Canada's Royal Nickel turns producer with two acquisitions

Mon Feb 1, 2016 7:17am EST
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By Susan Taylor

TORONTO(Reuters) - Canada's Royal Nickel Corp RNX.TO, capitalizing on discount asset prices as commodity markets swoon, announced two cash and stock acquisitions on Monday that transform the mine developer into a cash-generating nickel, copper and gold producer.

Royal Nickel Chief Executive Mark Selby said the company will acquire a 67 percent stake in Australia's privately-held Salt Lake Mining Pty, in a deal worth C$7.7 million, and 100 percent of Vancouver-based VMS Ventures Inc VMS.V, in a separate transaction worth C$11.4 million.

Salt Lake Mining owns the Beta Hunt Mine, a low-cost nickel and gold mine in Western Australia. VMS's main asset is a 30 percent stake in Reed Mine, a Manitoba copper mine that is 70-percent owned and operated by HudBay Minerals (HBM.TO: Quote).

"When you're close to cycle lows is the time to be picking up the assets. You never know for sure when you're at the bottom, but I think we're pretty close," Selby said.

"We're basically picking these things up for a fraction of the cost to put them into production."

In 2015, production from Beta Hunt Mine and a 30 percent stake of Reed Mine totaled approximately 4,000 tonnes of nickel, 4,000 tonnes of copper, and 3,300 ounces of gold.

In 2016, combined production is estimated at 3,500-4,500 tonnes of nickel, 4,000-4,500 tonnes of copper, and 35,000-45,000 ounces of gold, as Beta Hunt ramps up gold production.

Royal Nickel expects to announce more such modest deals, Selby said.   Continued...