Ron Guth: The Act of May 16, 1866 authorized a new five cent coin made of 25% nickel and 75% copper. This created the unusual situation where two coins of the same value circulated simultaneously (the other coin being the Half Dime). A massive quantity of nearly 15 million new "Nickels" was produced in the first year, partly to promote the new coin and partly because of the availability of nickel and copper compared to the higher cost of silver for Half Dimes. The first versions of the new Nickel included rays on the reverse, between the stars surrounding the large 5 at the center of the coin. These extra elements caused the coinage dies to fail early because of the extra pressure needed to strike the nickel alloy and to force the metal into the recesses of the dies.
The 1867 With Rays Proof is excessively rare.
Interesting varieties include a widely repunched date in 1866.