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Royal Nickel Corp
Symbol C : RNX
Shares Issued 359,184,424
Close 2018-06-18 C$ 0.12
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Royal Nickel withdraws $12M (U.S.) from Dumont JV

2018-06-18 09:50 ET - News Release

Mr. Mark Selby reports


In lieu of the previously announced debt extension and equity raise (see Royal Nickel news releases dated May 31, 2018), Royal Nickel Corp. is withdrawing $12-million (U.S.) of its capital from the Dumont joint venture formed in April, 2017, with Waterton Precious Metals Fund II Cayman LP and Waterton Mining Parallel Fund Onshore Master LP.

Mark Selby, president and chief executive officer of Royal Nickel, commented: "This cash withdrawal avoids significant equity dilution at current price levels and allows a significant reduction in RNC's debt with the elimination of the majority of its debt payments in 2018. With the improved visibility from the Beta Hunt sale process, we believe that the value of the debt extension announced on May 31, 2018, has been reduced. RNC continues to focus its strategic efforts on the advancement of the Dumont nickel-cobalt project, which contains the world's largest undeveloped reserves of both cobalt and nickel."

Royal Nickel will retain $4-million (U.S.) of cash in the Dumont JV, which will be more than sufficient to cover its share of the expenditures that are planned to advance Dumont toward a construction decision. With the improved visibility on a sale of Beta Hunt reinforced by Royal Nickel's receipt of multiple non-binding indicative offers, the benefit associated with the previously announced debt extension has been reduced as Royal Nickel expects that this debt will be repaid out of the proceeds of sale (or assumed by a Beta Hunt purchaser as part of the total consideration for the asset). This cash withdrawal and the planned sale of Beta Hunt would eliminate a significant portion of Royal Nickel's debt and finance the majority of the company's debt repayments due in 2018. Royal Nickel will also not be proceeding with the purchase of the Beta Hunt nickel royalty that was announced on May 31, 2018.

Royal Nickel currently owns 50 per cent of the Dumont JV, which in turn holds the Dumont nickel-cobalt project. In order to obtain the withdrawal of these funds, Royal Nickel has agreed to remove the Dumont project conversion cap under the $10-million (U.S.) convertible note entered into by Royal Nickel and Waterton in June, 2017. As a result, if these conversion rights are exercised by Waterton for additional units of the Dumont JV, Royal Nickel's interest would be diluted to approximately 28 per cent (as compared with 40 per cent under the prior terms of the convertible debenture, assuming that Waterton converted the full $10-million (U.S.) in principal and Royal Nickel repaid $5.5-million (U.S.) of the convertible note in cash). If Royal Nickel was diluted to approximately 28 per cent of the Dumont JV, Royal Nickel would retain its right to act as manager of the Dumont JV, but would no longer hold veto rights on certain fundamental joint venture matters or the ability to trigger certain exit rights included in the current joint venture arrangements.

About Royal Nickel Corp.

Royal Nickel is a multiasset mineral resource company with a portfolio of gold and base metal production and exploration properties. Royal Nickel's principal assets are the producing Beta Hunt gold and nickel mine in Western Australia, a 50-per-cent interest in a nickel joint venture with Waterton that holds the Dumont nickel project in the Abitibi region of Quebec, and a 29-per-cent stake in the producing Reed mine in the Flin Flon/Snow Lake region of Manitoba, Canada.

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