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Royal Nickel inks royalty deal with Red Kite

Keywords: Tags  Royal Nickel, Dumont Mine, nickel mining, Red Kite Group, RK Mine Finance, quarterly earnings, nickel, Daniel Fitzgerald

NEW YORK — Royal Nickel Corp. has signed a royalty purchase agreement with RK Mine Finance in which RK will acquire a 1-percent net smelter return royalty in the Dumont nickel project in Quebec for $15 million.

The deal with RK Mine Finance, a division of hedge fund Red Kite Group, was expected to close May 10, Royal Nickel said.

"This royalty sale provides an attractive form of financing, particularly in current capital market conditions. The additional capital will allow us to continue to aggressively advance the (Dumont) project once the feasibility study is completed by midyear," Royal Nickel president and chief executive officer Tyler Mitchelson said in a statement.

Meanwhile, Royal Nickel recorded a first-quarter net loss of Canadian $1.8 million ($1.78 million) for the three months ended March 31, down from a net loss of C$2.5 million in the same period last year.

The narrower loss was primarily due to lower general and administrative expenses, which totaled C$900,000 ($889,000), including lower consulting fees and share-based payments, the Toronto-based company said.

"We remain on track to complete the feasibility study by the middle of this year and continue to expect we will receive the required permits for Dumont during the second quarter of 2014," Mitchelson said. "At the corporate level, our focus is on continued discussions with potential partners aimed at entering into a development financing arrangement in advance of the completion of the permitting process."

Falling nickel prices in recent months have not deterred seasoned mining investors, Mark Selby, Royal Nickel’s senior vice president of business development, told AMM earlier this month (, May 2).

Construction on the Dumont Mine is projected to start following the receipt of permits in 2014, with commissioning to follow in late 2015. The mine is expected to ramp up production in 2016.

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