GGL Diamond Corp. Nickel Discovery Catapults Share Price
By Laura Bobak
04 Apr 2007 at 09:53 AM GMT-04:00
TORONTO (CP) -- GGL Diamond Corp. [TSXv:GGL] shares shot up like a rocket in heavy trading Wednesday, after the junior exploration company said it has made a major nickel discovery in the Northwest Territories.
The Vancouver company's announcement comes at a time of strong demand for nickel, used in the production of stainless steel, and continuing mergers and acquisition activity in Canada's mining sector.
GGL's share price rose more than 10-fold to an intraday high of C$1.50 at the Toronto Stock Exchange, up from 13 cents the day before.
Before the end of trading, though, the stock lost altitude and closed the day at 83 cents, up 70% or 538% with 52.4 million shares traded.
The company has about 105 million shares outstanding - about 118 million fully diluted - giving it a market value of between C$92 million and C$98 million as of Wednesday, up from less than C$15.5 million the day before.
It was by far the highest volume and highest price for the stock since at least 1998.
The heavy activity came as global nickel prices hit a record high of US$22 a pound and as Vancouver-based Lundin Mining [TSX:LUN] said Wednesday it has launched a C$821-million friendly takeover bid for Rio Narcea Gold Mines Ltd. [TSX:RNG], a Toronto-based company with a nickel mine in Spain and other assets.
Last year Canada's two biggest nickel producers, Inco Ltd. and Falconbridge Ltd., were acquired by foreign buyers in two multi-billion-dollar deals. They now operate as CVRD Inco and Xstrata Nickel, respectively.
Last month, European-based Xstrata PLC made a C$4.6-billion bid for LionOre Mining International Ltd. [TSX:LIM], a Vancouver-based nickel producer with operations in Australia, South Africa and Botswana.
GGL Diamond said Wednesday that several factors point to its discovery as possibly being the first major new nickel area detected in Canada since Voisey's Bay, the huge deposit in Labrador that's being developed by CVRD Inco.
The junior company said it found the sulphide nickel mineralization as it was exploring for diamonds, using information from the Geological Survey of Canada.
''It was a Christmas present,'' said Ray Hrkac, the president and CEO of GGL.
''I was very excited and that led me into looking further into what this area really was. ... We saw we had an important situation similar to the nickel belts around the world.''
However, at least one analyst said the results are clearly very preliminary and should be treated with caution.
''It's encouraging, but I wouldn't get too excited about it yet,'' Smith said. ''So far they haven't done much,'' Kerry Smith, a mining engineer and analyst at Haywood Securities,
Smith said the company would need to find 50 million tonnes of ore to make a mine worthwhile.
Hrkac said GGL has staked an area about 80 kilometres in length and up to 20 kilometres wide in the area, but would not hazard a guess on how much ore might lie there. Exploration will occur this summer.
''It's early days,'' Hrkac said. ''The geological parameters look very good and very permissible for nickel.''
''If we're fortunate, it'll come earlier rather than later,'' he said.
Hrkac said he's particularly excited since sulphide nickel, which is easier to extract and process than laterite nickel, is scarce. Laterite nickel is found more in tropical areas such as the Philippines and Australia.
Other nickel belts in Canada include Sudbury, Ont., Thompson, Man. and the Raglan Belt, in northern Quebec.
Shares of GGL rose another 18%in heavy trading Thursday, a day afer the junior explorer announced it had found nickel deposits in the Winter Lake area of the Northwest Territories.
The Vancouver company gained 15 cents to 98 cents, a jump of 18%, in heavy trading of more than 13.2 million shares on the TSX Venture Exchange.
© The Canadian Press 2007
