RNC Minerals (TSE:RNX) says it's well positioned for discussions on advancing the Dumont nickel-cobalt project in Quebec towards construction, having filed a feasibility study showing a large scale, low cost venture.
RNC owns a 28% interest in the nickel joint venture, which owns the Dumont project, which contains the second largest nickel reserve and ninth largest cobalt reserve in the world.
The firm is manager of the venture with Arpent Inc, which is a subsidiary of Waterton Precious Metals Fund II Cayman LP and Waterton Mining Parallel Fund Offshore Master.
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"With the filing of the positive feasibility study, RNC, with our partner Waterton, are well positioned to accelerate discussions with potential partners to advance the Dumont project towards construction." said Mark Selby, CEO at RNC.
Selby noted that once in production, Dumont would be one of the largest base metal mines in Canada, and one of the top five sulphide nickel producers globally.
It will also be one of the only large scale fully permitted nickel-cobalt projects that can begin to satisfy the significant growth in nickel and cobalt demand driven by the electric vehicle (EV) sector.
The project is the second largest nickel reserve in the world at 2.8 million tonnes (6.1 billion pounds) contained nickel and the ninth largest cobalt reserve with 110 thousand tonnes (243 million pounds) contained cobalt.
The feasibility study showed an after tax net present value of US$920 million and 15.4% after-tax internal rate of return (IRR).
The estimated annual EBITDA (underlying earnings) is seen ramping up from US$303 million in Phase I to US$425 million in Phase II and averaging of US$340 million over the life of project. Free cash flow averages US$201 million annually over the 30-year life of the project.
The study showed initial nickel production in concentrate of 33,000 tpa (tonnes per annum), ramping up to 50,000 tpa in the Phase II expansion, with production of around 1.2 million tonnes (2.6 billion pounds) of nickel in concentrate, over a 30-year life with an initial capital expenditure of US$1 billion.
The feasibility study also had identified opportunities to significantly increase the return of the project, including by the sale of magnetite as a by-product.
Last month, RNC revealed that it had substantially increased the resource on the Western Flanks Zone of the company’s Beta Hunt gold mine in Western Australia.
According to the updated resource, the size of the measured and indicated resource jumped nearly five times to 710,000 ounces at 3 grams per ton (g/t) gold, while the inferred resource nearly tripled to 250,000 ounces at 3.1 g/t gold.
RNC Minerals shares shed around 5.6% in Toronto to $9.58 each.
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