Royal Nickel Corp. RNKLF

Last Mark Selby interview since he resigned as Pres. & CEO

[pierreg]

Very good CRUX Investor RNX interview with Mark Selby and last Mark Selby interview since he resigned as President and CEO (July 18th 2019): RNC Minerals (RNX) 390% Increase in M&I Resource News release 27th June 2019. Video & my transcript

Video: https://www.youtube.com/watch?v=tRZJf-Om-UI+

My transcript:

Matthew Gordon: « Hello and welcome to our viewers on CRUX Investors […] We will be speaking in a second to Marc Selby. He's the CEO of RNC Minerals. We spoke to him a month ago and he's going to give us an update as to what's been going on since then. They had a press release this morning about their drill results in the Western Flanks of their Beta Hunt project. But we're also going to be asking about Zone A, exploration drilling, his mining program, the resource update due in Q3, Higginsville, the GDXJ listing, Dumont and his opinion about the recent Cobalt 27 acquisition. So, Mark hi, how are you?

Mark Selby: « Great sir, how are you? »

Matthew Gordon: « Not too bad. I hear you doing the rounds in Toronto and I know you're in New York also, recently? »

Mark Selby: « Yeah. Obviously with today's release, it's getting lots of attention and lots of investor enquiry. So, it's been a good day. »

Matthew Gordon: « Perfect, well that's why we called. So obviously, we've been through the press release. Do you want to give us the highlights in your own words? »

Mark Selby: « The key thing there is when we bought this asset two years ago, we wanted to drill out the Resource, get a mill in place and so, today's Resource is I think a vindication of really what we saw as the sort of massive Resource potential for the mine itself. So, what we announced today is just for Western Flanks, 710,000 ounces M & I Resource and another 250,000 ounces of Inferred. Almost a million ounces combined at a discovery cost of less than five dollars an ounce and Western Flanks remains open up along strike and at depth as well and again, we think these structures can continue for many hundred meters. So, we're very happy with the results today and now we're entering the phase, the exploration. Now we've proven what the potential of one of these shears looks like. We're going to step out and start to highlight where the Gold that we think exists in some of the other shears on the property. »

Matthew Gordon: « That’s a great point to bring out. So, this was just along one kilometer of one shear and you've got another three shears of aggregate four kilometers. »

Mark Selby: « Exactly, so lots of room to go find a lot more ounces. »

Matthew Gordon: « Right, now I gotta talk about the cutoff grade. Now that's what shifted from 1.8 g/t Au to 1.6 g/t Au. »

Matthew Gordon: « You've got a grade tonnage curve diagram in the press release; we can see that. But maybe it's worth just explaining that for people, why you've done that. In fact, why couldn't you go lower? »

Mark Selby: « Yeah. I think with our own mill and with the mining costs that we think we'll be incurring on a go forward basis, we think that's the appropriate cut-off grade. I think you highlighted the grade tonnage curve there and the point we made in the release is that there's 450,000 oz of that 750,000oz is at 4g/t. So, where we'll end up in a mining plan, which will be out by the end of third quarter, was likely somewhere between that 3 and 4 grams. It gives us lots of ounces to work with. »

Matthew Gordon: « Right and I've noticed you are also quite careful in the release to talk about and focus on the bulk tonnage and not the High-Grade 'nuggety', I think is the word of the day, Coarse Gold. Why was that? »

Mark Selby: « We can't put a Resource around it, so it will be bonus ounces and bonus grade on top of whatever we have in the base Resource today. So that's the way that investors should think about that going forward. »

Matthew Gordon: « Okay. I think it's quite a well-written press release so perhaps people should have a look at and there's a few diagrams that's definitely worth looking at. You've also got a lot going on and we haven't spoken for a month so I want to take advantage of you today. There's a lot going on. There's obviously Zone A. You may be making an announcement on that. When is that due? »

Mark Selby: « Yeah. So, the way we've done it, we've got the Western Flanks Resource out first. We'll get the A Zone out probably sometime in the first half of August and we'll, in one technical report file, 45 days from now we'll have the report for both of those Resources. So, it's not as big, it’s not as thick as a Resource as Western Flanks. So, we're not going to see the same total ounces. But we should see a good bump in the Resource from what we had in 2017. »

Matthew Gordon: « Right and between now and then you continue to drill? »

Mark Selby: « Yeah. So, we've got to the one drill left that's working on the exploration holes. Again, the diagram in the release shows where the Fletcher Zone is. In 2016 we put one hole out there and hit 25m at over 2.5g.Mineralisation looked very similar to what we had a Western Flanks. We have our East Alpha, which is on the other side of the A Zone and again, from the historic Nickel drilling, we literally have hundreds if not thousands of historical intersections from the Nickel drilling that highlighted where the Gold was. So, we've got lots of targets to go after and in this phase of the drilling we'll be able to start to do that. »

Matthew Gordon: « When we last spoke you made a fabulous announcement in terms of the mining component. You've continued to mine and you continue to make discoveries. When do you expect to be able to talk about that? »

Mark Selby: « Yeah. We've been mining along that 16 level. So, we pulled out initially a 1000 oz. We pulled out a little bit more. From there we'll end up seeing what the final number is once we get that Gold processed in the next week or two. But again, the key thing there is we've gone at the intersection of the set of shears three times, and we've hit it three times on the 14 level, 15 level and now the 16 level.We still have all of those stoping blocks left in between and again, we've been pulling off a 1000oz to 2000oz per 5m level. You can do the math to see what the potential High-Grade coarse Gold that we might find once we stope those areas out. That's stuff that we'll be doing between now and the end of this year. »

Matthew Gordon: « Okay. I think we spoke previously about a Resource update in Q3. That's still on schedule? »

Mark Selby: « Yeah. That's correct. It will be a Reserve update. »

Matthew Gordon: « A Reserve update. Okay. »

Mark Selby: « Yeah, so we'll have the first Reserve for Beta Hunt Gold in the mine's history. »

Matthew Gordon: « Okay. Which is obviously great news. I think everyone is expecting great things because they have done the maths as you just asked. So, the planning for the mine. That continues to evolve at the moment. Have your plans changed in terms of the kind of rigour and planning that you've put to that so far? »

Mark Selby: « No, the first step in that was always getting a comprehensive Resource in place which we've now got for Western Flanks and we'll have shortly for the A Zone and using that base we'll look at the mine plan.Fundamentally, because of the scale, the thickness, Western Flanks is 10 to 40 meters wide. It provides us lots of opportunities to look at different ways to mine it. Potentially a lower cost ways to mine it. We'll see when the mine plan comes out. But we're quite excited to have this much Resource to work with, which should deliver a multi-year Reserve for the mine, which is ultimately where we wanted it to get to when we acquired it back in 2016. »

Matthew Gordon « Right. Well talking of which, obviously the recent acquisition and you did touch upon it earlier, Higginsville. That obviously comes with a few ounces in the ground too. I think some people are curious as to what you've done in the last month since that deal closed and do you have any sort of sense of what the mix between Beta Hunt ore and Baloo ore will need to look like or could look like? Or is that still a work in progress? »

Mark Selby: « Yeah. So, it's a work in progress. But again, with Higginsville, whenever you acquire an asset, the key thing is to get the people right. So, our team there has been actively managing that integration. That's gone well. We've ran our first batch of ore through.We don't have the final numbers yet but based on the amount of Gold we've poured; we think that the mill performed quite well. We're doing one of the last third-party tolls from there, and then the remainder of July, August and September is going to be focused on Beta Hunt and Higginsville material. By September we should be having quantities of ore from Baloo to feed the mill and so, we're looking forward to a decent Q3 and then a good Q4. Which hopefully we'll be ramping back up Beta Hunt to whatever we think the optimal level is from the Reserve. Mine plan and Reserve update, that'll be done at the end of Q3. »

Matthew Gordon « Okay. Two questions that come out of again from listeners and viewers, is obviously you continue to do work there. What's your expectation in terms of the All In Sustaining Cost (AISC)? You had a number previously. You're going to be doing this work to optimise that. What are those savings mean in the new environment we're in today? »

Mark Selby: « Yeah, I think in terms of AISC, we should come out somewhere in the range of $900 oz to $1000 oz. We can do better than that. Certainly, will and again, that assumes the zero High-Grade Gold. So, any of that will help increase the denominator and help bring that number down. »

Matthew Gordon « Right. So, I think you used the word earlier 'vindicated'. So, you feel that this... you're on the way to vindicating the decision to acquire this. Because again, you had a few critics at the time.I think the chat rooms would bear out that perhaps people think that's now quite a smart call of yours, especially with Gold having done what is done in the last couple of weeks. »

Mark Selby: « Yeah. With Gold at $2000 an ounce. »

Matthew Gordon « Australian dollars. »

Mark Selby: « Yeah, $2000 Australian dollars an ounce. Yes, with Australian dollar. With Australian Gold at that level. Having done that mill deal when we did, was very fortuitous because there's lots of low-grade open pits scattered throughout the Kalgoorlie region and with Gold at these levels there's going to be a new surge of ore. Looking for a mill to process it, to take advantage of these high Gold prices. So, we are in the position over the next six months here, that as people who are looking for capacity to process, we are one of the few people who have it. »

Matthew Gordon « Remind me what the mill capacity is? »

Mark Selby: « Yeah, basically it's about 1.2 Mt per annum. »

Matthew Gordon « Right, and what does that work out a day? »

Mark Selby: « That's about 3500 tons a day. »

Matthew Gordon « Right, and you think that's the limit? »

Mark Selby: « No, I mean there's potential to expand it further. Westgold Resources was looking at options to make it a larger mill. So, for the right opportunity, if someone's looking for a capacity to mill a sizable Resource, if it makes sense for our shareholders and creates value for shareholders that it's something we'll take a look at. »

Matthew Gordon « Right Ok. I don't quite understand the process for optimising or upgrading it, but is that a quick to market process? »

Mark Selby: « It depends on how much you would want to expand it. Right now, we want to focus on filling what we have. But again, there's a number of different projects in the area and if there's an opportunity that makes sense, we'll definitely take a look at it. »

Matthew Gordon « You have made a statement previously that you believe that the grades will improve at depth. Do you still feel that's the case with a new data that you've got? »

Mark Selby: « Yeah, I think that's one of the things and we highlighted it in the release, was the final hole of that Western Flank's campaign, which is sort of the deepest northern most hole. It had a fairly consistent grade across the intersection at over 6 g/t. So, we'll see when we continue to drill further north and further down and see what happens. But if the grades continue at those levels then that gets too a pretty exciting grade going forward. »

Matthew Gordon « Okay, well let's step back and we'll wait and see. What is the focus between now and December then for you? You've got a lot of moving parts here and I'm looking at the share price today, hasn't really moved on what is know reasonably good news. I think maybe a few people taking the chance to cash in which is fair enough. Name of the game. But for you, what's important? »

Mark Selby: « Yeah, again we've been focused on getting a multi-year Reserve mine plan in place for Beta Hunt and so, that remains on track and we will look to have that in place by the end of the third quarter. Based on that we will then look to ramp up the mine to the level that that mine plan suggests, makes the most sense and creates the most value. At Higginsville, we will be looking to get Baloo into production by September and then, between the optimisation between the  Higginsville property and Beta Hunt, in terms of feed for that mill and then, on the Dumont front, we'll be continuing to resume discussions with a number of people around partnering and financing on the Dumont project. »

Matthew Gordon « Well that's great. That was one of my questions actually, in terms of, have those conversations started up again, or are they about to resume? »

Mark Selby: « Yeah. They've been ongoing. One of our teams was just in Korea last week, so those discussions continue in earnest. »

Matthew Gordon « Also by the way, congratulations on getting on the GDXJ Index. I think people perhaps haven't given you enough credit for that. I was talking to the CEO of a 700 M$ market cap company who's very keen to get on the Index. You're obviously a lot smaller than that but you've a very enthusiastic following and trading which I think has got you on that. So, congratulations. »

Mark Selby: « Thanks and that's the thing too is, liquidity in the stock is something that's important to join an index and so, that consistently good volume that we've shown through September is what allowed us to join it and obviously, was quite happy with the response post the index listing last week. »

Matthew Gordon « Yeah, I think it's important to note that, the importance of it. Obviously again, looking back from September to now, shares 9x higher than they were then. Which is great. But you just turned the corner. So, getting back to where you were. Are you feeling confident with the news coming through that people should start reacting to that in the marketplace and if so, is it going to be institutional or retail? »

Mark Selby: « Yeah, I think that one of the big things about this Resource update and then the A Zone Resource update to come, and then a Reserve, is I think for some institutional investors relative to the Resource base that we had at the time, valuations look pretty rich.So, the fact now that we're getting some pretty robust Resource and hopefully robust Reserves in place, we will make it a lot easier for them to step into the story and step in a meaningful way. Fundamentally for investors today, yes, the share price is up quite dramatically.But my beliefs always been is that we acquired this asset because there's a 5 km ramp system sitting above what we think is 4 shears across +4 km and so, once we start demonstrating the Resource potential of those shears, which I think today's announcement is a major step forward on that, the reality is there's very few multi-million-ounce Resources available in low-risk jurisdictions around the world. You have a bunch of Aussie mid-tiers that are cashed up with well valued paper. You saw some transactions that occurred during the last month and so, I think over the next 6 to 12 months, if we continue to do what we're doing, we may start getting a few knocks on the door or maybe more than a few knocks on the door. »

Matthew Gordon « Well you hope. Just to finish off because I know your time is tight, you're running around the city at the moment. We got into this because we appreciated the rigour and the planning and the thought and the strategy to this, and you've always said from the start this is going to be big. Question is how big? You're now telling that story to the institutional brokers, the Haywood's, the Cantor Fitzgerald guys. How are they reacting to what's going on over the last couple of months? »

Mark Selby: « I think again getting the mill, milling solution in place took a big question mark around the asset away. I think it's one thing for a CEO to say, 'oh we've got a massive Resource potential'. It's another thing to deliver 700,000 oz of incremental Resource at a discovery cost of less than $5 oz. I think it takes the question mark around what the potential could be and again, now that we've demonstrated for one shear, this next round of drilling is really going to step out and test some of the other shears. I think really start to show what the potential of this asset could ultimately be. »

Matthew Gordon « Right, okay and you think technically things are going as expected, as you planned. There haven't been any hiccups since when we spoke last? »

Mark Selby: « No, Beta Hunt's working well. Higginsville, the integration is going well. We've got a great team in Australia in place and so, with the Dumont update as well, we're firing on all cylinders on Dumont as well. »

Matthew Gordon « Well talking of which. Cobalt27. They just did quite an enormous deal with Pala Investments. Do you think that's been a good deal for Cobalt27? For investors? For Pala? »

Mark Selby: « Well I think with Cobalt27 now becoming Nickel28, again I think it highlights what some of the potential is in the Nickel space. I think the portfolio of assets they had, between royalties and mining assets and stuff that is more Nickel and less Cobalt, or more Cobalt and less Nickel. It helps to separate the assets and bring some clarity and focus to each of the portfolios. So, I think they've got a very fundamental belief in where Cobalt is going and its a transaction they're paying a premium for. »

Matthew Gordon « It's interesting, I think congratulations due to Anthony. We're speaking to him shortly actually and also, by inference yourself with Dumont. Don't forget Dumont, it's a big part of this story. Well congratulations by the way. I just want to say that. It's been a good month, been good month for shareholders, I think. You've got to keep it going. The hard work has just begun. But also, please pass my congratulations on to Russell Starr, he did a great presentation. I think anyone watching this, should maybe look at Russell's presentation as well that he did. I think last week. »

Mark Selby: « Yeah, at the conference in the US there. »

Matthew Gordon « Yeah, perfect. Okay, well I've taken enough of your time. I know you were you were rushing off. »

Mark Selby: «Okay, no thanks Matt. It's great to catch up and we'll be catching up again soon. »

Matthew Gordon « Great work. Thanks Mark. »