RNC Update Conference Call True North Nickel Transaction Nickel Market Update June 2, 2014
Disclaimer Cautionary Statement Concerning Forward-Looking Statements This presentation contains "forward-looking information" including without limitation statements relating to the completion of the transaction contemplated by the LOI, the potential of the West Raglan Project and the outlook for the nickel market. 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. Factors that could affect the outcome include, among others: failure of the parties to sign definitive agreements and satisfy conditions of closing; future prices and the supply of metals; the results of drilling; inability to raise the money necessary to incur the expenditures required to retain and advance the properties; environmental liabilities (known and unknown); general business, economic, competitive, political and social uncertainties; accidents, labour disputes and other risks of the mining industry; political instability, terrorism, insurrection or war; or delays in obtaining governmental approvals. 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 forwardlooking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable securities laws. Cautionary Statement Concerning LOI The LOI does not constitute a binding agreement or commitment of any nature between the parties respecting a transaction. The transaction is subject to the parties respective due diligence investigations and the entry into a Definitive Agreement on customary terms. The transaction will be subject to TSX approval. There is no assurance that the transaction will be completed as planned or at all. Information Concerning West Raglan Property: Information concerning the West Raglan property in this presentation is taken from sources, some of which are historical, that RNC believes to be reliable, but RNC has not verified the information and does not assume responsibility for such third party information. 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 any current resource estimates and there is no certainty that any such estimates will ever be established. NI 43-101 Compliance The disclosure of the technical information contained in this presentation has been approved by Alger St-Jean, P. Geo., Vice President Exploration of RNC, and a Qualified Person under NI 43-101. TSX: RNX 1
Summary RNC s LOI to acquire a controlling stake in privately held True North Nickel and its West Raglan project is another step forward to become the nickel-focused leader in the Canadian base metals market Provides exposure to a 2 nd drill-ready project in another world class high grade nickel-pgm camp Provides a 3 rd asset which allows the company to take advantage of a rapidly improving nickel (and PGE) market about to enter a multi-year period of structural shortfall in supply RNC is pleased to welcome Donald McInnes and Mark O Dea, both with proven track records of building companies and shareholder value creation, into the organization Donald McInnes will be appointed to the Board of Directors at closing Mark O Dea will be appointed as a Special Advisor to the Board of Directors at closing Dumont project advancing on multiple fronts First two phases of public hearing process successfully completed. Final phase scheduled for June 12 th. Remain on schedule for permits by year-end. Recent trip to Japan and Korea has successfully generated further interest from multiple potential partners in each country as market reality of Indonesia ban becoming clearly understood Awarded contract for detailed engineering for long-lead items to Ausenco Nickel market continues to rapidly improve. Since our last update call just 2 months ago in April, 1.8% saprolite ore price have more than doubled No additional ore from Philippines as YTD April imports into China are unchanged 2
TNN Transaction Overview RNC has signed a non-binding letter of intent to acquire a 56% interest in True North Nickel from a shareholder group led by Donald McInnes, Co-Chairman and CEO, and Mark O Dea, Co-Chairman of True North Nickel Letter of intent signed with 6 primary shareholders holding 39% of the outstanding shares of True North Nickel RNC will issue 0.3389 shares per TNN share. Acquisition of 56% interest will result in the issuance of approximately 5.6 million RNC shares. Additionally, RNC expect to issue 0.38 million and 0.55 million replacement options with exercise prices of $0.74 and $1.48, respectively 0.25 million and 0.66 replacement warrants with strike prices of $1.48 and $2.07, respectively At closing, Donald McInnes will join the Board of Directors of RNC and Mark O Dea will be appointed as a Special Advisor to the Board of Directors Execution of definitive agreements expected on or about June 5, 2014 Minimum closing condition of not less than 50.1% on a fully diluted basis Successful completion of due diligence Transaction will result in less than $100K in expenses for Royal Nickel in 2014 3
West Raglan Rich Nickel, PGE District Cape Smith Belt host to prolific, high-grade, polymetallic nickel deposits and includes two operating mines Raglan ore grades among the highest of significant global nickel deposits 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 operation 1 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 any current resource estimates and there is no certainty that any such estimates will ever be established. 1 According to Q1-2014 WoodMac report 4
West Raglan Multiple Targets Outcropping Sulphide Mineralization 7 mineralized zones identified across the property Outcropping sulphide mineralization across more than 35km of strike, very limited testing Magnetic signatures, lithogeochemistry, and geology same at Frontier and Raglan Strong potential for additional tonnage, two new untested zones at surface at Beverly and Red South part of property has magnetic and till anomalies suggestive of Nunavik Mine (South Trend) style mineralization (large tonnage, high Cu and PGM) 5
Frontier Zone High-grade Lenses West Raglan Multiple High Grade Lens Targets 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 17 and 18 for drill hole details 6
Donald McInnes, Mark O Dea Joining RNC Team Both Mark O Dea and Donald McInnes have proven track records as company builders and creators of significant shareholder value creation Donald McInnes will be joining the RNC Board of Directors upon closing of transaction Mr. McInnes has more than 20 years experience in natural resource development including founding Kutcho Copper Corp. (formerly Western Keltic Mines Inc.) and Plutonic Power Corp., a renewable power development company with a broad portfolio of clean energy projects. Mr. McInnes is currently Vice-Chairman of Alterra Power Corp, Chairman of the Clean Energy Association of British Columbia, and a Director of Pilot Gold and True Gold Mining. Mr. McInnes is also a past President and Director of the AMEBC, and past Director of the PDAC and a past Governor of the Business Council of British Columbia. Mark O Dea will be appointed as a Special Advisor to RNC upon closing of the transaction Dr. O Dea has created and led a family of strong, well-financed resource companies focused on the discovery and advancement of gold, copper, uranium and nickel projects around the world. He was co-founder and CEO, of both Fronteer Gold Inc. and Aurora Energy Resources Inc., which were sold to Newmont Mining Corp. and Paladin Energy Ltd. respectively in 2011. Dr. O Dea is Founder of Oxygen Capital Corp. and plays leadership roles in all Oxygen companies. He is currently Co-founder and Chairman of Pilot Gold, Executive Chairman of True Gold Mining, and Director of Laurentian Goldfields. 7
Creating the Nickel-focused Leader in the Canadian Base Metal Market The proposed acquisition of 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 25% Interest in Sudbury Platinum Corp 56% Interest in True North Nickel Historic Producing Property in Prolific High Grade Ni-Cu-PGE Sudbury Camp Positioned on Worthington offset between new Totten mine and Victoria development project Drilling to begin summer 2014 Well-positioned on Cape Smith Nickel 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 8
Dumont Nickel Project Ready to Take Advantage of Improving Nickel Markets Dumont project advancing on multiple fronts First two phases of public hearing process successfully completed. Final phase scheduled for June 12th. Remain on schedule for permits by year-end. Constructive discussions with potential partners Recent trip to Japan-Korea has successfully generated further interest from multiple potential partners in each country as market reality of Indonesia ban becoming clearly understood Discussions with European stainless producers underway Financing discussions continue with lending institutions, Ressources Quebec Awarded contract for detailed engineering for long-lead items to Ausenco Target remains 1 st quarter 2015 to begin construction 9
Nickel From Worst to First Nickel has been the best performing base metal in 2014 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% LME Base Metals Prices 2014 YTD Change (as of May 28) Nickel Tin Aluminum Zinc Lead Copper Source: Metalprices.com 10
US$/wmt FOB Nickel Ore Prices Have Moved Sharply Higher The price of nickel ore in China has increased by more than 5X since 2013 lows and more than double since our last update less than 2 months ago 140 130 120 Nickel Ore Prices (2014 YTD 28-May) 110 100 90 80 70 60 50 40 RNC Jan. 21 market update Laterite 1.8% Ni Ore (12-18% Fe) Until Jan 12: Indonesia Post Jan 12: Philippines RNC Apr. 14 market update Laterite 1.5% Ni Ore (Philippines 25-30% Fe) 30 20 10 0 Source: Ferroalloynet.com Limited 11
27-Dec-13 3-Jan-14 10-Jan-14 17-Jan-14 24-Jan-14 14-Feb-14 21-Feb-14 28-Feb-14 7-Mar-14 14-Mar-14 21-Mar-14 28-Mar-14 4-Apr-14 11-Apr-14 18-Apr-14 25-Apr-14 4-May-14 9-May-14 16-May-14 23-May-14 Nickel Ore Stockpiles Continue to Decline Portside nickel ore stockpiles in China from Indonesia have been declining since February 21 st at more than 400kt per week. Increased stockpiles of Philippines ore driven more by seasonality and weakness in carbon steel market Chinese Nickel Ore Stockpiles at Major Ports Total (Mt) 25 20 15 8.4 8.3 7.8 7.4 7.2 17.0 17.5 17.4 17.6 18.1 7.2 18.9 6.4 18.3 6.3 6.5 6.0 5.4 17.6 16.9 16.6 16.2 5.5 5.6 5.6 5.5 5.3 5.8 6.1 6.1 6.5 15.1 14.7 14.4 14.3 14.0 13.5 13.2 13.1 12.9 Philippines 10 Indonesia 5 0 Source: Ferroalloynet.com Limited 12
Philippines Providing Little Additional Ore to Market Imports of nickel ore from Indonesia into China are drying up while Philippines providing little additional ore to China 7 6 5 2014 Indonesia Nickel Ore Exports to China (Mt) 6.1 7 6 5 Philippines Nickel Ore Exports to China YTD April (Mt) 4.6 4.7 4 3 3.1 4 3 2 1 0 Source: GTIS 0.9 0.3 Jan Feb Mar Apr 2 1 0 YTD Apr 2013 YTD Apr 2014 13
Nickel Market Summary Nickel ore and NPI prices now trading at a premium to LME prices NPI plants in China are beginning to close as ore prices require NPI prices and LME prices higher than current levels for many operations to break even As year progresses and ore inventories continue to decline, expect further plant closures in China RNC expects LME inventories to begin declining by fall 2014 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 multiyear nickel shortages as early as mid-2015 despite record LME inventories of 260kt 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 14
APPENDIX Appendix 15
West Raglan Property History True North acquired 100% interest from Anglo American in August 2012 Anglo invested $44 million historically 38,000 metres drilled in 197 widely spaced holes Successfully found widespread Ni-Cu mineralization Was searching for single large tonnage lenses inconsistent with the Raglan geological model Left several key mineralized intercepts open True North exploration model True North invested $6 million and drilled 5,500 metres in 32 holes Exploration approach aligned to producing deposits Geology, structure and mineralization style are the same as Glencore s Raglan Mine property 40km east, along strike True North s geological model tested by successful 2012 drilling program and refined by 2013 analysis supports True North s interpretations and proves continuity of lenses 16
True North West Raglan Frontier Zone Drill Results Source: True North Nickel 17
True North West Raglan Frontier Zone Drill Results (Cont d) Source: True North Nickel 18
Corporate Overview Share Structure: Basic Shares Outstanding 1 : 94.4 million Options (average exercise price: C$0.67) 8.9 million Deferred/Restricted Share Units 2.1 million Contingent Shares 7.0 million Fully Diluted Shares Outstanding: 112.4 million Directors and Officers Share Ownership: ~9% Largest Shareholder RAB Special Situations (Master) Fund Limited: ~17% Balance Sheet Highlights 2 : Cash and Cash Equivalents: C$9.7 million Current Tax Receivable: C$2.1 million Working Capital: C$10.2 million Market Capitalization: C$66 million 1. Shares outstanding, fully diluted shares outstanding and shareholdings as at May 8, 2014 2. Balance sheet highlights as at March 31, 2014; market capitalization at May 8, 2014 TSX: RNX 19