Canada's Royal Nickel turns producer with two acquisitions

By Susan Taylor
TORONTO, Feb 1(Reuters) - Canada's Royal Nickel Corp
RNX.TO , capitalizing on discount asset prices as commodity
markets swoon, announced two cash and stock acquisitions on
Monday that transform the mine developer into a cash-generating
nickel, copper and gold producer.
Royal Nickel Chief Executive Mark Selby said the company
will acquire a 67 percent stake in Australia's privately-held
Salt Lake Mining Pty, in a deal worth C$7.7 million, and 100
percent of Vancouver-based VMS Ventures Inc VMS.V , in a
separate transaction worth C$11.4 million.
Salt Lake Mining owns the Beta Hunt Mine, a low-cost nickel
and gold mine in Western Australia. VMS's main asset is a 30
percent stake in Reed Mine, a Manitoba copper mine that is
70-percent owned and operated by HudBay Minerals HBM.TO .
"When you're close to cycle lows is the time to be picking
up the assets. You never know for sure when you're at the
bottom, but I think we're pretty close," Selby said.
"We're basically picking these things up for a fraction of
the cost to put them into production."
In 2015, production from Beta Hunt Mine and a 30 percent
stake of Reed Mine totaled approximately 4,000 tonnes of nickel,
4,000 tonnes of copper, and 3,300 ounces of gold.
In 2016, combined production is estimated at 3,500-4,500
tonnes of nickel, 4,000-4,500 tonnes of copper, and
35,000-45,000 ounces of gold, as Beta Hunt ramps up gold
production.
Royal Nickel expects to announce more such modest deals,
Selby said.
"It's these markets that create opportunities," he said.
"Picking up assets close to the bottom is one of the ways to
really create value for shareholders."
Royal Nickel, which expects a nickel supply deficit to
emerge later this year, is developing the new Dumont mine in
Quebec.
Project finance efforts will resume when nickel prices move
above $5 a pound, Selby said. The price of nickel on Friday
was$3.88 a pound.
Dumont is expected to produce 33,000 tonnes annually for the
first five years, and 54,000 tonnes per year thereafter, with a
mine life of more than 30 years.