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RNC Minerals expanding its Western Australia footprint, which will bring name change to Karora Resources


Recently, the company has been focused has on integrating its Beta Hunt gold mine with its Higginsville gold operation in Western Australia

Royal Nickel Corp -

Quick facts: Karora Resources Inc.

Price: 3.92 CAD

Market: TSX
Market Cap: $565.09 m
  • Becoming high quality, gold producer in Western Australia,
  • Transformational Higginsville acquisition in 2019
  • Plans to acquire the Spargos Reward gold project in Western Australia
  • Looking to change name to Karora Resources 

What RNC Minerals does:

RNC Minerals Corp (TSE:RNX) is a mining group focused on becoming a high quality, gold producer in Western Australia, following the transformational Higginsville acquisition in 2019.

Recently, the company has been focused has on integrating its Beta Hunt gold mine with its Higginsville gold operation (HGO) in Western Australia, which included a low-cost 1.4 million tonne-per-annum (tpa) processing plant.

The acquisition brought with it a 367,000 ounce historical reserve within a 1.2 million ounce historical measured and indicated gold resource on a 386 square kilometre land package in the Kalgoorlie gold region. Exploration has been carried out and will continue at both Higginsville and Beta Hunt.

At Beta Hunt, the focus will continue to be finding gold and nickel drill targets based on historic (and current) drill holes. The project already boasts a measured and indicated (M&I) resource of 944,000 ounces of gold.

The company has made further strides in 2020, signing a sale and purchase agreement to acquire the Spargos Reward gold project in Western Australia in May.

The firm said the project contains a historical JORC1 2012 mineral resource estimate of 112,000 ounces of indicated resources and 19,000 ounces of inferred resources.

RNC also has a 28% stake in the joint venture that owns the Dumont nickel project, which is in the established Abitibi mining camp in Quebec. RNC also owns a 24% interest in explorer Orford Mining, which is focused on underexplored areas in northern Quebec.

How is it doing:

In early May 2020, RNC posted solid financials and a strong operating performance for the first quarter of 2020, which saw production lifted and costs reduced.

The miner also strengthened its coffers and ended the three months to March 31 with cash of C$38.4 million, and working capital of C$30.7 million.  That was an improvement of C$3.8 million and C$4.2 million respectively compared to the end of 2019.

RNC's net earnings for the first three months of 2020 were C$884,000 compared to a loss of C$1.5 million in the first quarter of 2019. Revenue came in at C$54.2 million, versus C$10.8 million in the first quarter of 2019.

The company had all-in-sustaining-costs (AISC) of US$1,101 per ounce sold during the quarter, a US$30 per ounce improvement on the fourth quarter of 2019.

RNC also said it remains on track to achieve its 2020 gold production guidance of 90,000 to 95,000 ounces and AISC of US$1,050 to US$1,200 per ounce sold, assuming no significant interruption in operations as a result of the coronavirus pandemic.

Highlights in the quarter also included growing the potential feed for the HGO open pit, with recent drilling suggesting mine life extensions at both the Baloo and Fairplay North open pits.

Recent drilling at HGO combined with a review of historical exploration continued to identify a number of areas at the mine for further exploration, including at the high-grade Aquarius project, formerly Corona project, and a newly interpreted 5 kilometer structure north of historic Trident mine. There is also potential open pit expansions to both the Mousehollow and Hidden Secret projects, RNC noted.

Days after reporting its latest numbers, RBC revealed the plans to acquire Spargo Reward. If the deal goes ahead RNC will be required to pay A$4 million, satisfied at RNC's election in cash, shares, or a combination of both.

It accompanied the deal news with the plans to change its name to Karora Resources Inc. which the group said will “more accurately reflect its business focus as a growing, profitable gold producer in Western Australia”.

The name change proposal will be voted on by shareholders at the company’s virtual annual general and special meeting to be held on June 11, 2020.

Inflection points:

  • Upcoming name change
  • Completion of Spargos Reward purchase
  • Continued increase in output/reduction of costs

What the boss says:

In a statement on the Spargos Reward acquisition, Paul Andre Huet, chairman and chief executive of RNC Minerals said: "The potential addition of a near term high-grade open pit gold project such as Spargos Reward, which is located close to our Higginsville treatment plant, is a very compelling opportunity. In our view, Spargos Reward has the potential to be fast tracked into our growing production pipeline and generate substantial cash flow with little risk to RNC and its shareholders.

"Importantly, the sale and purchase agreement structure allows RNC an exclusive window during which to conduct a thorough due diligence program over the next three months before making a decision to close the transaction."

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