Royal Nickel Corp. RNKLF

AISC & gold price is key for RNC Minerals profitability

[pierreg]

AISC and average gold price sold is key for RNC Minerals in terms of profitability. First, what is the AISC comprised of?  Then, what Mark Selby, Russell Starr, Rob Buchanan, Graeme Sloan, Red Cloud, Haywood & Cantor Fitzgerald have said concerning the future AISC.  Graeme Sloan said enclosed in the future mine plan with the reserves, there will be more definitive AISC numbers. Numbers commented are projections and as such must be taken with a grain of salt. In Q2 2019 production was significantly ramped down and Baloo open-pit wasn't yet in production (AISC 1329 USD/OZ) . Q3 production is seemingly off to a good start as RNC Minerals produced 7873 ounces of gold in July 2019 and mining is underway at the Baloo Stage I open pit. Also, Q3 average gold price sold will most probably be higher with July and August complete as July 1st gold per OZ closed at $1383 USD and is currently $1545 USD. As for the mine plan: « The timing for a full rampup decision will be based on completion of an updated mine plan based on the new resource update and is expected to be competed by the fourth quarter of 2019 » as per August 30th 2019 Preliminary short form prospectus.


https://www.denvergold.org/wp-content/uploads/DGG-Presentation_GrantMalensek.pdf:
«AISC Adjusted Operating Costs; plus
-Corporate General and Administrative expense
-Exploration and study costs (sustaining)
-Capital exploration (sustaining)
-Capitalized op stripping and UG development (sustaining)
-Capital expenditures (sustaining)
= All-In Sustaining Costs

Adjusted Operating Costs:
-On-site mining costs
-On-site G&A costs
-Royalties/Production taxes
-Hedging impacts on operating costs
-Community relations costs
-Permitting costs
-3rd party smelting, refining and transport costs
-Non-cash remuneration (site based)
-Stockpiles/product inventory write-downs
-Operational stripping costs
-By-Product credits. »

https://ceo.ca/rnx?37e73f03290e:
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. »

https://ceo.ca/rnx?581803a78e67:
Russell Starr: « So, we’re only going to be using about 30% or 40% of the mill with the current run rate which is 40,000 ounces. That will obviously go up as we drill more and find more. The AISC assuming we don’t hit other bonanza grade material is about $800 or $900 USD. So, its actually quite profitable right now and the reason we acquired that mill was you drop yourself below $ 1000 USD very quickly. »

https://ceo.ca/rnx?92675e4ef484:
Rob Buchanan: « The main way to bring AISC down is to mine more, so that's why they are ramping up. […] the main costs are relatively flat at the mine, so the more they can mine, the better.»

https://ceo.ca/~rnxpublic?4589a7290ba0:
Graeme Sloan: « At this stage you it is to a level. We'll bring that down but it has to happen over a period of time and again, it comes back to the fact that we're currently still mining the resources. We haven't finished the new mine plan with the reserves. So, there's always this bit of delay between what we're doing now and where we want to be very shortly and we'll have the mine plan completed and then, were able to come back and we have to be more definitive around production numbers and cost numbers and it would be wrong of me like to give you those or even hint where they're going until that comes out because we have to finish the process.

Mike Coyle: When it's safe to say that we're going to see much improved AISC costs with the integration of HGO and further production?

Graeme Sloan: Yeah, we've got so many areas Mike we're working on the cost reduction program. The Higginsville acquisition gives us the ability to start to really look at synergies. Even now we're starting to see these people swap around from site to site. We're seeing services being performed across both sites. All of these have a way of lowering the cost for us and as I said earlier on, fuel is a massive one, the big cost. So, we bring all of those down now because we're twice the size. We can get better deals and better rates for it than what we're getting at Beta Hunt. So, both operations will sort of benefit from those Mike.»

https://www.redcloudfs.com/wp-content/uploads/2019/08/20190823-RNC-Update-1.pdf:
Red Cloud Klondike Strike Inc. August 26th 2019:
Updated mine plan and guidance coming. The company plans to issue new guidance which should provide the market clarity on the potential of these assets. Based on the recently released Beta Hunt resource, we believe this mine could produce ~80k oz/year at cash costs ~US$800/oz. This coupled with ~20-30k oz/year from Higginsville, should make RNC a +100koz/year producer in the medium term. While the initial guidance may not be at this rate, we believe it is a short path to get there.

https://cdn.ceo.ca.s3-us-west-2.amazonaws.com/1ekmn3g-RNXJul312019.pdf :
Haywood July 31st 2019 RNC Minerals (TSX:RNX):

Minor adjustments to our estimates. We are maintaining our 2019 production guidance despite the weaker than expected 2Q19 production results. For 2019, we expect EPS of C$0.03 (from C$0.02) and CFPS of C$0.04 (from C$0.03). As a result of savings from the Higginsville mill, we are revising our cash cost estimates for 2019 to US$893/oz from US$991/oz and AISC to US$1,056/oz from US$1,158/oz. The new mine plan for Beta Hunt-Higginsville is expected in 2H19 will provide more clarity on production plans. The discovery of additional high-grade gold mineralization is possible, but will not be a focus of the development plan.

https://cdn.ceo.ca.s3-us-west-2.amazonaws.com/1ef0cdg-Cantor%20Fitzgerald.pdf :
Cantor Fitzgerald Equity Research - Corporate Update May 30th 2019

2019E USD $1110
2020E USD $767