RNC Minerals (RNX) – Share Rollback Clearly Good for Retail Shareholders

RNC Minerals
  • TSX: RNX
  • Shares Outstanding: 608M
  • Share price C$0.57 (23.05.2020)
  • Market Cap: C$347M

Matthew Gordon Interviews Paul Huet of RNC Minerals, 14 May 2020

It has all been enabled by solid gold production numbers and the resulting cash. And it hasn’t happened by accident, or just because the price of gold has risen $500 in the last 8-months. This turnaround story, led by CEO, Paul Huet, has happened by design and rigorous planning.

Exciting Moves

The recent news flow is also by design and rigorous planning. Some exciting moves by the company; buying back of the entire Morgan Stanley Royalty; the acquisition of Spargos Reward; a name change; and a rollback. Shareholders are being asked to vote on these in June as they require shareholder approval.

Not that we can imagine why shareholders would want to contradict the companies recommendations, we thought we should look at the moving parts again.

Morgan Stanley Royalty

RNC Minerals has managed to eliminate the Morgan Stanley royalty that has stood for decades. This move is worth tens of millions to the bottomline, and this should have a truly transformative impact on the company’s ability to profitably fill the Higginsville Mill, which is the name of the game.

Spargos Acquisition

A group of four mining workers stand proudly in front of a huge hunk of gold ore.
Beta Hunt Coarse Gold

The Spargos acquisition is super smart. It adds higher-grade ounces to the RNC feed for their mill. It also signals to Maverix that the negotiation on their Beta Hunt royalty just got serious. RNC Minerals has all the feed it needs for several years and is happy to play the waiting game. Beta Hunt is a significant proportion of the Maverix revenue. And it hard to see how RNC Minerals makes money mining their under the current royalty agreement with Maverix Metals. Maverix needs to come to the table with a reasonable offer or be prepared to write down its revenue forecasts from Beta Hunt for the foreseeable future. Tough play by Huet, but absolutely in the interests of the company and shareholders as always.

Karora Resources

The name change is a no-brainer. Institutions and gold funds still think of RNC Minerals as the Royal Nickel Company. Why, I don’t know, but they do. We’ve had those conversations ourselves. I don’t care what the new name is and to focus on it is to miss the point. Huet has instigated wholesale change in the company. It is producing gold; it has a mill; it has c.$40M cash; it has removed a large royalty component to costs; it has replaced the operational team; reduced costs; reduced AISC; consistently delivered ounces through fires, floods and COVID-19; it has made cheap accretive acquisitions; I can go on and on. The point is it has been all-change throughout the company, and it’s time for Huet to put his stamp on the things. I’ll give him this one without missing a beat.

Share Consolidation

In addition, a share rollback is what investors have been waiting for. For savvy investors this isn’t a case of why, but why haven’t they done this sooner. This move, if voted through transforms the company from junior to mid-tier territory. It is especially good for long suffering retail investors. Why?

US Generalist Funds cannot invest in penny stocks. The roll back removes this barrier and opens RNC Minerals up to significant global trading accounts. Finally! And as a +100,000 oz producer, it gives the company a capital structure in line with the piers it aspires to compete with. Perhaps this next reason is a little forward looking, but not out of line with current aspirations for the company, should the company be in a position to look at M&A in the US, and potentially a listing in the US at some point in the future, it takes them past the required $3 barrier. But perhaps the biggest component which is often forgotten, by retail investors in particular, is the ability to use margin.

Prior producer consolidations have all been well received. Companies who have successfully consolidated: Americas Gold & Silver, Endeavour, Eldorado, Equinox, Golden Star, Leagold, Teranga, TorexGold. Verus Peers the average performance metrics look good:

+26% 6-month; +44% 12-month; +32% 24-month

Other important factors to consider in another article are:

  1. Improved per share metrics – greater analysis accuracy, better financing pricing, lower commissions for those charged on a share basis
  2. Institutional / Banker / Broker support – these guys want a rollback so they can support the stock
  3. Increased institutional investment eligibility – gets company out of the penny stock territory and into significantly increased liquidity
  4. Increased institutional investors should reduce shorting
  5. Current gold bull environment is positive

If you are a shareholder, first of all congratulations, this company is finally going places. And secondly, my take on the shareholder vote is show confidence in the CEO who has turned this ship around and vote with the company and its recommendations and look the future because it is bright.

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.

RNC Minerals (RNX) – An Eliminated Royalty And An 11:1 Rollback: Exciting Times Ahead?

The RNC Minerals Company Logo.
RNC Minerals
  • TSX: RNX
  • Shares Outstanding: 608M
  • Share price C$0.50 (14.05.2020)
  • Market Cap: C$301M

Interview with Paul Huet, CEO of gold producer, RNC Minerals (TSX:RNX).

We’ve covered RNC Minerals with detailed investigative articles for much of the last year. Make sure you check them out.

It seems like we just got off the phone with Huet! The gold producer has been hitting it out of the park recently with good news after good news. This latest update could top the lot…

RNC Minerals has managed to ELIMINATE a royalty that has stood for decades and this could have a truly transformative impact on the company’s gold mining economics.

In addition, a share rollback could be just what gold investors have been waiting for, but why has it taken so long? Why not earlier? A crucial watch for gold investors.

We Discuss:

  1. Morgan Stanley Royalty: Timeline, Terms and Possibilities
  2. Share Consolidation Proposal: Reasoning and Shareholder Benefits
  3. What to Look Forward to Next?

CLICK HERE to watch the full interview.

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) – Will A Name Change And A New Asset Propel This Gold Producer Forwards?

The RNC Minerals Company Logo.
RNC Minerals
  • TSX: RNX
  • Shares Outstanding: 608M
  • Share price C$0.50 (14.05.2020)
  • Market Cap: C$301M

Interview with Paul Huet, CEO of gold producer, RNC Minerals (TSX:RNX).

RNC Minerals has been some turnaround story. The gold producer has been in top gear for the last 12 months, and this is mainly down to Huet’s excellent stewardship.

We’ve covered RNC Minerals with detailed investigative articles for much of the last year. Make sure you check them out.

What is Huet’s latest update? The gold producer had excellent Q1/20 results, and now a name change is on the cards, as RNC Minerals looks to shed its legacy issues. RNC Minerals is a nickel company no longer. Gold is the order of the day, and lots of it.

In addition, the new gold acquisition, Spargos, could be an absolute game changer. 2020 could have a hell of a lot to offer for gold investors.

We Discuss:

  1. RNC No More: Name Change Announcement
  2. New Acquisition: What Do They Know and When Will They Have News on the Economics
  3. 2020 Plan: What’s to Look Forward to?

CLICK HERE to watch the full interview.

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) – I watch the ripples change their size (Transcript)

The RNC Minerals Company Logo.
RNC Minerals
  • TSX: RNX
  • Shares Outstanding: 608M
  • Share price C$0.50 (14.05.2020)
  • Market Cap: C$301M

Interview with Paul Huet, CEO of gold producer, RNC Minerals (TSX:RNX).

RNC Minerals is a great turnaround story in the gold space. CEO Huet returns to talk us through the latest updates for the stable gold producer with exploration potential.

After becoming a much less nickel-focussed company, RNC Minerals could now have a name change to match. RNC Minerals could become Karora Resources (TSX: KRR). This is dependent on shareholder approval, but he claims that shareholders have been keen on a name change for a long time. RNC Minerals has been suffering from some legacy issues when it comes to marketing, and this appears to have put off some of the larger funds. Huet had already wiped then strategic plate clear, but now the name change could be the final step to clearly communicate the new value proposition that RNC Minerals has to offer. RNC Minerals may be completely separated from its confused, nickel-focused heritage. This is precise, focused marketing, and Huet sees it as a long-time coming.

Away from the new name, RNC Minerals has been busy working on a new acquisition: Spargos. RNC’s heightened cash flow and the Morgan Stanley renegotiation have allowed RNC Minerals to look at potential M&A much more actively. Huet sets an aggressive timescale of Q4/20, but a realistic timescale of Q1/21. The company has just signed a “definitive agreement” on Spargos, and it is just c. 45km from RNC’s plant. This gives the company 90 days of exclusivity. He claims that while the company still has to conduct its final due diligence, but the veins in the resource are a higher average grade than their underground Beta Hunt mine (excluding coarse gold). There are over 130,000oz in the resource that are over 4g/t. It’s looking like an average 3g/t grade in an open pit. RNC Minerals is now much less reliant on Beta Hunt, and this matters for shareholders. Huet thinks Spargos could have a transformative impact on RNC Minerals’ economics. The proximity to the mill is another game-changer.

Has this opened a lot of doors for RNC Minerals? Will the optionality increase the share price? Will Higginsville operations get ramped up now?

What did you make of Paul Huet? Is RNC Minerals a stock you’ll consider in the near future? Comment below: we will respond to everyone.

We Discuss:

  1. RNC No More: Name Change Announcement
  2. New Acquisition: What Do They Know and When Will They Have News on the Economics
  3. 2020 Plan: What’s to Look Forward to?

CLICK HERE to watch the full interview.

Matthew Gordon: Hey, Paul, how are you doing?

Paul Huet: Hey, Matt. Long time no see, right? Is it two days now?

Matthew Gordon: It must be all of two days. But you have some news? I don’t know why you couldn’t have told me on Friday, hey?

Paul Huet: Well, look, I said we’d talk soon, on Friday, I remember saying that and then hanging up and kind of chuckling in the background, anticipating that we would likely talk on Monday. It is good to see you again and we have got some very exciting news.

Matthew Gordon: Yes. There are 2 things that we are seeing here: we are seeing a name change and an acquisition. First of all, the name change: what are you proposing that you are going to call yourselves?

Paul Huet: Yes, look, Matt, we ran an internal process and we have come up with a new name – Karora Resources. More importantly, this is something that we have been working on for a significant amount of time now. Back when I joined the company as CEO, we started saying our strategy would be different. We didn’t want to neglect or underestimate that we still have our Nickel operation in Quebec, but the fact is that we laid down a strategy and we said to the market, and to the street that we are a Gold producer.

One of the things we learned as we were marketing is that we were being dismissed by some of the larger funds, actually. When some people were looking at registers, I actually went to the Indaba show in Cape Town, and I had 2 guys walk up to me, and the said, ‘Look, we presented to you, we had no idea you were a Gold company, because it comes up as RNC – Royal Nickel.’ So it was a bit of a disadvantage for someone who doesn’t know us.

Rebranding has always been part of our strategy. I have been saying now for months; the only thing that hasn’t changed is the name. Well, today, you see a new name and the same similar focus. I will say that the precise focus that we have had is still going to be maintaining following through with our strategy. So, new name – long time coming. Exciting. And I am very happy about that.

Matthew Gordon: Karora Resources – how are you spelling that? How are you saying that?

Paul Huet: K A R O R A. And the ticker is going to be KRR. Now, Matt, look, I don’t want to get ahead of myself here; it still needs shareholder approval. We are going to announce this. It is going to be included in our management information circular. It is going to be voted on by our shareholders, they have to vote on it. But clearly, we have been hearing a message for some time now, from even our shareholders – when are you going to change this name? We are not a base metal company, we are a Gold company.

Matthew Gordon:  Okay, so it still has to be voted on, but you are saying that you have changed everything else in the company, this is the final piece of the jigsaw for you, and you think that it will probably help people who have seen you as a Nickel company in the past to understand what you are. Okay. Well, look, good luck with that. I can’t wait to see the designs and whatever else you do. But it sounds like it is much in demand.

The second one – slightly more important to me because you guys, and I have been saying this for a while, you guys are now throwing off a lot of cash – a lot of free cash here. And it is giving you a lot of optionality, especially since you did that Morgan Stanley renegotiation. We talked on Friday about the exploration optionality that you have, and you have got that, especially joining up a couple of these zones that you are looking at. So, great optionality for you but you have also gone and decided to go and do something else with your money.

Paul Huet: Yes. Look, perfect timing, new name; Karora Resources, a new acquisition. Look, we have made a definitive agreement on an asset that is 45kms from our plant. It is a great opportunity for us in the fact that, look, we have an asset that is 45km from our mill, the grade in the resource that they have, look, we signed a definitive agreement, we have still got to conduct our final due diligence. But the grades in the resource are higher grades than are underground at our Beta Hunt mine. Now, that excludes the coarse gold. But I am talking about the average grades. So, this provides us with more flexibility. In fact, there are over 33,000oz in this resource in Spargos. Spargos is the name of it, that’s over 4g/t, so we are talking about an average grade of, say diluted, in a 3g/t, in an open pit. Open pit is cheaper, hands down, mining than it is going to be underground.

We have been saying for months now; we have been saying we have a strategy on reducing our costs. How are we going to reduce our costs? We said we are going to focus on 4 things. We clearly demonstrate that behind the scenes, we are fighting for our shareholders, we are going to create some optionality via that mill. We are so much less reliant on Beta Hunt and that matters to us and that matters to our shareholders. If we want to turn on more at Higginsville, and this property here could, look, if we really are really aggressive – let’s call it Q4/20, realistically, probably Q1/21, what does that mean? It means that 2021, our plan, once we execute this thing and we sign this thing, our plan is going to be significant and we will have the flexibility – it will be significantly different than what it is today where we are not so reliant on Beta Hunt.

So, at the end of the day, this thing here opens a lot of opportunities for us, never dismiss that grade, that high grade. Open pit, nearby our plant, you know, you talked about cash, but owning that mill in that district and that area, really provides us that option. We are the nearest player to that asset. It made a lot of sense to us to acquire that asset.

Matthew Gordon: How much data do you have? When do you start to understand how much money you are going to be able to make by putting ore from there, Spargos, into your mill?

Paul Huet: Yes, so look, by signing this definitive agreement, we have given ourselves a 90-day exclusivity period. The truth is that this definitive agreement is buy-in, we have obviously done some work behind the scenes. We are going to refine that work. Our hope is that we can get to site. We want to get to site so that we are seeing a bit longer exclusivity period. With a thing this size, you wouldn’t normally see a 90-day exclusivity period. I think with Higginsville, we closed that in a quicker timeframe. The intent here is to give us the time that we need to get to site ourselves and some of our people in Australia, and then drill down into the numbers.

Look, let’s face it; last quarter, at Beta Hunt, we were, call it 2.6g/t, 2.7g/t, this thing could be 3g/t or higher, in an open pit, open pit costs are cheaper than underground; it is that simple. The average grade of this is higher grade. The Gold price is the same. The recovery; we are going to find that out during our complete due diligence but the test report suggests that we are going to get very good recoveries on this. This is really a no-brainer for us and our shareholders; creating optionality and a very good use for some of that cash that we have.

Matthew Gordon: That’s what this is about. I think that shareholders, and certainly the conversations that we are having with our subscribers and followers is that they are wondering what you are going to do with all of this cash this year. And I guess you are staring to answer those questions. You are buying up cheap Gold in the ground, you are looking at exploring your current assets and seeing what you have got there, and all towards the end of feeding your mill so you are in control of the costs there. All of that is pretty exciting.

Have you got much more to look for this year or is it going to be just all exploration?

Paul Huet: Look, we have still got our heads down on some key initiatives here. We remain steadily focussed. Look what we have done in the last 7 to 9-months; turning this whole company around. You know, I think we have still got some excitement in front of us and look, our drill bit; that program needs to unleash some really spectacular results.

Matthew Gordon: Okay, okay. Well, look, thanks very much for the update; I know it was a quick one, but it was very interesting. I like the name change. I think it adds that freshness to the story when it is not under duress; you are not doing it under duress. You know, acquisitions with the cash; you are creating more dollars – you know, $1 equals more than $1 when you do that, so I think that is great.

Keep it going, buddy. Nice story so far. I hope it continues for you.

Paul Huet: Thanks, Matt.

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) – Ooh na na, what’s my name? (Transcript)

The RNC Minerals Company Logo.
RNC Minerals
  • TSX: RNX
  • Shares Outstanding: 608M
  • Share price C$0.50 (14.05.2020)
  • Market Cap: C$301M

Interview with Paul Huet, CEO of gold producer, RNC Minerals (TSX:RNX).

Hot on the heels of the announcement about the acquisition of Spargos and the proposed name change to Karora Resources.

RNC Minerals has agreed to pay $9M (30% $2.7M immediately, the remaining 70% paid over 30-months $1.26M every 6-months). The Morgan Stanley royalty elimination is a highly accretive transaction. The 2% + 1.75% NSR buyback effectively lowers the mining cut-off grade. The Morgan Stanley royalty covers ~2/3rd of the 1.22Moz historic M&I Resource (18,790 kt @ 2.0 g/t) and 0.68Moz historic Inferred Resource (10,634 kt @ 2.0 g/t) at HGO as well as large portions of our exploration targets. This is a significant move. And the resulting contribution to the bottom-line will be felt for years. We calculate it to be in the tens of million of dollars.

In addition this week RNC Minerals is proposing a share consolidation. 11:1. We discuss why and why not sooner.

And welcome to new addition, Roger Huet….

We Discuss:

  1. Morgan Stanley Royalty: Timeline, Terms and Possibilities
  2. Share Consolidation Proposal: Reasoning and Shareholder Benefits
  3. What to Look Forward to Next?

CLICK HERE to watch the full interview.

Matthew Gordon: Hey Paul, how are you doing, Sir?

Paul Huet Hey, Matt, how are you?

Matthew Gordon: Yes, not bad. It’s not quite a daily occurrence, but it is kind of getting there – you are throwing out the news like it’s going out of fashion. So, hot off the heels of Spargos and the rebrand situation. You’ve also announced this Morgan Stanley renegotiation. Do you want to talk to us about that? What happened? How long has it been in the works? Why couldn’t you have told me Monday?

Paul Huet: Well, it wasn’t completely signed on Monday. It’s been in the works for months now, actually. When we announced our renegotiation back in December of 2019, that was phase one. We were always working on phase two. We had a strategy and a plan to do everything we could to get this royalty eliminated. And this really, as you know, we’ve been talking about it for some time, opens up this district, this royalty. And we have been in this area for approximately two decades, almost 20-years, so now we are just further taking advantage of what we started. We started with phase 1, quickly did some drilling. Identified 5 areas. Now phase 2 comes along. We wipe out the last 2%. We take out the NSR component of the legacy portion of that royalty. This is a game changer for us. This really gives us flexibility, optionality. This is an opportunity where a company takes advantage of spending USD$1 and where it creates USD$2 to USD$3 for our shareholders. This is the best way for us to be spending our money to create value for our shareholders.

So, I’m obviously, I’m jazzed, I’m excited. It’s one more step in our strategy. One more thing, part of our focus. We’ve been in control for a long time now. This has been part of our strategy. We’ve executed on it.

Matthew Gordon: Okay. I mean, a couple of things there – what price did you end up paying for this?

Paul Huet Yes, it was USD$9M. Just think of it this way, look at it this way, Matt; today we have at Higginsville, when we bought Higginsville, we had 1.9Moz in our resource; measured, indicated and inferred. That’s all three categories. I know you’re supposed to split them up. We have 367,000oz of 2P reserve. You start looking at these numbers here, these things pay themselves back quite, quite quickly here.

The first 5%, of it was phase one, you can effectively say from the beginning to the end, a royalty that’s been in place for two decades, we’ve really paid USD$9M. It was always part of our strategy to continue doing what we’re doing. So, for us, again, the dollar spent was worth USD$3 for our shareholders in return as we continue to unlock this district here.

Our backs are not against the wall anymore; we now have Spargos. We’ve got Spargos in play here. Let’s say we get that completed, it could be as soon as Q1/20 that we’re mining in Spargos. We have no royalty here at Higginsville. We have more flexibility and optionality than we’ve ever had in our lifetime. Not so reliant on Beta Hunt.

The grade at Spargos is actually higher grade than our underground at Beta Hunt. And I know we’re talking about this royalty, but all of these things together are part of a larger strategy. It’s that simple. Yes. I can’t help but be excited about eliminating the royalty.

I’ve been mining for 33-years, Canada, the US, Australia, South Africa; it’s very uncommon that a mining company can actually repurchase or buy back, or eliminate their complete royalties. It is a very challenging thing to do. And how many of us look at ourselves in the mirror and think we’re a little bullish on Gold here? I’m certainly bullish on Gold. I think what’s in front of us is pretty exciting.

So, 1.9Moz of measured, indicated, inferred, is without a drill hole. That’s without any drilling. We inherited that resource. Once we start drilling this thing here, it could double, then we’re going to look back in time and go, man, are we ever glad we were aggressive? So, I’m very proud of the team. I’m very proud of the success. I think it is an amazing step forward for the new company as we proceed.

Matthew Gordon: Look, I can hear that you’re as pumped and excited as ever. I’ve been talking to people in the market about what the generation of this free cash flow that you’re producing now: you are making money, month after month, quarter after quarter, and it’s giving you optionality, which is great. And it’s a case of the markets looking at you to what you’re doing with it. And you’re saying you are going to put that into the exploration of these five new targets you’ve identified. You’ve made this acquisition at Spargos. You’ve renegotiated the Morgan Stanley deal, which is obviously fantastic. So those are all options that you’ve got under your control and I think that sends a big, loud message to the market, which I think is fantastic, but you’ve also done something else. You’ve also done a, or you are proposing a share consolidation? Why? Why have you done that?

Paul Huet Yes, so, actually, let’s clarify that: so, we put that in our management information circular based on the heels of our shareholders. This is us as a board and as a company listening to our shareholders. We have had a large amount of institutional shareholders, even some retail shareholders, some very significant retail shareholders have said to us, why wouldn’t you do this? We said, let’s pose the question to the people we work for – our shareholders. Let’s put it in the management information circular and allow our shareholders to direct us by voting on it. What are the advantages? Look, there’s some clear-cut advantages here too, Matt. Let’s face it, our larger, our biggest shareholder base is in North America. We open up the door for funds that can buy over a dollar. Right now, there are a tremendous amount of institutional funds that we would love to see in our shareholder base register that don’t exist, only because our share price is below it, USD$1.

Secondly, it also unlocks opportunities for funds with margin accounts. It creates opportunities to buy with margin accounts. So, opening that door will create an opportunity for us to get additional shareholders, which is certain. In fact, I actually had a call with one large retail person who said, you know what? You’ve actually, if you do this, Mr. Huet, you’re actually going to give me free money, and I didn’t understand what he said. He said, let me clarify; my own margin account will be created by you doing this in my retail. He’s a retail shareholder. He said, I’m now going to have an extra USD$50,000 that I’ll be able to do whatever I want with because their share price is over a certain price and it’s not a penny stock anymore.

Look, from the USD$0.19c we were at, our low at USD$0.50c here, we are 2.5 times there. There’s a lot of room here for opportunity and growth for us. I’m always a firm believer that you can’t go wrong if you listen to your shareholders. You’re not going to make everybody happy, but you should always at least listen to what they have to say. And this is a perfect example of us doing such a thing.

Matthew Gordon: Okay, well look, Paul, I’m a big fan of the turnaround story that you were a huge, huge part of, a driver for, last year. There’s been a lot of change, a lot of change in the last week. Is there much more to come? Is there more we should be looking for?

Paul Huet Look, we will never be sitting on our heels. We’re an aggressive team. We’ve got a new name. We’ve got a good shareholder base, a good board, strong executive team, very focused. There’s no doubt that there’s some opportunities and some value that we’re prepared to unlock in Western Australia and other areas of the Gold sector. So, I’d certainly say, keep an eye on us because we’re going to continue to deliver. We’re going to continue our production. It’s our first year, again, You know, people underestimate and they forget. You know, it wasn’t that long ago that we didn’t own a mill. We didn’t have any production. We didn’t produce 8,000oz a month. We didn’t have a large treasury. We had no cash. We have USD$38M in cash, but next month here are hedges are going to be gone, Matt.

So, as things come forward for us, we’re starting to make money here. We’re generating good cash at these prices. So, I’d say it’s a pretty exciting time. We have just got to remain focused, continue to deliver on our strategy and continue to have a strategy. Putting together a strategy and a plan and executing on it – you get things done. So, again, I’m quite excited. It’s been an exhausting week. It’s been a very exciting week. I have got to tell you, on a personal note, I adopted a little baby boy. So, whether I’m supposed to say that or not, he’s my seventh child. I’m a very proud father and tired daddy, but very focused and happy to work for my shareholders.

Matthew Gordon: That is fantastic. I’m talking about the adoption of the baby boy – congratulations! Number seven to join the clan. That’s amazing.

Paul Huet: Number seven: Mr Roger Hewitt. Amazing little 4lb, little beautiful little boy.

Matthew Gordon: Oh, well done. Congratulations. Obviously, well done with the company as well, but that’s great news. Paul, I better let you go. You’ve got to get back to the family, Joyce, and the kids. So, thanks very much for making the time today. I appreciate the phone call. I really do, but you know, let’s speak soon.

Paul Huet: Alright, let’s stay in touch, Matt.

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) – Outstanding Q1/20 Results For This Gold Turnaround Story

The RNC Minerals Company Logo.
RNC Minerals
  • TSX: RNX
  • Shares Outstanding: 608M
  • Share price C$0.50 (14.05.2020)
  • Market Cap: C$301M

We recently decided to carry out another interview with Paul Huet, CEO of gold producer, RNC Minerals (TSX:RNX).

We’ve covered RNC Minerals with detailed investigative articles for much of the last year. Make sure you check them out.

The Q1/20 results are outstanding and Huet is delighted. We expect gold investors will be too. RNC Minerals has managed to hit its gold production targets in the midst of the COVID-19 pandemic, while most gold producers have fallen asunder. This is excellent management and long may it continue.

Now, gold exploration and share price growth appears to be on the cards. Let’s unpack this…

We Discuss:

  1. Q1 Results: Headline Numbers and Great Success
  2. Continuing the Winning Streak: How Will They do it?
  3. Strengthening the Cash Position: Free Cash Flow and Optionality
  4. Possibilities for Exploration: A Look into Trident and Aquarius

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.

Jervois Mining (ASX: JRV) – Cobalt Has Been “CRUSHED.” Now What?

The Jervois Mining Limited company logo
Jervois Mining Ltd.
  • ASX: JRV
  • Shares Outstanding: 642M
  • Share price A$0.19 (14.05.2020)
  • Market Cap: A$122M

Have a watch of our recent interview with Bryce Crocker, CEO of Jervois Mining (ASX: JRV).

Jervois Mining is an ASX-listed mining company with a focus on cobalt, but with significant exposure to nickel and copper. Jervois Mining has assets in Uganda, Australia, and the United States (the main focus).

Crocker was incredibly honest during our interview. He is clearly aware that COVID-19 has thrown a spanner in the works of the EV revolution, especially on a consumer level: will they even be able to buy cars after this crisis is over?

The EV market is already relatively small (2M) compared to conventional gasoline vehicles (100M), but Crocker thinks that the position of his cobalt assets, in America rather than the unstable DRC, could be highly advantageous. Will the U.S. government see cobalt as a strategic commodity? This has been touted before, but it remains to be seen. Will green energy and, therefore, cobalt, win the day?

We Discuss:

  1. Company Overview
  2. Grim Outlook for EV Revolution: Predictions Post-COVID-19
  3. Jervois Mining: Survival Tactics Involving the US
  4. Green Mining to Prevail: Hope for EVs
  5. BFS Completion Timeline
  6. Negotiating Deals at Present or Waiting for the Pandemic to Pass?
  7. US & Cobalt: Outcomes of Nationalisation
  8. Contributing Value to Jervois Mining: What Takes the Cake?
  9. Plans for Non-Core Assets: The Future
  10. On Listing in the US

Company Website: https://jervoismining.com.au/


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 Jervois Mining Limited company logo

Jervois Mining (ASX: JRV) – Thought that was always the plan (yeah) (Transcript)

The Jervois Mining Limited company logo
Jervois Mining Ltd.
  • ASX: JRV
  • Shares Outstanding: 642M
  • Share price A$0.19 (14.05.2020)
  • Market Cap: A$122M

Interview with Bryce Crocker, CEO of Jervois Mining (ASX: JRV).

Jervois Mining is an ASX-listed mining company with a focus on cobalt, but with significant exposure to nickel and copper. Jervois Mining has assets in Uganda, Australia, and the United States (the main focus).

The company is hoping to benefit from the much-discussed and much-distressed EV revolution by producing raw battery materials. COVID-19 appears to have put a real spanner in the works of the EV thematic, though Crocker suggests the US government is viewing cobalt as a strategic commodity, and Jervois Mining could benefit.

Crocker paints a “profoundly negative” picture of the impact of COVID-19 on EV global supply chains. COVID-19 hasn’t just compressed cobalt demand, “it has DECIMATED it”. China was down c.80% in Q1/20 and the West is down 40%-50% in Q2/20. Some companies are losing as much as “US$100M per day.” There is no positive scenario near-term. Crocker expects a massive “dislocation” of the supply chain across 2020, and says people aren’t expecting it.

How does Jervois Mining plan on taking advantage? Do its hopes lie in the hands of the US government? Government subsidies for EV manufacturers are starting to flow back in, but they have been crushed because their export markets are off; this is particularly true of China. It’s also very difficult to be bullish when it comes to aerospace right now. Who knows when the airline industry could recover? There is a lot of uncertainty right now.

Crocker claims cobalt is a unique commodity, with 75% of cobalt coming out of the unstable Democratic Republic of Congo. The supply chain looks incredibly fragile as it is, and COVID-19 has worsened problems. The major mines in the DRC are still operating. Some borders are still open, but the border with South Africa is closed, and the border with Zambia is an “unmitigated disaster,” with queues stretching as far as the eye can see. The cobalt mines are stockpiling aggressively, and a lot of the highly-technical major projects are being canceled because of key minds being repatriated. The outlook for cobalt is very binary as to what is going to happen in the DRC. Crocker expects to see COVID-19 peak in the region in the first few weeks of June. Cobalt investors will need to keep their eyes peeled. The impact could be “profound.” COVID-19 is going nowhere in the short term, and the DRC already has logistical issues: the cost of trucking copper and cobalt out of the country is US$300/t.

Crocker is actually very happy with Jervois Mining’s own position in a stable jurisdiction with a “half-built” cobalt project. He has always claimed the US is the most strategic market in the world for cobalt, and claims the country is fast catching up China. The US has no domestic cobalt mines, and Crocker thinks it is timely for Jervois to be at the forefront of this.

Cobalt has always been of geopolitical importance to the US, and now it is even more so. Crocker expects green mining to prevail as the US government tries to create jobs in 2020. Crocker remains coy on the government’s plans for possible nationalisation, but claims cobalt is “up there” because of its importance to aerospace and critical industries.

Crocker expects the BFS by the end of the year. It’s nearly finished, there are just a few things to sort on the offtake side (metallurgical test work). Travel restrictions have caused delays. Jervois Mining has c. US$7M cash to see the company to midway through 2021. Away from Jervois Mining’s core Idaho assets, Jervois has been clear it wants a partner to form a JV for the Nico Young nickel-cobalt project in Australia. The rest of the projects will have their day in the sun, but right now there is an emphasis on keeping a tight balance sheet. This seems sensible. A Tanzanian acquisition is also on the cards.

We Discuss:

  1. Company Overview
  2. Grim Outlook for EV Revolution: Predictions Post-COVID-19
  3. Jervois Mining: Survival Tactics Involving the US
  4. Green Mining to Prevail: Hope for EVs
  5. BFS Completion Timeline
  6. Negotiating Deals at Present or Waiting for the Pandemic to Pass?
  7. US & Cobalt: Outcomes of Nationalisation
  8. Contributing Value to Jervois Mining: What Takes the Cake?
  9. Plans for Non-Core Assets: The Future
  10. On Listing in the US

CLICK HERE to watch the full interview.

Matthew Gordon: Hey Bryce, how are you doing, Sir?

Bryce Crocker: Matthew,I’m well. How are you?

Matthew Gordon:  Not too bad. Not too bad. Surviving. What’s that bike in back? I meant to ask you. What’s that bike in the background? You look like a serious road bike kind of a guy.

Bryce Crocker: That bike is a specialised brand; a bit of free advertising, but it is a lot more technically advanced and capable than its jockey.

Matthew Gordon: Blimey. That seat looks terrifying. That’s the thing I would say to you, not sure I could cope. Right, why don’t we kick off with a one-minute overview of Jervois mining then I will pick it up from there?

Bryce Crocker: Yes, thanks. We are ASX-listed and we are excited to be a creating battery raw materials company, a producing battery raw materials company. We are focused on security of supply chains, supporting the rest of the industry which has clearly become more topical in recent weeks and months with the unfortunate arrival of COVID and the impact on global supply chains.

So, we are a group of executives who came from larger mining companies, and I guess, what I wanted to cover today is that we don’t typically talk about the commodity; but I did want to talk about Cobalt because it is very interesting, and if you look across all of investor presentations, you will see nothing in Cobalt and nothing in any of our statements, but it is an area where collectively as a team, we do have a lot of background. We do look at what we have as a competitive advantage, and it is. It is fascinating what has happened.

Matthew Gordon: I think we both want to talk about the same thing actually, because we talked to you previously about the company and where you are at, and we will get on to that but I wanted to talk to you specifically about what you think is happening, because of COVID-19, how you think it is going to affect buying behaviour, investment in the EV thematic, which obviously you play into with your Cobalt. What do you think the impact is going to be on all of that?

Bryce Crocker: Profoundly negative. Profoundly negative. Anyone who gets up and says otherwise doesn’t understand the physical dynamics of what is happening in the market and hasn’t really thought around what the implications are. I think Cobalt, it is interesting for a couple of reasons; I mean demand, it is not weakening – it is getting crushed. Completely decimated. I’ve never seen anything like it. You have got China orders, probably down 80% in Q1/20. All of the Western order makers: 40, 50% in Q2/20. Most of the big oil producers losing USD$100M per day, per day. And so you have had, from a supply chain perspective, you have had this massive disruption and we are just really at the start. And I think this is where this is interesting, if you look at what is going to play out over the next 3 to 6-months. We are really at the start of this process because COVID-19 from a supply perspective has really just started. We have got customers who aren’t buying or can’t buy because they are locked in their homes. Manufacturing facilities that are shut. So, if I am a steel mill, and I am getting ferronickel, ferrochrome, ferro cobalt – all of these deliveries, I don’t want that. That’s getting pushed back to the traders who are pushing back to the producers, and this shock is getting pushed through the system and is going to take time to flow through.

 But if you look at what is happening to end demand on Cobalt, I mean, electric vehicles, there’s no positive scenario in the near term as to what is happening for EVs, clearly. Orders are being crushed. But as you look forwards, I do think that the Chinese are trying to come back on. Their biggest challenge, from what I understand, is that really their export markets are off. They are trying to turn their economy back on, get those order flows to try to start again. They are obviously, again, it is the incentivisations, the government prioritisations for electric vehicles, that’s flooding back in.

But any way you look at it, electric vehicles, the numbers are fluid but it is going to be a significant, significant reduction. Even over last year, and we are talking growth rates that have gone. So that’s the bad news on EVs. But is that a structural, permanent shift? I can’t talk about that. I don’t believe so, but it is going to create a massive dislocation in the supply chain across 2020 that people weren’t expecting.

 So that’s on the electric vehicle side, which is obviously Cobalt Chemicals, Cobalt metals – aerospace: it’s pretty hard to be positive on aerospace right now. I would suggest that this is 30% to 40% down. Oil and gas – it is pretty difficult to be positive on oil and gas type exploration drilling, so cobalt gasses etc.

So, demand is bad, but I think, taking away from that, Cobalt is kind of unique because you have three quarters coming out of one country that is highly unstable so, we all hope that Africa, including the Congo, gets through COVID. We are sitting in a part of the world where we are relatively very fortunate. There are some other parts of the world that don’t have the health infrastructure. The majority have immunocompromised complications because of HIV which don’t have the efficiency of the governance, perhaps, that we are able to rely on in the West. We are all hoping that Africa holds together as a continent, particularly the DRC because there is no safety net in the DRC if something goes wrong. But clearly, with three quarters of the Cobalt coming out of the DRC, for context, it is twice the size of OPEC on the oil market, so, it kind of matters.

In terms of what we are seeing and hearing on the DRC, the major mines are still operating. Some of the smaller ones: KiPOI*, Isoko, Kisavari are shut. But the big mines, the Katanga’s, TENKE’s etc, they are continuing to operate. The border currently is back open, obviously you have two borders to get the product out of the DRC: you have got to get through Zambia then you have got to get across from Zambia to South Africa. South Africa is shut, so the port of Durban is shut. There is material coming out to the east, through Dar es Salaam, material is coming out from Mombasa, traders are using alternate exit routes.

For the trucking, I mean, if you have ever been to the DRC, the border with Zambia is an unmitigated disaster at the best of times: just queues stretching as far as the eye can see and a lot further. So that is obviously there now. You do have Sulphur and Lime and consumables coming across. The mines in the DRC are stockpiling aggressively on the expectation that there could be some disruptions. Expats are gone. In a simplistic and broad statement, but a lot of expats with their families in South Africa, they didn’t want to be sitting in the DRC, so a lot of the critical technical expertise, major projects are being cancelled.

So, I think it really depends. So, the outlook for Cobalt is very, very binary to the situation in the DRC. They are behind us. The advise that I have seen is that the COVID-19 peak is coming; you are looking at June, week 1 June, week 2 June, in terms of when it is likely to genuinely flow through. Clearly, the potential market impact is profound. Cobalt, Metal Bulletin SG grade is trading at about, I think, around USD$14/lbs, USD$15/lbs, so that is inconsistent with demand getting completely destroyed. If you look at what has happened in the oil market, obviously, that shows what happens when demand disappears, which illustrates with the Cobalt market, there is this uncertainty there about what is going to happen in the DRC.

The Chinese refineries have inventory for now, but that inventory is not going to last multiple months. There’s material obviously sitting in Durban, which is waiting to get out, as and when the ports open again. But COVID-19 is also not going to go away. One of the greatest challenges of the DRC is logistics. It is one of the most painful places to get consumables in and to get a product out anywhere in the world. It will probably cost you USD$300/pt to get it out on the back of a truck; whether it is Copper, Cobalt hydroxide.

Zambia has installed a 14-day quarantine period, so if you are a truck driver, you come in from South Africa, you get a 14-day quarantine period upon entry to Zambia, you go into the DRC, you come back, you get another 14-day quarantine period. Trucking delays are probably up only 2 to 3-days currently. There is no shortage of guys wanting to drive the trucks, for now.

If South Africa, Zambia and particularly the DRC, they are different, there is potential for social unrest in the event of these big mine closures, clearly, to use the artisanal supplies as an example, people aren’t mining, you don’t get women and children mining artisanal Cobalt because they choose to do that versus open a corner stall selling clothes, they are doing that because it gives them the option to put food on the table. Many people are working at the big mines; they are big employers. The social implications of these sites shutting is profound. I don’t profess to have a crystal ball. I don’t know which way it is going to go but the potential market dislocation is obviously enormous.

What is highlighted in our conversations with other ERMs and other end-users, clearly the DRC has been there and people have been uncomfortable with certain aspects of the DRC, whether that is governance, whether that is the artisanal mining, for a long time, but now they are looking at the security of supply chains and realising that this really is a profound risk to their business. Being reliant on a critical component for electric vehicles, or for steel production from a part of Africa which is obviously a long, long way from you having the confidence that you are going to get the product that you need on time.

Matthew Gordon: Okay. That’s a fairly devastating picture you are painting with regards to, obviously, demand, which, as you say, you are not quite sure when that kind of comes back on because it is a kind of slightly dislocated logistic supply chain at the moment. So, if the Chinese come on earlier than the rest of the world, we are sort of playing catch up there. I know that you were talking about Cobalt in the DRC because Cobalt is a big part of the DRC economy. Can I just ask, before we get onto you, what do you think it is going to mean for the other battery commodities: the Nickels of this world, the Lithium, the graphites, et cetera. Are they as disrupted as Cobalt?

Bryce Crocker: No commodity has 3/4 of supply coming from one country. Clearly, Indonesia is incredibly important for the Nickel market, and clearly other countries are important for Lithium. I don’t pretend to know as much about the Lithium market, but from what I see, there was an expectation that Lithium was in over-supply before this began, so that kind of implies that Lithium is in for some challenges.

Lithium ion batteries, the components are subject to discrete market forces. Nickel is going to be a core component of the battery, moving forward. Everyone wants a car that is going to go a long way and gets there quickly. That’s obviously a big part in what is going in with the success of electric vehicles because everyone wants to get there quickly and get there fast and gets there safely, hence the significance of Cobalt. If Cobalt was easy to engineer out, we wouldn’t be having this discussion. There have been a lot of smarter people than I am, looking at this for a long time, but as of today, it hasn’t been possible to engineer out in a way that provides the same performance et cetera, as an 8.11 or one of the high-Nickel NCA chemistries, Panasonic, Tesla’s…

Matthew Gordon: Okay. Well, I guess the whole EV market is going to be dependent on the lowest common denominator coming through, and you are suggesting that is Cobalt, because of the dynamics in the DRC. So, let’s get back to you; what are you going to do about that? How is that going to affect your business? Because we have been reading about your and talking about your Idaho business. There has been lots of conversations about conversations that you have been having in the US with US funders. Is that your route out of this?

Bryce Crocker: Well, if you gave me a choice of, in this type of environment, what mining project would you like to have? I would take a Cobalt project in the United States with moderate capital, that is half-built. That is, as opposed to other alternatives that I could have on my plate, that is not bad. I think that I’ve always said that the United States is the most strategic market in the world for Cobalt, period. Because of the importance to aerospace, because of the importance to the steel industry and increasingly, because of the importance of electrification. The US automakers have been behind those in China but they are catching up fast, or they are planning to catch up quickly. I think that being in the United States, the United States has no domestic Cobalt mining, it is all imported, so, for us to be at the forefront of that is obviously, it’s timely and I think it does provide an opportunity.

If you look, Cobalt was always geopolitically important to the United States, now you are in a situation where anything you can do to create economic growth and jobs in the second half of 2020 and into 2021 in the US is going to be enormously important. I mean, we are all seeing the news out of the States. We are all seeing the levels of unemployment rising at quite terrifying rates.

We are already getting traction with what we want to do. Now, I think there is an opportunity to really have a profound impact and build a mine during a period when the US and Idaho is looking to create economic growth once we come out of this situation.

Matthew Gordon: It sounds logical, but it is also enhanced, I guess, by this wave of nationalism which is spreading across the US; US first. We have also read about the support that you are getting for this. You say that this is timely. This is absolutely timely for you. You have recently submitted some RPFs, is that right?

Bryce Crocker: So, this is in terms of our debt financing process. We are working the site pool with potential lenders. We will be finalising the bankable Feasibility Study for Idaho shortly to provide that to the banks on an NDA level, so they get an updated financial model. We did provide indicative term sheets in January. We have made a decision at that time not to make a final appointment. We want to progress the PFS and get to the position where we can really differentiate between the options that are available.

This is an asset which, there has obviously been USD$100M which has been spent so it is a part-way constructed mine in a great jurisdiction. Clearly, I mean, the capital markets, I spoke a little about what has happened in terms of industry on the supply chains. Capital markets, again, they have lots of volatility, but equally, lots of liquidity getting pumped into the system, I guess. USD$10Tn between fiscal injections in the US and monetary easing, certainly that is having an impact in terms of debt capital markets remaining open and banks willing to lend. And clearly you will have seen an impact in terms of what’s happened to the Dow in terms of the last 30 days or so,

So, I think as we move forward, we have moderated the timeframe because we didn’t think it was the right time to be pushing someone to go through credit right now, just given the uncertainty. I mean, we are optimistic on the future. I am in transparent in that I think demand right now is crushed but I don’t expect that to last indefinitely. I do expect there are also going to be pushes that come out of this, if you like, like COVID-19, that are difficult to judge now. I think everyone in the city is getting to like having clean air with oil use being down by 30M to 40M barrels per day. People are going to Venice and seeing jellyfish – it is things like that. But I think that it is difficult to judge what the environmental flow-through will be in our governments when they come back on and revitalise the industry, are they really going to want to revitalise industry and reallocate their capital towards ICEE production rather than taking the opportunity to use it as, essentially, a step change on the EV side.

Matthew Gordon: Right, just tell me a little about the types of institutions that were submitting bids? Because if you look at people like BlackRock, I mean, that’s the one that people are talking about, they are segueing away from coal, they are segueing away from oil, and they are moving into and investing into cleaner and greener opportunities. So, are you seeing more of that? Or is it just the usual players?

Bryce Crocker: No, I think that ESG is a big deal. I mean, I know there is a debate between you and the companies you speak with. What does COVID-19 mean for ESG? Is it on the backseat for a period? My personal view is that I don’t think it will. I think that ESG is here; it is an important part of investing. It is in the matrix of any decision-making. Also, the electrification of vehicles is something that is fundamentally important, and I think that it is going to be a criterion, if we had a coal mine up in this part Idaho, we would be having very different discussions. We would be having discussions with many of the lenders, the commercial banks aren’t in the business of funding coal mines, and equally on the equities side, a lot of investors are also, I think looking at ESG. If you want to invest in Cobalt, you have either got to go to the DRC, which is very difficult within an ESG type framework, or a lot of the other projects are large capital, long lead time, high technical risk in varied jurisdictions, not without exception, but as a general rule, some of the better projects are located in more challenging jurisdictions than the developed world.

So, again, this is where Idaho is nice; I mean, it is small. You know, I like small, I like low-risk. It’s a good way to start a business.

Company Website: https://jervoismining.com.au/


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 Jervois Mining Limited company logo

RNC Minerals (TSX: RNX) – In that orange glowing moment (Transcript)

The RNC Minerals Company Logo.
RNC Minerals
  • TSX: RNX
  • Shares Outstanding: 608M
  • Share price C$0.50 (14.05.2020)
  • Market Cap: C$301M

Interview with Paul Huet, CEO of gold producer, RNC Minerals (TSX:RNX).

Paul Huet is as excited as ever with regard to their Q1/20 Quarterly results. He talks us through the numbers. We have been impressed with the turnaround of the company since Huet came in last June. However the most impressive element is that despite fires, flooding and COVID-19 they have not only been driving their costs down and therefore reducing their AISC (down to $1,101), but also they have been producing cash.

We have been pointing this out since the announcement of the Q4/19 numbers. Investors need to understand what this cash allows them to do. The options are hugely increased. They have been looking at exploring some of their land packages with good results.

We Discuss:

  1. 1:30 – Q1 Results: Headline Numbers and Great Success
  2. 3:53 – Continuing the Winning Streak: How Will They do it?
  3. 8:39 – Strengthening the Cash Position: Free Cash Flow and Optionality
  4. 11:02 – Possibilities for Exploration: A Look into Trident and Aquarius

CLICK HERE to watch the full interview.

Matthew Gordon: Paul, how are you doing, Sir?

Paul Huet: Hey, Matt. How are you today?

Matthew Gordon: I’m all good. I’m all good here. Long time, long time. But you have got some fantastic results here I see today. Congratulations. Are you pleased?

Paul Huet: Yes, look. It’s hard not to be pleased when you can deliver results like we have in the current environment. So, I am absolutely thrilled with the team and the results we have had. It has been an outstanding Q1/20 for us.

Matthew Gordon: Yes, and that is the bit I want to talk about, but why don’t you give us the headline numbers for people who haven’t perhaps seen the press release yet? We will put a link to it on the comments section, but I want to talk about how you have done that.

Paul Huet: Sure, let me focus on a couple of things first, Matt, obviously the production – we have guidance out to the market right now: 90,000oz to 95,000oz. Q1/20, despite the challenges we have had with COVID-19, and even in January we had issues with rain and flooding, we managed to achieve just slightly under 25,000oz. Look, if you multiply that times 4, we are on a path to do about 100,000oz, which is the high end of our guidance, so I am extremely happy with the results with respect to production.

Alongside that, we managed 3 consecutive quarters, Matt, to reduce our All in Sustaining Costs. We have been very disciplined. We have been very focussed at following our costs. We’ve always targeted four things: those 4 things were Suppliers, Royalties, people and productivity rates., top 20 vendors, and all of those things that we have been working on have been successful. We are getting to where we need to reduce that AISC. Our All in Sustaining Cost (AISC) has dropped by another USD$30/oz. We are down to about USD$1,100/oz. Our target internally is to get it to USD$1,000 p/oz. Our guidance for the year was USD$1,500 to USD$1,200/oz: it was a larger range. But the truth is, early in January we were faced with some floods, on the heels of the fires from Q4/19. We have had a challenging goal here in Q1/20 and the team have still managed to consistently deliver, so it is nothing to baulk about. I’m pretty proud of them, actually. It’s a pretty exciting time for us and our shareholders.

Matthew Gordon: Yes, for sure. The thing that amazes me is that you are forecasting the same numbers that you did at the beginning of the year despite the fires, despite the floods, despite COVID-19, how are you managing to do this?

Paul Huet: Yes, so look; we have been very proactive on the COVID-19 front. One of the things that happened to us that was actually unplanned but it was a blessing for us: was the fact that when Graeme came on, we talked early on, every interview I have had with you, Matt, we have talked about how our turnover rate went from 87% to 16%. What I wasn’t saying in that interview was where our population or our people reside: we used to have about 80% of our people fly-in, fly-out at Beta Hunt. That has completely reversed now since Graeme has taken over. We have 70% of our workforce that are local. 30% fly-in, fly-out. That turned out to be a tremendous, tremendous blessing for us throughout this COVID. The lowest we ever got to with our workforce, the lowest of the trough was 68%, which coincides perfectly with where our workforce is located. So, when companies were struggling to get people in and out of the plant, our workforce was still coming to work. We are now above 90% with both Beta Hunt and Higginsville.

 90% of our workforce is at the mine site. So that is a huge change. By managing to get that workforce locally, we reduced costs, we reduced costs of fly-in, fly-out, we have managed to maintain our production. Coupled with that, Graeme did an extremely good job of hiring a nurse right out of the gate. Look, it was way back in February it was very early on. I think that we were actually the first mining company to hire a nurse, doctors, to do some pre-screening, to put them at the mine site, to put them at the airports. We have been very, very disciplined at making sure that our people coming into the mine site are properly quarantined so that we are not infecting any of the workforce.

All these things we have been doing have been very proactive and have helped us to maintain our guidance. Look, I was asking one of the bankers yesterday, Matt, what is the number for those that maintain guidance? The number I got was anywhere between 40% and 50% of all mining companies have dropped guidance.

We are very fortunate, being based in Western Australia, that none of the governments have come in and shut us down. We are being very proactive, we are being very disciplined in what we do, and as a result, you see the numbers in Q1/20.

One of the other things I just want to talk about is another step we are doing to be very proactive; we can’t say for certain where any of this is going. I don’t think anyone can, to be quite honest, but we are taking the worst-case scenario. We are saying, what if we are forced to shut down?  If that happens, we have placed a stockpile in front of our mill. We have built up a stockpile. We are mining from 3 sources today: we are mining from Fairplay, Beta Hunt and Baloo. We have about 100,000t of stockpile in front of the mill. If you are running 4,000tpd, that is almost 1-month’s of feed. So, putting that in front of the mill is a very disciplined approach.

 In fact, I will tell you this – it is what saved us in Q4/20. When we bought Higginsville, I remember telling you this, Matt, early on, when we bought Higginsville, we got the mine, the mill, but we also got a stockpile. When we had those fires in Q4/20, we ended up using that stockpile. We had 100,000t of stockpile. We depleted that down to nothing. So, come middle of January, we were faced with no more stockpile and we started building that up by adding Fairplay North into our mix. Adding that into our mix, and now we are putting in safeguards. We are taking away that risk. We are making sure that we have ore and feed in front of the mill in case we get a call where we are asked to shut down the operations or something like that. We believe that because there is only 6 to 10 people at the mill, that there will be the opportunity to keep open the mill. So, we are making sure we are very proactive in case the roads get closed, in case materials or supplies stop coming in.

Matthew Gordon:  Okay. Stockpiling, I get. That’s smart. I do remember from the previous conversation that you had done that and it kind of saved the day, as it were. So, you were getting back to building up that stockpile. I was really getting at, what has building up this cash, this free cash flow, you are making money now, you are making money, which is always nice, but it is giving you optionality, right? You have talked previously about the ore-sorter and bringing that in in terms of improving productivity. What are the other things that it is allowing you to do now and what are the things that, just in your head, that you are thinking, what’s it going to allow us to do in the future? Because money brings options.

Paul Huet: Right, let’s talk about the cash first and then I will talk about the exploration onsite. In Q1/20, we managed to increase our cash position to CAD$38.4M, what was that? Probably about a CAD$4 to CAD$5M increase from Q4/19. Look, this is an important part here: that is despite paying into CAD$5.3M into hedges. These were legacy hedges that were put in place to reduce dilution when the mill was bought. The hedges made sense whilst they were put in place for the debt. Now, we had 7,500oz of hedges in Q1/20 which cost us USD$5.3M. You add that into what we actually added to our treasury,  you are close to USD$9M to USD$10M cashflow in Q1/20 – that’s an impressive quarter.

Now, where do we go from here? Q2, we burn off those hedges. We believe wholeheartedly that people are investing in us, in fact, we are hearing it, people are telling us. ‘Look, Paul Huet, don’t hedge, don’t hedge. I believe that Gold is going somewhere else.’ Look – I’ve been in Gold for 30-years, I am not the only one who doesn’t believe that Gold has topped yet. There is an unlimited amount to where Gold can become in the next year or so.

So Q2, we will have no more hedges. We have got 35,000oz left, Matt. 35,000oz. We had 7,500oz replaced in Q1, it is easy math – it is 2,500oz pm. That’s what we were doing.  So, once these 3,500oz are gone, our hedges are gone, we are selling at the open market.

Now, what do we do about it? We are in a district that hasn’t had much exploration in almost 2-decades. Matt, we have been talking about it. We have managed to reduce that Morgan Stanley Royalty. We have always said, if we can do some work on these Royalties, we are going to change these locations of the mines. We are in an area, 1,800km2. Within 4-months we have identified 5 new areas within that 18km2 – extra cash will add, we believe organic growth is certainly, certainly something that is doable for us. But certainly, having extra cash opens up a lot of opportunities.

Look, of the 5, I will talk about Fairplay North, which has been very instrumental to us generating the stockpile. I will talk about Aquarius: Aquarius is just South of the mill. The Trident mine was what the mill was built for. It produced 1Moz, Matt. You have got a resource directly South, 5km South of our mill, it is called Aquarius. This thing is wide open. We have intercepts at 6g/t, 200g/t across 2m. We have drilled some holes into that.

So, some of this money; you are saying, well, what are you doing with that cash? There is no doubt that us putting money back into the ground, reinvesting into ourselves, paying off our debt, will really create shareholder value.

Matthew Gordon: Does Trident and Aquarius connect? Do you have enough data? What do you know?

Paul Huet: Look, I would never go out on a limb to say that, but I would say that yesterday on our call, there is indication now that Mouse Hollow and Hidden Secret, yes there are so many of them. Mouse Hollow and Hidden Secret are two satellite between pits that are between Baloo and our mill, so they are closer to the mill. Their grades are similar to Baloo, i.5 to 2g, very high-grade open pit. There is a potential that these two open pits, these two satellite pits, could connect. We are looking at that. You asked where the dollars go? That is a great place to spend dollars for our shareholders where we can unlock value. If these things connect, look – who knows what could happen in this district, right? Again, 5 areas in 4-months:  Fairplay North, we are mining at Mouse Hole, Hidden Secret, Aquarius and then that zone to the north, of the geophysics, it is a 5km structure that has been identified.

You can’t help but be excited in this district, and executing and hitting on all cylinders. Look, at the end of the day, producing cash, I couldn’t be happier.

One more thing, Matt, that I think is really relevant here; people sometimes forget that Gold is AUD$2,600 to AUD$2,700. When you consider the metal price in US dollars, when you consider the FX – oh my god, never in my lifetime have I seen Gold like this. In fact, it has been a record in Australia. It hasn’t happened in anybody’s lifetime. So, it is quite exciting to be mining in Australia at our location with these metal prices and knowing that there is no cap on Gold – who knows where it goes from here?

Matthew Gordon: I think a lot of people are quite excited about where it could potentially go. Watch this space?

Paul Huet: Exactly. Exactly

Matthew Gordon: Look – great quarter. Under conditions, as you say, not many people doing it. We interview a lot of companies. I can count on one hand how many people here are. Congrats on that, you and the team, obviously. Looking forward to seeing what you are going to be able to do with all of this cash. I think that it is a very exciting year for you. It’s no secret, we do write about you and we have been very positive about what you have been able to do in a short space of time. I think this year has started of tough, but it would be great to see what you could do by the end of it.  Thanks for picking up the phone. Keep talking to us. If there is any news, let us know. I am sure it will be coming in thick and fast.

Paul Huet: Right, hopefully we will be talking sooner rather than later. You take care, Matt.

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RNC Minerals (TSX:RNX) – The reason you loved me before (Transcript)

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RNC Minerals
  • TSX: RNX
  • Shares Outstanding: 608M
  • Share price C$0.40 (14.04.2020)
  • Market Cap: C$243M

Interview with Johnna Muinonen, President of RNC Minerals, Dumont Nickel (TSX:RNX).

RNC Minerals was originally known for it large Nickel project, Dumont, before their extraordinary gold find at Beta Hunt changed everything. As a consequence, investors have been looking towards Australian and consistent cash generative gold, and perhaps have forgotten that in Dumont they have a potentially large future value-generating event.

We spoke with Muinonen in early November to find out where they are in monetising this large Nickel asset. She gives us an update about the movement in the Nickel market and the completion of their Feasibility Study. Muinonen gets in to the detail. She describes Dumont as perhaps the most advanced large Nickel development project in the world. With a Life of Mine of +30-years it is certainly large scale. That also makes it attractive and it can operate through inevitable nickel cycles.

Clearly capable and knowledgeable, Muinonen, a Nickel lifer, appears to have the same energy and drive as her CEO, Paul Huet, and is keen to ensure Dumont is ready when large strategic partners and operators come knocking on the door. She doesn’t seem to think that is too far away. They are fully funded between now and that point, because of a JV with Waterton.

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

CLICK HERE to watch the full interview.

Matthew Gordon: Hello, Johnna. How are you?

Johnna Muinonen: I’m good, Matt, how are you doing?

Matthew Gordon: Not bad, not bad. I haven’t spoken to you since November. And I remember when RNC minerals used to be a Nickel company, so I thought I better get in contact. How are you?

Johnna Muinonen: I’m good. It’s a different days than the last time we were together, for sure. It’s a bit of a different world right now.

Matthew Gordon: Yes, it is. Obviously I think you’re referring to covid 19 impacting on the way people are doing business. But honestly, Minerals is a very different company too; you guys have done a great job on the Gold stuff, bringing in the cash. Nice and consistent. I think the market is saluting that. Well done to you guys. But the other big piece of this, which I think people have forgotten about, and I don’t think they should have because it’s potentially worth a lot of money, is the Nickel component – Dumont. What’s been happening since we last spoke? We’re about to find out. We’re about to find out, are we?

Johnna Muinonen: We are, I mean, the last time we were able to be together, now we’re doing it over video calls. So we’ve been busy with Dumont. If I look at where…first maybe I’ll get into a little bit about what Dumont is for your viewers.

Matthew Gordon: Please, just give us that one-minute overview again.

Johnna Muinonen:  The one-minute overview: RNC owns the 28% interest in the Dumont project. The Dumont project is a Nickel sulphide project located in the Abitibi region of Quebec. We’ve completed an updated Feasibility Study back in 2019. We are fully both provincially and federally permitted. And so, really at this point we’re waiting, we’ve been waiting for a Nickel market, and if we look at where we were back in October, November, December, and even earlier this year, we were really starting to come along in terms of where the Nickel market was, and getting into a bit of a bull market there.

Matthew Gordon: Well, let’s talk about that. First of all, thanks for the summary; it’s a nice reminder to people of how advanced you guys are. And the Nickel market – let’s talk about it. I agree with you. I think there was a resurgence towards August, September last year, then as predicted, the scrap kind of came into the market effecting pricing but it was expected. And you would’ve thought that the price would have sort of recovered kind of mid-year this year, but COVID-19 comes along, what’s that done for you guys? What’s it done for the Nickel market, more importantly?

Johnna Muinonen: Exactly, we talked last October, early November and  definitely, we thought the market had been a bit over-done in the summer of 2019, and Anesia announced they were going to pull forward that ore ban which is still in place. And on the back of that announcement, Nickel price took off, inventories fell down. But when you look at the stainless steel market, it definitely didn’t seem to be translating into demand on the day. It wasn’t coming from demand on the stainless steel side. So definitely thought there was probably going to be a bit of a weakness coming into Q1/20, Q2/20 of this year. Of course, with the impact of covid on top of that, obviously we’re definitely seeing that now, both in Nickel inventories as well as Nickel pricing. Nickel prices being held currently somewhere in sort of the USD$5lbs range.

We’ve got inventories that have increased over the last two to three months since January, into about 230,000t of Nickel on the LME. However, we look at that and there is definitely an impact from covid, but my personal opinion and, just when you look at this market, I think we will get past this. Fundamentally, the longer-term base, the basic fundamentals longer term remain strong. We have seen a deficit in the Nickel industry for the last four years, and that was even before the Indonesian ore ban. We’ll probably see a bit of a surplus this year, however, that’s directly related to this slowdown from covid and we will catch up to that.

Fundamentally there’s been a 10-year period of lack exploration in the Nickel sector. There really just hasn’t been anybody out there looking for Nickel. And there’s been a lack of investment in the Nickel junior side of things as well as even the major companies weren’t spending the money on exploration that historically they used to do. And really what that translates to is that we’re going to see a delay between finding new Nickel projects and being able to bring them on online.

Matthew Gordon: If I may just interrupt because I don’t want to forget to ask you, which is, if you stick around what the impact of COVID-19 is, now obviously, it’s impacting people’s ability to work now. People are being restricted to their homes. I think mostly, globally, most people are adhering to that. It’s affecting people: family businesses, small businesses, their ability to earn cash. And I think some governments are stepping in. Some governments are not. I mean surely that is going to have an impact on people’s buying behaviour, which is going to have a knock on effect into the metals market. But do you see that as a, again, I know you are used to dealing with tens of years for these types of large Nickel projects, but do you think that’s a kind of short-term impact, or do you see that not really affecting the way that large players like Nickel tend to want to plan their operations out?

Johnna Muinonen: Yes, I mean I think, I think definitely we’ll see obviously a short term drop in consumer demand: people aren’t shopping. I think I’ve seen some graphs which shows just the hugely dramatic drop in people’s buying and people shopping, which absolutely will have an impact.

The stainless steel market – most Nickel produced today goes directly into stainless steel. That stainless steel is generally used for infrastructure projects and things along those lines. So one of the things that I think will be interesting to see is, in terms of government infrastructure spending and stimulus packages, how will that really impact the Nickel market and the economy moving forward? , Nickel in the ramp up in 2007, most Nickel came out of the consumer goods space just because of the price of Nickel went up to USD$25lbs and it became too expensive.

So when we look at consumer buying – for sure – that will impact the demand on Nickel. However, I think I’m kind of interested to see what happens once we get out of this initial covid crisis, a month or two from now when governments really want to stimulate their economy. I think they’ve already talked about stimulation in China, and China has sort of come out of the initial covid lockdown and they’re starting to see manufacturing again. I think that would really help Nickel on the stainless steel side. And I think that could be a real positive as we move into Q3/20, Q4/20 this year and maybe into next year. And I think on top of that, the whole lithium battery growth sector and in the EV market and energy storage market on the battery side of things, I still think it’s a very exciting place coming forward.

And I also think that some of the interesting things that people have seen with this slowdown is really the improvement in the environment in cities; in the improvement in pollution and smog without all of the internal combustion engines driving around. So once we come out of that, I think people might look at how to do things differently, and potentially that could speed up that demand for electric vehicles as well as the demand for batteries.

Matthew Gordon: I love that argument. I think that’s so true. I think that’s so true. I think people will behave, think, act differently after this, because it’s going to affect people psychologically. We haven’t had anything like this since the Second World War: we haven’t been held captive, we haven’t been worried about food, toilet roll – had to throw that in there. Energy, seeing friends, all of all of those things you take for granted. And yes, some of the benefits, the main beneficiary here is the fact that the world is possibly a little bit cleaner as a result; we’re seeing rivers and waterways, the Thames included making a huge recovery there. So it is fascinating. I like that argument. Probably worth exploring more. But there’s, we want to talk about you today.

So given that world, that picture that you have painted for us, we have spoken to a lot of Nickel companies recently, they’ve all been telling us they are a top 10 Nickel company, definitely a top 10 at this, that or the other. How are you positioning yourself? Because you talked about the completion of the Feasibility Study in the last year, which is great. You have talked about having conversations in the past and obviously you’re working with Waterton there. So what are you doing? And I guess, what’s been happening since we spoke to advance things  with Dumont?

Johnna Muinonen: Okay, there’s a couple of different questions in there; we can get to all of them. So I’m going to start looking at competition; how are we differentiating ourselves? Like you said, you’ve been talking to lots of Nickel companies with the sort of run up in Nickel there, and a bit of some tailwinds behind Nickel. We’re seeing more and more Nickel companies, or companies that were focusing on other things, now looking at their new Nickel assets.

For us, I think we have quite a few strengths, specifically around Dumont. One jurisdiction – we are in the active mining region of Quebec. We have an educated and experienced regional workforce for both construction and operation of the project. The project has amazing infrastructure. We have water, we have rail, a rail line that’s on the property. We have an all-weather highway right beside the property. And we have very competitively priced green hydro-power which is located 8kms away from the project. So that piece, that allows us to be structurally low cost just because we’re in the right region.

Our timeline to construction; I talked a little bit earlier there where I gave it a little bit of a blurb, the overview of Dumont, we are both federally and provincially permitted. We have a recently completed Feasibility Study and with those pieces we are ready to start construction. So for investors that are looking to hit the next step, sitting in the Nickel cycle, we are perfectly positioned for them.

The asset itself is a large scale, long-life assets.  I’ve previously spoken about the Nickel market and how volatile it is. Dumont is a 30-year project that on average will produce 39,000t of Nickel annually. The long life of Dumont really allows investors increased certainty about hitting several price cycles over the life of project and maximizing their return. If you’ve got a 5 to 10 year Nickel project, you can theoretically build it and miss the price cycle at the time where you need it to pay back your investors. That 30 year life, and then plus upside after that, that really, I think, adds something to our story versus other stories.

And then finally, I think one thing that we don’t talk about enough that I’d like to start talking about with Dumont is really the green side of things. So not only will Dumont produce Nickel and Cobalt to supply the low-carbon energy storage industry it’s also a very low-carbon footprint project. 100% of our electricity is hydro sourced, and we actually increased the electrification of the project in the updated Feasibility Study to include trolley assist for our haul trucks. What that does is actually reduce our diesel consumption by over 500M litres over the life of the project, or by almost a third – this gives us the advantage. So when we’re talking to potential investors, many of these investors, especially those based in Europe have carbon footprint ESG requirements for some investments. So I really think that that helps us and that is definitely something that we can take and we can bring to the table over other projects.

Matthew Gordon: Now that stuck out: when you were talking about green hydro-power, I was going to ask you, it’s not something we’ve talked about before. We’ve looked at projects which are battery related, and you talk about, how do you get a truly end-to-end green solution here. And we’ve talked about, at the back end here, there’s a fantastic Australian company called Neo Metals, which is doing a battery recycling project, which is getting back a huge percentage of the commodities which have gone into the batteries and then recycling and reusing them. And we like that, but no one’s really talked about the front end, which is as you say, all of that diesel and that dirty power that’s used for mining, and the way that miners behave. Their ESG is not usually up to scratch. It is interesting that you’ve thought about that. And I agree, we’ve got some pretty big funds here in London who have pretty much changed their rationale for investing based on that. So I like that, that’s fascinating. Fascinating.

Johnna Muinonen:  Yes, I know, and actually, one of the pieces of work that we’re talking about right now is looking at, we had to quantify our greenhouse gas emissions from the project for our environmental permitting process, through  the province. However, looking at that life-cycle of including all of our reagents that we have to buy, including the transportation of those to site, as well as the fact that both our tailings and our waste rocks have the ability to sequester carbon passively, we are looking at trying to quantify the whole picture so that we have that for our potential investors. Because I do think moving forward that is just going to be a very important piece that we can bring to the table for various investors that are much more ESG focused today than they were five years ago.

Matthew Gordon: Well, let’s talk about that, and you’re going to need some point of differentiator, because according to a lot of companies we’re talking to, they’ve got fantastic projects as well. I don’t think they’re anywhere near as advanced as you, in all honesty. But nevertheless they’re going to be talking to the same people as you. So can you give us an idea of timing? Because again, you talked about being able to hit the cycle at the right time, being able to insert yourself to benefit from an uptake in price, et cetera. Where are you with regards to the conversations and the timing for actually monetising this? I’m not going to ask you too much about monetisation because I know you’re not going to tell us anything. You’re not going to give anything away there, but what are those conversations like? Let me put it like that as opposed to where are you with them?

Johnna Muinonen: Yes, no, absolutely. I mean, I think it’s been an interesting time in the last six to eight months, right up until PDAC in early March, we were seeing some significant positive overall market signs that definitely had us considering a much more focused marketing approach for 2020. And including that when we look at, and I want to be clear, I’m not talking about conversations specifically with us, but when we look at some of the major mining companies around the world, they’ve been publicly stating a shift of focus, and now are publicly stating that they want to look at Nickel sulphide resources, and they want to look to add those to their portfolios, or they’re looking at funding additional Nickel exploration projects.

I think in general, in the fall and early in the winter, Nickel was definitely starting to get some tailwinds. And while the short-term market is going to be a bit soft, many were starting to look at the medium and longer-term knowing that there’s a timeline to get these things into construction, to get them into production. And as we’ve indicated, as we said, we’re definitely further ahead than most Nickel companies. So when companies are looking at the space of Nickel juniors and Nickel projects, having one with a Feasibility Study, having one that’s fully permitted definitely ticks many boxes, more so than some of the projects that are earlier stage where they’re still drilling or looking to get into just starting either a PEA or a pre-Feasibility Study.

Also I think, some of them, I think for the last, earlier in the fall and early mid last year, people were still deciding how they want to divest in the battery space. I think there’s a lot of ways that people talk about the battery space. People are very excited about it. However, how do you want to invest in it? Are you looking at Lithium? Are you looking at Nickel? Are you looking at Cobalt or Copper? And I think, over the last six to nine months, we’ve really seen a couple of things: one is that almost all battery chemistries, especially for electric vehicles are trending towards more and more Nickel. As well as, when you look at major mining companies, most of them are very familiar with operating base metal assets such as Copper, such as Nickel as opposed to say, Lithium. So in terms of major mining companies that are looking around, Nickel would be familiar and in the real house.

So one of the main drivers for the timing for us to update the Dumont Feasibility Study was really around being able to come into what we saw as an upcoming bull market for Nickel with a current technical report so that we could go out and really start to market again. Now obviously, I think the COVID-19 pandemic has slowed everything down in the short term, but I really do feel confident that once we get through this I think we’re going to regain the momentum that we were seeing in the Nickel market that we saw earlier this year and late last year. The fundamentals remain strong, and the world does need more Nickel. Dumont is well positioned to weather the storm without any near-term financing requirements so then we will be well positioned to be able to emerge from the current economic crisis: the covid pandemic. We will be ready to hit the ground running when the markets return.

Matthew Gordon: Okay. I know you’re fully-financed. I know you don’t need to, although quite frankly you could these days, because I think the Gold business is throwing off so much cash at the moment, there’s no reliance to go and ask Paul for more money. You’re fully financed to take you through to…what? Until when?

Johnna Muinonen: Yes. So, I mean, I’ve talked about this a little bit before; we own 28% of Dumont. Dumont is 100% owned within the JV that we have with Waterton. And the financing for the Dumont work is contained within that JV. As part of the initial agreement back in 2017, the RMCs portion of that funding was provided by Waterton in a segregated account. We are well-financed to complete the work that we’ve planned for 2020. And then if things continue to slow, we are able to hold the project for another several years without any additional financing. And that includes maintaining the project team and all the brain trusts that sort of has worked for the last 10 to 12-years on Dumont so that we don’t have to lose that as we move forward. So in the medium to mid-term, there is no requirement for RNC to have to provide any additional financing.

Matthew Gordon: I think that’s interesting. Again, a lot of the juniors that we’ve been talking to have been cognisant of saying, we’re running out of cash but we can’t lose the, I think you just called them the brain trusts; the people with the knowledge here, because if we have to lay them off, we’re not sure to get them back on. It’s a real concern, for sure. Can we just finish off? Can you remind me of what were the highlights from the Feasibility Study with regards to the numbers -in terms of cost, returns, scale, et cetera?

Johnna Muinonen: Yes, absolutely. So we completed the Feasibility Study last year. It has an NPV8 of USD$920M, just over a 15% rate of return, 15.4% rate of return. We have an All in Sustaining Costs of less than USD$4lbs. The project itself will produce an average of, it’s a two-phase project approach. The initial phase, which is the first seven years will produce an average of 33,000t of Nickel per year and that will be expanding to 50,000t per Nickel annually after that for the next sort of, for the first 20-years. Overall the project itself is a 30-year life project. And the free cash flow once we’re an operation over the life of the project is around USD$200M per year.

Matthew Gordon: Wow. Okay. And what are you going to need to raise? I missed that number.

Johnna Muinonen: And the initial capital is USD$1Bn.

Matthew Gordon: Okay. So it’s not big by Nickel terms.

Johnna Muinonen: It’s not big by Nickel terms. I mean it’s very much, if we look at even by sort of larger scale Gold operations, if you look where we are operating in the Abitibi, it’s USD$1Bn to build a 50,000t per day plant. You look at Malartic, which is about 60kms south of us, it’s the large Gold mine that was built in 2009 for about USD$850M. If you look at Detour Gold, which is on the other side of the border from us in Ontario, again, that was more remote and needed a camp. However, it needed more power infrastructure, however, that was built for about USD$1.2Bn, USD$1.3Bn for about the same size mill.

So roughly within the area that we’re operating, we have people that are experienced in how to build these large mills, and recently. That is one of the biggest advantages with where the project is located. We get to take advantage of all of that experience.

Matthew Gordon: That’s fantastic. Well, Johnna, thanks very much for the update, and please stay in touch with us. Obviously, as we move through and sort of work out when we can get back to some sense of normality, or some semblance of normality, should I say, it would be good to sort of see how you’re getting on with regards to conversations in the market place, and can you move this forward. I mean, you are the most advanced Nickel company that we’ve spoken to, so I guess people are paying attention to you.

Johnna Muinonen: Yes, I mean I think right now we’re seeing a bit of a lull on the market side, but I do want to be clear that we’re actively working on items to move the project forward internally. So we’ve got a few things that we’re looking at this year. We have, since we last spoke, we did approve the 2020 work plan and that work plan really focuses on sort of three different things. One is maintaining our shovel-ready status. So that’s one thing we’re very proud of in terms of, we have permitting, we are ready to go into detailed engineering. With the completion of the 2019 Feasibility Study, we need to update some of our documents, which includes things like the closure plan, which is a critical element in finalising the mining lease and that goes towards maintaining our shovel-ready status. And also, we need to be able to communicate with all of our stakeholders what the results of the 2019 Feasibility Study were. That includes shareholders and obviously, we were on your show a couple of times, as well as just the local community, local governments, provincial governments. So we’ve been starting that and we’re going to work, continue to work through that in the next six months.

So we’ve been working on things like that where really we can take advantage of the time now to really reduce any sort of schedule or cost risk to the construction phase. And terms of, the Feasibility identified several opportunities to add value to the project so we are looking at several of those items, and we’re going to be looking at how we can add more information, add data, and bring some of those opportunities closer to fruition over the next few months.

Matthew Gordon: Fantastic. You sound as pumped up as Paul was when I last spoke to him. But what are you guys drinking?

Johnna Muinonen: We are pretty excited about the Nickel market in general. I mean, I think we need to get through this current period, but I think long-term, the fundamentals are good. I know I’m a Nickel bull but, definitely, definitely I think it’s an opportunity that Dumont has been waiting for in terms of the market, having one of the few Nickel projects that is able to be delivered and built in short order. Being able to take advantage of that. I think when we look at the world, there just hasn’t been enough exploration in Nickel over the last 10-years. So we’re able to really differentiate ourselves between us and other Nickel companies just because we do have a project that has a Feasibility Study, that is fully permitted, and we are ready go into engineering, detailed engineering and construction.

Matthew Gordon: You’re excited. I’m excited for you because I don’t think the market is giving you a credit for the Nickel component. I think that it’s all valued on what’s happening with the Gold. If you can move this thing forward this year, I hope you can, I’m referring to COVID-19, nothing else. If the market does recover and you are able to demonstrate to us and your shareholders exactly what it is worth, it’d be nice to see. I’m sure you’ll be delighted. I’m sure Paul will be delighted. We wish you will wish well with that.

Johnna Muinonen:  Thank you so much, Matt, thank you very much for having me on. It was good to catch up with you again.

Matthew Gordon: Beautiful. Speak to you soon.

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