VANCOUVER (miningweekly.com) – Diversified Canadian miner RNC Minerals is engaging a number of potential strategic investors, offtake partners and financiers who could provide the $1.3-billion capital financing required to start construction of the shovel-ready Dumont nickel/cobalt project, in the Abitibi region of Quebec.
The Toronto-headquartered company advised on Monday that given the forecast explosive growth in nickel and cobalt demand from the electric vehicle (EV) market over the coming decade, Dumond’s time is has come.
Estimated to contain he world’s largest undeveloped nickel and cobalt reserves, RNC hopes to be in a position to make a construction decision on the project by 2019, pending financing and market conditions at that time.
According to RNC, the Dumont nickel/cobalt project also contains the second largest nickel reserve and the eighth largest cobalt reserve of any deposit in the world. Dumont is the only deposit of this scale that is not currently in operation and not owned by a major mining company. RNC advised that the other eight largest deposits are owned by companies that include Glencore, Vale, Norilsk, Sumitomo Corp and Jinchuan.
“Given market concern regarding future cobalt and nickel supply for EVs, and nickel prices at the $12 000/t to $13 000/t ($5.50/lb to $6/lb) level, RNC believes it is well-positioned to significantly advance Dumont in 2018,” president and CEO Mark Selby said in a statement.
Cobalt prices have also reached a new nine-year high of $34.25/lb in recent weeks, as global demand is exploding on the back of the EV revolution.
He believes that Dumont compares favourably with many Australian nickel/cobalt projects, which have seen significant increases in market value during 2017.
“Dumont contains larger nickel and cobalt reserves, has completed a feasibility study, is fully permitted, and is a sulphide deposit rather than a laterite deposit, which allows the recovery of nickel and cobalt using proven, conventional milling technology, rather than the more technically challenging pressure acid leach technology,” he advised.
According to a 2013 feasibility study, Dumond is slated for large-scale nickel and cobalt production, comprising more than one-billion tonnes of reserves that could power a 33-year mine life. Significant exploration upside adds the potential for a much longer mine life and for future operational expansions.
The initial production scenario hinges on producing 73-million pounds of nickel and 1 000 t/y of cobalt contained in concentrate. The current mine plan provides for an expansion in year five to 113-million pounds of nickel a year and 4.3-million pounds of cobalt a year.
Dumont is expected to produce one of the highest-grade nickel concentrates in the world, suitable for feeding both the stainless steel and battery markets.
The Dumont project currently hosts 1.18-billion tonnes of ore in the proven and probable reserve categories, containing 6.9-billion pounds of nickel and 278-million pounds of cobalt.
The June 2013 feasibility study had calculated an after-tax net present value of $1.14-billion, using an 8% discount rate, with an after-tax internal rate of return of 15.2%.
In March 2017 RNC joined forces with private equity firm Waterton Global Resource Management to buy, develop and operate nickel assets. As part of the deal, Waterton bought a 50% stake in Dumont for C$30-million.
RNC currently holds stakes in the producing Beta Hunt gold and nickel mine, in Western Australia, and a 30% stake in the producing Reed mine, in the Flin Flon-Snow Lake region of Manitoba.
RNC’s announcement drew frenzied market interest on Monday – mostly prompted by white-hot investment sentiment towards cobalt – lifting RNC’s TSX-listed equity by more than 47% to C$0.25 apiece on Monday morning on significant trading volumes.