TORONTO (miningweekly.com) – Toronto-based Royal Nickel has appointed Scott Hand – who was CEO and chairperson of nickel group Inco when it was acquired by Brazil's Vale – as chairperson of its board of directors, and announced that China's Ningbo Sunhu Chemical Products (Sunhu) will buy a 15,6% stake in the company for C$21,8-million.

Another former Inco executive, Tyler Mitchelson, will join the privately-held company as president and CEO, Royal Nickel said on Monday.

The company's flagship asset is the Dumont nickel project, in Quebec, which Hand touts as “one of the largest undeveloped nickel sulphide project in the world”.

The project is still in the relatively early stages, however, with a prefeasibility study expected to kick off next year.

Hand takes over the role of chairperson from Royal Nickel founder Tom Griffis who will become deputy chair.

“The addition of both new capital and new management capability are instrumental in advancing our development plans, which include the initiation of a pre-feasibility study at Dumont in 2010, and also for growing the company beyond the Dumont project,” Hand said.

Mitchelson worked at Inco, and subsequently Vale Inco, since 1995, and was most recently vice president for strategy, business planning and brownfield exploration at the company. He will join Royal Nickel in mid-October.

Before the sale to Vale in 2006, Hand famously tried to create a new Canadian nickel champion, by having Inco acquire rival Falconbridge, which was being targeted by Anglo-Swiss miner Xstrata, and then sell the enlarged company to US copper-miner Phelps Dodge.

At the end of the day, Xstrata won Falconbridge, Vale got Inco and Phelps was acquired by Freeport-McMoRan Copper and Gold.

CHINESE INVESTMENT

With its investment in Royal Nickel, Sunhu is the latest in a progression of Chinese companies seeking a finger in the Canadian resources pie, and hoping to snap up assets cheaply, thanks to the toll taken by the financial crisis on exploration and development companies, in particular.

In fact, Sunhu is the second Chinese firm to move on a Canadian nickel project in as many months.

In August, Chinese exploration, mining, smelting, refining and chemicals group Jilin Jien Nickel Industry said it would team up with Canadian junior Goldbrook Ventures, in an offer for explorer Canadian Royalties.

Canadian Royalties' main asset is the Nunavik nickel project, also in Quebec, but the company's board has urged shareholders to reject what it says is a “low-ball” offer.

Also last month, Jilin Jien Nickel Industry bought a stake in TSX-listed Victory Nickel, which owns sulphide nickel deposits in Manitoba and Quebec, as well as the past-producing Lynn Lake nickel mine in Manitoba.

Sunhu, which distributes nickel and other metals and chemicals in China and also has "investments in other mining interests", will support Royal Nickel's plans to develop Dumont, and to increase its asset portfolio, the company said.

After the Sunhu transaction is completed Sunhu's chief executive, Weifang Yuan, will join the board of directors of Royal Nickel.

The Dumont project is 25 km west of Amos, in Quebec and holds about 1,1-million tons of contained nickel in indicated resources and 0,8-million tons in inferred resources.

Production is targeted for 2014, and the asset is expected to have a 21-year mine life.

According to Royal Nickel, the “deposit characteristics and initial metallurgical testing indicate low-cost, low-risk development in an open-pit using conventional processing methods, while the large scale of the deposit permits various development strategies.”

The company plans to complete a new NI 43-101 resource estimate by the end of this year, ahead of starting the prefeasibility study and environmental impact study in 2010.

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