When a planchet is sheared by a poorly sharpened punch, the dull edge pulls some of the parent material from the strip. This extra material usually stands proud of the planchet, like a flag, and is called a rim burr. When the planchet is struck by the dies, the rim burr is then impressed into the design of the coin.
I think it's lamination. The area at the lower part of the collar on the obverse is directly opposite the U and the R in the motto on the reverse. The right upright of the U has a jog in it suggesting post strike movement. The flap sticking up between GOD and WE on the obverse may be a small area that partially detached and looks like it's laying on top of the D. If it were a rim burr it would have been struck into the D.
Well I'm sorry to say this but in my most honest opinion it won't grade. As I have sent nickels in to be graded and a hit on the front like this one will send it home in a body bag. The reverse will grade as lamination but the hit on the obv. will be pmd. I say this with tongue in cheek as it's a shame ! One beautiful coin and a key to the series at that! And close to full steps as you can get.