exploration sector in recent weeks.
Nevertheless, industry watchers are hesitant to label Nuinsco
another Diamond Fields until further data is available.
"We've got grade but we need tonnage," said Glenn Brown, analyst
at Toronto's Canaccord Capital Corp. "I always recommend
caution and we've practised that as a firm on these drill hole trading
plays."
"It is a real speculative play," agrees George Albino, of Deutsche
Bank Securities Ltd. of Toronto. "You can't judge it. You can only
play momentum and hope."
NUINSCO RESOURCES LTD.
CEO: Douglas Hume
Ticker: NWI
Listed: Toronto Stock Exchange
Head office: 908 The East Mall, Lower Level, Etobicoke, Ontario
M9B 6K2
Telephone: (416) 626-0470
NUINSCO RESOURCES LTD. : Income statement:
12.31.97 12.31.96 12.31.95 12.31.94
Operating revenue $000s n.a. n.a. n.a. n.a.
Net income $000s (617) (675) (488) (438)
Earnings per share $ (0.02) (0.02) (0.02) (0.02)
Dividends - cash $ . . . . . . . . . . . . . . . . . . . . .
Cash flow operations $000s (640) (413) (498) (981)
Cash flow operations per share $ (0.017) (0.011) (0.014) (0.032)
P/E ratio: n.m. Dividend yield: n.a. (at 2.16.99)
12.31.93 12.31.92 12.31.91
Operating revenue $000s n.a. n.a. n.a.
Net income $000s (309) (500) (252)
Earnings per share $ (0.02) (0.03) (0.01)
Dividends - cash $ . . . . . . . . . . . . . . . . . . . . .
Cash flow operations $000s (1,109) 185 291
Cash flow operations per share $ (0.057) 0.010 0.015
NUINSCO RESOURCES LTD. : Ratios:
12.97 12.96 12.95 12.94 12.93
Net profit margin n.a. n.a. n.a. n.a. n.a.
Return on equity (2.18) (2.73) (2.20) (2.34) (1.90)
Return on assets (2.14) (2.69) (2.08) (1.73) (1.32)
Current ratio 3.85 8.81 38.14 4.29 0.5 |
