The New Nickel Mining
A B.C. company has found an innovative new way to mine for nickel, attracting the attention – and investment dollars – of one of the industry’s biggest players.
Junior mining companies populate the world’s stock exchanges in the thousands, each one touting itself as the best thing since sliced bread, the next big thing, guaranteed to outperform; pick your cliché.
A handful of those companies actually grow, prosper and amount to something. Another handful are scams, occasionally spectacular such as Bre-X, and give investors and regulators fits. The vast majority live for a while, attract enough investment capital to take a run at a prospective gold deposit or a copper play and make (and lose) money for shareholders who get lucky (or unlucky) as the stock prices go from 10 cents to 20 cents, down to five cents and back up again.
For most of its life, Vancouver-based First Point Minerals Corp., trading on the TSX Venture Exchange, fit into the latter category. Established in 1995, the company has spent the last 15 years raising money to go after base and precious metals in Canada, the U.S. and Mexico, with not much to show for it.
A year ago, that status changed dramatically, leading some market players to wonder whether First Point Minerals does indeed fall into the “builder of a better mousetrap” category. The jury is still out, but in December of 2009, First Point reached an agreement with U.S. industrial giant Cliffs Natural Resources Inc. that will see Cliffs spend up to US$4.5 million over four years on First Point’s potential nickel deposit at Decar in northwestern B.C.
Cliffs Natural Resources Inc.
A supplier of raw materials for the steel industry, Cliffs is a Fortune 1,000 company with a market capitalization of about $8 billion. It trades on both the New York and Paris stock exchanges, has coal mines and iron ore mines all over the world, and has been in business for 163 years. Of all the gin joints in the world, why did Cliffs walk into First Point’s?
“They are thinking outside the box,” says John Kaiser, whose online mining newsletter at kaiserbottomfish.com seeks out those junior mining companies that appear to have a leg up on the rest of the pack. (A disclosure: Kaiser owns shares in First Point.)
Kaiser explains that what First Point is proposing in its Decar nickel property is a brand new concept in nickel mining: an open-pit bulk-tonnage mine exploiting low-grade nickel in deposits that are very hard to identify and that fall outside of traditional nickel exploration. He believes it could in time become a significant source of nickel worldwide, and not only is no one else doing this but, for now, no one else knows how to do it.
The kind of alloy First Point is looking for is called awaruite, a naturally occurring alloy that contains stainless steel and whose nickel composition ranges from 63 per cent to 83 per cent, while the rest is iron. This alloy, however, is found in very low concentrations; First Point hopes to process huge quantities of rock taken from open-pit mines, whose total concentration of nickel would be only in the 0.1 to 0.25 per cent range. This is far below nickel concentrations found in more traditional nickel deposits.
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