Friday, 1 November 2013

Pure Nickel & The Howard Group – Moving On!

Pure Nickel (TSX:NIC)
Basic Shares: 68.1 million
Fully Diluted: 73.1 million
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It was just over six years ago, during the heady days of the junior resource market, when explorers were still enjoying investor exuberance, that we formally became involved with Pure Nickel. It was with our very good, long time friend and hyper deal maker, Jay Jaski, that Pure Nickel became a client as well as an investment.  Jay, who left us at far too young an age, had mining in his blood, driving him to build and finance a multitude of successful companies.

Jay raised millions of dollars for Pure Nickel, the bulk of which went to purchasing a bundle of Canadian properties from a major mining conglomerate. It was also a time when Pure Nickel was trading as high as a $1.50. And then came along 2008!

Financial devastation descended upon global stock markets and, in particular, ripped the guts from the Canadian junior resource sector as funds across the globe climbed over each other in a blind rush to sell everything and anything. It all started for Pure Nickel when a large U.K. based fund holding millions of shares poured the stock into the market. By October, 2008, the stock was at $0.04.

After Jay’s passing, the Board of Directors asked David McPherson, who was very closely associated with Jay and Pure Nickel, to step into the breach. Through very rough waters, David was instrumental in keeping the company afloat, negotiating a tremendous deal with ITOCHU, a Japanese conglomerate that has put millions into the company’s MAN, Alaska project. David also negotiated a deal to take the company out of its future royalty interest in a Utah copper project that put several million dollars into Pure Nickel’s coffers.

Unfortunately, half a dozen years of work and drilling hasn’t yet turned up the elephant sized platinum group element deposit that a number of experts believed existed on the property. It still may, as it is a huge tract of land. Such is the risk reward of exploration.

The company’s other Alaska project called Saltchuck did not see additional drilling this year as the company sits without the necessary permits to do what it needs to do. We had high hopes for Saltchuck as the final drill hole of 2012 turned up to be what is called a “glory hole” in the business, returning assays of almost an ounce of gold. Pure Nickel’s property is in the heart of a rare metals producing area from years gone by that also has a history of strong gold showings.

As the saying goes, “to everything there is a season”, so there is a season to this relationship. Our office was well into the seven figures in its holdings, some of that being the original stock purchased at $1.25 a share. By mutual agreement, we are ending the formal relationship but will remain interested in the company’s progress going forward. The Howard Group wishes the very best success to Pure Nickel and hopes that, in the future, the ground beneath its feet will bear an abundance of riches.

Grant Howard