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Voisey’s Bay infographic Part 2—The auction

Presented by Equitas Resources TSXV:EQT | Posted with permission of Visual Capitalist | October 29, 2015

The Story of Voisey’s Bay: The Auction (Part 2 of 3)


The hit at diamond drill hole #2 of 33 metres of massive sulphides turned Voisey’s Bay from caribou pasture to one of the most exciting stories in the mining world. For a full recap of the events leading to this point, check out Part 1 of the Voisey’s Bay story.

In Part 2 we look at the ensuing bidding war that occurred once it was clear that Voisey’s Bay had all of the action. Again, we have turned to Jacquie McNish’s fabulous book The Big Score, which documents the history of the discovery, biographical elements of Robert Friedland’s life, and the ensuing bidding war between Inco and Falconbridge that led to one of the most spectacular takeovers in mining history. If you like these infographics, then look into buying Jacquie’s book. It’s gripping and full of information.

Finally, it’s worth noting that Part 3 of this series will be released within a week or two.

Setting the stage

The discovery of massive sulphides with hole #2 brought increased attention to the former diamond play. However, the stock price didn’t really explode until the assays came in: 2.23% nickel, 1.47% copper and 0.123% cobalt. Diamond Fields traded in December 1994 at $13.50 per share, up from $4.65 just a month prior.

The company doubled down on drilling, but up until January 1995 they hit nothing after hole #2. The price dribbled down to $11.

However it was in February 1995 that the results for holes #7 and #8 were released and they were some of the most significant holes for the entire project. The holes were in the Ovoid, which would soon be a famed and ultra-rich section of the Voisey’s Bay discovery.

Hole #7 was 104 metres long and had 3.9% nickel, 2.8% copper and 0.14% cobalt. Hole #8 was 111 metres long and had 3.7% nickel, 2.78% copper and 0.13% cobalt. This propelled the stock price to $20 in February 1995.

Continued exploration of the Ovoid revealed a bowl-shaped orebody lying just below surface. This deposit had surface dimensions of some 800 metres by 350 metres and extended to depths of about 125 metres. More nickel from Ovoid came in every month and the stock price continued to rise.

At this point, Diamond Fields could no longer fly under the radar. Major mining couldn’t stand to watch as one of the world’s greatest base metal deposits blossomed outside of their influence.

The suitors

Three major mining companies vied to get in on the action. Here’s some history on each of them.


At this time, the Canadian diversified mining company Teck had nine mines in operation and a reputation as a swift deal maker.

In 1947, Teck’s founder Norman Keevil Sr. was one of the first explorers to use magnetic survey technology that was initially employed by the U.S. military to find submarines. With this technology, he found one of the richest copper deposits in Canada.

He once impressed a plane load of investors by flying them over a 150-foot copper vein that was exposed to the air. It shone like a newly minted penny as they passed over, stunning even the most skeptical investors. (He had previously parachuted a crew in to polish the ore in the bush.)


The International Nickel Company was founded in 1902 and for most of the 20th century it remained the dominant player in nickel exploration, production and marketing.

The company virtually invented the nickel market: In 1890, global output of nickel was 3,000 tonnes. Nickel was mainly used for military purposes but sales dried up at the end of WWI. The company discovered nickel alloys that were marketed for use in automobiles, pipes, industry, coins and even kitchen sinks.

By 1951, the world consumed 130,000 tonnes of nickel a year with 90% of it supplied by Inco. By 1995, Inco was still the market leader in nickel, producing 26% of the world’s nickel with $2.3 billion in sales each year.


In 1901, American inventor Thomas Edison found a nickel-copper ore body in the area northeast of Sudbury. However, it wasn’t until 1928 that Thayer Lindsley, the founder of Falconbridge, bought these claims and began to turn them into its first mine.

At the time, Inco had the only technology in North America to refine nickel, so Falconbridge sent its production to Norway where the company purchased an operating refinery.

Falconbridge was smaller than Inco but seen as more aggressive and nimble. The company produced 11% of the world’s nickel in 1995.

The bidding begins

While Inco, Falconbridge and up to a dozen other global miners spent resources on calculating the value of Voisey’s Bay, Teck was the first to approach with a different strategy.

In less than a day, and without seeing any core, Teck was able to do a simple deal less than four pages long: $108 million for 10% of the company, or the equivalent of $36 per share. Teck also surrendered its voting rights to Friedland to prevent future hostile takeovers.

That got the market talking. Days later, Diamond Fields would trade at over $40 per share with a market capitalization of more than $1 billion.

In May 1995, after much posturing between Inco and Diamond Fields executives, another deal was struck. This time, Inco bought a 25% stake of Voisey’s Bay for US$386.7 million in preferred shares and cash, as well as 8% of Diamond Fields from company co-founder Jean-Raymond Boulle and early investor Robertson Stephens.

By the time the deal closed in June 1995, Diamond Fields’ stock price doubled again to $80.

In August, after months of drilling misses outside the Ovoid, there were signs of light: one metre of massive sulphides in hole #166.

In November, drill hole #202 retrieved 40 metres of massive sulphides, the largest section of sulphides found outside the Ovoid. It was now clear that there was a series of deposits at Voisey’s Bay. The hole assayed 3.36% nickel and became a part of what is known as the Eastern Deeps.

The showdown

In December, Inco and Falconbridge both began to aggressively pursue Diamond Fields.

First, Inco presented a deal in principle for $3.5 billion, or $31 per share. Then Falconbridge intercepted with an official offer for $4 billion, or $36 per share. This was a risky move for the smaller company, but it limited its downside by adding $100 million in fees to the agreement in case the deal wasn’t finalized.

Next, the two competitors (Inco and Falconbridge) teamed together through a mutual connection to present an offer in tandem.

It was instantly shot down by Friedland.

Finally on March 26, 1996, Inco announced a takeover bid of its own for $4.5 billion of Diamond Fields—the equivalent of $43.50 per share or $174 pre-split. Inco’s stock price dropped but the company held on, making the total value of the deal closer to $4.3 billion. On April 3, the deal was officially signed by all parties.

Watch for Part 3, Voisey’s Bay today, coming in early November.

See Part 1: The discovery.

Posted with permission of Visual Capitalist.

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