BMO Nesbitt Burns Increases Stake in Nicola Mining: A Strategic Move or a Buying Opportunity?

The recent Early Warning Report filed by BMO Nesbitt Burns Inc. on SEDAR+ has placed Nicola Mining Inc. (TSXV: NIM) in the spotlight. The report, correcting prior filing errors, reveals a notable increase in BMO’s ownership stake, now holding 17.75% of Nicola’s shares—a figure that underscores shifting dynamics in the junior mining sector. For investors, this development raises critical questions: Is BMO’s stake-building a signal of confidence in Nicola’s prospects, or merely a routine portfolio adjustment? Let’s dissect the data to find answers.

The Ownership Timeline: A Gradual Build-Up

BMO’s holdings in Nicola have evolved significantly since June 2021, when it first crossed the 10% threshold with 10.38% of shares. By May 2022, the stake rose to 12.52%, followed by a jump to 15.30% by February 2023. The most recent correction, however, reveals a more complex picture. After a share consolidation in November 2023 (reducing Nicola’s outstanding shares by 50%), BMO’s adjusted stake as of April 2025 stands at 17.75%—a level not previously disclosed due to prior reporting errors.

This pattern suggests deliberate, incremental accumulation. Notably, BMO’s purchases have been executed through TSXV trading and private placements, with average monthly transaction values ranging from $61,595 to $285,815. The most active period was in early 2023, when $223,536.98 was spent to increase ownership by 2.78%.

The Correction Context: What Went Wrong?

The report explicitly addresses errors in prior filings, where certain shares held in managed accounts were excluded. This oversight likely underreported BMO’s influence, particularly between February 2023 and September 2024. For instance, the corrected April 2025 stake of 17.75% contrasts sharply with the previously reported 10.19% as of September 2024—a discrepancy attributable to the share consolidation and administrative missteps.

Regulatory adherence is critical here. National Instrument 62-103 mandates incremental disclosures when ownership crosses 2%, 5%, 10%, and subsequent thresholds. BMO’s delayed corrections may invite scrutiny, though the firm asserts its intent was purely investment-driven, not control-seeking.

Implications for Investors

1. Sentiment Boost: A 17.75% stake by a major institutional player could signal confidence in Nicola’s projects, particularly in its metallurgical coal operations. BMO’s track record in resource investing adds credibility to this narrative.
2. Market Liquidity: Nicola’s small market cap (assuming ~$166 million post-consolidation) means even modest institutional buying can influence stock movements. BMO’s average monthly spending of ~$100k-$200k may amplify volatility.
3. Future Activity: BMO explicitly states it may trade further “based on market conditions.” Investors should monitor TSXV activity for signs of accumulation or divestment.

Conclusion: A Cautionary Opportunity

BMO Nesbitt Burns’ stake in Nicola Mining represents both a strategic bet and a regulatory wake-up call. The corrected disclosures highlight the risks of administrative oversights in compliance—a reminder for investors to verify data rigorously.

From an investment lens, Nicola’s stock could benefit from BMO’s endorsement, especially if coal demand rebounds (e.g., from Asian steel producers). However, the firm’s small size and commodity exposure mean risks remain high. Key data points to watch:
- Ownership Thresholds: BMO’s next reporting trigger would be at 18% or 20%, depending on future purchases.
- Project Milestones: Nicola’s exploration results or partnerships could justify BMO’s interest.
- Industry Trends: Coal prices and regulatory shifts (e.g., ESG pressures) will heavily influence Nicola’s valuation.

In sum, BMO’s increased stake is a compelling indicator—but it’s not a guarantee. Investors must weigh Nicola’s operational fundamentals against the speculative upside of institutional interest. As always in junior mining, patience and due diligence are paramount.