St. John's Telegram story on Nuinsco:
By CHRIS FLANAGAN
Business Editor
An old-fashioned land-staking
rush is taking place in the
frozen boreal forest and bogs of
northern Quebec as news of
what could be the next Voisey's
Bay discovery passes from
Canada's junior mining
companies to Bay Street
brokerage firms.
At least 10 juniors have begun pounding stakes into the rock-hard ground
north of Mattagami, Que., near the tip of James Bay, where the tiny but
well-established mining company Nuinsco Resources Inc. has found
nickel in concentrations not seen since Voisey's Bay in 1994.
Etobicoke, Ont.-based Nuinsco saw its share price increase threefold
Jan. 21, when it announced a drill hole at Lac Rocher with 10.8 per cent
nickel over a 3.2-metre section and nearly 2.5 per cent nickel over the
bottom 37 metres. Voisey's Bay's first significant drill hole produced
almost the same percentage nickel, but over nearly double the distance.
That find led to one of the wildest staking rushes the country has seen,
with more than 200,000 claims staked in 1995 alone. But the Labrador
claims were staked on maps, in the warm, dry Department of Mines and
Energy offices in St. John's.
Quebec's mining regulations call for property to be staked by hand, with
government-issued tags attached to stakes that must be pounded into
the ground. The province won't know exactly how many claims have been
staked for another week or two.
“I know the sector is very busy. We have sold, in the last week, 10,000 to
12,000 sets of tags,” said Denis Fortin, manager of law enactment and
land management for the mines branch of the Quebec Department of
Natural Resources. “If all the tags were used, there would be about
12,000 claims.”
At least 10 junior mining companies and 25 to 50 prospectors have
descended on the area around Lac Evans, Fortin said.
Vancouver-based junior miner International CanAlaska Resources was
one of the first on the ground, flying to the area the day after Nuinsco's
announcement.
“We jumped in there right away,” said CanAlaska vice-president Douglas
Hickey. “As you might recall we did this in the Voisey's Bay days, but
unfortunately for us and the Labrador staking rush, that didn't come to
anything.”
There has been nothing like this since Voisey's, said Hickey, who has
seen his company's stock double once again.
“Certainly not, not even close,” he said.
Hickey estimated 18 to 20 helicopters are buzzing the Lac Rocher area
and said he's heard all the majors — Inco, Falconbridge, Teck and
Noranda — have prospectors on the ground.
The strike came as no surprise to Nuinsco, which had been drilling holes
showing one per cent nickel for about a year, but virtually all Canada's
mining community stayed away.
“Like many areas of Canada, it's vast and of course rather unexplored,”
Hickey said. “Geological maps show it all as being granite, a pretty
boring part of the Canadian shield. Obviously that's not the case.”
Still, one impressive hole is a long way from the more than 200 holes that
defined Voisey's Bay in the first couple of years.
“It's early stages yet, they've only hit one hole that's significant, but
they're raising a lot of capital,” Hickey said.
Nuinsco has raised at least $5 million through an exclusive private
placement restricted to investors throwing in a minimum $150,000 apiece.
The placement was orchestrated by First Marathon Securities Ltd. and,
ironically, was announced the day the brokerage firm settled what should
be its final penalty from the Cartaway scandal — a Labrador mining claim
once touted as the next Voisey's Bay.
First Marathon was fined $4 million by the Toronto Stock Exchange (for
Cartaway and other violations); $250,000 by the Alberta Securities
Commission; and last Friday agreed to pay $450,000 to a mineral deposit
research fund at the University of British Columbia and $50,000 to the
B.C. Securities Commission for its role in promoting Cartaway in 1996.
The trouble with the Cartaway deposit was that rock samples were
grossly exaggerated, while First Marathon employees bought and
unethically sold overvalued stock. Cartaway shares rose to $21 from $2 in
a day before crashing back to earth. Eight employees were involved, four
of whom are no longer with the company. Cartaway traded six cents at
home on the Alberta Stock Exchange Tuesday.
Executives at First Marathon downplayed the penalties, arguing the
company settled to put the issue behind it, but didn't necessarily agree
with all charges.
“We continue to look at the mining industry in a much broader context
than junior mining,” First Marathon mining analyst John Lydall said
Tuesday. “We have a strong mining team both in investment banking and
on the research side, and we're out there looking for ideas every day.”
It doesn't hurt that, unlike Cartaway, this “next big thing” has assay
results to back it up.
The phone's been ringing off the hook since the Jan. 21 announcement,
said Cathy Hume, company director and daughter of Nuinsco president
and CEO Douglas Hume.
“A lot of major mining companies from around the world have called the
company to learn more about the geology,” Hume said in an interview,
“and many of them have actually offered deals (but) the company felt it
would be better to do an equity financing, and may or may not include a
major partner later on.”
It's far too early to sell the asset, Hume said.
Nuinsco shares, which traded at between 25 and 50 cents for the past
eight months, jumped to 75 cents and then $2.50 on the Lac Rocher
news.
But the company has been around for 30 years, Hume said, and Douglas
Hume has six previous mineral discoveries to his credit.
“This will be the seventh discovery; we're hoping No. 7 will be the lucky
one,” Hume said. “The others were small-to-medium sized deposits and
only one had gone into production.”
And Quebec is a mining-friendly province, Hume said, that is eager for
development. If the discovery turns into a mine that moves more quickly
than Voisey's Bay, it could come as a major blow to Inco and the
government of Newfoundland, still at odds over the development of the
Labrador nickel, copper and cobalt deposit.
“The political risk is lower than if this project had been discovered in a
province without the history of a nickel mine, such as Newfoundland,”
said Ray Goldie, St. James Securities' base metals analyst.
With the First Marathon financing guaranteed, Nuinsco is switching from
one small drill unit capable of drilling 30 to 40 metres a day to two or
three larger rigs that can punch a 300-metre hole every 24 hours.
This week, Nuinsco is constructing a winter road to get the rigs in place
while the junior miners send prospectors across the frozen bogs. Despite
the cold and the hard ground, winter prospecting is better than summer
staking in this country, when soft, wet ground becomes impassable.
But there is one romantic footnote for the dozens of prospectors sleeping
in tents, trudging through snow and attaching tags to hand-driven posts in
this remote part of Quebec: Lac Rocher will likely be the last
ground-staking rush in the province's mining history. Later this year,
Quebec will switch to map-staking, which is done in the comfort of
government offices.
“We are having the act amended; it should be enforced by next fall,” the
province's Fortin said. “I think this will be the last (ground-staking rush).”
-30-
PS ANYONE KNOW IF FREEWEST RESOURCES HAS A WEB SITE OR KNOW OF A LINK TO TODAYS FWR PR?
PPS ANY TALK ABOUT MANSON CREEK'S PROPERTY (PARKER LAKE [I think]) NEARER TO RAGLAN?
THANKS CJ |
