TORONTO, Dec. 20, 2016 /CNW/ - RNC Minerals (TSX:
RNX) ("RNC") has signed and closed a US$6.5
million Secured Copper Prepayment Agreement and US$5.0 million Copper Purchase and Working
Capital Facility with Auramet International LLC. The arrangements
have been entered into with respect to RNC's 30% share of the
copper and other metals produced at the Reed Mine operated by
Hudbay and located in Manitoba.
"The copper prepayment agreement and working capital facility
will allow RNC to quickly realize cash flow benefits from the
current strong copper price environment. The early repayment of the
Hudbay loans will allow RNC the benefit of access to Reed Mine cash
flow from copper production beginning in January 2017, much sooner than our prior estimate
of Q3 2017 made when RNC acquired the 30% interest in Reed," said
Mark Selby, President and CEO of RNC
Minerals.
Mr. Selby continued, "We expect that these transactions will
attract market attention to the significant value of RNC's interest
in the Reed Mine at a time when copper prices are showing strong
momentum. The transaction also allows RNC to opportunistically
lock-in favourable copper prices as we have forward priced an
average of 700,000 pounds of production per month for December 2016 and the first six months of 2017 at
an average price of US$2.49 per pound
(C$3.33 per pound)."
The structure of the transactions is similar to the refinancing
of the Beta Hunt Mine debt that RNC completed in early October,
which was comprised of gold prepay and working capital facilities
that replaced the prior nickel-weighted Lascaux prepay facility
(see RNC news release dated October 4,
2016). Had the Lascaux debt remained in place, given the
run-up in nickel prices during the past 8 weeks, the dollar value
of the refinanced Lascaux obligations would have been C$1 million higher. Also noteworthy is that the
dollar value of the gold obligations under the new Beta-Hunt gold
prepayment arrangements are C$4.4
million lower than it was when the transaction closed in
early October. Under that transaction, RNC also hedged 1,300 ounces
per month of Beta Hunt gold production commencing in February 2017 and expiring in April 2018 at A$1,728 (US$1,320)
per ounce.
US$6.5 Million Secured Copper
Prepayment Agreement
The US$6.5
million copper prepay will be repaid by the delivery of 2.8
million pounds of copper over a 12-month period commencing on
January 31, 2017 (0.2 million pounds
per month). RNC also granted call options to Auramet on two million
pounds of copper with a strike price of US$3.30 per pound (C$4.42 per pound) and expiration dates from
September through December, 2017 (0.5 million pounds of copper per
month).
The security granted to Auramet in connection with the prepay
includes a pledge by RNC of its shares in VMS Ventures Inc. (RNC
subsidiary and owner of our 30% interest in Reed). The loan is
repayable at any time without penalty.
US$5.0 Million Copper Working
Capital Facility
Auramet has also agreed to provide a
US$5.0 million working capital
facility (as part of a copper purchase agreement) bearing interest
at a rate of LIBOR + 4.5% per annum. Each month, Auramet will
purchase RNC's share of the accountable metal content in the ore
extracted from the Reed Mine in the prior month and will advance to
RNC 95% of the purchase amount.
The closing proceeds from these transactions have been applied
to repay all outstanding obligations owed to Hudbay under the
Construction and Bridge Loans entered into in connection with the
financing of VMS's share of the construction and operation of the
Reed Mine.
Beta Hunt Gold Tolling Agreement with FMR Investments Pty
Ltd
Separately, Salt Lake Mining Pty. Ltd., RNC's
wholly-owned subsidiary, has signed a one year tolling agreement
with FMR Investments Pty Ltd, with a minimum of 35kt and
flexibility to process up to 80kt per month of tolling for RNC's
Beta Hunt mine, providing sufficient capacity for the mine to ramp
up. The FMR mill has achieved consistent gold recoveries of
approximately 93% during the three tolls that have been completed
at the mill in 2016.
Beta Hunt Mine Update
Beta Hunt is continuing to meet
expectations for Q4 2016 with run-of-mine ore grades in line with
expectations and mined gold production expected to be within the
previously announced range of 8.5-10,000 ounces for Q4. RNC also
continues to expect targeted annualized gold production rates of
60,000 ounces per annum to be achieved early in Q1 2017, and 2017
gold production in excess of 60,000 ounces.
Beta Hunt continues to make good progress developing the first
large stopes to be brought online. The first large Western Flanks
stopes, expected to yield in excess of 100kt with grades expected
in excess of 3 g/t, will be brought online during the second half
of January 2017. The first large A
Zone stope on 14 level, expected to yield in excess of 170kt at an
expected gold grade of 2.6 g/t, is scheduled to be brought online
by March 2017. A number of smaller
higher grade stopes also continue to be advanced.
The disclosure of scientific and technical information contained
in this news release has been approved by Johnna Muinonen, Vice President Operations of
RNC and Kevin Small, Director,
Mining Operations of RNC, both Qualified Persons under NI
43-101.
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.
About Auramet
Auramet is a global physical metals merchant that provides a
full range of services to participants in the precious and base
metals sectors, including prepayment and other financings, advisory
services, off-take from mining and recycling companies, revenue
enhancement strategies, and price protection programs.
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