Peter Koven/Financial PostFNX operations at Subbury

SUDBURY, Ont. -Deep down in the Podolsky mine, nearly 2,500 feet below the surface, a group of investors is staring intently at a big ore deposit that is suddenly at the centre of Bay Street's hottest mining deal.

This is the northeast corner of the Sudbury Basin, the trillion-dollar nickel resource created after a meteorite crashed into the Earth nearly two billion years ago. But this group is not just here to see the nickel. Podolsky has plenty of that, but what is striking down here is the copper and precious metals -- the grades are very high and the material is literally shining off the wall.

Podolsky was brought into production this year by FNX Mining Co. The fact that new mines like this one are still coming onstream after 125 years of exploration speaks to the amazing wealth of the Sudbury Basin. And as mining companies invest more and more money in such politically terrifying jurisdictions as Ecuador and the Democratic Republic of Congo, Sudbury just looks better than ever.

But Sudbury mining is in transition these days, and Podolsky is one of the reasons why. It is one of a number of properties with a great deal of gold, platinum and palladium that are shifting the basin away from its nickel roots and getting the community excited about very lucrative precious-metal discoveries to come.

"You've got a complete rejuvenation of the camp after 100 years. And that's been a rather unique thing, because it's been such a heavily studied and heavily explored basin," says Dave Constable, vice-president of investor relations at FNX.

The huge potential of the precious metals was highlighted last week, when the brand new gold stream company Gold Wheaton Corp. struck a deal to buy 50% of FNX's precious-metals output from Podolsky and other Sudbury mines. It served as a wake-up call to anyone who still thinks of Sudbury in purely nickel terms.

Podolsky contains "footwall" deposits, each of which features that very high-grade copper and precious metals. While these have been known for a long time, they never generated the same excitement as the big nickel deposits until recent years. Now they are a primary focus for exploration and development.

Unlike those massive nickel finds that put Inco Ltd. and Falconbridge Ltd. on the map, footwalls are generally small, with less than 10 million tonnes of ore in total. They also tend to be more difficult to find with traditional tools, forcing geologists to explore over a wider area.

But the footwalls are more concentrated with metal than the larger nickel ore bodies, which makes them even more valuable. And today, fluctuations in commodity prices have made them look better than ever.

Last year, nickel was all the rage as the price of the silvery-white metal shot up to nearly US$25 a pound and producers were picked off in a huge wave of consolidation. But that excitement vanished this year as nickel plunged back to around US$10 amid concerns about excess supply.

Meanwhile, the footwall deposits feature all the hot commodities of the moment: copper, gold, platinum and palladium.

Copper reached a record high of US$4.00 a pound this year amid dangerously low global inventories. Gold topped US$1,000 an ounce as the U. S. dollar crumbled. And platinum has soared to near-ludicrous levels because of power disruptions in South Africa, the world's biggest supplier.

"What really took off in the last decade was the realizaton of how important these kind of deposits are with respect to margins or value per tonne of ore, because that's what we're selling," says Catharine Farrow, director of exploration at FNX.

Footwalls were discovered largely by chance by Inco and Falconbridge (now Vale Inco and Xstrata) and both companies had some success mining them as far back as the 1970s. But Inco's focus was always nickel and it had little to no interest in copper or platinum and palladium.

That started to change in the late 1990s, as palladium prices peaked and Inco put its "153" footwall into production. The Sudbury mining community quickly realized just how valuable these discoveries could be.

Today, the footwalls are so popular they are literally transforming the way miners approach the basin. Vale Inco recently greenlighted a $132-million investment to bring its "170" footwall ore body into production, and Xstrata's next Sudbury mine, called Nickel Rim South, is a footwall that the company is counting on heavily as its old nickel mines wind down.

Then there is FNX, the newcomer on the scene that perfected the art of finding and developing footwall ore bodies that went ignored in the past. The company, created by Inco veteran Terry MacGibbon, was built out of old projects that were bought from his former company. The FNX team revitalized them with a focus on finding footwalls, and has become a stock market darling in a few short years.

"FNX's plan was recognizing that Inco did not focus on exploring for or developing footwall ore bodies, and the recognition that there had to be a couple of big footwall ore bodies in the Northern range [of the Sudbury Basin]," says Mike Collison, an analyst at Dundee Securities.

Output from Podolsky and the Levack footwall, due to come onstream next year, will dramatically raise the company's production of high-margin platinum, palladium and gold. The precious metals will become even more important over time as those projects ramp up.

It is great news both for FNX and Gold Wheaton, which will buy much of that output.

"We've been able to take previously-discovered information that maybe wasn't brought completely to the fore and turn that into something economic, and we've been able to find new things as well," Ms. Farrow says.

Of course, none of this takes away from the importance of the nickel. Sudbury has always been a nickel camp, and unless nickel prices collapse and copper moves to stratospheric levels, that is not going to change.

But for the companies, the most exciting thing in the basin right now is the potential for future footwall discoveries and the high-margin ore within them.

Serious exploring for footwalls has only taken place in the last several years. Now that it is going full-force, everyone assumes that more ore is out there.

"People recognize the value now, where you're not exposed just to the fluctuations of one commodity, which was very much the case in the older days in Sudbury," Ms. Farrow says. "So I think there's a lot of opportunity there."

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