A sebaceous cyst on the nipple seems extremely unlikely.  Sebum is
usually fairly oily and sometimes even fairly thick.  This is not what
was described.

This sounds like the typical milk cyst.  I usually open it with a
sterile needle (the mother can do this) when it develops, squeeze out
any thickened milk, and then treat with Kenacomb ointment for a couple
of weeks (after every feeding, do not wipe or wash off).  I think this
prevents it from coming back, but I'm not sure.  In the US, a
combination of Mycolog and Mupirocin ointments would be a good, maybe
better, substitute.

I would advise the mother to stay away from an excision of the lesion.

Jack Newman, MD, FRCPC