TORONTO (miningweekly.com) – TSX-listed Royal Nickel Corporation (RNC) on Thursday said it had reached an agreement with Hydro-Québec to construct a high-voltage power transmission line to connect the proposed Dumont nickel project, in Quebec’s Abitibi mining camp, to the existing electricity grid.

The connection would require installing about 10 km of 120 kV power lines and the agreement covered completing the necessary studies, as well as construction of the transmission system.

"It is a critical step to have this agreement in place with Hydro-Québec to ensure power will be available in a timely manner as we move forward towards the development of the Dumont project,” president and CEO Tyler Mitchelson said.

He added that RNC remained focused on pursuing partnership/financing options that would reduce shareholder dilution and securing the main permit for the Dumont project.

“With respect to partnership and financing activities, discussions are ongoing and we continue to focus on putting together a package that will allow us to advance to the construction stage as soon as practicable once we receive the environmental authorisation permit for the project, expected by the middle of next year,” Mitchelson said.

RNC in June reported the results of a bankable feasibility study, demonstrating a technically and economically sound project with an after-tax net present value of $1.1-billion when applying an 8% discount.

The report had also found the nickel/cobalt/platinum group metals (PGMs) 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%.

RNC 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 life-of-project. 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 PGMs, mainly comprising platinum and palladium reserve.

RNC 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 the mine life, 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.