Australia: Nickel and Dime Boom

Stock fever has swept Australia, . which is going through the wildest wave of investment speculation in its history. In Melbourne’s new 26-story exchange building last week, somber-suited businessmen, workmen in overalls and pig-tailed secretaries jostled each other in the gold-carpeted gallery to watch brokers screaming for 100, 200 and 500 shares of mining and oil companies. One day, trading on the Sydney exchange reached a record of nearly 36 million shares.

The boom was set off by a small but promising nickel find in the sand and spinifex of Western Australia. It attracted particular attention because of the worldwide nickel shortage, made worse this summer when Canadian nickel miners went on strike. A tiny Australian mining company called Poseidon started the speculative mania late in September. A drill on its 1,100-acre lease in desolate Windarra churned up traces of nickel ore. After the company announced assays of 3.5% nickel, its stock, which had sold earlier in the year for 50¢ a share, jumped to $35. “In sober fact, all the company has to offer in support of this is a hole in the ground,” warned the London Times.

But the rush was on. Speculators turned to cheaper issues of other mineral companies operating in Australia’s raw and open West. Rumors spread that undiscovered nickel deposits lay under much of the territory. Thus, the boom is likely to spur prospecting as well as speculation.

The nickel find was made by Ken Shirley, 55, a veteran of 40 years’ prospecting for gold in the Outback. Last year he went to work for Poseidon. He found several promising outcroppings and staked out the drilling site. The big payoff has gone not to Shirley but to his burly friend Norman Shierlaw, an Adelaide broker, who hired him for Poseidon. A mining engineer before turning to finance last year, Shierlaw controls 8% of the company’s 2.5 million shares, an amount worth $6.5 million. Sitting behind a desk littered with empty beer cans, lumps of ore, contract notes and mining magazines, Shierlaw said: “Early in the week it was champagne, but we’ve calmed down a bit now. Back on beer.” Meanwhile, his friend Shirley, who owns an undisclosed amount of the company’s stock, had returned to Windarra—to begin prospecting again.