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Edited Transcript of RNX.TO earnings conference call or presentation 15-Aug-19 2:00pm GMT

Q2 2019 Royal Nickel Corp Earnings Call

TORONTO Aug 17, 2019 (Thomson StreetEvents) -- Edited Transcript of Royal Nickel Corp earnings conference call or presentation Thursday, August 15, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Graeme Sloan

Royal Nickel Corporation - MD of Australian Operations

* John Joseph Leddy

Royal Nickel Corporation - VP of Business Development & General Counsel

* Johnna Louise Muinonen

Royal Nickel Corporation - President of RNC Nickel Division

* Paul André Huet

Royal Nickel Corporation - Executive Chairman & CEO

* Timothy Hollaar

Royal Nickel Corporation - CFO & Corporate Secretary

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Conference Call Participants

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* Derek Macpherson

Red Cloud Klondike Strike Inc., Research Division - VP of Research

* Matthew Dennis O'Keefe

Cantor Fitzgerald Canada Corporation, Research Division - Research Analyst

* Pierre D. Vaillancourt

Haywood Securities Inc., Research Division - VP & Senior Mining Analyst

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Presentation

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Operator [1]

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Good morning. My name is Adam, and I will be your conference operator today. At this time, I'd like to welcome everyone to the RNC Minerals Second Quarter 2019 Conference Call. (Operator Instructions) Thank you. I'd now like to turn the call over to your host, Mr. Paul Huet, Chairman and CEO of RNC Minerals. Please go ahead.

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Paul André Huet, Royal Nickel Corporation - Executive Chairman & CEO [2]

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Thank you. Good morning, everyone, and welcome to RNC's Q2 2019 conference call. In addition to me, speaking on today's call will be other members of RNC executive management team: Graeme Sloan, Managing Director of Australian operations; Johnna Muinonen, President, RNC Dumont division; and Tim Hollaar, Chief Financial Officer.

This morning, we issued a news release outlining second quarter 2019 results. Our MD&A and financial statements for the period ended June 30, 2019 have been filed, all of which are available on the RNC website or under RNC's profile on SEDAR.

During today's call, the speakers will be referring to slides of the presentation. These slides are available for download through a link on the home page of our website at www.rncminerals.com.

Before I begin the presentation, I would like to remind you to please review our cautionary statement regarding forward-looking information and non-IFRS measures, which can be found on our management discussion and analysis, news release and in our presentation slides.

Today is my first quarterly conference call with investors as Chairman and CEO of RNC. I admit we are very excited about the prospects for RNC and the value we believe we will continue to unlock for our shareholders. The recent gold price certainly has us all pretty excited as well. We have listened to suggestions from many of our shareholders that more frequent updates from the company are required. To address this, we are working on standardizing this within RNC, and you can expect to see more frequent reporting implemented in the near future. We recognize that at this stage of our growth, quarterly reporting with periodic updates on material news, like most of our peers, is insufficient for us. As such, you will be hearing from us on a more regular basis as we standardize reporting.

With that being said, I am pleased to provide you with highlights from our second quarter 2019 results as well as an update on our operations.

Let's face it. The second quarter was transformational for RNC and our shareholders with the acquisition of the Higginsville Gold Operation and an impressive start to the integration with our Beta Hunt Mine. As previously disclosed, we increased the measured and indicated resources by 395%. Honestly, I've never seen a resource drill that large so quickly, at least in my career.

We also increased inferred resources by 195% at Beta Hunt while delivering an updated feasibility study for the Dumont Nickel-Cobalt Project. We were also pleased that we got added to the GDX index.

These are all major milestones and are the result of tremendous efforts by our team. I want to take the time to thank everyone for their dedication in delivering several major initiatives in such a short period. It truly is impressive. There is still a lot of hard work ahead of us to evolve the company and continue creating value. We are all committed to make sure that we do such.

Since accepting the role of CEO, I've continually been asked about what our strategy will be with respect to nickel versus gold. Rest assured, this is something we must assess and evaluate carefully so that we generate as much value possible for all our shareholders. This issue will not be ignored.

To help achieve our goals, I'm announcing today some management updates that will make us a stronger company and better align us to maximize the value of each of the assets within our portfolio. Effective immediately, Graeme Sloan has been appointed as Managing Director of RNC's Australian operations with overall responsibility for the Beta Hunt and Higginsville operation in Western Australia. Graeme has an excellent track record of success in building and operating integrated mining operations, and he is already doing a great job of integrating Beta Hunt and Higginsville operation, which will create a stronger and lower-cost operations with the tremendous amount of synergies we have in front of ourselves.

Secondly, Johnna Muinonen will take the role of President of RNC Nickel Dumont (sic) [Dumont Nickel] and be responsible for the management of Dumont joint venture. Her mandate will be to work towards finding the best strategy to maximize the value of RNC's share.

At this point, I would like to turn the call over to Graeme to discuss further operations.

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Graeme Sloan, Royal Nickel Corporation - MD of Australian Operations [3]

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Thank you, Paul. Turning to Slide 6. This is an illustration of our West Australian portfolio. You can see our assets and in proximity to one another in the Kambalda area. We now control nearly 400 square kilometers in one of the most prolific gold jurisdictions in the world. As of early August, we now have 2 mines fitting into our 100%-owned Higginsville plant, providing new operational flexibility to the company.

In the second quarter of 2019, we mined over 11,000 ounces of Beta Hunt. Milled ounces were over 9,000 ounces, including a small amount of Higginsville material from stockpiles for the stock period June 10 to 30. With the Baloo open pit now online as of early August, the Higginsville operation will be a key contributor to our production and revenue going forward.

It's been a solid quarter for the Australian operations with the key focus of consolidation of Beta Hunt with the recently acquired Higginsville operations. I'm pleased to say this process has gone well, and is being executed as planned with both operations coming together nicely.

As part of this process, we have installed an experienced management team at Higginsville, which complement the already strong team we have at Beta Hunt. Morale and safety at both sites is very good with over 143 days LTI-free.

The acquisition of Higginsville is already delivering a number of cost savings across both sites, and it's the addition of the Higginsville treatment plant that is providing the greatest benefit. Not only are we now seeing much lower treatment cost compared to toll treating, a $15 tonne or 25% cost saving, but we now have greater flexibility around the treatment and blending of the different ore pipes to maximize gold recovery. The Higginsville plant is also allowing us to revisit our mining method at Beta Hunt. We can now look at much wider mining blocks to optimize gold extraction rather than being restricted to the narrow high-grade zones.

Slide 8 shows a number of operational highlights. At Higginsville, we have commenced mining our first open pit coal, Baloo stage 1. We're always intersected by only 3 meters below the surface. Stage 1 Baloo is forecast to deliver, on average, around 30,000 tonnes per month to the mill for the rest of the year. Treatment of this ore is already occurring.

Permitting for stage 2, Baloo stage 2, is underway. And drilling to test the Baloo north extension is expected to be underway early next month depending on weather. As part of our overall Higginsville mining strategy, a specialist resource geologist has been employed to focus on reviewing the very large historic resource that came with the Higginsville purchase. This work is showing very positive results with a number of new areas identified as part of the next generation of open pits.

At Beta Hunt, operations are performing very well with production levels around 40,000 to 45,000 tonnes per month. However, the really exciting news is the recently announced resource upgrade for Western Flanks and A Zone. On a measured and indicated basis, we now have 944,000 ounces plus an additional -- sorry, 406,000 ounces in the inferred category. Importantly, the measured and indicated component has been achieved at a discovery cost of $7.30 an ounce, which is extremely low and clearly demonstrates the potential of Beta Hunt. The new resource will form the foundation from which we can develop a long-term production plan for Beta Hunt. And the aim over the coming weeks is to convert as much of this resource to a mineable reserve as possible.

So in summary, the consolidation is going well with many positives flowing through to operations: a new resource, open pit mining underway, production ramping up across both sites, and a review of the historical resources looking very promising. So in closing, we've had a good start to the third quarter at our Australian operations, and I look forward to providing more details around production guidance in the next few weeks.

I'll now hand over to Johnna.

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Johnna Louise Muinonen, Royal Nickel Corporation - President of RNC Nickel Division [4]

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Thank you, Graeme. We have a 28% interest in the Dumont Nickel-Cobalt Project, which is one of the largest undeveloped nickel projects in the world. With the excitement over the future for nickel and cobalt prices and the anticipated explosive growth from the battery metal demand from the electric vehicle market, we are pleased that this valuable asset was in the front wheel. We are looking for the best way to realize the value of this asset for our shareholders.

In Q2, we are pleased to deliver the results for our updated feasibility study for Dumont. Dumont represents one of the only large-scale, fully permitted nickel-cobalt projects that can begin to satisfy the significant growth in the nickel and cobalt market. The feasibility study update maintain the same project scope, mill flow sheet and overall site layout for the feasibility study completed in July 2013. The study incorporated the results from the concentrate value in use, updated macroeconomic assumptions, updated mine plan, optimization of tailings deposition and updated capital and operating cost. The study confirmed the robust economic feasibility of the deposit with a strong rate of return of 15.4% and an after-tax NPV 8% of USD 920 million.

These results confirm that Dumont is a large-scale, low-cost, long-life asset, producing an average of 39,000 tonnes of nickel per year at a C1 cash cost of $3.22 per pound over the 30-year mine life. Dumont's operating C1 cash cost is expected to be in the second quartile of cash cost, which gives it a long-term flexibility to generate cash over the nickel price cycle. Once in operation, the annual free cash flow will average USD 201 million over the life of mine with an annual EBITDA of USD 340 million.

Moving forward into the second half of 2019, we will continue to work with our partners at Waterton to focus on developing financing plans and continue to evaluate opportunities outlined in the feasibility study to further add value to the project.

Thank you, and I will now hand the call over to Tim Hollaar.

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Timothy Hollaar, Royal Nickel Corporation - CFO & Corporate Secretary [5]

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Thank you, Johnna. I'll begin with a few financial highlights from the quarter. Q2 revenue was $17.2 million, up 59% from Q1. The revenue increase was primarily from Beta Hunt, where our ounces sold were up 28% due to higher production. The increased revenue also arose from a higher realized gold price per ounce and the addition of Higginsville revenue since the June 10 acquisition.

Our Q2 net loss was $16.2 million or $0.03 per share, which included $2.5 million of noncash expenses per share-based payments and depreciation and amortization, and a onetime $2.6 million charge for Higginsville acquisition cost. Our adjusted EBITDA was a loss of $5 million, and adjusted EBITDA per share was a loss of $0.01.

The Higginsville acquisition significantly increased the size of our balance sheet. Current assets increased $25 million and included $9 million cash at June 30. Total assets increased $86 million, offset by a $64 million increase in liabilities. The liabilities included, though, was assumed as part of the Higginsville acquisition together with partial funding for the acquisition from a $25 million bridge loan and a fully drawn $10 million revolver. Our equity was strengthened by $22 million or 61% from the prior quarter, primarily from shares issued to Westgold for the Higginsville acquisition.

I will now turn the call back over to Paul.

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Paul André Huet, Royal Nickel Corporation - Executive Chairman & CEO [6]

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Thanks, Tim. In closing, with the integration of our Beta Hunt and Higginsville operations, we are well underway. We can look forward unlocking synergies in several areas. Simply put, the 2 operations are a great fit and complement each other well. We are focused on our future and on becoming more transparent with more frequent updates to the market.

And I just want to talk about some of the reporting that Graeme spoke about. He was saying we're going to have something in the coming weeks. We do intend to provide guidance for our Australian assets within the next 2 weeks that will not just be tonne. I know sometimes we get accused of trying to hide things. We're trying to finalize things to make sure that we can get them out there and that they're accurate, and we'll promise to get them here shortly.

We understand it is important, and we are committed to getting an internal system in place that will allow us to continue to report more frequently. At the end of the day, we are all aligned in the vision to create shareholder value, and that is what motivates me every day. We will always do what we believe is in the best interest of our shareholders and to grow the business at the same time. We've got a great combination of assets, a growing gold resource, rising commodity prices and a significant infrastructure in place in a safe, safe jurisdiction. All of these give us great confidence into a bright future for RNC and our shareholders.

Thank you for your time. And with that, we'd now like to open up the call to some questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And your first question comes from Matthew O'Keefe of Cantor Fitzgerald.

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Matthew Dennis O'Keefe, Cantor Fitzgerald Canada Corporation, Research Division - Research Analyst [2]

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Congrats on a fairly transformative quarter. I just had a few. I know you've got some more detailed guidance coming, but just a few questions on the ongoing ramp-ups. First, at Beta Hunt. I know we were -- we had a -- during some of your previous press releases, you'd found some additional coarse gold underneath the Father's Day Vein area. I understand some development was going in those couple of levels beneath. Are we going to be getting into that in the next -- this quarter or next quarter as you ramp up mining? That is my first question on Beta Hunt. Then it's also on Beta Hunt, with the resource update, the grades that -- well, you lowered your cutoff, and grades still look pretty good. But are we to assume that you'll be mining, more or less, that resource grade? Or will you be able to find -- it's a fairly broad resource. Will you be looking at sort of higher-grade zones within that in the near term?

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Paul André Huet, Royal Nickel Corporation - Executive Chairman & CEO [3]

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Okay. Thank you very much for the 2 questions. This is Paul. Actually, I'm going to let Graeme, our Managing Director of Australia, respond to both of them. So Graeme, on the first one?

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Graeme Sloan, Royal Nickel Corporation - MD of Australian Operations [4]

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Just on the development of this area, we did, I think, announce that sales on ounces, which was on the 16 level, just below the Father's level, very close to that, but about 25 meters below. The 16 level is currently being developed to its very end of the ore. And at that point in time, we will then combine that as part of our overall mine plan, stoping plan, to aggressively work back from the end towards that area around the Father's Day. So we will mine it. It will be part of our production. And at some stage, we'll get close to that in our production model. Now I will say that this is also a part of an overall mining strategy at Beta Hunt. The recent resource that's come out is currently being converted into a reserve, which will then go in and form part of that mine plan. All of the mining sequences will flow from that. So once we have that information, I'll be able to tell you exactly when we can and will be mining in and around that area. But to do it out of sequence would cause all sorts of future travel in the production of that whole entire level. So it's best to do this the way we're doing it. It's structured. It's part of the process. And this way, we know we'll get all of the material and maybe not just some of them.

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Paul André Huet, Royal Nickel Corporation - Executive Chairman & CEO [5]

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What Graeme's team is really trying to accomplish is make sure we don't sterilize any areas or leave any pillars behind. This stuff is such good material. We want to make sure we capture it all in the right sequence as we retreat back into the main accesses. So does that answer your questions?

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Matthew Dennis O'Keefe, Cantor Fitzgerald Canada Corporation, Research Division - Research Analyst [6]

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That's a very, very good answer. No, I appreciate that, and it's good. You got to have that discipline. I totally understand and respect that. And also, just on -- oh, is that -- yes, and on Baloo in the Higginsville operation, I don't really -- we don't really know much about that. Can you just give us a quick overview of what that looks like now, and how long, like, just an overview of what that resource looks like and what that mine looks like?

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Graeme Sloan, Royal Nickel Corporation - MD of Australian Operations [7]

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Excellent. Look, Baloo is actually the first of the open pit set that we have mined since taking over the Higginsville. We're at the very top of it. The really positive thing about Baloo is that, literally, the ore was on the surface. Baloo is situated on a lake or in a lake. And we removed the top lake sediments, which were only 3 meters deep at that area. And as soon as our sediments, we exposed the ore at the top of the Baloo mineralized zone. Now stage 1 of Baloo will take us through to the end of the year, and stage 2, which is currently being permitted, and will be another 6 or so months of mining of that. However, Baloo stage 2 might well fall out of the mining sequence because we're currently looking at other open pits to hopefully bring those online closer to the mining, to the plant and also maybe a little bit higher grade. So this ore part comes back to that sequencing we were saying, so we have 2 stages at Baloo. And on top of that, just north, immediately north of Baloo, we have what we think is an offset to the Baloo mineralization, which we are currently looking at putting some drilling into, which may again extend Baloo mineralization much further than what we currently have in our books. So it's a new open pit. It's going well. It's close to the plant, and it's sort of -- it's a good first pit to start off with.

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Paul André Huet, Royal Nickel Corporation - Executive Chairman & CEO [8]

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This is a perfect -- this is Paul Huet again. This is a perfect example of what we were discussing in the call that we really want to improve our communications. There are some huge opportunities for us here to communicate some of our plans at Higginsville. We have several opportunities with these open pits, and we're going to be clearly identifying them and reporting them and telling our shareholders some of these -- all of our opportunities, so you can really get to appreciate some of the value.

Higginsville wasn't only the mill. We acquired 1.9 million ounces in total resource -- measured, indicated and inferred, I just want to clarify that -- as part of the acquisition. There were a lot of ounces that came into it. So we've got a very, very interesting position. It's one of the reasons why I accepted to join, so that I can help with the operations and help with making sure we maximize value of it. So hopefully, we answered your question.

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Matthew Dennis O'Keefe, Cantor Fitzgerald Canada Corporation, Research Division - Research Analyst [9]

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Yes. I guess just to close that off, will we get some guidance on what that's going to look like when you come out with your mine plan update? Or is that strictly going to be focused on Beta Hunt?

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Paul André Huet, Royal Nickel Corporation - Executive Chairman & CEO [10]

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No. We intend to provide guidance on Western Australia. It will be Beta Hunt and Higginsville together. We really thought to get out there transparently and start giving guidance out. That's something -- going to be a shift. It's going to be something we evolve. And we're pleased to do it. We want to hold ourselves accountable as well.

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Graeme Sloan, Royal Nickel Corporation - MD of Australian Operations [11]

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Just going one step further on that Baloo open pit and what Paul said, and he raised a very good point. Those resources that came with the Higginsville operation, they've now -- we've now put on a real specialist resource geologist. His aim primarily is just to focus on that resource and remodeling that resource to upgrade it as much as we can to look at what are the next priority open pits. Already, that's started to open up sort of a pipeline of projects that we can go back and have a look at and may well be the next generation of open pits for Higginsville.

So we've got a lot of data. We've got a very big area at Higginsville, and it's about being very disciplined in the approach to how you evaluate and prioritize these data, because quite frankly, there's so many of them. So our approach is put the specialist in, focus on that and then look to get a good, solid pipeline of these open pits coming into the plant.

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Operator [12]

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Your next question comes from Derek Macpherson of Red Cloud.

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Derek Macpherson, Red Cloud Klondike Strike Inc., Research Division - VP of Research [13]

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Congratulations, everyone, on what, as Matt said, a transformational quarter. Obviously, because it was transformational, there are some significant balance sheet changes quarter-over-quarter. And obviously, you're in a bit of a negative working capital position at the moment. As the operations are going out, I know it's still in an early stage and ramping up, has there been a shift? And obviously, with the Australian gold price north of $2,200 an ounce, how is -- are you guys starting to generate cash from the operations? Or is that still a couple of quarters away?

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Paul André Huet, Royal Nickel Corporation - Executive Chairman & CEO [14]

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Yes. Look, Derek, thanks for the question. Look, obviously, we're taking advantage of the metal prices. We do have some hedges in place. We're always going to do what's best for the business. At the end of the day, I think Graeme talked about the month of July, we did well over 7,500 ounces produced. I don't want to forecast that far to 12 months because we are finalizing our 2P mine plan.

With respect to cash, we ended the quarter like we said with $8.8 million, and we still bought some specimens at hand that we need to monetize. So we'll always evaluate what's best for our shareholders at any given time.

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Derek Macpherson, Red Cloud Klondike Strike Inc., Research Division - VP of Research [15]

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Okay. And then I guess, obviously, the integration -- and we only saw a little bit of that affected in this quarter. Can you talk a little bit about the steps in the integration and the benefits you're seeing of having the 2 operations working together?

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Paul André Huet, Royal Nickel Corporation - Executive Chairman & CEO [16]

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Yes. Thanks, Derek. I'll let Graeme talk about integrations.

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Graeme Sloan, Royal Nickel Corporation - MD of Australian Operations [17]

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Yes, sorry. Just one -- just repeat that, Derek. Sorry, I missed that.

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Derek Macpherson, Red Cloud Klondike Strike Inc., Research Division - VP of Research [18]

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Yes, Graeme. Just maybe talk -- obviously, we only -- in the financial results, we only saw sort of less than a month of sort of the integration sort of there. Can you maybe talk a little bit about some of the steps you've taken to integrate 2 operations and the benefits you're seeing even now only a couple months in?

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Graeme Sloan, Royal Nickel Corporation - MD of Australian Operations [19]

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Absolutely, Derek. The -- I suppose the biggest one has been around the plant. The plant has been the key focus and one of -- obviously, one of the key reasons why we acquired Higginsville. But it's delivered immediate benefit to Beta Hunt in the tune of sort of $15 a tonne compared to what we were paying at a toll treating. Now that's -- when you look at you're treating sort of 4,000 tonne a day or 100,000 tonne a month, that's a big saving for -- if it was all Beta Hunt. Unfortunately, only -- so that 60% of that material or around that number is Beta Hunt dirt at this stage, but that's one. Certainly, around things as far as services is another. Fuel, simple things and fuel and explosives, they're starting to flow through now. The transfer of personnel between site -- from site to site to make better use of our technical group is already underway and starting to show benefits around that. So there's a whole host of these that are starting to flow through now. And I think over a period of time, we'll see this continuing for some time. They take -- it takes some while to settle these operations into one another. The cultures need to come together. But as I said in my opening remarks, it's one of the more easiest and simplest integrations I've had to deal with. And with morale really good and a good qualifier, a good primer to measure yourself on this is things like turnover and safety, and all of those are positive and heading in the right direction.

So overall, I think apart from the obvious benefits of all the rest of the extra open pits, the extra resources, the bigger land package, the fact that this plant controls that entire region is massive for the company. We're now in a very, very strong position as a whole sitting there in that area, being the only plant within 100 kilometers that would take any material. So any person within that range that wants to trap their ore or trade their ore will either have to come to us or stop. And at this point in time, we have no plans to look at any further toll treating. So it gives us pretty strong position in this area.

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Paul André Huet, Royal Nickel Corporation - Executive Chairman & CEO [20]

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Yes. Derek, with respect to synergies, this is really a textbook case here. Graeme and his team have identified even the top 20 vendors. We're going through a list, and we have now leverage to renegotiate all our contracts because of volume. So we're really taking this on a step-by-step approach and making sure that we can reduce cost in every area.

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Derek Macpherson, Red Cloud Klondike Strike Inc., Research Division - VP of Research [21]

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Great. No, it sounds like it's a -- I know the hard issues or even the soft issues are the ones that take time. And it sounds like you guys are off to a good start. So I'll let someone else ask a question now.

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Operator [22]

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And your next question comes from Pierre Vaillancourt from Haywood.

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Pierre D. Vaillancourt, Haywood Securities Inc., Research Division - VP & Senior Mining Analyst [23]

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Paul, just wondering, with all these plans you and Graeme are talking about, just what are the costs involved here? I mean your cash at almost $9 million, there's obviously a lot of development work to be done at Higginsville, not to mention Beta Hunt. So how does that look next 2 quarters?

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Paul André Huet, Royal Nickel Corporation - Executive Chairman & CEO [24]

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Yes. So thanks for the question, Pierre. And as I was saying, everything is going to be based off of the resource and then the 2P reserve, which we're finalizing the 2P reserve, right? So I don't anticipate huge capital. None of us, in fact, anticipate huge capital costs at Higginsville with respect to building a big open pit or stuff like that or roads or anything like that. We actually have access road to the new Baloo pit. It was done by the previous operator. We inherited it. They just never got it done.

With respect to Beta Hunt, the capital in the development is just an ongoing, sustaining thing that we'll do year-over-year. So there's no huge red flag with respect to capital at either site for that matter. Our focus is really at maintaining and making sure we put together the 2P reserve so that we can have one for the first time.

Look, I'm sure, Pierre, you'll appreciate, having your background, that we really need the 2P reserves so that we can develop our mine plans and then put our CapEx, our people and everything afterwards. So we've been aggressively doing that. But I will say that in the foreseeable, even next 2 to 3 quarters, there is no huge capital outlay that hasn't already been disclosed that is alarming to us. There's no $5 million or $10 million thing that's out there that we're going to go, "Oh, my, we needed to do this upgrade." That doesn't exist in our plan.

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Pierre D. Vaillancourt, Haywood Securities Inc., Research Division - VP & Senior Mining Analyst [25]

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Okay. So what you're saying is with the cash that you have, and I mean you're not quite in a free cash flow positive situation at this point. But with the cash that you've got and I guess the cash you will be generating, you're saying that, that's enough to undertake all your plans at Beta Hunt and at Higginsville? Is that what I should take away from it?

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Paul André Huet, Royal Nickel Corporation - Executive Chairman & CEO [26]

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Yes. So what I'm saying is, Pierre, specifically, look, there is no big capital demand here in the next couple quarters. There absolutely none that I've been made aware of in the first 2.5 weeks here And I don't -- I will not accept or expect any big red flag here. There's nothing in the foreseeable future that's going to alarm the market or any of us in a capital requirement like the original question, Pierre.

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Pierre D. Vaillancourt, Haywood Securities Inc., Research Division - VP & Senior Mining Analyst [27]

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Okay. So just to be clear, there will be no financing, let's say, going forward for the foreseeable future? None this year. And like I'm -- from what you're saying, probably not next year. Is that what I should take away from that?

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Paul André Huet, Royal Nickel Corporation - Executive Chairman & CEO [28]

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Yes. Pierre, look, I don't want to alarm anybody. I've never said there'd never be a financing. That would be the most ridiculous thing for me to answer on. I am saying exactly that there's no capital. I don't want to alarm people and say there is one either because we'll always do what's best for our shareholders. Look, I took myself, I align myself so much with the shareholders. I made sure that my own compensation, 77% of it, was paid in stock. I don't want the stock to go down like anyone else. We're in a rising gold environment. We need to do what's best and look at the overall picture. And I don't even have a 2P reserve in front of me. For me to answer that question directly, it's premature and a little tough without having a 2P reserve in front of myself or anyone else for that matter. So.

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Pierre D. Vaillancourt, Haywood Securities Inc., Research Division - VP & Senior Mining Analyst [29]

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All I'm saying, Paul -- I mean, I'm not trying to put you on the spot. I'm just saying you're the new guy. It's a chance to reset. It's a chance to give yourself enough breathing room to do what you need to do. So it would stand to reason that you'll probably need a little more cash to execute, especially at Higginsville with all the plants or open pit development there. That's all I'm saying, is it would seem, given your current situation, that, that would be a logical conclusion. But yes, I'll just leave it at that.

One thing I did want to ask is so with respect to Higginsville, what proportion of production is that likely to be?

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Paul André Huet, Royal Nickel Corporation - Executive Chairman & CEO [30]

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Graeme (inaudible) that stuff.

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Graeme Sloan, Royal Nickel Corporation - MD of Australian Operations [31]

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Yes. It's...

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Pierre D. Vaillancourt, Haywood Securities Inc., Research Division - VP & Senior Mining Analyst [32]

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(inaudible) Can you give me a rough idea?

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Graeme Sloan, Royal Nickel Corporation - MD of Australian Operations [33]

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Yes. It's building as we speak. So you're looking at Beta Hunt at the moment in the ore -- we have 3 ore sources: Beta Hunt, Higginsville open pit area, and then we have a very large stockpile of -- historic stockpiles that are there that vary in grades and texture. They will form the blend into the plant over a period of time.

So Higginsville will progressively ramp up. Beta Hunt will take a bit more up until it's sort of around that sort of 60% area. Higginsville will take somewhere at the moment into 30% and then sort of 10 percentage sort of roughly in about the stockpiles. Those figures will change month by month as open pits come on and maybe we do a bit more development at Beta Hunt. So a little bit less ore. So we have that flexibility.

And that's been what's sadly lacking in the past because everything was driven by the toll. You have to have a certain amount of tonnes. They have to be at certain grade to make sense to go into the toll, and it just you no flexibility. The real secret to what this Higginsville plant gives you now is this flexibility, and we're able to shuffle tonnes in and around. So as the Higginsville open pit builds up, we'll adjust the other parameters or vice versa around Beta Hunt.

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Pierre D. Vaillancourt, Haywood Securities Inc., Research Division - VP & Senior Mining Analyst [34]

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So what would you want it to trend toward? Like Higginsville right now, you're saying 30%? Does it go to 50%? Or will you...

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Graeme Sloan, Royal Nickel Corporation - MD of Australian Operations [35]

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I think those sort of numbers will come. They'll flow through, be it from the mine, the new production numbers that are coming out that we're working on now. But ideally, you're looking to somewhere around that 50-50 for both Higginsville and Beta Hunt. That's sort of in order. And then you can get into the position where once you reach that steady state into the plant, you can start to modify the plant and maybe lift production and throughputs up a touch and make. But that sort of number is not out of the question.

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Pierre D. Vaillancourt, Haywood Securities Inc., Research Division - VP & Senior Mining Analyst [36]

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Okay. And I know the mine plan will come out, but in just ballpark terms, like what kind of profile production are you aiming for?

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Paul André Huet, Royal Nickel Corporation - Executive Chairman & CEO [37]

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Yes. Look, that -- we were just talking about that, Pierre. We're going to put that out within 2 weeks. That's why we only had time -- and look, I was the first to complain to ourselves that look, nobody can calculate anything. It looks like we're trying to hide stuff, and we're not. We're going to put out guidance here. We're working aggressively on it. We're taking advantage of the different time zones. They're working at night in Australia. We're working here so that we can get a number and get some guidance and proper guidance to the market.

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Operator [38]

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And our final question today comes from [Nancy Drew].

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Unidentified Analyst, [39]

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I'm just wondering, can you give us an update on the application you applied for listing in Australia? And has the application been submitted?

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Paul André Huet, Royal Nickel Corporation - Executive Chairman & CEO [40]

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Thanks, Nancy. Let me revert to John Leddy, our Counsel. John, do you want to give an update on that?

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John Joseph Leddy, Royal Nickel Corporation - VP of Business Development & General Counsel [41]

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Sure, Nancy. So we -- I don't think we ever said that we put -- we haven't put in an application. I think we've said it's something that we're considering and we think it makes sense, and we haven't landed definitively on it. But again, I expect you'll hear on that one way or the other over the next -- over the short term. But we haven't -- again, we haven't said that we were submitting one or have we submitted one. But we -- having said that, we do think it makes sense given where the assets are and given the interest in gold stocks in -- on the Australian market.

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Unidentified Analyst, [42]

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So could we expect an update shortly on that?

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John Joseph Leddy, Royal Nickel Corporation - VP of Business Development & General Counsel [43]

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I don't know what you mean by shortly, but I think over the short -- it's not going to be as quick as the guidance that Paul spoke of. But I -- in the short term, we think it's -- the market is where it is. We see it, we think it's an action item, and we want to capitalize on it. So I do think you'll hear about it within the next quarter, for sure.

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Operator [44]

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And this concludes our question-and-answer session for today. So I will turn the call back over to Mr. Paul Huet for closing remarks.

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Paul André Huet, Royal Nickel Corporation - Executive Chairman & CEO [45]

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Thank you again, everyone, for joining us today. Look, we're excited about the future. There's a lot of moving parts, but we're excited to jump in and do the work. And our intentions are the same as the shareholders. We are aligned, we want to do what's best for our shareholders and be a very successful company as well. So we appreciate your support as shareholders. We appreciate every one of you taking the time during a busy schedule to dial in to our call and ask the questions. Thanks very much, and have a wonderful day.

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Operator [46]

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And this does conclude today's conference call. You may now disconnect.