Vancouver junior sits on major Brazilian nickel deposit; world nickel inventories at historic low

Gary Park, Petroleum News Calgary correspondent

Junior mining companies are supposed to be daring, but Canico Resources stretches its horizons more than most.

The Vancouver-based company is pinning its hopes on a nickel deposit in north-central Brazil and so far is making a hit with investors, especially after announcing earlier this month that its deposits could contain 104 million tonnes of nickel-bearing ore with an average grade of 2.15 percent nickel.

Analysts such as Pierre Vailancourt of Orion Securities rank the Onca-Puma deposit as one of the “most significant” development projects in the world at a time when nickel is in short supply, putting Canico on line for a takeover.

The day of Canico’s announcement its stock soared 30 percent or C$2.41, with more than 1.6 million shares trading compared with the usual daily volume of about 110,000 shares.

The shares have gained more than 250 percent this year and jumped sevenfold in the past year.

Canico Chairman Roman Shklanka, one of four top Canico officers who previously ran Sutton Resources which made its mark as a gold explorer in Tanzania before being acquired by Barrick Gold, insists his team is one of “honest explorers (who don’t spend their time) promoting goose pastures.”

Company looked for major property

Nickel was first discovered 30 years ago by Inco, but it wasn’t until the development of infrastructure that the pace picked up.

Inco traded full rights to Onca-Puma in exchange for an 18 percent interest and two seats on Canico’s nine-member board, gaining a stock position worth more than C$50 million.

With nickel inventories at historically low levels and demand growing by 5 percent last year, plus the timing of major new ventures either lagging or in doubt, Canico is rated a strong buy by Raymond James analyst Eric Zaunscherb. Seven analysts polled by Bloomberg all rate the shares as a buy.