Royal Nickel (TSX: RNX; US-OTC: RNKLF) is an attractive takeover candidate, mining analyst Nik Rasskazovskiy of independent investment dealer Salman Partners contends in a recent research note.
Not only is the company a pure play on nickel — the base metal Salman Partners is most bullish about in the long term — but Royal Nickel’s flagship Dumont open-pit nickel sulphide project in northwestern Quebec is poised to be shovel ready by June.
Rasskazovskiy also points to the company’s management and directors being nickel specialists (the majority previously worked at Inco), and the fact that the team at Royal Nickel expect to receive the main environmental permit for Dumont in the first six months of 2015.
Other attributes include the project’s location in mining friendly Quebec, where the Abitibi mining district gives it “excellent access” to infrastructure and human resources. The analyst also points to the province’s support of Stornoway Diamond (TSX: SWY; US-OTC: SWYDF) and its Renard project, Quebec’s first diamond mine.
With the help of the province, Rasskazovskiy notes, Stornoway raised $946 million for construction. “The financing package included debt, equity, diamond stream and equipment financing,” he writes, “with Ressources Québec and Caisse de dépôt et placement du Québec providing $240 million and $105 million.”
At the end of 2014, Royal Nickel also had $2.9 million in cash on its balance sheet, which Rasskazovskiy says could take the company through June.
In addition to Dumont, Royal Nickel has a 19% stake in Sudbury Platinum Corp. (SPC), a private company exploring for nickel, copper and platinum group metals (platinum, palladium and gold) at its Aer-Kidd property in Sudbury, Ont., and a 56% interest in True North Nickel, a private company whose main asset is its wholly owned West Raglan project, a nickel-copper-PGM exploration project in Nunavik, Que.
West Raglan is a mature nickel sulphide exploration project in the centre of the Cape Smith nickel belt in northern Quebec, which hosts two producing nickel mines: Glencore’s (LSE: GLEN) Raglan mine and Jilin Jien Nickel’s Nunavik mine.
The most recent focus of exploration was advancing the Frontier area, where high-grade nickel, copper, and PGM mineralization had been discovered including five key high-grade lens clusters. The company says the intersections occur in the same geological setting as the Raglan mine, in ultramafic intrusions and flows occurring stratigraphically below the Chukotat Group basalt. The mineralization is also similar to the typical ores from the Raglan mine, which are amongst the richest nickel-copper-PGM mines in the world.
Highlights from the Frontier area include 7.62 metres of 2.5% nickel, 1.4% copper, 0.39 gram per tonne platinum, 1.56 grams per tonne palladium and 0.09% cobalt in Frontier East; 10.5 metres grading 2.8% nickel, 1.2% copper, 0.8 gram platinum, 2.78 grams palladium and 0.05% cobalt in Frontier Central; and 14.9 metres of 2.5% nickel, 1.1% copper, 0.37 gram platinum, 1.5 grams palladium and 0.06% cobalt in Frontier South.
Meanwhile in Ontario, SPC is evaluating the Aer-Kidd project, a 280 km property covering 1.4 km of the Worthington Offset Dyke near Worthington in the Sudbury basin. Aer-Kidd is 2 km from Vale’s (NYSE: VALE) Totten mine (10.1 million tonnes grading 1.5% nickel, 1.97% copper, 4.8 grams PGM per tonne).
On March 2, Royal Nickel released assays from two of SPC’s first three drill holes, with highlights of 8.1 metres grading 1% nickel, 0.8% copper and 2.40 grams PGM per tonne, including a higher-grade section of 2.5% nickel, 2.5% copper and 10.18 grams PGM per tonne over 1.7 metres.
The second hole returned a 1.8-metre intercept of 1.4% nickel, 0.5% copper and 1.64 grams PGM per tonne.
The company noted that the host geology at Aer-Kidd is consistent with the reported host geology at Vale’s Totten mine, and that the borehole geophysics indicate that the mineralized zones are open to the east, as well as both up-dip and down-dip of the reported intersections.
This is very interesting proposition, Wish I had that kind of money to pay it and run it for Quebe benefit program !