what a read!Overview: Global Nickel Investments (?Global...

what a read!

Overview: Global Nickel Investments (?Global Nickel?, ?the Company?) is the dominant exploration license holder in the Jutson Rocks greenstone belt, 125km north east of Laverton, WA. The Company now controls 80 per cent of the area, regarded as one of Australia‟s last remaining underexplored greenstone belts. Modern exploration has been hampered by the project‟s isolation and access agreements. While phase one drilling completed in 2010 didn‟t encounter evidence of economic mineralisation, the area‟s potential has been affirmed from
regional exploration success by Ausgold Ltd (ASX: AUC, ?Ausgold?) and Gold Road Resources Ltd (ASX: GOR, ?Gold Road Resources?).
Catalysts: Ausgold‟s intercept of 31m @ 0.58% Cu and 0.35% Ni from 29m depth at its neighbouring Winchester prospect has seen Global Nickel prepare to test adjacent licenses near Mt Cornell. Drilling is due to commence in June. A concurrent follow up program planned by Ausgold also has the potential to drive a rally in Global Nickel‟s share price. Regional exploration potential has been highlighted by the success of Gold Road Resources at its Yaramana project. 100km to the south of Jutson Rocks, the project hosts a 1.06m oz gold resource, underpinning Gold Road Resources current $186m market cap.
Hurdles: Following Global Nickel‟s ?lacklustre‟ 2010 drilling program, the Company faces a greater challenge attracting investor interest. However the appointment former Normandy exploration Chief Exploration Geologist, Carl Swensson, as Technical Director highlights the ongoing potential of Jutson Rocks. After increasing its fully paid share capital by 160 per cent during 2010, financing concerns have also weighed on the share price. Fortunately, the recent procurement of a $12.5m convertible loan facility from Zulu Capital should alleviate these risks. The non interest bearing loan can be drawn down at Global Nickel‟s discretion, with the balance convertible into shares upon maturity in 12 months.
Investment View: Global Nickel remains a speculative, high risk investment leveraged to exploration results at Jutson Rocks. Now that financing risks have been alleviated without immediate dilution, dual upcoming drilling campaigns by the Company and neighbouring Ausgold have the potential to re rate the share price.

The Bulls & The Bears

The Bulls Say
 Jutson Rocks is one of the last remaining unexplored greenstone belts in WA, of which Global Nickel now controls around 80%.
 Plans by Poseidon Nickel (ASX:POS) to build a nickel concentrator 150km away at Windarra could mitigate the region‟s isolation.
 While initial drilling didn‟t strike any high grade intercepts, Ausgold‟s neighbouring Winchester prospect has encountered 31m grading 0.58% Cu and 0.35% Ni from 29m depth, affirming the immediate area‟s exploration potential.
 Gold Road Resources $186m market capitalisation and 1m oz resource inventory at its Yarmana project, 100km to the south of Jutson Rocks, further highlights the region‟s exploration potential.
 Second phase drilling planned for June is targeting untested ground adjacent to Ausgold‟s Winchester discovery, and has the potential to be a share price catalyst along with follow up drilling by Ausgold.
 The Zulu Capital financing facility alleviates funding risks and reduces dilution in the event of a discovery.

The Bears Say
 Jutson Rocks is unexplored because of its isolation, and any discovery will need to be big in order to justify potentially high transport and capital costs involved with any future development.
 Exploration on some parts of Jutson Rocks requires consent from traditional land owners, and despite current agreements, past access issues could arise once again.
 Significant dilution arising from new share issues during 2010 may provide upside resistance for the stock in the event of a discovery.
Gold Price Weekly ($US/oz)
Source: Bloomberg
Copper Price Weekly ($US/tonne)
Source: Bloomberg, LME
Nickel Price Weekly ($US/tonne)
Source: Bloomberg, LME