RNC Minerals has received positive results from CRU’s value-in-use market analysis on RNC’s innovative roasting approach on several different nickel concentrates, including the nickel-cobalt concentrate grades expected to be produced by its Dumont nickel-cobalt project. Dumont is the largest known undeveloped nickel reserve in the world and second largest undeveloped cobalt reserve.

“CRU’s market analysis determined a significantly higher value from RNC’s roasting approach over traditional smelting and refining. The 25% improvement in payability calculated for nickel concentrates would allow a producer of various nickel concentrates to realize an additional $1.10 for every pound of nickel in concentrate produced at current $6.00/lb nickel prices,” said Mark Selby, President and CEO of RNC Minerals.

“This benefit provides tremendous leverage as nickel prices increase,” continued Selby. “Dumont is expected to produce the highest-grade nickel (29%) and cobalt (1%) sulphide concentrate in the world, providing maximum flexibility for potential partners and offtake parties from a wide range of nickel consuming sectors, including the battery and stainless steel markets.”

The CRU study looked at toll-processing in Asia for a range of nickel concentrates with nickel content ranging from 14% to 29% through to a final ferronickel product. It found that net payabilities using this approach for all concentrates were significantly higher than current market terms based on CRU’s estimate of long-term nickel prices, product premiums, and tolling costs. For a 29% Ni concentrate, which is the grade expected to be produced from Dumont, the Ni payability for concentrate was estimated to be 94%, or 25% higher than the top end of the estimated current 70-75% market range for nickel sulphide concentrates.

RNC’s alternate roasting approach allows for the use of nickel concentrate by a wide range of nickel consumers, including large scale integrated NPI/stainless plants converting feed into finished product at higher recoveries and significantly lower processing costs, resulting in expected payabilities that are much higher than traditional smelting and refining.

RNC successfully completed a bulk concentrate test in early 2016 and, in co-operation with a leading Japanese trading house, successfully delivered roasted concentrate samples to multiple potential end users across Asia and Europe using RNC’s alternate roasting approach.

RNC believes that market prices over the last several years from traditional nickel smelters and refiners results in the concentrate producer receiving approximately 70-75% of the contained value of the Ni in the concentrate, allowing the smelter/refiner to capture 25-30% of the concentrate value (less their operating costs and recovery).

After successfully demonstrating the potential of roasted Ni concentrate as a more valuable alternative to traditional smelting and refining in 2011, RNC worked with the Tsingshan Group, beginning in 2012, to validate the concept. In 2014, Tsingshan began construction of the first plant to directly utilise nickel sulphide concentrate as part of the stainless steel making process and has since built an additional plant using the roasted Ni concentrate approach. Additionally, Tsingshan signed an offtake agreement with Western Areas in late 2016. RNC believes Tsingshan’s successful use of roasted nickel concentrate in their production facilities in China is an important development for the nickel market.

RNC’s work with a large Japanese trading house indicates that roasters in Asia are able to process feed at an approximate cost of $30/t. When combined with the average integrated NPI/stainless conversion cost of approximately $80-$90/t (according to Wood Mackenzie), the implied conversion cost is approximately $110-$120/t of concentrate (equivalent to some $400/t of contained nickel for a 29% concentrate or about 3% of the current LME price of $13,800/t). This compares very favourably to the 25-30% of the concentrate value believed to be currently captured by traditional smelters/refiners. The CRU value-in-use study is expected to be used to estimate the terms that roasting market participants would require to be willing to process the nickel-cobalt concentrate expected to be produced by Dumont as compared to these current market benchmarks.

CRU has considered a scenario under which Asian processors would process nickel concentrate on a tolling basis. This means that the concentrate producer would retain ownership of the ferronickel product, and simply pay the processor to cover their costs, plus a margin.

The picture shows a bulk sample being mined at the project. Dumont highlights:

• World’s largest known undeveloped nickel reserve and second largest cobalt reserve
• Large scale, long life nickel and cobalt production – 33-year life with over 1,000 Mt of reserves. Potential for much longer life/future expansions from equally large resource
• Initial annual production of 33,000 t of nickel and 1,000 t of cobalt contained in concentrate
• Expanded in year five to an annual average of 51,000 t of nickel and 2,000 t of cobalt
• World’s highest grade Ni (29%) and Co (1%) sulphide concentrate – suitable for feed to both the stainless steel and battery market
• Dumont proven and probable reserves consist of 1,180 Mt of ore containing 3.15 Mt of nickel and 126,000 t of cobalt
• Shovel-ready: feasibility study and permitting complete; strong community support
• Conventional open pit, mine-mill operation using proven sulphide flotation
• Structurally low-cost operation: significant infrastructure in place, low strip ratio (1.1:1)
• Excellent jurisdiction: Abitibi region of Quebec with significant labour and capital infrastructure
• Significant additional value potential from the roasted Ni concentrate approach advanced by RNC
• RNC has a 28% interest in the nickel joint venture (with Waterton Global Resource Management) that owns Dumont.

RNC is a multi-asset mineral resource company with a portfolio of nickel, cobalt, and gold production and exploration properties. Besides its 28% interest in Dumont, RNC has a 100% interest in the producing Beta Hunt gold and nickel mine located in Western Australia and a 35% interest in Orford Mining Corp, a mineral explorer focused on highly prospective and underexplored areas of Northern Quebec and the Carolina Gold Belt in the USA. RNC also has a 27% stake in the producing Reed mine in Manitoba.