PROJECT UPDATE: Royal Nickel Signs $15-million Royalty Deal

Royal Nickel’s (TSX:RNX) Dumont project in the Abitibi region of Quebec was given a boost today with the announcement of a royalty purchase agreement with RK Mine Finance (Red Kite).

Under the terms of the agreement, Red Kite will pay $15 million for a 1-percent net smelter royalty in Dumont, which Royal Nickel says contains the third-largest nickel reserve in the world and is among the five largest nickel sulphide operations.

The deposit contains about 6.3 billion pounds of nickel in probable reserves and 9.6 billion pounds in the measured and indicated category, with 2.9 billion pounds inferred — enough for 30 years of production according to Royal Nickel’s website.

A 2012 prefeasibility study shows the project has a net present value of $1.4 billion and an internal rate of return of 19.5 percent.

Royal Nickel’s stock was up 10.14 percent on over triple average volumes in mid-day trading Thursday.

Securities Disclosure: I, Andrew Topf, hold no direct investment interest in any company mentioned in this article.