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RNC Minerals hails long-life, low-cost nickel operation at Dumont, according to feasibility study

Highlights of the feasibility study include production of approximately 1.2 million tons of nickel over a 30-year mine life, with significant earnings and free cash flow generation

Dumont is located in the mining-friendly Abitibi region of Quebec

RNC Minerals (TSE:RNX) (OTCMKTS:RNKLF) released new results from an updated feasibility study on its Dumont nickel project that indicate a large-scale, low-cost operation with a long mine life.

The Dumont project, a joint venture with Arpent Inc, a subsidiary of private equity firm Waterton, is located in the western portion of the Abitibi region of Quebec. RNC has a 28% interest in the project.

Highlights of the feasibility study include production of approximately 1.2 million tons of nickel over a 30-year mine life, with an initial capital expenditure of US$1 billion.

READ: RNC Minerals CEO says 2019 operations have begun strongly as the company positions itself for production growth

The feasibility study points to significant earnings and free cash flow generation, including US$920 million of after-tax net present value and a 15.4% internal rate of return after tax.

Dumont hosts the second largest nickel reserve in the world of 2.8 million tons of contained nickel and the ninth-largest cobalt reserve of 110,000 tons of cobalt.

Once in production, Dumont will be one of the largest base metal mines in Canada, one of the top five sulphide nickel producers globally, and one of the only large scale fully permitted nickel-cobalt projects to satisfy the significant growth in nickel and cobalt demand driven by the electric vehicle sector, according to RNC’s CEO Mark Selby.

"The achievement of this major milestone once again confirms the robust economics of the Dumont Nickel-Cobalt Project." Selby said in a statement. "With the completion of this positive feasibility study, RNC, with our partner Waterton, is well positioned to accelerate discussions with potential partners to advance the Dumont project towards construction."

Improvements since 2013

The updated feasibility study builds on a previous study undertaken in 2013. The 2019 feasibility study delivered an improvement in financial returns with IRR from 15.2% to 15.4%, with initial capital expenditures reduced by US$173 million. The change in net present value from US$1.1 billion to US$920 billion was due to a combination of factors including inflation, revised mine design and metal prices.

Through the update of the feasibility study, the project has been de-risked technically with an updated mine design and additional engineering work on tailings management and tailings storage facility design, according to RNC. Selby added that RNC had “successfully improved” the project’s design to reduce risk and achieve improvements in operational reliability.

Infrastructure in place

Dumont will be an open pit mine and mill operation once it begins production. It is located next to a rail line and highway and a power line with enough capacity for the construction period. RNC plans to build a short rail spur to allow access to the property, as well as a 10 kilometre power line feed from existing lines.

Earlier this month the Toronto-based RNC exercised its option to buy the Higginsville mill from Westgold Resources Limited, a move that will significantly reduce costs at the miner's gold operations in Western Australia.

Shares of RNC slipped 8.5% on Thursday afternoon in Toronto to sit at C$0.43.

Contact Angela at [email protected]

Follow her on Twitter @AHarmantas

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