RNC, private equity firm Waterton Global form nickel-focused partnership

VANCOUVER (miningweekly.com) – Canadian miner Royal Nickel Corp (RNC) has joined forces with private equity firm Waterton Global Resource Management (WGRM) to buy, develop and operate nickel assets.

The companies on Wednesday announced that they had inked a joint venture (JV) accord that will result in Waterton buying a 50% stake in RNC’s Dumont nickel project, in Quebec, for C$30-million in cash. The transaction values Dumont – billed as one of the world’s largest undeveloped nickel deposits – at about C$60-million.

RNC and Waterton have also agreed to inject $17.5-million each into the newly established limited partnership that will own Dumont, support its advancement to development, as well as to acquire other high-quality nickel assets globally. The JV entity's objective is to establish a pure-play nickel company with multiple projects operating in stable jurisdictions.

"This transaction clearly highlights the value of the Dumont nickel project and will allow us to continue to advance Dumont. RNC is very pleased to partner with WGRM, a leading mining private equity firm with exceptional in-house mining and investment expertise. WGRM's unique approach combines proprietary expertise and patient capital over the course of the mining cycle and provides our JV with the ability to advance nickel projects on an opportunistic timeframe,” RNC president and CEO Mark Selby said.

WGRM will make an immediate $5-million cash payment to RNC and contribute $17.5-million cash to the JV entity on behalf of RNC, to pursue the nickel acquisition and Dumont development strategy. Including WGRM’s own contribution of $17.5-million to the JV, the JV will have $30-million of cash available immediately to pursue the nickel acquisition and consolidation strategy.

SIGNIFICANT ASSET
Located in the Abitibi mining camp of Quebec, Dumont is fully permitted and shovel ready. When in production, it is expected to rank as the fifth-largest nickel sulphide operation in the world by yearly output and contains the third-largest nickel reserve in the world. Once in operation, the mine will produce nickel for over 30 years.

The Dumont deposit contains about 6.9-billion pounds of nickel in the proven and probable reserve categories (held in 1.18-billion tonnes grading 0.27% nickel) and 9.75-billion pounds of nickel resources in the measured and indicated category (held in 372-million tonnes at 0.28% nickel and an indicated resource of 1.29-billion tonnes grading 0.26% nickel).

A June 2013 feasibility study had calculated an after-tax net present value of $1.14-billion, using an 8% discount rate, with an after-tax internal rate of return of 15.2%.

RNC currently holds stakes in the producing Beta Hunt gold and nickel mine, in Western Australia, and a 30% stake in the producing Reed mine, in the Flin Flon-Snow Lake region of Manitoba.