We report the observation, by scanning tunneling microscopy (STM), scanning electron microscopy (SEM), Auger electron spectroscopy (AES), and atomic force microscopy (AFM), of island formation on SIC during high temperature deposition and annealing of thin Ni films. Ni films with a nominal thickness of 2.5 monolayers were sputter deposited onto H-2-etched single crystal 6H-SiC (0001) substrates heated to 600 degreesC in an ultrahigh vacuum STM system. After the substrates were annealed to 800-1000 degreesC, island formation was observed by STM. The islands were 0.1-0.5 mum in diameter, similar to 30 nm high, and separated by similar to2 mum from each other, with an exceptionally flat top with a peculiar 'stitched' surface structure. A second type of island, similar to1.5 mum in diameter, similar to 10 nm high, and separated by similar to 10 mum from each other, was observed by ex situ AFM and SEM. Microspot AES showed that the first islands are composed of Ni and C, while the second islands are composed of Ni, C, and Si. AES lineshape studies showed that the carbon in both types of islands is graphitically bound as opposed to the carbon in the substrate which is carbidically bound. From comparisons to literature, we believe that the first islands are a new type of graphite intercalation compound. An indexing of Ni on the top graphite sheets is presented for each anneal temperature.