Royal Nickel Corp. RNKLF

Dumont Nickel asset to fund a mill expansion?

[pierreg]

Good post by @huntore on CEO.ca October 27th 2019:

« Dumont Nickel Asset

I would be supportive of a decision to sell their stake in the Dumont Nickel asset to fund a mill expansion to 2.4Mtpa plant, ~160kozpa to 180kozpa - The upgrading of the gravity circuit recovery would yield significant increases to the percentage of overall gold recovered by gravity.  Advantages of an upgrade to the system includes low capital cost and improved cash flows. 2.5Mtpa is approximately 300 tph. The largest Knelson concentrators top out at around 400 tph. If more capacity is needed multiple units are used in parallel.

The remaining cash from the sale of the Dumont asset could be applied to the reduction of debt to strengthen the balance sheet. It would be advantageous to report a stable balance sheet with no debt if the sale were to generate enough capital.

Going forward RNC Minerals would be wise to internally fund growth from the generating of profits from operations rather than raise capital from the past practices of share dilution or taking on debt. Establishing itself as a low-cost Australian gold producer with multiple sources of production, that can generate enough income to fund future exploration and development requirements, with out the need to go to the capital markets for cash should be at the top of their guidance going forward.

It’s important for them to raise capital to expand their production and fund exploration activities with profits from operations to establish themselves as a mid-tier mining company. The main reason is their potential to grow production and keep costs from rising. Another reason, is their strong management team. They don’t have the best cost structure currently, but I think that creates opportunity for investors who expect rising gold prices.

If the gold price continues to rise, RNC Minerals with good management, an affordable mill expansion and a viable well-stocked pipeline of projects will move the company closer to mid-tier gold producing capacity over the next 2 to 3 years. They do have a considerable amount of exploration opportunities with the strong opportunity for several high-grade discoveries on both of their land packages. They are aiming to generate substantial free cash flow relative to their current market cap which in turn will offer shareholders more opportunities to profit from their investment in RNC Minerals Corp.

I am looking forward to positive news to be released on a regular and reoccurring basis going forward. »