Canada's Royal Nickel turns producer with two acquisitions

NexMetals Mining

01/02/2016 12:00

By Susan Taylor 
    TORONTO, Feb 1(Reuters) - Canada's Royal Nickel Corp 
 RNX.TO , capitalizing on discount asset prices as commodity 
markets swoon, announced two cash and stock acquisitions on 
Monday that transform the mine developer into a cash-generating 
nickel, copper and gold producer. 
    Royal Nickel Chief Executive Mark Selby said the company 
will acquire a 67 percent stake in Australia's privately-held 
Salt Lake Mining Pty, in a deal worth C$7.7 million, and 100 
percent of Vancouver-based VMS Ventures Inc  VMS.V , in a 
separate transaction worth C$11.4 million. 
    Salt Lake Mining owns the Beta Hunt Mine, a low-cost nickel 
and gold mine in Western Australia. VMS's main asset is a 30 
percent stake in Reed Mine, a Manitoba copper mine that is 
70-percent owned and operated by HudBay Minerals  HBM.TO . 
    "When you're close to cycle lows is the time to be picking 
up the assets. You never know for sure when you're at the 
bottom, but I think we're pretty close," Selby said. 
    "We're basically picking these things up for a fraction of 
the cost to put them into production." 
    In 2015, production from Beta Hunt Mine and a 30 percent 
stake of Reed Mine totaled approximately 4,000 tonnes of nickel, 
4,000 tonnes of copper, and 3,300 ounces of gold.  
    In 2016, combined production is estimated at 3,500-4,500 
tonnes of nickel, 4,000-4,500 tonnes of copper, and 
35,000-45,000 ounces of gold, as Beta Hunt ramps up gold 
production. 
    Royal Nickel expects to announce more such modest deals, 
Selby said. 
    "It's these markets that create opportunities," he said. 
"Picking up assets close to the bottom is one of the ways to 
really create value for shareholders." 
    Royal Nickel, which expects a nickel supply deficit to 
emerge later this year, is developing the new Dumont mine in 
Quebec.  urn:newsml:reuters.com:*:nL1N0ZB1Z6 
    Project finance efforts will resume when nickel prices move 
above $5 a pound, Selby said. The price of nickel on Friday 
was$3.88 a pound.  
    Dumont is expected to produce 33,000 tonnes annually for the 
first five years, and 54,000 tonnes per year thereafter, with a 
mine life of more than 30 years.   
 
 (Reporting by Susan Taylor; Editing by Alan Crosby) 
 ((susan.taylor1@thomsonreuters.com; +1 416 941 8083; Reuters 
Messaging: susan.taylor1.thomsonreuters.com@reuters.net)) 
 
Keywords: RNC M&A/