NEW YORK First Nickel Inc. is actively looking for acquisition opportunities amid a lack of investment in the junior mining sector, president and chief executive officer Thomas Boehlert told AMM.
Boehlert noted that the value of the TSX Venture Exchange has declined by almost two-thirds since March 2011, which he said illustrates his previous claims that there is a serious lack of investor interest in junior mining companies (amm.com, May 1).
That gives you a clear indication that the money has fled from the junior sector, but thats where we see an opportunity, he told AMM in an interview. We have a cash-flow-producing mine that even in the current nickel market is viable, and thats a unique position to be in for a junior mining company.
The goal is to maintain self-sufficiency and not rely on capital markets to stay in business, he said. Now that Lockerby (Mine) is up and running, we have a good financial base to take advantage of this market situation, where asset values have gone down by two-thirds. We want to use that opportunity to acquire additional assets to diversify away from a single-asset base and build a portfolio of assets that will be viable in the interim and very valuable when the commodity markets turn around.
Boehlert said the company is focusing its search on London Metal Exchange-traded base metal opportunities in the Americas, but he didnt specify a timeframe. We look for opportunities based on our existing skill set where we can add something to create value, he said. Were putting quite a bit of effort into it.
The urge to diversify is understandable, with the Lockerby Mine in Ontario experiencing development delays and higher-than-expected capital expenditure costs over the past year (amm.com, Feb. 7). However, Boehlert noted that these are still fairly early days in the life of a mine, with the site only reaching its full production rate in the first quarter of 2013 (amm.com, April 18). It previously had been expected to hit full production in the fourth quarter of 2012.
It is a single-asset procuring company at the moment, and operating a very old mine deep underground certainly has challenges, he said. But the workforce has proven this can be done. It is a viable operation even in the current nickel market, where 30 to 40 percent of nickel operations are under water.
Boehlert said he expects an ongoing lull in official nickel prices to eventually force many unprofitable operations to be mothballed, which should tighten supply and boost official pricing and eventually stimulate more investor interest.
Cash nickel prices on the LME settled at $14,855 per tonne June 10, down 3.1 percent from $15,325 a month earlier.