RNC set to develop the world’s largest nickel-cobalt project

RNC Minerals [RNX-TSX; RNKLF-OTCQX], also known as Royal Nickel Corp., says it is working to secure $1 billion to develop the world’s largest undeveloped reserves of both nickel and cobalt at the company’s flagship Dumont Project near Amos, northern Quebec. It hopes to start the construction phase next year. RNC is headed by a group of former executives of the nickel giant formerly known as Inco Ltd. The Canadian mining icon and its Sudbury, Ontario operations were acquired by Vale [VALE-NYSE] of Brazil in 2006.

When in production, the Dumont Mine is expected to rank as the fifth-largest nickel sulphide operation in the world by annual production. Only the mining operations at Norilsk (Russia), Jinchuan (China), Sudbury, Ontario, Canada), Voisey’s Bay (Newfoundland and Labrador, Canada) will be larger, the company said.

“With many market participants expecting explosive growth in nickel and copper demand from the electric vehicle market over the coming decade, RNC continues to be approached by a number of strategic investors, offtake partners, and financiers who could provide financing to begin construction,” the company said in a press release.

“Dumont contains the second largest nickel reserves and the eighth largest cobalt reserve of any deposit in the world,” added Mark Selby, President and CEO of RNC Minerals.  He said Dumont is the only deposit of this scale that is not currently in operation and not owned by a major mining company (the other eight largest deposits are owned by companies that include Glencore, Vale, Norilsk, Sumitomo Corp. and Jinchuan).

“Given market concern regarding future cobalt and nickel supply for electric vehicles, and nickel prices at the $5.50 to $6 a pound level, RNC believes it is well positioned to significantly advance Dumont in 2018,” Selby said.

The RNC CEO went on to say that in the company’s view, Dumont compares favourably with many Australian nickel-cobalt project, which have seen significant increases in market value during 2017. He said Dumont contains larger nickel and cobalt reserves, has completed a feasibility study, is fully permitted and is a sulphide deposit, rather than a laterite deposit.

With 3.15 million tonnes of nickel sulfide and 126,000 tonnes of cobalt, it ranks as the world’s largest undeveloped reserves of both metals. Production is forecast at 73 million pounds of nickel annually and 2.3 million pounds of cobalt in concentrates. The recovery of nickel and cobalt will be achieved using proven, conventional milling technology, rather than more technically challenging pressure acid leach technology.

However, any construction decision remains subject to financing. According to a July, 2013 technical report, the initial capital cost is estimated at $1.26 billion, including $320 million for the mine and $550 million for the processing plant. Dumont is expected to produce 2.8 billion pounds of payable nickel over 33 years from an open pit operation.

RNC is in talks with large Japanese trading houses, companies that offer streaming deals, and miners interested in off-take arrangements to feed their smelters, Selby told Reuters News Service in an interview. RNC owns 50% of the Dumont Project with private equity firm Waterton Global Resource Management holding the balance.