RNC Minerals (TSX:RNX) – The Dumont Nickel-Cobalt Project: An Exciting Option?

The RNC Minerals Company Logo.
RNC Minerals
  • TSX: RNX
  • Shares Outstanding: 608M
  • Share price C$0.31 (31.03.2020)
  • Market Cap: C$185M

Last week, Crux Investor explored the numbers behind gold-producer RNC Minerals’ encouraging Q4/19 results.

Now, fresh from an uplifting interview a few weeks ago with RNC Minerals’ CEO (TSX: RNX), Paul Huet, Crux Investor interviewed Johnna Muinonen, the President of Dumont Nickel (a subsidiary of RNC Minerals).

Nickel ore
Nickel ore

We were curious about how RNC Minerals’ former flagship project will be developed to add value for shareholders. RNC Minerals investors have been focussing on the company’s strong, stable gold-production, but have they been overlooking one of the most exciting elements of the story?

If RNC Minerals is a company that takes your interest, you may well want to check out our previous update from Huet. We’ve covered RNC Minerals with detailed investigative articles for much of the last year. Make sure you check them out.

Nickel, Nickel, Nickel

Muinonen is a nickel lifer. Her experience, expertise and enthusiasm was tangible during our interview. She has a similar level of passion and drive as her CEO, Paul Huet. That can only be a good thing.

RNC Minerals was originally known for its large nickel project, Dumont; it has the potential to be the 4th largest nickel sulfide project in the world (once ramped-up in a year 7 Phase II expansion). However, after RNC made its major gold discovery at Beta Hunt, the company moved its focus away from nickel towards consistent, cash generative gold. 51,090oz for 2H/19 at an AISC of US$1,144/oz is evidence this plan was prudent. While these results are strong, investors seem to have forgotten that RNC Minerals’ option on nickel at Dumont could potentially be a sizeable future value-generating event.

What are the key stats?

Potentially the 4th largest nickel sulfide project in the world, with a 30+ year Life-of-Mine

Scale is undeniably important, especially when it comes to Nickel investment

Nickel is the most important metal by mass in lithium-ion battery cathodes, which are commonly used by EV manufacturers. At present, nickel comprises a third of Nickel Manganese Cobalt (NMC) cathodes and 80% of Nickel Cobalt Aluminum (NCA) cathodes.

If the EV revolution is, indeed, to be a ‘revolution,’ the entire global automotive infrastructure will have to transform. This will require great change and great nickel demand, and this will only be satisfied by big projects. With the large scale of Dumont, RNC is priming itself to take advantage of nickel demand in the near future. In RNC Minerals’ Feasibility Study, released last year, initial nickel production in concentrate is projected to be 33ktpa ramping up to 50ktpa after the Phase II expansion. The estimated annual EBITDA ramps up from US$303M in Phase I to US$425M in Phase II: an average of US$340M.

Muinonen is very confident that RNC Minerals is well-positioned for when large strategic partners and operators come knocking on the door, as the +30-year LOM means that this project will produce through multiple nickel cycles.

Multiple EV Commodities In An Established Jurisdiction

The Feasibility Study states Dumont is the 2nd largest nickel reserve in the world, with 2.8Mt (6.1Blbs) contained nickel, and is the 9th largest cobalt reserve with 110,000t (243Mlbs) contained cobalt.

These are 2 EV-related commodities that have similar macro stories and fit into a coherent narrative. This makes the project easier to package and market. This diversification appears to de-risk the project, helping to avoid a reliance on a single commodity’s market conditions.

The project is located in the Abitibi region of Quebec, one of the world’s most reputable jurisdictions. This, again, de-risks the project.

Low-Cost Nickel Sulphide

Looking at the metallurgy of Dumont’s ore body, it is comprised of nickel sulphide, rather than nickel laterite.

Laterite ores require complex and extensive treatment: an extremely expensive HPAL process, whereas nickel can be extracted from sulfide ore by simple, cheap techniques, namely: pyrometallurgy.

Conversely, it should be noted that sulphide deposits are more expensive to find in comparison to nickel laterite deposits, because nickel sulphides are found deep in the earth’s crust. However, in the case of Dumont, this shouldn’t be a problem. Construction and operation of the mine and processing facilities could be made easier by the existence of excellent infrastructure, including roads, rail and access to low-cost power. It looks like a great setup economically.

The Feasibility Study places the initial CAPEX at US$1.0 billion. This no small figure, but for a project of this scale, it looks reasonable. In fact, the Dumont Nickel Sulfide project is in the low 2nd quartile of the cash cost curve.

Fully Funded Out Of Existing Cash Flow And JVs

RNC Minerals is currently churning out the cash, courtesy of its successful gold mining operations.

Adjusted earnings of US$13.7M for Q4/19 show just how far the company has come in record time. RNC Minerals has the cash to make things happen. We’ve already seen what having cash has allowed them to do. Expect more aggressive news soon.

In addition to the growing robustness of the company’s own cash situation, RNC Minerals is fully-funded at Dumont through to a DFS, FID, and construction, thanks to a JV with Waterton.

Fully Permitted

The Dumont Nickel Sulphide Project is ‘fully permitted’ and ‘construction ready’ courtesy of existing investment into the project. The Impacts and Benefits Agreement has been successfully negotiated with the local First Nation, and RNC Minerals appears to have avoided any of the typical hurdles mining companies have to face. This helps with costs and timing.

Bonuses

There are several additional optimisations that further transform the economics of Dumont for the better:

  1. Implementation of an autonomous truck fleet – This could increase efficiency and cut costs to a sizeable degree.
  2. Larger-scale initial project phase of 75ktpd – If RNC Minerals scales up this project from day 1, this will undoubtedly generate even more intrigue from nickel investors.
  3. Sale of magnetite by-product – Just like cobalt provides commodity diversification, magnetite does too. Magnetite has robust demand and monetising this by-product could make every metre of drilling much more profitable.
An open charging port on a dark grey electric car.

The last fact to remember, and this is perhaps the most important, is that the Dumont Nickel Sulphide Project is not even the primary focus of RNC Minerals anymore. The enormous potential upside is an undervalued and unappreciated nickel option that has yet to see any reflection in RNC Minerals’ share price. Should they consider spinning out the JV to get the market to recognise the value?

If retail investors are looking for exposure to the upside of the EV & battery revolution, RNC Minerals is definitely worthy of some attention.

Company Website: http://www.rncminerals.com/

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

The RNC Minerals Company Logo.

RNC Minerals (TSX:RNX) – The Dumont Nickel-Cobalt Project: An Exciting Option?

The RNC Minerals Company Logo.
RNC Minerals
  • TSX: RNX
  • Shares Outstanding: 608M
  • Share price C$0.31 (31.03.2020)
  • Market Cap: C$185M

Fresh off the back of our uplifting interview with the CEO of gold producer RNC Minerals (TSX: RNX), Paul Huet, Crux Investor interviewed Johnna Muinonen, the President of Dumont Nickel (a subsidiary of RNC Minerals).

You may also want to check out our last update from Huet. We’ve covered RNC Minerals with detailed investigative articles for much of the last year. Make sure you check them out.

RNC Minerals investors have been focussing on the company’s strong, stable gold-production, but have they been overlooking one of the most exciting elements of the story? The Dumont Nickel-Cobalt Project could offer investors exposure to the EV revolution, as nickel and cobalt demand are projected to swell. RNC Minerals will look to monetise these assets once the time is right, and nickel and cobalt markets are favourable.

Cobalt has some ethical concerns, and a contributor has covered these in detail on this platform.

Investors will be clamoring for information about Dumont, and Muinonen was happy to oblige, providing Crux Investor with plenty of nickel nuances and cobalt considerations.

We Discuss:

  1. Overview of Dumont Nickel
  2. The Nickel Market: The Impact of Covid-19 and What’s to Come
  3. Positioning and Differentiating Dumont in the Market
  4. Greener Mining Solutions Being Applied at Dumont
  5. Timing on Monetising Dumont: The Ongoing Conversations
  6. Fully Financed: How Long Will the Money Last?
  7. Feasibility Study: The Highlights

Company Website: http://www.rncminerals.com/

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

The RNC Minerals Company Logo.

RNC Minerals (TSX:RNX) – A Serious Opportunity?

The RNC Minerals Company Logo.
RNC Minerals
  • TSX: RNX
  • Shares Outstanding: 608M
  • Share price C$0.31 (31.03.2020)
  • Market Cap: C$185M

COVID-19 has negatively affected the share price of most companies. Even the historic safe haven of gold investment has suffered, with gold producers and gold explorers suffering universally.

We recently sat down with the CEO of gold producer RNC Minerals (TSX: RNX), Paul Huet. It was a candid, honest interview that should get gold investors feeling much more upbeat.

You may also want to check out our last update from Huet. We’ve covered RNC Minerals with detailed investigative articles for much of the last year. Make sure you check them out.

We took at look at RNC’s impressive Q4/19 results and discussed the fact that, very impressively, RNC Minerals’ 2020 guidance remains unchanged.

We Discuss:

  1. COVID-19: Its Impact On The Gold Price And Gold Companies
  2. Q4/19 Results: Encouraging Progress
  3. Delivering Results: Continuing To Impress With Robust Operations
  4. Getting The Share Price Back Up Where It Belongs

Company Website: http://www.rncminerals.com/

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

The RNC Minerals Company Logo.

Noun: #COVIDITY

USA, New Jersey, Jersey City, Businesswoman in front of computer, looking tired.

Noun: COVIDITY

(1) The state of being totally bored

(2) The study of a topic digitally

A Wild Week

I’ve seen some hilarious videos on social media over the course of the last week. The Italian pianist entertaining his neighbours from his balcony is my favourite so far.

As the coronavirus continues to dominate the news and the attention of our governments, many people are bored out of their minds in their state of isolation and are resorting to going online in search of distraction.

The government’s ‘social distancing’ request is being embraced by many and being ignored by an unthinking and reckless few.

Social Distancing

However, social distancing is what I’ve managed to do effortlessly with my mobile phone and tablet for so long I was getting good at it.

So, if you are anything like me right now, you are sitting on your sofa in your house reading this. You probably still have your morning coffee on your table staring at you, cold and like everything around you, static. There is nothing less inspiring than a cold coffee. You know that you need to take it to the kitchen and put it in the dishwasher, but given the lack of things to do, maybe save that for later. It’s not like you have to be anywhere…

A Still World – Get Online!

In this stationary world, it would be all too easy to slide into a holding pattern, putting decision making on the back burner. Looking out your window at an empty road may reinforce this mood. A still world creates a mob mentality: why bother moving when nobody else is? However, the reality is that the world of opportunity is right now, and it is all accessible online.

Crux Investor knows all too well about going digital. We can be at the office in London in the evening, interviewing an Australian CEO in the morning. We buy and sell shares on exchanges around the world, and we invest in mining companies with assets in countries many would struggle to pick out on a map. We have access to all the information we need, both via our own sources, and online media (not the fake news kind). There is very little we can achieve physically that we can’t achieve digitally. In reality, on a normal working day, in a non-COVID-19 world, we spend hours of it in an office, staring at a computer screen anyway. Has our daily working routine really changed that much? No. The only real difference is that, at present, some supply chains are disrupted, some demand is curtailed, and investor sentiment has been flushed down the toilet. A violent bear market takes no prisoners. I’m not enjoying not being able to buy any bread either…

Volatility is a perfectly good reason for nervous investors to steer clear; after all, why take an unnecessary risk? However, volatility brings with it an immense opportunity to experience some of the biggest returns in your investment career. Investors might feel they lack the knowledge to navigate volatile markets. However, it’s not like you don’t have a lot of free time on your hands to learn how…

Crux Investor is going to keep the content streaming out, so if you’d rather do something productive with your time, now is the moment to change your mindset: become digitally minded. On our website, you will find in-depth interviews, articles, company profiles, opinion pieces, podcasts and transcriptions. All our content should help turn the next few months from coma-inducing into profit-inducing.

It’s time to take advantage of your free time, even if you just use the time to learn and monitor rather than to invest.

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

USA, New Jersey, Jersey City, Businesswoman in front of computer, looking tired.