Developing the Next Great Canadian Base Metal Mine€¦ · · 2016-08-10Developing the Next Great...
Transcript of Developing the Next Great Canadian Base Metal Mine€¦ · · 2016-08-10Developing the Next Great...
2
Disclaimer
Cautionary Statements Concerning Forward-Looking Statements This presentation contains "forward-looking information" including without limitation statements relating to the outlook for the nickel market, concentrate anticipated to be produced at the Dumont project and the nickel price. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of RNC to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. There are no assurances that Dumont, or any of RNC’s other property interests , will be placed into production. Factors that could affect the outcome include, among others: the actual results of development activities at Dumont and exploration activities at Aer-Kidd and West Raglan; project delays; inability to raise the funds necessary to achieve the milestones or complete development of Dumont and inability to raise the funds necessary to advance exploration activities; general business, economic, competitive, political and social uncertainties; future prices of metals; availability of alternative nickel sources or substitutes; actual nickel recovery; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; accidents, labour disputes and other risks of the mining industry; political instability, terrorism, insurrection or war; delays in obtaining governmental approvals, necessary permitting or in the completion of development or construction activities. For a more detailed discussion of such risks and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, refer to RNC's filings with Canadian securities regulators available on SEDAR at www.sedar.com. Although RNC has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as of the date of this presentation and RNC disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable securities laws. NI 43-101 Compliance The technical information pertaining to the Dumont project feasibility study in this presentation is based on RNC’s technical report dated July 25, 2013 that describes the results of the Dumont project feasibility study and was prepared in accordance with Canadian regulatory requirements by, or under the supervision of, Paul Staples, P. Eng. of Ausenco Limited, Sébastien Bernier, P.Geo. of SRK Consulting (Canada) Inc. and David A. Warren, Eng. of Snowden Mining Industry Consultants, all of whom are independent Qualified Persons as set out in National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101"). The Mineral Resource estimate set out in this presentation was classified according to the CIM Definition Standards for Mineral Resources and Mineral Reserves (November 2010) by Sébastien Bernier, P. Geo (OGQ#1034, APGO#1847), Principal Consultant – Resource Geology at SRK. The Mineral Reserve estimate set out in this presentation was classified according to the CIM Definition Standards for Mineral Resources and Mineral Reserves (November 2010) by David A. Warren (OIQ 121481), Principal Consultant – Mining at Snowden. All other technical information in this presentation has been prepared by or under the supervision of Alger St-Jean, P. Geo., Vice President, Exploration of RNC and Johnna Muinonen P. Eng., Vice President, Operations of RNC, each a Qualified Person as defined in NI 43-101. Reference is made to the full Dumont feasibility study and West Raglan report, each prepared as an NI 43-101 compliant technical report, which are available under RNC’s profile on SEDAR at www.sedar.com. Information concerning third parties in this presentation is taken from sources that RNC believes to be reliable, but RNC has not verified the information and does not assume responsibility for such third party information.
All currency references in U.S. dollars, unless otherwise stated.
5
Nickel Stocks Could Run Out as Early as Mid-2015
The Indonesia ban removes 25-30% of global nickel supply - equivalent to ALL OF THE OPEC GULF STATES
CEASING OIL PRODUCTION (29% of supply). RNC believes the ban unlikely to be overturned.
Approximately 3/4 of Chinese NPI production was sourced from Indonesian ore and the export ban will also severely impact nickel producers in Ukraine, Australia, and Japan
China has a limited ability to replace Indonesian ore and there is no certainty that significant NPI/FeNi capacity will be built in Indonesia in the near future
RNC believes that the Philippines could only supply 5-10 Mt of high grade ore (only 10-20% of Indonesian pre-ban exports). Please note that the Philippines has also considered export restrictions.
The nickel “project cupboard” was “emptied” during prior peak and few new projects have been developed to replace them resulting in long-term structural supply shortfall
2013 marked a milestone as the last of the “tidal wave” of new projects launched in peak in prior nickel cycle began commissioning. A number of these projects continue to struggle
Nickel prices could return to 2006-2007 ranges of $30-50,000+ per tonne as prices will once again have to rise to force demand in line with available supply
The combination of the Indonesia ban and structural supply shortfall will lead to multi-year nickel shortages as early as mid-2015 despite record LME inventories and ore stockpiles in China.
Demand will need to shrink by 8% by 2016 and cannot exceed 2% annual growth by 2020 in an optimistic supply scenario and most likely no more than 1% growth in a more conservative scenario
6
Indonesia Has Filled Supply Gap Globally by Allowing Export of High-Grade Ore
5%
10%
15%
20%
25%
30%
35%
2005 2006 2007 2008 2009 2010 2011 2012 2013
Indonesian Mine Supply as a % of Global Nickel Supply
Source: Wood Mackenzie Ltd.
In just 5 years, Indonesia’s share of global nickel supply has nearly tripled with most of the increase shipped as unprocessed ore to China – Indonesia now equivalent to “2 Saudi Arabias”
As of Jan. 12, 2014,
Indonesian nickel ore
exports are ZERO
7
Indonesia Ban to Remain in Place, Significant Barriers To Building NPI/FeNi Production
Indonesia ban to remain in place – as expected, elections had little impact. Some commentators are also suggesting that substantial capacity could be added quickly in Indonesia ignoring a number of key challenges which should be fully taken into account.
The nickel ore is located in areas with virtually no infrastructure, few people, and none of the power required to produce NPI/FeNi
Unlike NPI plants in China, projects will have to incorporate the construction of a power plant and all of the related support infrastructure. PT Antam – the state nickel producer has a project with an estimated capital cost of $1.6 billion for 40ktpa of nickel output
$1+ billion investments will be challenging given Indonesia’s investment climate (Indonesia ranks 114th on Transparency International Corruption Perceptions Index between Egypt and Albania) and proposed regulations which would limit foreign ownership to 49%
Operating costs could be lower than Chinese NPI production due to reduced ore and coal shipping costs which can be potentially more than offset by differences in labour costs and productivity and the need to source many inputs from outside
Chinese companies have a very mixed track record when investing and building mining projects outside China
8
Few Alternatives for High Grade Laterite Ore Outside Indonesia
There are few alternatives for high grade laterite ore outside Indonesia. RNC estimates that the Philippines could supply a maximum of 5-10 Mt of high grade ore (10-20% of current Indonesian exports) and New Caledonia only exports ore to partners in Japan and Korea.
Source: Glencore: “The Realities of the Nickel Market”, November 2013
9
China & Indonesia – An Important relationship China NOT Self-Sufficient in Nickel
<5%
15% 18%
29%
54% 57%
67%
85%
PlatinumPalladium
Nickel Copper Iron Ore(62% Fe-eq)
Lead Aluminium(Bauxite)
Tin Zinc
Chinese Self-Sufficiency Mine Supply as a % of Demand (2012)
Source: USGS, Wood Mackenzie Ltd., Macquarie Research, RNC Analysis
China to struggle to replace Indonesian ore as nickel is one of the metals in which China is least self-sufficient
10
Nickel – Portside Indonesian Ore Stocks are Declining and Ore Prices are Up
Source: Ferroalloynet.com Limited
0
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
US$
/wm
t FO
B
Nickel Ore Prices (2014 YTD 17-Nov)
Laterite 1.8% Ni Ore (12-18% Fe) Until Jan 12: Indonesia Post Jan 12: Philippines
Laterite 1.5% Ni Ore (Philippines 25-30% Fe)
The price of nickel ore in China has more than doubled in 2014
Portside Indonesia nickel ore stocks in China have declined as expected
17
.0
17
.5
17
.4
17
.6
18
.1
18
.9
18
.3
17
.6
16
.9
16
.6
16
.2
15
.1
14
.7
14
.4
14
.3
14
.0
13
.5
13
.2
13
.1
12
.9
12
.4
11
.9
11
.3
10
.9
10
.7
10
.5
10
.3
10
.1
10
.0
9.8
9
.4
9.0
8
.7
8.7
8
.6
8.5
8
.2
7.9
7
.9
7.8
7
.8
7.6
8.4
8
.3
7.8
7
.4
7.2
7.2
6
.4
6.3
6
.5
6.0
5
.4
5.5
5
.6
5.6
5
.5
5.3
5
.8
6.1
6
.1
6.5
9
.9
10
.7
11
.4
11
.8
12
.3
12
.5
12
.5
12
.9
13
.2
13
.6
14
.1
14
.7
14
.9
15
.0
15
.2
15
.1
15
.8
16
.2
16
.2
15
.9
16
.1
16
.1
0
5
10
15
20
25
Chinese Nickel Ore Stocks Total (Mt)
Philippines ore
Indonesia ore
11
Philippines Providing Little Additional Ore to Market
Philippines ore imports into China have increased, but are providing only a fraction of the 50+ million tonnes imported from Indonesia. Portion of increase in exports believed to be previously stockpiled material.
0
1
2
3
4
5
6
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nic
kel O
re (
Mill
ion
s o
f to
nn
es)
Chinese Nickel Ore Imports from Philippines
(2012-2014)
Source: GTIS
2014
2013
2012
Philippines Nickel Ore Exports to China YTD September (Mt)
21.3
27.1
0
5
10
15
20
25
30
YTD Sept 2013 YTD Sept 2014
12
NPI Production Beginning to Decline and Declines Expected to Continue
Source: Antaike, RNC analysis
Chinese Nickel Pig Iron Production (Annualized Monthly Production, Kt)
0
100
200
300
400
500
600
71 kt decline; ~3% of global supply
226 kt decline; ~12% of global supply
297 kt decline; ~15% of global supply
13
New Nickel Supply Fundamental Issue: An Empty “Project Cupboard”
Even without the strict implementation of the ban, the fundamental issue facing the nickel industry by 2015–2016 is an empty “project cupboard”. Nickel supply has to come from Indonesia but expect will take until the 2020s to meet demand. In the early 2000s, the “project cupboard” was very full, many projects known for decades Today’s picture is very, very different, setting the stage for an exciting nickel cycle
Project Cupboard 2001 (20+kt)
TOTAL: 500+ kt
Project Cupboard 2014 (20+kt)
TOTAL: ~200kt
Barro Alto Weda Bay
Koniambo Dumont
Onca Puma Enterprise
Tagaung Taung Kabanga
Ambatovy Nova-Bollinger
Goro
Ramu
Ravensthorpe
Weda Bay
Talvivaara*
Kabanga
Voisey’s Bay Sulphide
Laterite (HPAL)
Laterite (ferronickel)
Sulphide
Laterite (leach)
*bioheapleaching process
14
RNC Forecast New Nickel Supply
The source of future nickel supply growth is NOT clear
HPAL? Large capex overruns (projects $5+ billion), numerous delays and start-up issues
Operating costs also much higher than anticipated
FeNi? Best projects already being developed
No new large scale high-grade (2%+) discoveries for over 30 years
Sulphides? Largely empty project pipeline – only Enterprise, Nova-Bollinger, Dumont
Future growth likely to come from large scale, lower grade deposits
NPI? Largely dependent on availability of higher grade Indonesian ore
No NEW technology – China now using 30+ year old RKEF technology + hot charging
Combination of lower grade ore and higher input costs will drive costs higher
15
RNC Forecast – Supply / Demand Balance
USE
Nickel prices will once again have to rise to force demand in line with available supply as in 2006-2007 ($30,000-$50,000+/t), particularly 2016 when demand must DECLINE to balance the market
209 236 294
304 337 422
1,499
2,577
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
2,800
2010 2013 2014 2015 2016 2017 2018 2019 2020
Existing Supply
NPI
Demand (underlying)
Nickel Supply / Demand Forecast (Kt)
Structural Deficit
Source: Wood Mackenzie Ltd, RNC Analysis
Demand (constrained)
16
Nickel Supply – Little Project Development for 35+ Years
1.4% 1-2%
2.8% 3-4%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
1965-75 1975-90 1990-00 2000-10 2010-13 2014-20F
Global Nickel Supply Growth “Traditional” vs. Alternative
1965–2020 (% CAGR)
Stainless demand destruction helped bring nickel demand in line with available supply during the 2000-2010 period
After unprecedented supply growth in 2010-2013, supply to struggle during 2014-20
Given forecast supply growth of just 1-2% annually during 2014-2020, demand destruction of 3-4% or almost 75-80% of demand must be achieved to balance the market during 2014-2020
Stainless Demand Destruction
NPI
FSU Collapse
Japan FeNi
Source: Wood Mackenzie, Macquarie, RNC Analysis
Demand Forecast
4-5%
Nickel prices increased 10X (from <$5,000 to $50,000+/t) during 2000-2010 to force demand in line with supply. How high will prices have to rise to generate an even higher amount of required demand destruction during 2014-2020?
6.5%
3.3%
5.4%
10.7%
18
RNC’s Dumont Nickel Project: A Billion Dollar Opportunity
Note: Price and exchange rate assumptions contained in “Key Assumptions” table found on slide 53 of this presentation
4.31/lb
19
RNC’s Dumont Nickel Project: A Billion Dollar Opportunity
Source: Company reports and Wood Mackenzie Ltd. (December 2011); RNC 105ktpd (LOM) vs 2012 production for other projects
20
Risk Reduction – Redesigned Site Layout RNC’s Dumont Nickel Project: 1 Billion Tonne Reserve + Upside Potential
20
Resources Grade Contained Metals
(Mt) (%) (Bln lbs) (Mt)
Proven 179.6 0.32 1.274 0.578
Probable 999.0 0.26 5.667 2.571
Total 1,178.6 0.27 6.942 3.149
Resource Estimate (SRK April 30, 2013) inclusive of Mineral Reserves
Reference is made to the full Technical Report on the Dumont Ni Project, Launay and Trecesson Townships, Quebec, Canada, July 25, 2013, available at www.royalnickel.com and on www.sedar.com. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Reserve Estimate (Snowden June 17, 2013)
Reference is made to the full Technical Report on the Dumont Ni Project, Launay and Trecesson Townships, Quebec, Canada, July 25, 2013, available at www.royalnickel.com and on www.sedar.com.
Resources Grade Contained Metals
(Mt) (%) (Bln lbs) (Mt)
Measured 372.1 0.28 2.310 1.050
Indicated 1,293.5 0.26 7.441 3.380
Measured + Indicated
1,665.6 0.27 9.750 4.430
Inferred 499.8 0.26 2.862 1.300
21
Dumont Feasibility Study Highlights
21
After-Tax NPV8% (US$ millions) $1,137
After Tax IRR 15.2%
Initial Capital1 (US$ millions) $1,191
Project Life (years) 33
52.5 ktpd 2016-2020
105 ktpd 2021-20362
Stockpile 2036-2049
Average
Ni Production (kt/year) 33 51 31 41
Net (C1) Cash Costs (US$/lb) $4.01 $4.54 $3.97 $4.31
Concentrator Nickel Recovery 53% 48% 34% 43%
Strip Ratio 0.66 1.22 - 1.13
NSR (US$/t) $30.90 $22.63 $13.67 $19.40
Site Operating Costs (US$/t) $11.39 $10.31 $5.34 $8.27
Reference is made to the full Technical Report on the Dumont Ni Project, Launay and Trecesson Townships, Quebec, Canada, July 25, 2013, available at www.royalnickel.com and on www.sedar.com. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
1. Excludes first fills of $14 million initial capital 2. 2036 is a transition year.
22
Feasibility Study Capital and Operating Cost Summary
22
($ millions) Initial
Capital Expansion
Capital LOM
Capital1
Mine 304 194 879
Process Plant 523 472 1,220
Tailings 32 55 242
Infrastructure 83 24 107
Indirect Costs3 149 73 222
Contingency 100 73 173
Total 1,191 891 2,843
Operating Costs
$ per tonne
$ per tonne2
Mining 3,285 3.50
Processing 4,034 4.30
G & A 441 0.47
Total Site Cost 7,760 8.27
TC / RC 2,800
By-products (1,058)
Total 9,502
Capital Cost Summary
2 $/tonne ore milled . Mining cost $/tonne material mined $1.49
Operating Cost Summary
1 Life-of-mine capital includes $761 million of sustaining capital
3 Indirect costs include $80 million in EPCM costs: • Engineering (Detailed design and IFC drawings) – $33 million • Procurement (Contracts and purchase orders etc) – $16 million • Construction Management – $31 million Note that EPCM fees primarily for non-Mine portion of capital expenditure
25
Structurally Low Cost, Large Scale Project
Reference is made to the full Technical Report on the Dumont Ni Project, Launay and Trecesson Townships, Quebec, Canada, July 25, 2013, available at www.royalnickel.com and on www.sedar.com. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
26
Tsingshan Strategic Alliance Leads to World’s 1st Integrated Stainless Steel Plant Utilizing Sulphide Concentrate
Tsingshan currently constructing the world’s first integrated nickel pig iron (“NPI”) plant to directly utilize nickel sulphide concentrate as part of the stainless steel production process
The plant, located in China, is expected to begin operation in 2014
Significant potential benefits to producers of suitable nickel sulphide concentrate feed such as RNC’s Dumont Project:
Lower costs due to simpler processing compared to traditional smelting and refining
Higher payability than traditional smelting and refining
Greater flexibility for more potential partners and customers
Roasted nickel concentrate is effectively a very high grade laterite ore feed –
creates new source of demand for nickel sulphide concentrate notably at a time when many NPI and ferronickel producers face feed shortages as a result of Indonesia’s recently implemented nickel ore export ban
27
Well-positioned on Cost Curve
Reference is made to the full Technical Report on the Dumont Ni Project, Launay and Trecesson Townships, Quebec, Canada, July 25, 2013, available at www.royalnickel.com and on www.sedar.com. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
28
Lower Capital Intensity
Source: RNC technical report dated July 25, 2013, publicly available disclosure, Wood Mackenzie Ltd. (figures shown to two significant digits)
29
Developing the Next Great Canadian Base Metal Mine
Based on RNC analysis. All mines based on reported 2012 production with exception of Dumont (technical report-July 25, 2013) expected Phase I and Phase II life of mine production, Gibraltar Expansion (Taseko website) life of mine production. Ni-eq., Cu-eq production calculated using the average long-term prices per tonne as of May 31, 2013 based on the 4 of 5 analysts who cover RNC and regularly publish commodity forecasts : Au: $1,250/oz, Cu: $6,283, Mo: $29,542, Ni: $19,842, Zn:$2,315 .
34
Financing Options
RNC intends to pursue project financing options that minimize shareholder dilution as it did during the feasibility study stages
In addition to the target of approximately $500- 600 million in project debt, there are a number of other sources of potential financing which will likely be less dilutive than raising equity
Sale of direct minority interest in project
Subordinated debt structures
Monetization of precious metal streams (PGMs)
Offtake financing
Conversations have occurred with multiple parties during the past year and are ongoing
35
A Leading Base Metal Project Shovel Ready for Coming Development Cycle
Values above sourced from latest publicly available technical reports filed on each project and reflects the base case pricing used in each report. Producing properties sourced from financial statements for recent periods selected when pricing consistent with long-term average pricing. Sources are detailed on slide 54 of this presentation.
www.royalnickel.com 37
Creating the Nickel-focused Leader in the Canadian Base Metal Market
The acquisition of a majority interest in True North builds on our earlier acquisition of an interest in Sudbury Platinum Corporation – leveraging combined management strengths will accelerate future growth and support development of the Dumont Nickel Project
RNC will continue to look for acquisitions that create value for shareholders with a focus on nickel, base metals, and stainless steel materials
19% Interest in Sudbury Platinum Corp
56% Interest in True North Nickel Inc. (100% interest in West Raglan Project)
SPC has a 100% interest in the Aer-Kidd property
Historic Producing Property in Prolific High Grade Ni-Cu-PGE Sudbury Camp
Positioned on Worthington offset between new Totten mine and Victoria development project
Well-positioned on Cape Smith Belt hosting high grade Ni-Cu-PGE mineralization
Historic drilling has yielded multiple high grade Ni-PGE intersections
Exploration in summer 2015 depends on market conditions
www.royalnickel.com 38
West Raglan Project Location Rich Nickel, PGE District
Cape Smith Belt host to prolific high grade polymetallic nickel deposits and includes two operating mines: Raglan and Nunavik Nickel
Raglan ore grades among the highest of significant global nickel deposits (14.5Mt @ 3.21% Ni M&I1 )
West Raglan located 40 km from Glencore’s Raglan Mine Property
Glencore is world’s fifth largest nickel producer
Raglan is a first quartile cash cost operation2
The proximity to Glencore’s Raglan Mine and Jilin Jien Nickel’s Nunavik Mine does not mean the West Raglan project will obtain similar results. West Raglan is an
exploration project without a current resource estimate and there is no certainty that any such estimate will ever be established.
1. http://www.mineraglan.ca/FR/Operations/Documents/Raglan_FS_Eng_Feb%202013_web.pdf
2. According to Q1 2014 Wood Mackenzie report
Map of northern Quebec highlighting the position of the True North Nickel, West Raglan property. (Nickel Occurrences © Gouvernement du Québec) Image provided by TNN
40
West Raglan – Analogue to Katinniq Zone
Raglan Mine hosts 190 individual lenses in 12 distinct zones; four zones are currently in production feeding a central mill facility
www.royalnickel.com 41
West Raglan – Multiple Targets Outcropping Sulphide Mineralization
9 mineralized zones identified across the property
Raglan Trend
South Trend Total Magnetic Field
Outcropping sulphide mineralization across more than 35km of strike, very limited testing Magnetic signatures, lithogeochemistry, and geology same at Frontier and Raglan Outcropping sulphide mineralization across more than 35km of strike, very limited testing Magnetic signatures, lithogeochemistry, and geology same at Frontier and Raglan Strong potential at two new untested zones at surface at Beverly and Red Southern part of property has magnetic and till anomalies suggestive of Nunavik Mine (South Trend) style
mineralization (large tonnage, high Cu and PGM) Reference is made to the full Technical Report on the West Raglan Ni Project, Quebec, Canada, filed on July 29, 2014, available at www.royalnickel.com and on www.sedar.com.
www.royalnickel.com 42
West Raglan Multiple High Grade Lens Targets
Frontier Zone High-grade Lenses Five key mineralized lens
clusters 2,500 metre strike extent
has five stacked mineralized target horizons
High-grade (2-3% Ni, 3+ g/t PGE) sulphide lenses outcropping
High priority targets modelled from BHEM and 3D magnetic inversion suggest vast potential remains above 250 metres depth
See slides 42 and 43 for drill hole details
Reference is made to the full Technical Report on the West Raglan Ni Project, Quebec, Canada, filed on July 29, 2014, available at www.royalnickel.com and on www.sedar.com.
www.royalnickel.com 44
West Raglan Frontier Zone Drill Results
Reference is made to the full Technical Report on the West Raglan Ni Project, Quebec, Canada, filed on July 29, 2014, available at www.royalnickel.com and on www.sedar.com.
www.royalnickel.com 45
West Raglan Frontier Zone Drill Results (Cont’d)
Reference is made to the full Technical Report on the West Raglan Ni Project, Quebec, Canada, filed on July 29, 2014, available at www.royalnickel.com and on www.sedar.com.
www.royalnickel.com 46
West Raglan- 2014 Work Plan
Near Term
July 2014 Complete 43-101 report
August 2014 Site visit
October 2014 Airborne EM survey
Oct 14 -Mar 2015 Target definition
Summer 2015 Drilling (12,000 metres)
Drill targeting will leverage existing data
Geophysics :
Review of disregarded/untested geophysical targets
which do not fit "Raglan model” and untested targets
Remodel data considering “Mequllion” geometry
Possible airborne EM/Gravity survey (August/Sept 2014)
Geology
Review geological logs, photos and structure for rock
types consistency, re-consider geological model
Geological interpretations with 3D mag inversion
Consider existing lenses, what size spacing required to
obtain resource, which direction for expansion
Identify holes that did not go deep enough to test
anomalies
www.royalnickel.com 47
West Raglan-2015 Season
Summer 2015
Define resource and test new targets
Drilling to extend existing bodies
(~2000m)
Drilling to test existing and new
geophysical targets (~7000m)
3000m of follow-up drilling
Gossanous Outcrop- West Raglan
52
Parameter 2015 2016 2017 Long Term
Nickel Price ($ per pound) $9.50 $10.00 $10.50 $9.00
Nickel Price ($ per tonne) $20,944 $22,046 $23,148 19,842
US$/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 $14
Cobalt Price ($ per tonne) $30,865 $30,865 $30,865 $30,865
Electricity (CDN$ per kilowatt hour) $0.0445 0.0445 $0.0445 $0.0445
Oil ($ per barrel) $90 $90 $90 $90
Note: 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.
Price Assumptions
Project Source Price Assumptions Au; Ag; Pd; Pt: $/oz, Others $/lb
Additional Comments
RNC Dumont Technical report dated, July 25, 2013
Long term Ni $9; Co $14; Pt $1,800; Pd $700
All figures based on feasibility study highlights reported in news release.
Inmet, Cobre Panama
Basic engineering report, May 2012
Cu $2.75; Au $1,250; Mo $15.00; Ag $20
All figures quoted directly from basic engineering report except NSR/revenue per tonne, calculated by dividing total project NSR by total ore milled.
Quadra FNX, Sierra Gorda
Technical report, June 8, 2011
Cu $2.50; Mo $12.00 Au $1,000
All figures except NSR directly from technical report. NSR calculated using Table 23.23 by multiplying total payable metals X (base metal price assumptions less treatment charges for each metal outlined in Section 23.4) divided by total ore milled. Site operating costs calculated as operating costs less transport and port costs.
HudBay Minerals Constancia
Technical report, Oct. 15, 2012
Long term Cu $2.75; Mo $14.00; Au $1,150; Ag $23.00
All figures quoted directly from technical report.
Terrane, Mt. Milligan (Thompson Creek)
Technical report, October 23, 2009
Cu $2.00; Au $800; All figures quoted directly from technical report.
Capstone, Santo Domingo
Technical Report, May 22, 2014
Cu $2.85; Fe (65%) $0.85/dmtu; Au $1,275/oz
All figures directly from technical report. Site operating costs calculated as operating costs less port facility costs.
53
Summary of Source Information
54
Feasibility Study Capital and Operating Cost Summary
54
($ millions) Initial
Capital Expansion
Capital LOM
Capital3
Mine 304 194 879
Process Plant 523 472 1,220
Tailings 32 55 242
Infrastructure 83 24 107
Indirect Costs4 149 73 222
Contingency5 100 73 173
Total 1,191 891 2,843
Operating Costs
$ per tonne
$ per tonne2
Mining 3,285 3.50
Processing 4,034 4.30
G & A 441 0.47
Total Site Cost 7,760 8.27
TC / RC 2,800
By-products (1,058)
Total 9,502
Capital Cost Summary 1,2
2 $/tonne ore milled . Mining cost $/tonne material mined $1.49
Operating Cost Summary
1. Accuracy of capital cost estimates are +/- 15% 2. Infrastructure costs for sustaining capital are included in
process plant costs 3. Life-of-mine capital includes $761 million of sustaining capital 4. Excludes first fills of $14 million initial capital and $7 million
expansion capital and the associated $20 million release in sustaining capital at the end of the project life
5. Initial capital contingency of $100 million plus growth component of $29 million for an initial contingency of $129 million representing 12% of costs at risk in the initial capital figure
55
Feasibility Study Summary
55
1. Includes transportation of concentrate 2. Based on $19,842/t ($9/lb) Ni, $26,455/t($12/lb) Co, $1,500/oz Pt, $750/oz Pd ; revised PFS is base case + trolley assist. 3. Based on price and exchange rate assumptions contained in “Key Assumptions” table found on slide 31 of this presentation 4. Average over 20 year-mine life. Over 33-year project life average annual EBITDA is $381 million per year and average annual cash flow is $228 million per year.
Units PFS
Dec. 16, 20112 Revised PFS May 14, 20122
Feasibility Study Jun. 17, 20133
Ore Mined Mt 1,070 1,066 1,179 Strip Ratio Waste : Ore 1.18 1.19 1.13 Nickel Recovery % nickel 41 45 43 Project Life Years 31 31 33 Annual Production (contained) Nickel (life of mine) Mlbs (kt) 96 (44) 108 (49) 104 (47) Nickel (life of project) Mlbs (kt) 82 (37) 91 (41) 90 (41) Cobalt (life of project) Mlbs (kt) 6 (3) 4 (2) 4 (2) PGEs (life of project) Koz 18 - 19 Total C1 Cash Costs $/lb Ni ($/t Ni) $4.68 ($10,582) $4.32 ($9,524) $4.79 ($10,560) By-product Credits $/lb Ni ($/t Ni) $0.55 ($1,213) $0.25 ($551) $0.48 ($1,058) Net C1 Cash Costs $/lb Ni ($/t Ni) $4.13 ($9,105) $4.07 ($8,973) $4.31 ($9,502) Average EBITDA4 $M $410 $470 $427 Average Free Cash Flow4 $M $228 $262 $238 Initial Capital $M $1,112 $1,112 $1,191 Total Capital $M $2,578 $2,680 $2,843 Pre-Tax NPV8% $M $1,918 $2,437 $2,003 Pre-Tax IRR 20.2% 23.5% 18.7% Post-Tax NPV8% $M $1,083 $1,420 $1,137 Post-Tax IRR 16.6% 19.5% 15.2%
56
Reference is made to the full RNC technical report dated July 25, 2013, available on www.sedar.com. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Resource Category Quantity Grade Contained Nickel Contained Cobalt
(000 t) Ni (%) Co (ppm) (000 t) (Mlbs) (000 t) (Mlbs) Measured 372,100 0.28 112 1,050 2,310 40 92
Indicated 1,293,500 0.26 106 3,380 7,441 140 302 Measured + Indicated 1,665,600 0.27 107 4,430 9,750 180 394 Inferred 499,800 0.26 101 1,300 2,862 50 112
Resource Category Quantity Grade Contained Palladium Contained Platinum
(000 t) Pd (gpt) Pt (gpt) (000s ounces) (000s ounces) Measured 372,100 0.024 0.011 288 126 Indicated 1,293,500 0.017 0.008 720 335 Measured + Indicated 1,665,600 0.020 0.009 1,008 461
Inferred 499,800 0.014 0.006 220 92
Resource Category Quantity Magnetite Contained Magnetite
(000 t) (%) (000 t) (Mlbs)
Measured
Indicated 1,114,300 4.27 47,580 104,905
Measured + Indicated 1,114,300 4.27 47,580 104,905
Inferred 832,000 4.02 33,430 73,702
Mineral Resource Statement (inclusive of mineral reserves), Dumont Nickel Project, SRK Consulting (Canada) Inc., April 30, 2013
Grades Contained Metal Category Quantity
(000 t) Ni
% Ni Co
(ppm) Pd
(gpt) Pt
(gpt) Ni
Mlbs Co
Mlbs Pd
000 oz Pt
000 oz Proven 179,600 0.32 114 0.029 0.013 1,274 45 166 77 Probable 999,000 0.26 106 0.017 0.008 5,667 233 550 250 Total 1,178,600 0.27 107 0.019 0.009 6,942 278 716 328
Mineral Reserve Statement, Dumont Nickel Project, Snowden, June 17, 2013
1 Billion Tonne Reserve
58
SPC - Transaction Overview
RNC acquired 6 MM units of Sudbury Platinum Corporation (“SPC”) for C$0.25 per unit, each unit comprising a share and full warrant. Each warrant is exercisable at C$0.45 per share for 18 months SPC is private subsidiary of Transition Metals Corp. (57% interest). RNC’s investment represents
a 19% interest of the issued and outstanding shares
RNC has 1 seat on the SPC Board (1 of 5 members) and right to maintain pro rata share
SPC’s key asset is an option to earn up to a 70% interest in the Aer-Kidd property located on the Worthington Offset Dyke in the Sudbury Basin SPC announced on August 11, 2014 that it plans to exercise its Right of First Refusal to purchase
CaNickel Mining Company Limited's (“CaNickel”) 100% interest in the Aer-Kidd Project for a cash payment of $1,250,000. By doing so, the Option and Joint Venture Agreement currently in place
between SPC and CaNickel dated October 1, 2012 will be terminated.
The investment is consistent with RNC’s strategy to target high quality Ni-Cu-PGM and other base metal opportunities and RNC’s market outlook for nickel with a structural shortfall in supply through the end of the decade
The investment allows RNC to gain exposure to one of the world’s highest potential nickel exploration opportunities with an exploration team that has a proven track record of success in the Sudbury basin Aer-Kidd is also one of few properties in the Sudbury basin that does not have a captive offtake
with either Vale or Glencore
60
Aer-Kidd – Significant Untested Potential Worthington Offset Longitudinal Section, Looking Northwest
Victoria (deep): 14.5 Mt 2.5% Ni, 2.5% Cu, 7.6 g/t PGM2
2. Resource reported by KGHM in news release dated January 16, 2012
Totten (deep): 10.1 Mt 1.5% Ni, 1.97% Cu, 4.8g/t PGM1
1. Resource reported by Inco Limited in news release dated January 18, 2001
Totten Vale
Aer-Kidd McIntyre
Vale
Victoria KGHM (QuadraFNX)
Untested
Potential
At Depth
2.6 km 4.3 km
Mined Out Massive & Disseminated Sulphide
DDH Pierce Point Mineralized Non-mineralized
Howland Robinson Rosen
Source: Sudbury Platinum Corp.
61
High Priority Drill Targets Already Identified Significant Geophysics Potential Remaining
Source: Sudbury Platinum Corp
Drill Targets & Historic Drilling Long Section Howland Pit AE-13: 0.20m @ 4.43%Ni, 6.95% Cu, 23.0g/t PGE’s U9E-23: 30m @ 0.33% Ni, 1.3%Cu Robinson Mine U-806: 6.8m @ 1.6%Ni, 0.80% Cu AE-1B: 2.34m @ 1.63%Ni, 0.70%Cu U9E-2: 28.65m @1.46%Ni, 0.60% Cu W03-03AW1: 8.90m @ 1.46%Ni, 0.56%Cu Rosen Mine U-610: 7.3m @ 1.0%Ni, 1.74% Cu W03-05: 1.0m @ 2.73%Ni, 0.35%Cu AE-07: 2.0m @ 1.2%Ni, 0.83%Cu AE-07A: 8.1m @ 0.30%Ni, 1.2%Cu
62
SPC Management Team - Significant Sudbury Experience and Track Record of Discoveries
Scott McLean | Chairman & CEO - B.Sc. P.Geo. 23 years with Falconbridge/Xstrata (Responsible for the
Sudbury Exploration Investment)
10 years exploration in Sudbury Basin, responsible for 100k m drilling/yr & 20-25 employees
2004 PDAC Prospector of Year (Nickel Rim South)
Past president of APGO (Association of Professional Geoscientists of Ontario)
Grant Mourre | President & COO- M.Sc., P.Geo. 14 years minerals exploration within NA focused primarily
on Ni-Cu-PGE’s.
7 years with Falconbridge/Xstrata & Inco in Sudbury Basin
10 years deep drilling in the Sudbury Basin
Masters thesis funded by Inco (Vale) & NSERC on Copper Cliff offset dyke
Kevin Stevens | Chief Geophysicist - M.Sc. P.Geo. 27 years mineral exploration and research geophysics
12 years as Falconbridge Principal Geophysicist in the Sudbury Basin
2004 PDAC Prospector of Year (Nickel Rim South)
Geophysics (EM modeling) expert
Developed key geophysics techniques for sulphide detection at depth (3D EM and Radio-Imaging)
2004 Prospector of the Year Nickel Rim South Mine
Source: Sudbury Platinum Corp.
# Year Deposit Resources (t) Status
1 1994 Onaping Depth 17,000,000 Study (deep)
2 1995 Norman West 7,500,000 Idle (deep)
3 1997 Creighton West 10,000,000 Idle (deep)
4 1997 Fraser Morgan 8,000,000 Development
5 2001 Nickel Rim South 17,400,000 Production
6 2001 Beeper 3,904 Idle
7 2001 Roland Lake 500,000 Idle
8 2002 Rapid River 70,000 Idle
9 2003 Bowell Open Pit 363,000 Idle
10 2004 Capre Lake South 580,000 Idle
11 2006 Onaping-Craig Corner 250,000 Depleted
12 2007 Onaping 2 Zone 80,000 Depleted
Total Ni Discovered 61.7 million
www.royalnickel.com 64
Corporate Overview
Share Structure:
Basic Shares Outstanding1: 109.6 million Options (average exercise price: C$0.70) 10.0 million Deferred/Restricted Share Units 2.1 million Warrants (exercise price: C$0.98) 5.7 million Compensation Warrants (ave. price C$0.60) 0.6 million Contingent Shares 7.0 million
Fully Diluted Shares Outstanding: 135.0 million
Directors and Officers Share Ownership: ~9%
Largest Shareholder –
RAB Special Situations (Master) Fund Limited: ~17%
Balance Sheet Highlights2: Cash and Cash Equivalents: C$6.1 million Current Tax Receivable: C$0.5 million Working Capital: C$4.2 million Market Capitalization: C$39 million
1. Shares outstanding, fully diluted shares outstanding and shareholdings as at November 6, 2014 2. Balance sheet highlights as at September 30, 2014; market capitalization at November 6, 2014