As international nickel titans lead a wave of consolidation that has resulted in several major deals in Canada’s mining sector, investor attention is turning toward small exploration companies that could be the next big find.

One small venture company, Golden Chalice Resources Inc. (TSXV:GCR), reported promising signs of a nickel find that sent its stock soaring this week, amid strong global demand for the metal used in the production of stainless steel.

Shares in Golden Chalice, which reported promising signs of nickel at the Langmuir property south of Timmins, Ont., surged to $1.80, or 543 per cent on Wednesday, with 20.3 million shares traded, after the find was announced. The stock dropped to about $1.60 in midday trading Thursday.

The company announced earlier that analysis of a single drill hole on the property showed 1.14 per cent nickel over 72.5 metres, including two separate intervals graded at 2.23 per cent and 1.74 per cent nickel, respectively.

The Langmuir property is about 35 kilometres south of Xstrata’s Kidd Creek metallurgical site in Timmins, which has a plant to concentrate ore from Xstrata’s Montcalm nickel mine.
Golden Chalice is the second Canadian nickel exploration company to draw attention from investors this week.

On Tuesday, nickel exploration company Pure Nickel Inc. (TSXV:NIC) saw its shares rise by about one-fifth, up 23 cents to $1.46, after a trading halt was lifted. The company’s shares were relatively unchanged at $1.45 Thursday morning on the Toronto venture exchange.

Pure Nickel had announced it would pay $15.25 million and warrants to buy four million shares in exchange for Xstrata Nickel’s interests in 10 properties in Canada under a letter of intent.
The warrants will allow Xstrata Nickel, the former Falconbridge, to buy the Pure Nickel shares at $2 each. The shares would represent about eight per cent of Pure Nickel’s outstanding shares.
Pure Nickel will acquire a 100 per cent interest in nine separate properties and Xstrata Nickel’s 50 per cent joint-venture interest in one property.

Two of the properties are in the Thompson Nickel Belt in Manitoba, including the advanced William Lake project and the former operating mine at Manibridge. Three of the properties are in Quebec’s Raglan Belt and other claims were acquired in Nunavut, Labrador and central Quebec.
Another company that recently generated heat on the stock market is GGL Diamond Corp. (TSXV:GGL), which saw its shares shoot up early last month in heavy trading after the junior exploration company said it had made a major nickel discovery in the Northwest Territories.
GGL’s share price rose more than 10-fold to an intraday high of $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 per cent or 538 per cent with a remarkable 52.4 million shares traded. It was by far the biggest volume and highest price for the stock since at least 1998.

The strong interest in nickel exploration comes as global nickel prices are at record highs of about US$22 per pound, boosted by strong demand and a scarce supply.

The world demand for nickel is forecast at more than 1.511 million tonnes this year, while supply will be only 1.495 million tonnes, a deficit of 16 million, according to a May 14 metals and mining report authored by John Redstone and John Hughes of Desjardins Securities.
The analysts predict nickel output will increase to 1.551 million tonnes in 2008, but demand will also increase to 1.571 million, leaving a deficit of 20 million tonnes.

Earlier this week, European-based Xstrata PLC sweetened its offer to $25 per share in a bidding war with Russian mining giant Norilsk Nickel for LionOre Mining International Ltd. (TSX:LIM), a Vancouver-based nickel producer with operations in Australia, South Africa and Botswana.
Last month, Vancouver-based Lundin Mining (TSX:LUN) launched an $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 CVRD of Brazil and Xstrata Nickel, respectively.

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