Raymond Hrkac couldn't have picked a better time than yesterday to say he hit the jackpot.
Last fall, his company GGL Diamond Corp. was looking for diamonds in the Northwest Territories when it came across some unusual-looking rocks. It collected a sample and put it aside as it continued the search for diamonds.
Around Christmas, the sample results came back and the company realized it had stumbled on nickel sulphides. Mr. Hrkac, a 70-year-old prospector, knew he was onto something and started staking claims to the most promising parts of the region.
That led to yesterday's blockbuster announcement from GGL. The company said it might have discovered the first new nickel area in Canada since Robert Friedland found the Voisey's Bay deposit in 1994.
The statement came on a day when nickel was red hot. Prices soared to a new record high, and a major Canadian nickel merger was announced for the second time in two weeks.
The result was an astounding 538% gain for GGL's stock, which closed at 83? on the TSX Venture Exchange. It was a welcome development for the company's shareholders, who have waited more than a decade since GGL's last major discovery.
"The phone hasn't stopped ringing," Mr. Hrkac said in an interview from his Vancouver office.
"We're certainly hearing from people who are prepared to help with the financing. [Also] a lot of loyal shareholders calling with congratulations. A lot of investment analysts, geologists. You name it, and it's been coming in."
Before co-founding GGL in 1981, Mr. Hrkac worked for a number of companies, including Inco.
In 1996, GGL made a major diamond discovery in N.W.T.
Mr. Hrkac, who owns more than a million shares in the company, yesterday gained a paper increase of about $750,000 when the stock soared.
About an hour after GGL's announcement yesterday morning, Lundin Mining Corp. unveiled an all-cash deal to buy Rio Narcea Gold Mines, Ltd. for $864-million. The deal gives Vancouver-based Lundin, a diversified base metal producer, its first foothold in the nickel market.
Investors cheered the acquisition, pushing Lundin's stock up more than 13% to $15.24 a share.
Rio Narcea rose 30? to $5.12, above Lundin's offer price of $5.00 a share.
Rio Narcea is one of the few remaining Canadian nickel companies. Last week, nickel producer LionOre Mining International Ltd. agreed to a $4.6-billion buyout by Xstrata PLC.
"There's a pretty small sandbox to play in right now [for acquisitions]," said Colin Benner, Lundin's vice-chairman. He said Rio Narcea is a perfect fit for Lundin because the company's key asset, the Aguablanca nickel mine in southern Spain, is close to Lundin's own operations in Portugal.
Aguablanca also has a lot of room for further exploration and has overcome some start-up problems that plagued it in the past, he said.
Meanwhile, the price of nickel rose again yesterday to a record high of US$49,500/tonne on the London Metal Exchange. Nickel is up approximately 55% in 2007.
Bart Melek, an economist at BMO Capital Markets, said there's no reason to believe prices will fall back to earth anytime soon. "Chinese demand alone might be up as much as 20%, 25% this year," he said. "And production will be outpaced by demand growth, probably for the next two years or so.
"A lot of large projects that are scheduled are being delayed," he added. "Even with existing projects, there are a lot of constraints out there in terms of manpower, machinery, equipment and so on. Supply is not responding to high prices as quickly as it used to."
With Rio Narcea and LionOre disappearing, the biggest independent nickel companies left in Canada are FNX Mining Company Inc. and Dynatec Corp. Shares of both firms have soared in recent weeks amid high nickel prices and rumours of more consolidation. FNX stock is up 47% this year, while Dynatec has jumped 75%.
pkoven@nationalpost.com