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Canadian Nickel Discovery Puts Promoter in the Black

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DIAMOND Fields Resources has struck it rich, but not on diamonds.

The junior exploration company from Vancouver paid a couple of prospectors to go on a search at the other end of Canada, in the cold wastes of Labrador, where they found what could be the richest, lowest-cost nickel deposit in the world.

The Voisey Bay discovery has moved Diamond Fields Resources stock from $4 (Canadian; US $2.96) last November to C$57 this past week. The majority owner of the company, Robert Friedland, has made almost C$250 million from the find.

Mr. Friedland, who describes himself as a promoter, has been involved in other deals that have lost investors money. But with this project, huge mining companies are lining up to buy a piece of a company that is worth C$1.64 billion before it has put a shovel into the earth.

''The discovery of the Voisey Bay nickel-copper deposit has potentially left this company with one of the most exciting nickel discoveries since Sudbury,'' writes Stephen Bonnyman in a report this month from RBC Dominion Securities, Canada's largest brokerage firm.

Sudbury, in northern Ontario, is the home of the nickel deposit that built and sustains Inco (International Nickel), the world's largest nickel company.

This week, a new report on exploration of the ore body shows that the nickel discovery may be richer than earlier thought.

''The estimates range anywhere from 10 million to 100 million tons, though 40 million would be a good estimate,'' says Ray Goldie, mining analyst at Richardson Greenshields in Toronto.

''This discovery is becoming so potentially huge that some of the major mining companies such as Inco and RTZ Corporation [of London] will be almost forced to come in and take it over,'' Mr. Goldie says.

''Inco, like many other companies, is profoundly interested in Voisey Bay,'' said Inco spokesman Bob Purcell.

There is talk the mine could be open in 1998 or earlier. The deposit, while in a bleak, barren part of the world, is relatively close to the coast and the open ocean.

But Goldie says there are three big problems facing its development: ''Total lack of infrastructure; its virgin environmental territory; and two native groups have land claims there.''

Goldie says the environmental hurdles may be the toughest. ''Greenpeace knows and loves the coast of Labrador,'' he says.

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