"huge cushion of profitability"Here's a little coy called CRO that has its sh&& together...... eager to see LBE's annual report.
Hope they made a quick fix to the C of A limits in tails that they exceeded. The new CEO must be 100% hands-off and if sh## happens then start firing the mgr and supt....they no longer have Nash to help shoulder there pain. Thats why they are paid the big $$$ for accountabilities.
Canadian Arrow Will Use Short-Term Profits To Build Its Kenbridge Nickel Project
By Kevin Michael Grace
Kim Tyler had big plans in 2008. Then the credit crunch hit. So the President of Canadian Arrow Mines Ltdwas forced to hunker down, sell assets and put off production at theKenbridge Project, near Kenora, Ontario. But there was, one might say, anickel lining to the cloud that passed over his world three years ago.As he explains, “More than 70 nickel producers closed worldwide thatyear, and most are closed forever.” So today, with nickel consumptionrising 3.1% a year, Canadian Arrow will be there to help meet it whenKenbridge begins production in 2011.
Canadian Arrow announced February 16 it had reached agreement with Blackstone Venturesto acquire 100% of Kenbridge. The final agreement requires a cashpayment of $250,000 and $250,000 in shares. Kenbridge was operated byFalconbridge from 1952 and shut down in 1957 when the United States soldits strategic metals inventory, and the price of nickel fell from $2 apound to 50 cents. Falconbridge did extensive work on the property,including a 2,000-foot shaft, 3,300 feet of horizontal development and50,000 feet of drilling.
“The project was shuttered and left untouched for almost 50 years,” Tyler says. Blackstone bought it in 2005, and Canadian Arrowoptioned it in 2007. Kenbridge’s appeal to Tyler was obvious: “Thedevelopment work Falconbridge did was in excess of $100 million intoday’s dollars. We’ve spent $9 million on Kenbridge, drilling about30,000 metres, with assays as high as 7.2% nickel over 5.5 metres.Falconbridge left us all their information, which was pretty much ablueprint on moving to feasibility. We’ve redone the metallurgical work,although there’s more we’d like to do. We have excellent recoveries,87%, with little in the way of deleterious elements. It’s open at depthand in three directions. The mining will be open pit, which Falconbridgenever considered, and underground.”
According to an August 200843-101 resource estimate, Kenbridge contains 97.7 million pounds nickeland 52 million pounds copper. A September 2008 preliminary economicassessment calculated $108 million in preproduction capital costs, amine life of eight years and a net present value of $253 million.
Pre-crash,production at Kenbridge was supposed to begin December 2010. “It’s sucha shame,” Tyler says. “We had a full head of steam going, but we had tostop. We’d bought a sag mill, a head frame and a hoist, but we had tosell them, as they were sitting idle and depreciating.”
Tylerreports that Kenbridge is now about nine months from a concludedfeasibility study and will require two years of construction after that.But to get Kenbridge into production, Canadian Arrow will require cash flow, and it will soon have two sources of that. The first is its NSR on Liberty Mines’Hart Nickel Project, which is expected to start producing soon,generating $9 million in royalties over three years. The second are itsAlexo and Kelex Nickel deposits, 50 kilometres east of Timmins, Ontario.“With the usual forward statements,” Tyler says, “our objective is tostart producing in the third quarter of this year.”
According to aSeptember 2010 43-101 resource estimate, Alexo and Kelex contain 5.8million pounds of nickel indicated and 1 million pounds inferred. Canadian Arrowproduced there from 2003 to 2005 and shut down when the price of nickelfell to below $5 a pound. “The difference now,” Tyler reports, “is thatbefore we had to truck the ore 400 kilometres to Sudbury forprocessing. Now there are facilities close by in Timmins. And todaynickel is around $13 a pound.”
There is a huge cushion of profitability on our operations — Kim Tyler
Tylerbelieves nickel’s fundamentals are excellent. He says, “Two-thirds ofthe world’s nickel is used as an alloy for the production of stainlesssteel, and 2010 was a record year for stainless steel production: 32million tonnes. It’s used in girders, beams, bridges, ships: anythingthat requires corrosion resistance. If you look at what’s happening withthe Chinese and Indian economies, it’s not surprising I’m reading moreabout nickel shortages in the future.”
On the other hand, he isnot taken with the recent excitement over latertites or “pig nickel,”despite its abundance. This, he argues, “is a crappy quality nickelproduced around the equator and in China. It makes a very poor qualitystainless steel; if you get a wedding toaster that rusts out in a year,that’s what it’s made of.”
Canadian Arrowproduces nickel sulphide and will produce it cheaply: $2.50 a pound atAlexo and Kelex and $3.50 a pound at Kenbridge. Thus, according toTyler, “There is a huge cushion of profitability on our operations. Wefigure that we should make about $30 million profit from Alexo.”
At press time, Canadian Arrow shares were trading at
.105,up 35% in February. Current market cap is $13 million. The company hasabout $500,000 cash and is $800,000 in debt. Tyler believes that notonly his company but the entire nickel sector is undervalued. He pointsto future exploration of Kenbridge and Alexo, as well as his company’snickel and platinum group metal resources around Lynn Lake, Ontario. Onthe macro side, he argues, “Some of the smart money is going to say thatgold’s had a good run and ask which metals are lagging. Copper is hotnow, but nickel is lagging the most. That’s why I’m here.”
And Canadian Arrowintends to stay. “We plan to be operators,” he concludes. “That’s whowe are we; we like to build things. That’s why the new management cameaboard in 2007. We didn’t do it to promote something or polishsomething. We want to build a mid-tier nickel company.”