RNC will host a conference call/webcast on
March 22, 2017 at
10:00 a.m. (Eastern Time) to discuss
the arrangement. North American callers please dial:
1-888-231-8191, international callers please dial: (+1)
647-427-7450. For the webcast of this event click
[here] (replay access information
below).
TORONTO, March 22, 2017 /CNW/ - RNC Minerals (TSX:
RNX) ("RNC" or the "Company") is pleased to announce
that it has entered into a joint venture arrangement (the "JV
Arrangement") with Waterton Precious Metals Fund II Cayman, LP
and Waterton Mining Parallel Fund Onshore Master, LP (collectively,
"Waterton"). Pursuant to the terms of the JV Arrangement,
Waterton has agreed to acquire 50% of RNC's interest in the Dumont
Nickel Project for US$22.5 million
(C$30 million) in cash, implying a
value of C$60 million for 100% of the
asset. RNC and Waterton will also inject US$17.5 million (for a total of US$35 million) into a newly established limited
partnership (the "JV Entity") that will own Dumont, support
its advancement to development, and acquire high quality nickel
assets globally. The JV Arrangement provides for a unique structure
within the resource sector and sets forth a partnership between an
innovative mining private equity firm and a leading nickel
executive team to create and unlock value within the nickel
industry. The JV Entity's objective is to establish a pure play
nickel company with multiple projects operating in stable
jurisdictions.
Mark Selby, President and CEO of
RNC, commented, "This transaction clearly highlights the value of
the Dumont Nickel Project and will allow us to continue to advance
Dumont. RNC is very pleased to partner with Waterton Global
Resource Management, Inc. ("WGRM"), a leading mining private equity
firm with exceptional in-house mining and investment expertise.
WGRM's unique approach combines proprietary expertise and patient
capital over the course of the mining cycle and provides our joint
venture with the ability to advance nickel projects on an
opportunistic timeframe. Our team has identified a number of
targets to pursue through this JV Entity with minimal or no
dilution to existing RNC shareholders."
Mr. Selby continued, "In addition to the nickel acquisition
strategy with WGRM, RNC Minerals is poised to create value for
shareholders through multiple platforms: the ongoing ramp-up of
gold production at the Beta Hunt Mine in Australia with the added option potential of
our recently announced agreement with Westgold, the contribution of
cash flow from the Reed Mine in Canada in 2017, and the recently announced
spinout of our Qiqavik and True North Nickel assets into a separate
entity. Today's announcement of the JV Entity represents both a
significant recognition of value in our Dumont project, and an
opportunity to capture further value in the nickel market."
Isser Elishis, Managing Partner
and CIO of WGRM, commented, "We are very pleased to have reached a
JV Arrangement with RNC on the Dumont project. This arrangement
provides the foundation for us to collaborate on future
opportunities to acquire and develop high-quality nickel assets. We
look forward to working closely with and combining our expertise
with RNC's management team and board of directors."
Benefits to RNC Shareholders
RNC believes this partnership with Waterton will benefit
shareholders in the following ways:
- Commitment to advance Dumont and provide ongoing nickel
exposure, while minimizing potential dilution to existing RNC
shareholders and its precious metals business;
- Immediate value realized for Dumont of C$60 million (based on RNC's 100% interest), or
approximately C$0.20 share, which is
not currently reflected in RNC's market valuation;
- Immediate US$5.0 million cash
payment to RNC and US$17.5 million
cash contributed to the JV Entity on behalf of RNC to pursue the
nickel acquisition and Dumont development strategy;
- Further capital commitments from Waterton to the JV Entity of
an additional US$17.5 million to
pursue this strategy. A total of US$30
million of cash will be available immediately to pursue the
nickel acquisition and consolidation strategy
Overview of the JV Entity
The JV Entity will implement a strategy to unlock value within
the global nickel market by acquiring attractive and undervalued
nickel assets. Backed by RNC's team with over 100 years of combined
experience in nickel, and WGRM's long-term view of the nickel and
base metals business, RNC and WGRM believe that now is the time to
acquire high quality, undervalued assets.
The JV entity will contain:
- 100% interest in the Dumont nickel project
- US$35 million in cash or binding
capital commitments
- US$5 million to continue to
advance Dumont
- US$30 million to acquire
additional nickel assets. RNC and WGRM have identified a
transaction pipeline with a number of short, medium, and
longer-term opportunities.
Terms of the JV Arrangement
Under the JV Arrangement, RNC and Waterton have agreed to create
and jointly own the JV Entity. RNC will contribute Dumont to the JV
Entity. As consideration for contributing Dumont, RNC will receive
a 50% interest in the JV Entity, US$5.0
million at closing and the benefit of US$17.5 million in capital contributions to the
JV Entity made on its behalf, US$2.5
million of which will be applied to fund RNC's proportion of
the JV Entity's operating expenses related to the development of
Dumont, and US$15.0 million of which
will be applied to fund RNC's proportion of the JV Entity's costs
of acquiring and developing additional nickel projects.
The US$5.0 million in cash paid to
RNC at closing will be used for general corporate and working
capital purposes.
On closing, RNC and Waterton will be equally responsible for the
costs and expenses of the JV Entity and its business. As noted
above, the first US$17.5 million of
RNC's share of Dumont and acquisition-related costs and expenses
will be funded at closing.
RNC and Waterton have agreed to terms under which the JV Entity
will be governed and among other matters, the day-to-day management
and operations of the JV Entity, project financing, capital
distributions, voting and veto rights, dilution, liquidity and such
other matters as are consistent with arrangements of this
nature.
The JV Entity will be operated by RNC and shall be governed by
the terms of a limited partnership agreement (and certain other
agreements) and a four person board of directors made up of two
appointees from each of RNC and Waterton. Certain matters
pertaining to the JV Entity and its assets will require the
unanimous approval of both RNC and Waterton.
Closing of the JV Arrangement is anticipated to occur during the
second quarter of 2017 and is subject to the satisfaction of
certain conditions precedent, including in relation to the
permitting status of the Dumont project.
Dumont Nickel Project
RNC's Dumont Nickel Project is one of the world's largest
undeveloped, permitted and shovel ready nickel sulphide deposits.
Dumont is located near the town of Amos, in the municipalities of Launay and Trécesson, in the established
Abitibi mining camp in the mining-friendly Canadian province of
Québec. When in production, Dumont is expected to rank as the
fifth-largest nickel sulphide operation in the world by annual
production and contains the third largest nickel reserve in the
world.
Beta Hunt Update - Westgold Purchase Option and Toll
Processing Agreement; Extension to Copper Prepayment Arrangements
with Auramet
In order to take advantage of the lower cost toll processing
agreement with Westgold that RNC recently announced, and to finance
the build-up of mined gold inventory from Beta Hunt in advance of
the start of tolling at Westgold's Jubilee gold mill beginning
July 1, 2017, RNC has entered into
new working capital facilities and a US$2.5
million extension of its copper prepayment agreements with
Auramet International LLC. RNC expects to begin making shipments of
ore to the Jubilee mill before month-end. The US$2.5 million copper prepay facility will be
repaid through 75,000 pounds of copper production from the Reed
mine from June to December 2017 and
300,000 pounds in each of January and February 2018. RNC also granted call options to
Auramet on 1.5 million pounds of copper with a strike price of
US$3.30 per pound and expiration
dates from January through May, 2018. The US$4 million in-process gold facility has
identical terms to the facility currently in place for the existing
tolling arrangement and bears interest at LIBOR+4.5% when drawn
(see RNC news release dated October 4,
2016).
The ramp-up at the Beta Hunt mine is continuing but at a slower
pace than previously anticipated as initial grades from the first
Western Flanks stope was lower than expected and equipment
availability issues slowed throughput and development rates during
the first quarter. These issues are being addressed and annualized
production rates of 60,000 ounces of gold are now expected by
mid-year. The ramp-up is expected to continue during the year to
achieve previously announced guidance of 65-70,000 ounces per year
at an all-in-sustaining-cost of US$900-1,000 per ounce.
The disclosure of scientific and technical information related
to the Beta Hunt Mine operations contained in this news release has
been approved by Kevin Small,
Director, Mining Operations of RNC, a Qualified Person under NI
43-101.
Financial Advisor
Haywood Securities Inc. has acted as financial advisor to RNC in
connection with the JV Arrangement.
Conference Call
RNC will be hosting a conference call today beginning at
10:00 a.m. (Eastern Time).
Live Conference Call and Webcast Access Information:
North American callers please dial: 1-888-231-8191
Local and international callers please dial: 647-427-7450
A live webcast of the call will be available through CNW Group's
website at: www.newswire.ca/en/webcast/index.cgi
A recording of the conference call will be available for replay
for a one week period beginning at approximately 1:00 p.m. (Eastern Time) on March 22, 2017, and can be accessed as
follows:
North American callers please dial: 1-855-859-2056; Pass Code:
83329745
Local and international callers please dial: 416-849-0833; Pass
Code: 83329745
About Waterton
Waterton is a leading private equity firm dedicated to
developing high quality resource assets in stable jurisdictions.
Waterton's founding team has a successful track record of
originating, structuring, managing and exiting investments through
acquisitions, joint ventures and partnerships, across a range of
sectors and asset classes. Waterton's core strength is its
cross-functional, fully-integrated, in-house team of professionals
who possess significant mining, financial and legal expertise.
Waterton's team employs a proactive approach to asset management,
leveraging significant sector knowledge and extensive industry
relationships to support the firm's investment activities.
Waterton's two current active private equity funds, Waterton
Precious Metals Fund II and Waterton Parallel Fund closed with
capital commitments in excess of U.S. $1.725
billion in 2014 and 2016 respectively.
About RNC
RNC is a multi-asset mineral resource company focused primarily
on the acquisition, exploration, evaluation and development of base
metal and precious metal properties. RNC's principal assets are the
producing Beta Hunt gold and nickel mine in Western Australia, the Dumont Nickel Project
located in the established Abitibi mining camp in Quebec and a 30% stake in the producing Reed
Mine in the Flin Flon-Snow Lake region of Manitoba, Canada. RNC also owns a majority
interest in the West Raglan and Qiqavik projects in Northern Quebec. RNC has a strong management
team and Board with over 100 years of mining experience at Inco and
Falconbridge. RNC's common shares
trade on the TSX under the symbol RNX. RNC shares also trade on the
OTCQX market under the symbol RNKLF.
Cautionary Statement Concerning Forward-Looking
Statements
This news release contains "forward-looking information"
including without limitation statements relating to the liquidity
and capital resources of RNC, production guidance and the potential
of the Beta Hunt and Reed mines.
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: 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, projected
cash costs, failure to obtain regulatory or shareholder 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 news
release and RNC 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.
SOURCE RNC Minerals