Singapore 18/05/2016 - Royal Nickel Corp (RNC) may reduce nickel production while lifting gold output at the Beta Hunt nickel-gold mine in Western Australia given the strength in gold prices relative to nickel prices, it said.
The Toronto-listed miner reaffirmed its net output guidance it provided for Beta Hunt earlier, but with the strength in the price of gold relative to that for nickel, "the company may take advantage of the operational flexibility of the mine and reduce nickel production in favour of increased gold production", it said in its first-quarter report.
The spot gold price has risen around 20 percent since the start of this year. It was last at $1,271.2/1,271.5 per ounce on Wednesday, down $8.80 from on Tuesday's close.
LME nickel fell more than 40 percent between May last year and mid-February this year to a 13-year low of $7,550. The price was last at $8,600 per tonne on Wednesday , down $195.
RNC's 2016 guidance is for Beta Hunt to produce 3,500-4,500 tonnes of nickel in concentrate and 35,000-45,000 ounces of gold in 2016.
Beta Hunt is transitioning from a nickel producer to a gold and nickel producer and continues to ramp up gold production, RNC said. The mine produced 5,636 ounces of mined gold and 800 tonnes of nickel in concentrate in the January-March quarter.
RNC lifted its stake in Salt Lake Mining (SLM) - the owner of Beta Hunt - to 66 percent in March this year from 20 percent. It may exercise its rights to acquire the remaining shares in SLM by end-September.
RNC also owns the Dumont nickel project in the Abitbi mining camp in Quebec and a 3- percent stake in the Reed Mine in the Flin Flon-Snow Lake region of Manitoba, Canada.
Commissioning of the Dumont nickel project is expected to begin iwithin around three years after financing is in place, RNC said.
RNC expects its 30-percent share of production from the Reed mine to be 4,000-4,500 tonnes of copper and 500-750 ounces of gold in 2016.
The company incurred a net loss of $1.6 million in January-March compared with a net loss of $300,000 in the same period of last year due to higher general and administrative expenses owing to acquisition costs and business development expenses.
(Editing by Mark Shaw)