THE ELEMENTS OF VALUE CREATION. Revised Prefeasibility Study Results. Dumont Nickel Project May 14, 2012

Transcription

1 THE ELEMENTS OF VALUE CREATION Revised Prefeasibility Study Results Dumont Nickel Project May 14, 2012

2 Disclaimer Cautionary Statements Concerning Forward Looking Statements This presentation contains "forward looking information" including without limitation statements relating to mineral reserve estimates, mineral resource estimates, realization of mineral reserve and resource estimates, capital and operating cost estimates, the timing and amount of future production, costs of production, success of mining operations, the ranking of the project in terms of cash cost and production, permitting, economic return estimates, potential upsides, and the future price and supply and demand for nickel. Readers should not place undue reliance on forward looking statements. Forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Corporation to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements. The revised pre feasibility study (PFS) results are estimates only, are preliminary in nature and are based on a number of assumptions, any of which, if incorrect, could materially change the projected outcome. Until a positive feasibility study has been completed, and even with the completion of a positive feasibility study, there are no assurances that Dumont will be placed into production. Factors that could affect the outcome include, among others: the actual results of development activities; project delays; inability to raise the funds necessary to complete development; 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 Although the Corporation 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 the Corporation 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 Compliance The technical information pertaining to the Dumont Nickel Project in this presentation is based on the news release titled Royal Nickel Revised Pre feasibility Study Significantly Increases Dumont Nickel Project Value by 31% to $1.4 Billion (NPV 8% ) published on May 14, 2012 that describes the results of the Dumont Nickel Project revised PFS and was prepared in accordance with Canadian regulatory requirements by, or under the supervision of, Paul Staples, P. Eng., of Ausenco Limited, Sébastien Bernier of SRK Consulting (Canada) Inc. and David Penswick, P. Eng., all of whom are independent Qualified Persons as set out in National Instrument Standards of Disclosure for Mineral Projects ("NI "). The Mineral Resource for the Dumont Deposit was classified according to the CIM Definition Standards for Mineral Resources and Mineral Reserves (December 2005) by Sébastien Bernier, P. Geo (OGQ#1034, APGO#1847), an appropriate independent person for the purpose of NI The Mineral Reserve for the Dumont Deposit was classified according to the CIM Definition Standards for Mineral Resources and Mineral Reserves (December 2005) by David Penswick, P. Eng. (PEO# ), an appropriate independent person for the purpose of NI Preparation of this presentation has been supervised by Alger St Jean, P. Geo., Vice President, Exploration of RNC and Qualified Person and Johnna Muinonen P. Eng., Vice President, Metallurgy, of RNC and Qualified Personas defined in NI The full Dumont revised PFS, prepared as a NI compliant Technical Report, will be filed under RNC s profile on SEDAR at within 45 days. All currency references in U.S. dollars, unless otherwise stated. TSX: RNX 1

3 Continuing to Reveal Dumont s Inherent Value Broad Mining Experience Strategic Asset Excellent Jurisdiction Significant Value Creation Potential TSX: RNX Using our strengths to unlock Dumont s value potential Revised Prefeasibility Study (PFS): Technical work led by RNC s experienced management team in the areas of geology, mineralogy, metallurgy and engineering De risking the project by increasing confidence in the resource estimate and optimizing recoveries Leveraging our infrastructure advantages Considering multiple development options that can further add value 2

4 Revised PFS Highlights (May 2012) Significant increases to after tax NPV 8% and after tax IRR 1 $1.4 billion NPV 8% Revised PFS May % IRR 31% 17% $1.1 billion NPV 8% PFS November % IRR 1. Compares RNC revised PFS base case including trolley assist option (see RNC news release dated May 14, 2012) with December 2011 PFS results. TSX: RNX 3

5 Revised PFS Highlights (May 2012) Revised PFS Improvements Compared to November 2011 PFS 1 Recoveries: 10% increase in recoveries to 45% over 31 year project life 11% increase in recoveries to 52% over 19 year mine life Annual Nickel Production: 16% increase in initial 50 ktpd phase to 72 million lbs (33 kt) annually 12% increase to 108 million lbs (49 kt) during 19 year mine life 7% increase to 63 million lbs (29 kt) over final 12 years during lower grade stockpile processing Cash Costs: 2% decrease in C1 cash costs, 2,3 to $4.07 per pound over life of project 10% reduction in total cash costs partially offset lower by product credits Diesel Consumption 28% reduction in diesel consumption through use of electric trolley assist in haul trucks 1. Compares RNC revised PFS base case including trolley assist option (see RNC news release dated May 14, 2012) with December 2011 PFS results. 2. Based on $9.00 per pound long term nickel price and CDN$1.00 = US$0.90 exchange rate. NPV and IRR calculated from start of construction, January 2014 and based on October 2011 real costs. 3. C1 cash costs are defined as the cash cost incurred at each processing stage, from mining through to recoverable nickel delivered to the market, net of by-product credits. TSX: RNX 4

6 Revised PFS Economic Summary PFS Dec. 16, Revised PFS May 14, Base Case + Trolley Assist Units PFS Base Case Ore Mined Mt 1,070 1,066 1,066 Strip Ratio Waste:Ore Annual Contained Nickel Production (Life of Mine) Mlbs (kt) 96 (44) 108 (49) 108 (49) Annual Contained Nickel Production (Life of Project) Mlbs (kt) 82 (37) 91 (41) 91 (41) Concentrate Grade 33% 29% 29% Total C1 Costs $ /lb Ni $4.68 $4.45 $4.32 By product Credits $ /lb $0.55 $0.25 $0.25 Net C1 Costs $ /lb Ni $4.13 $4.20 $4.07 Initial Capital $M $1,112 $1,099 $1,112 Expansion Capital $M $733 $733 $739 Total Capital $M $2,578 $2,593 $2,680 Post Tax NPV 8% $M $1,083 $1,379 $1,420 Post Tax IRR 16.6% 19.3% 19.5% 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 3. Based on $19,842/t ($9/lb) Ni and $26,455/t($12/lb) Co 5

7 Revised PFS Recovery Improvements Contribute Additional $296 Million to Project NPV 8% Project recoveries improved due a combination of significant additional metallurgical testwork since July 2011, a 50% increase in mineralogy samples (693 to 1,097) and a revised resource model incorporating 50,000 (44% more) metres of additional drilling. Dumont Project Nickel Recoveries (Nov PFS vs. May 2012 Revised PFS) 1 60% 57% 50% 40% 30% 49% 47% 51% 31% 33% 41% 45% PFS (Nov. 2011) 20% Revised PFS (May 2012) 10% 0% 50 ktpd year ktpd year 6-19 Stockpile year See RNC news release dated May 14, 2012, available on Total 6

8 Revised PFS Use of Trolley Assist in Haul Trucks Revised PFS base case including trolley assist summary: Operating costs reduced to $7.63 per tonne from $7.89 per tonne Diesel consumption by reduced by 28% or 872 M litres over project life Potential to add trolley during expansion to 100 ktpd in year 5 Initial capital remains $1.1 billion Cost Summary: November 2011 PFS Compared to Revised PFS Revised PFS Base Case Including PFS Assist Trolley Option Mining Cost Rock ($/t) $1.45 $1.31 Mining Cost Ore ($/t) $3.16 $2.91 Initial Capital ($ millions) $1,112 $1,112 Expansion Capital ($ millions) $733 $739 Sustaining Capital ($ millions) $733 $829 Total Capital ($ millions) $2,578 $2,680 1 Life of mine capital includes $829 million of sustaining capital 7

9 Iron Ore (magnetite) By product Upside Metallurgical testwork has shown that a high grade iron ore (magnetite) concentrate grading approximately 63.5% iron can be produced and marketed Indicated resource of 22.5 Mt and inferred resource of 53.8 Mt of contained iron ore (magnetite) Testwork indicated an average of 2.6% of total ore feed can be recovered as a 63.5% magnetite concentrate Additional capital to build 100 ktpd circuit estimated at $98 M (including $22 M contingency) Additional operating costs estimated to be $0.18 per tonne milled. Transport costs to Quebec City estimated to be $C 47/tonne of iron ore (magnetite) Initial marketability assessment indicates FOB Quebec City price of $94 per tonne (based on 3 year historical average) 1 Mineral Resource Statement, Dumont Nickel Project, Quebec, SRK Consulting, April 13, Resource Quantity Magnetite Contained Magnetite Category (000 t) (%) (000 t) (Mlbs) Indicated 579, ,450 49,500 Inferred 1,301, , , Based on CRU Strategies forecast incorporating value in use calculations (April 12, 2012, Real 2011$) 2. Based on US$9/lb Ni, US12/lb Co, and US$94/t magnetite; See RNC news release dated May 14, 2012, available on Mineral resources that are not mineral reserves do not have demonstrated economic viability. 8

10 Alternative Downstream Processing Options for Dumont Concentrate Separate study underway for downstream processing options including conventional roasting to produce nickel oxide and/or producing a final ferronickel product that provides many potential benefits: Lower costs simpler processing path compared to smelting and refining Lab scale testwork yielded a high grade ferronickel product (55 60% nickel vs. typical range of 15 40%) Direct ferronickel or nickel oxide from concentrate is analogous to eliminating refining step from smelting and refining Higher recoveries a high grade ferronickel or nickel oxide product means more payable nickel Value for 98 99% of contained nickel compared to 90 93% typically paid by certain smelters Greater flexibility opens door for many potential partners and customers Nickel oxide product can be used by any nickel pig iron or ferronickel producer A desirable ferronickel product that should command a premium in many markets and a more attractive product for potential partners Ferronickel Button Produced Directly from Dumont Concentrate in Preliminary Testwork 9

11 Continuing to Advance Project Project Development On Schedule Pre Feasibility Revised Pre Feasibility Partner Process Project Financing Feasibility Permitting Long Lead Items Construction Commissioning & Ramp Up Project Milestones Completed Nov 2011 Pre feasibility study results: $1.1 billion after tax NPV 8% Nov 2011 Project notice to begin environmental permitting process Site work to support feasibility study on schedule Nov 2011 PFS community consultation process completed Jan 2012 Rothschild appointed Project Finance Advisor Feb 2012 Application to secure industrial power rates April 2012 Magnetite concentrate study May 2012 Revised prefeasibility study results: $1.4 billion after tax NPV 8% Near Term Catalysts to Unlock Value Mid 2012 Project Director to be appointed Mid 2012 Alternative downstream processing study Q Environmental Impact Study Early 2013 Project partner Late 2013 Project financing TSX: RNX 10

12 Appendix 11

13 1 Billion Tonne Reserve Added Co, PGM and Magnetite Resources Mineral Reserve Statement, Dumont Nickel Project, May 14, Contained Nickel Reserve Estimate Quantity Nickel (000 t) (Mlbs) (000 t) Grade (%) Probable Reserves 1,066, ,876 6,340 Mineral Resource Statement (inclusive of mineral reserves), Dumont Nickel Project, SRK Consulting April 13, Resource Quantity Grade Contained Nickel Contained Cobalt Category (000 t) Ni (%) Co (ppm) (000 t) (Mlbs) (000 t) (Mlbs) Measured 359, , Indicated 1,261, ,330 7, Measured + Indicated 1,621, ,360 9, Inferred 513, ,320 2, Resource Quantity Grade Contained Palladium Contained Platinum Category (000 t) Pd (gpt) Pt (gpt) (ounces) (ounces) Indicated 182, , ,000 Inferred 256, , ,000 Resource Quantity Magnetite Contained Magnetite Category (000 t) (%) (000 t) (Mlbs) Indicated 579, ,450 49,500 Inferred 1,301, , ,515 Source: RNC news release dated May 14, 2012, available on Mineral resources that are not mineral reserves do not have demonstrated economic viability. TSX: RNX 12

14 Revised PFS Capital and Operating Cost Summary Capital Cost Summary Initial Expansion LOM ($ millions) Capital Capital Capital 1 Mine $335 $172 $810 Process $354 $314 $1,005 Tailings $30 $11 $135 Infrastructure $67 $25 $92 Indirects $184 $117 $301 Contingency $142 $101 $338 Total $1,112 $739 $2,681 1 Life of mine capital includes $829 million of sustaining capital Operating Cost Summary Operating Costs $ per pound $ per tonne 2 Mining $1.17 $2.91 Processing $1.71 $4.28 G & A $0.18 $0.45 Total Site Cost $3.06 $7.63 TC / RC $1.26 By products ($0.25) Total $ $/tonne ore milled. Mining cost $/tonne rock $1.31 Structurally Low Cost Simplified flowsheet (SAG + 2 ball mills) x 2 Low strip ratio 1.2:1 Low electricity costs C$ 4.3 cents/kwh Single concentrate Non acid generating waste rock and tailings All major support infrastructure in place 13