Goal is to Supply Infrastructure Projects
Nicola Mining Inc. (TSX.V: NIM, FWB: HLI) stands out among the many junior exploration companies because it has been consistently generating positive cash flow for some time. The revenues come from ore processing (most recently with Osisko), gravel and rock extraction, as well as soil reclamation. At the end of the 3rd quarter of 2023, the company had 6 million CAD in cash. Now Nicola and its partner Lower Nicola Site Services Ltd (“LNSS”) are adding another closely related business line to their portfolio.
Both companies have begun construction of a concrete plant and aim to supply infrastructure projects. LNSS is a partnership between the Lower Nicola Indian Band Development Corporation and Infracon Construction Inc. The company has permission to extract up to 3.0 million tons of available inert rock material from its quarry, which can be used for infrastructure reconstruction at an extraction rate of approximately 1,500 tons per day.
The location of the concrete plant is intended to be a gravel pit owned by the company and operated by LNSS. The gravel pit is adjacent to the Craigmont Mine site, located near Merritt, British Columbia. Since Nicola and LNSS are already involved in supplying riprap, sand, and gravel to the region and infrastructure projects, vertical integration was a logical development. The partners have also applied for a five-year extension of the mining permit for the gravel pit operation.
Peter Espig, Chief Executive Officer, commented: “The ability to be creative and work closely with LNSS while supporting First Nations, local communities, and numerous infrastructure projects is more than just an opportunity for revenue generation; it’s a chance to make a positive contribution. Delivering concrete will not only increase our revenue but also benefit the communities and improve relationships.”
Conclusion: Financially, Nicola has undergone a metamorphosis over the past year. In the first nine months of 2023, Nicola generated a profit of 1.4 million CAD. Additionally, the company ended the third quarter of 2023 with nearly 6 million CAD in cash. The year before, it was 800,000 CAD. The steady cash flow, primarily from rock and gravel extraction, provides Nicola with a healthy base. However, for the development of the stock price, the planned exploration activities in the middle of the year are likely to be even more important. Nicola has spent a lot of time mapping and exploring new zones (including MARB and CAS; see Figure 1). All targets are located just a few kilometers from the former Craigmont Mine, which was one of the highest-grade copper projects in North America during its 20-year operational period (1961-1981). A drilling success at MARB or CAS would most likely be a game-changer for Nicola. This is because the company has another trump card: a valid mining license. In case of success, the company could therefore quickly get started.
