Royal Nickel announces $1.1bn NPV for Ontario nickel project

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By: Henry Lazenby

17th June 2013

Updated 2 hours 29 minutes ago

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TORONTO (miningweekly.com) – Royal Nickel, which is working to develop the Dumont nickel project in Ontario’s Abitibi mining camp, on Monday announced a bankable feasibility study had demonstrated a technically and economically sound project with an after-tax net present value (NPV) of $1.1-billion, when applying an 8% discount.

The report had also found the nickel/cobalt/platinum-group metals project was expected to carry a total price tag of $2.84-billion to construct, however, the first phase would cost an expected $1.2-billion. The project would have an after-tax internal rate of return of about 15%.

Royal Nickel said the project was expected to be a low-cost operation, with nickel production slated to cost $4.01/lb during the initial phase of operations, and $4.31/lb over the expected 33-year life-of-mine. The projected costs placed the operation among the lower-cost nickel producers in the world.

The feasibility study also resulted in an 11% increase in the world's third largest nickel reserve to 1.2-billion tonnes containing 6.9-billion pounds of nickel to support a 33-year project life, including 1.3-billion pounds of proven reserves.

The Dumont project also contains one-million ounces of platinum-group metals, mainly comprising platinum and palladium reserve.

Royal Nickel added that when in production, Dumont was expected to be one of the largest base metal mines in Canada and one of the top five sulphide nickel producers globally, targeting production of more than $27-billion of nickel over 33 years, based on current reserves alone.

The feasibility study estimated initial nickel production of 73-million pounds (a year, which would increase in year five to a yearly average of 113-million pounds for the remainder of the 20-year mine life.

The Dumont project would be a conventional openpit mine/mill operation, using conventional drilling, blasting and loading with a combination of hydraulic and electric rope shovels and truck haulage. The mine is designed to produce ore at a rate of about twice the capacity of the mill, which would serve to mitigate the risk of feed shortages and allow for the highest-value material to be processed in priority.

As a result, an ore stockpile would be generated to continue to feed the mill for an additional 13 years at the end of the mine life, with the tailings deposited in the openpit.

"With our economically and technically sound feasibility study completed, I look forward to accelerating project discussions with potential partners on a financing package that will allow Royal nickel to rapidly advance the project into the construction stage following the anticipated completion of the main permitting process by the middle of next year," president and CEO Tyler Mitchelson said.

Edited by: Creamer Media Reporter

Key Assumptions1

Parameter	2015	2016	2017	Long Term
Nickel Price ($ per pound)	$9.50	$10.00	$10.50	$9.00
US$/CDN$ exchange rate	$0.95	$0.95	$0.90	$0.90
Platinum Price ($ per ounce)	$1,800	$1,800	$1,800	$1,800
Palladium Price ($ per ounce)	$700	$700	$700	$700
Cobalt Price ($ per pound)	$14	$14	$14	$14
Electricity (CDN$ per kilowatt hour)	$0.0445	$0.0445	$0.0445	$0.0445
Oil ($ per barrel)	$90	$90	$90	$90

1. Price assumptions for nickel, cobalt, platinum and palladium based on average forecasts for group of five institutions currently covering RNC where published forecasts are available (4 of 5 analysts for long-term nickel price as of April 25, 2013). Oil price assumption based on Thomson Reuters' analyst consensus estimates.

Read more: http://www.digitaljournal.com/pr/1308122#ixzz2WWTlBoKY

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Noront releases "positive" feasibility study for Eagle's Nest project in Ontario

5th Sep 2012, 2:10 pm by Joyanta Acharjee

The project is located at McFaulds Lake, James Bay Lowlands, Ontario.

Noront Resources Ltd. (CVE:NOT) Wednesday unveiled an NI 43-101-compliant feasibility study for a stand alone nickel, copper, platinum group element mine and mill complex at the Eagle’s Nest deposit in Ontario.

The project is located at McFaulds Lake, James Bay Lowlands, Ontario.

Amongst the highlights of the feasibility study, the project represents an after tax Net Present Value, at an 8 per cent discount rate, of $543 million; an after tax IRR exceeding 28 per cent; an estimated initial capital investment of $609 million and an estimated life of mine sustaining capital cost of $160 million.

Noronto said estimated operating costs were $97 per tonne or $2.34 per pound of nickel equivalent or -$0.31 per pound of nickel net by-product credits. The project has an estimated mine life of 11 years and a capital payback period of under 3 years based on a 100 per cent equity project.

In a letter dated August 10, 2012, Ontario’s Ministry of Northern Development and Mines advised Noront that the Province was in early stage discussions with Cliffs Natural Resources (NYSE:CLF) regarding a north – south all-season road that would connect the Ring of Fire to existing provincial infrastructure.

The letter confirmed the Province’s intent to contribute financially to develop the proposed all-season road subject to various environmental, regulatory and financial approvals.

The ministry advised Noront that "the current expectation is that the all-season road would be made available for use by industrial users other than Cliffs, with access fees generally based on proportional road usage, although specific terms are still to be determined."

Details on the estimated capital costs of the proposed north-south road have not been provided to Noront. However, Cliffs has publically stated that the cost of their proposed integrated transportation system is budgeted at $600 million.

"The decision of the Province of Ontario to financially support the north-south road corridor pending certain approvals is a very positive development in unlocking the mineral wealth of the Ring of Fire," Noront CEO Wes Hanson said.

"Our discussions with the Province have confirmed that the all-season road will be accessible to all industrial users including Cliffs and that the costs to use the road will be based on proportional usage, a critical consideration for Noront as our concentrate shipments represent less than seven percent of the currently identified ore haulage along the corridor.

“We are currently focused on site work in advance of project development as we evaluate opportunities to finance project construction. Analysts are predicting a nickel price rally in 2015 and 2016 as demand outstrips supply.

"This timing matches the planned start of production at Eagle’s Nest. With nickel production costs in the lowest quartile of existing and planned nickel producers and limited capital costs, Eagle’s Nest remains one of the most exciting opportunities in the nickel sector today.”

The project is pegged at 1.0 million tonne per year throughput rate, producing approximately 150,000 tonnes of high grade nickel-copper concentrate per annum from a proven and probable mineral reserve of 11.1 million tonnes grading 1.68% nickel, 0.87% copper, 0.89 grams per tonne (g/t) platinum and 3.09 g/t palladium.

At current (5th Sep 2012) metal prices, the Discounted Cash Flow model indicates an after-tax NPV (at 8 per cent) of $233 million and an IRR of 18 per cent.

Of the estimated operating cost of $97 per tonne, approximately 35 per cent was attributed to underground mining, and approximately 34 per cent was attributed to on-site processing; 9 per cent was attributed to road toll related costs, and 22 per cent was attributed to general and administrative related costs.

In terms of an operations update, the company is currently completing condemnation, geotechnical and hydrological drilling near the proposed portal location and detailed engineering related to portal construction.

Noront said it was evaluating potential benefits to producing both a nickel concentrate and a copper concentrate now that the development of Eagle’s Nest no longer considers use of a concentrate slurry pipeline.

Additional metallurgical samples will be required as will additional metallurgical testing. This work is planned in the coming months.

A consultation process is continuing with First Nation communities in the Ring of Fire. Open houses and meetings with community leaders are planned throughout the fall and winter season.

The company is continuing to progress through the environmental permitting process with the Ontario Ministry of Environment and the Canadian Environmental Assessment Agency. The permitting process is progressing as planned with no undue delays to date.

A comprehensive Environmental Assessment of Eagle’s Nest has been recommended by both agencies and the company believes that the process will be complete by the second half of calendar 2013.

Noront maintains a strong cash position and has sufficient funding in place to complete the work planned for the fiscal year currently underway.

The company is focused on development of the high-grade Eagle’s Nest nickel, copper, platinum and palladium deposit and the high-grade Blackbird chromite deposit, both of which are located in the James Bay lowlands of Ontario in an emerging metals camp known as the Ring of Fire.

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Note 2 Metal Price Assumptions:

The FS economic analysis is based on the following metal prices derived on a three year trailing average basis as of August 31, 2012: