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Royal Nickel Corp
Symbol C : RNX
Shares Issued 353,438,210
Close 2018-03-01 C$ 0.285
Recent Sedar Documents

Royal Nickel hires CRU for market value analysis

2018-03-01 09:13 ET - News Release

Mr. Mark Selby reports

RNC MINERALS ADVANCES VALUE ENHANCEMENT INITIATIVES FOR DUMONT NICKEL-COBALT PROJECT

Royal Nickel Corp. (RNC Minerals) has provided an update on value enhancement initiatives related to the Dumont nickel-cobalt project. CRU has been engaged to complete a value-in-use and market value analysis of the nickel-cobalt concentrate expected to be produced by the Dumont nickel-cobalt project.

"RNC is in the enviable position that, in addition to being the largest undeveloped nickel and cobalt reserve in the world, the Dumont nickel-cobalt project is expected to produce the highest-grade nickel and cobalt sulphide concentrate in the world (1), providing maximum flexibility for potential partners and offtake parties from a wide range of nickel consuming sectors, including the battery and stainless steel markets. As highlighted by Cobalt 27 in its recent announcement, Dumont concentrate is 'ideal for producing nickel and cobalt material feed to be sold directly into the battery industry,' (2)" said Mark Selby, president and chief executive officer of RNC Minerals.

Mr. Selby continued: "It is RNC's roasting approach that allows nickel concentrate to be utilized by a wide range of nickel consumers, including very large-scale integrated NPI/stainless plants that convert feed into finished product at higher recoveries and at significantly lower processing costs, resulting in expected payabilities much higher than the 70- to 75-per-cent payability recently available in the nickel concentrate market. We look forward to the value-in-use analysis from CRU to confirm the market value of Dumont's nickel-cobalt concentrate."

(1) Source: Wood Mackenzie (see attached tables).

(2) Source: Cobalt 27 Capital Corp. news release dated Feb. 22, 2018.

Alternative roasting process

RNC successfully completed a bulk concentrate test in early 2016 and, in co-operation with one of the leading Japanese trading houses, successfully delivered roasted concentrate samples to multiple potential end-users across Asia and Europe utilizing RNC's alternative roasting approach.

RNC believes that market prices over the last several years from traditional nickel smelters and refiners result in the concentrate producer receiving approximately 70 to 75 per cent of the contained value of the nickel in the concentrate, allowing the smelter/refiner to capture 25 to 30 per cent of the concentrate value less their operating costs and recovery.

After successfully demonstrating the potential of roasted nickel concentrate as a more valuable alternative to traditional smelting and refining in 2011, RNC worked with the Tsingshan Group, beginning in 2012, to validate the concept. In 2014, Tsingshan began construction of the first plant to directly utilize nickel sulphide concentrate as part of the stainless steel making process and has since built an additional plant utilizing the roasted nickel concentrate process. Additionally, Tsingshan signed an offtake deal with Western Areas Ltd. in late 2016. RNC believes Tsingshan's successful use of roasted nickel concentrate in its production facilities in China is an important development for the nickel market.

RNC's work with one of the large Japanese trading houses indicates that roasters in Asia are able to process feed at an approximate cost of $30/tonne. When combined with the average integrated NPI/stainless conversion cost of approximately $80 to $90/tonne (according to Wood Mackenzie), the implied conversion cost is approximately $110 to $120/tonne of concentrate (equivalent to approximately $400 per tonne of contained nickel for a 29-per-cent concentrate or approximately 3 per cent of the current LME price of $13,800 per tonne). This compares very favourably with the 25 to 30 per cent of the concentrate value believed to be currently captured by traditional smelters/refiners. The CRU value-in-use study will be used to estimate the terms that roasting market participants would require to be willing to process the nickel-cobalt concentrate expected to be produced by Dumont as compared with these current market benchmarks.

Note: Dollar amounts referred to above are U.S. dollars.

       2016 CONCENTRATE GRADE (% NI) FOR GLOBAL NICKEL SULPHIDE OPERATIONS COMPARED 
                            WITH DUMONT NICKEL-COBALT PROJECT (1)

Rank        Operation/project   Concentrate grade (Ni %)       Ownership (main)    Location 

   1                   Dumont*                      29%           RNC/Waterton       Canada  
   2             Voisey's Bay                       25%                   Vale       Canada  
   3              Mount Keith                       17%                    BHP    Australia
   4                   Raglan                       17%               Glencore       Canada  
   5               Flying Fox                       15%          Western Areas    Australia
   6             Vale Sudbury                       14%                   Vale       Canada  
   7            Vale Manitoba                       14%                   Vale       Canada  
   8             KGHM Sudbury                       14%                   KGHM       Canada  
   9           Nova-Bollinger                       14%     Independence Group    Australia
  10                     Long                       14%     Independence Group    Australia
  11     Other (19 operations)                  2.6-13%                                   

* Denotes development stage project.
  

2016 CONCENTRATE GRADE (% CO) FOR GLOBAL NICKEL SULPHIDE OPERATIONS COMPARED WITH 
                           DUMONT NICKEL-COBALT PROJECT (1)

Rank        Operation/project   Concentrate grade (Co %)       Ownership (main)      Location 

   1                   Dumont*                       1%           RNC/Waterton         Canada   
   2             Voisey's Bay                      0.8%                   Vale         Canada   
   3             Vale Sudbury                      0.6%                   Vale         Canada   
   4          Savannah Nickel                      0.6%    Panoramic Resources      Australia  
   5              Mount Keith                      0.4%                    BHP      Australia  
   6            Vale Manitoba                      0.4%                   Vale         Canada   
   7                  Kevitsa                      0.4%                Boliden        Finland   
   8                  Nkomati                      0.4%                    ARM   South Africa
   9                 Jinchuan                      0.4%               Jinchuan          China    
  10     Other (10 operations)                 0.1-0.3%                                              

* Denotes development stage project.
  

(1) Source: Wood Mackenzie and, with respect to Dumont, technical report on the Dumont Ni 
    project, dated July 25, 2013, available at the RNC Minerals website and under Royal Nickel's 
    profile on SEDAR.

Dumont highlights (1)

  • World's largest undeveloped nickel reserve and cobalt reserve;
  • Large-scale, long-life nickel and cobalt production -- 33-year life with over one billion tonnes of reserves. Potential for much longer life/future expansions from equally large resource;
  • Initial annual production of 33,000 tonnes per annum (73 million pounds) of nickel and 1.0 ktpa of cobalt (2.3 million pounds) contained in concentrate;
  • Expanded in year five to an annual average of 51 ktpa (113 million pounds) of nickel and 2.0 ktpa of cobalt (4.3 million pounds);
  • World's highest-grade nickel (29 per cent) and cobalt (1 per cent) sulphide concentrate -- suitable for feed to both the stainless steel and battery market;
  • Dumont proven and probable reserves consist of 1.18 billion tonnes of ore containing 3.15 million tonnes of nickel (6.9 billion pounds) and 126,000 tonnes (278 million pounds) of cobalt (2);
  • Shovel-ready: feasibility study and permitting complete. Strong community support;
  • Conventional open-pit, mine-mill operation using proven sulphide flotation;
  • Structurally low-cost operation: significant infrastructure in place, low strip ratio (1.1:1);
  • Excellent jurisdiction: Abitibi region of Quebec with significant labour and capital infrastructure;
  • Significant additional value potential from the roasted nickel concentrate approach advanced by RNC;
  • RNC currently has a 50-per-cent interest in the nickel joint venture (with Waterton Global Resource Management) that owns Dumont.

(1) See "Dumont Nickel project NI 43-101 compliance" statement below.

(2) Reference is made to table 15-1 in Section 15 of the technical report on the Dumont Ni project, dated July 25, 2013, available at the RNC Minerals website and under Royal Nickel's profile on SEDAR.

Dumont nickel project NI 43-101 compliance

Unless otherwise indicated, RNC has prepared the technical information contained in this news release based on information contained in the feasibility study dated July 25, 2013, relating to the Dumont nickel-cobalt project available under RNC's company profile on SEDAR. The feasibility study was prepared by or under the supervision of a qualified person as defined in NI 43-101 -- Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators. Readers are encouraged to review the full text of the feasibility study which qualifies the technical information. Readers are advised that mineral resources that are not mineral reserves do not have demonstrated economic viability. The feasibility study is intended to be read as a whole, and sections should not be read or relied upon out of context. The technical information is subject to the assumptions and qualifications contained in the feasibility study.

The technical information in this news release has been reviewed by Alger St-Jean, PGeo, vice-president of exploration of RNC, and Johnna Muinonen, vice-president of operations of RNC, with respect to the Dumont nickel-cobalt project, both qualified persons under National Instrument 43-101.

About Royal Nickel Corp.

RNC is a multiasset mineral resource company with a portfolio of nickel, cobalt and gold production and exploration properties. RNC has a 50-per-cent interest in a nickel joint venture with Waterton that owns the Dumont nickel-cobalt project located in the Abitibi region of Quebec which contains the second-largest nickel reserve and eighth-largest cobalt reserve (the largest undeveloped nickel and cobalt reserves in the world). RNC has a 100-per-cent interest in the producing Beta Hunt gold and nickel mine located in Western Australia. RNC has a strong management team and board with over 100 years of mining experience at Inco and Falconbridge.

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