The city of Sudbury, Ont., is getting some good news for a change.
The past 16 months have been about as bad as they could get for Sudbury, Canada's nickel capital. First, there was the crash in nickel prices, which led mining companies to idle most of their Sudbury operations. Then came the strike by the workers of Vale Inco Ltd., which has lasted six months with no sign of a resolution.
But Tuesday there was a true positive -- a new discovery that could turn into the region's next major mine.
FNX Mining Co. said it found significant nickel, copper and gold mineralization on its Victoria property in the Sudbury Basin. The discovery covers three separate zones and was made more than 2,000 feet underground.
"In this winter of discontent, the old Sudbury mining district still shows it has lots of life left in it," said Dave Constable, FNX's vice-president of investor relations.
It took nearly a year of constant drilling before FNX was confident enough to announce the discovery, and the company expects to work another 12 to 18 months before deciding whether to go underground.
FNX said it is dealing with a so-called "offset dyke" deposit at Victoria. These tend to have higher rock values than the contact nickel deposits that put Sudbury on the map, but much lower values than the so-called "footwall" deposits FNX now is mining in Sudbury that have high grades of copper and precious metals.
"It tends to be a hybrid between the two," Mr. Constable said.
FNX shares were halted for three hours yesterday until the announcement was made, and the initial response was muted. But the stock rose during the day and ended up 7.5%.
Analyst Orest Wowkodaw of Canaccord Adams said the grades look "pretty average" by Sudbury standards, which means that it should be a mine one day if the tonnage turns out to be big enough. However, it is nowhere near as spectacular as FNX's Levack Footwall deposit, also in the Sudbury Basin, which had grades of 8% copper and 1.25% nickel. He said this looks more like 2% copper and 1.5% nickel.
"It doesn't have the sizzle of the footwall, but it's obviously positive. They've made something out of nothing," he said.
