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VIDEO: Royal Nickel Corp (TSE:RNX) Once-in-a-Lifetime Gold Discovery

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Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.

Royal Nickel Corp (TSE:RNX) (OTCMKTS:RNKLF) (FRA:5RN) CEO Mark Selby talks about the company’s once-in-a-life-time gold find of a boulder with 9,000 grams of gold per tonne resulting in a find of 24,000 ounces of gold. The project site was initially purchased as a nickel mine with gold exploration potential and features vertical shears mineralized with gold throughout the property. The initial discovery will result in approximately $35 million for the company and Royal Nickel announced warrant exercises this week that are expected to raise an additional $8 million for the company’s treasury. In addition, the project’s cost of production is very low because of the high concentrations of gold. As a result, Royal Nickel is now fully financed to continue its exploration and drilling programs.

Transcript

James West:     Hey, welcome back. My guest this segment is Mark Selby, President and CEO of Royal Nickel Corp., trading on the TSX under the symbol RNX. Mark, welcome to our show.

Mark Selby:    Glad to be here.

James West:   Yeah, so the big buzz, the big news, is this big boulder that apparently grades 9,000 grams per tonne gold?

Mark Selby:    Yep.

James West:    Where did that come from?

Mark Selby:           Yeah, we made, we think, you know, a once in a lifetime discovery that we’re going to find multiple times. We pull out 24,000 ounces of gold from the size of your living room.

James West:    That’s incredible. So I’m assuming that there is a logical geological explanation for all of this?

Mark Selby:    Yeah, no, we’re quite lucky. The mine historically had found these high-grade gold specimens underneath the nickel contact. We’re mining about 150 metres down, where there’s a sediment layer that goes across the entire property, and so for the first time, in that layer is where we hit that 24,000 ounces. So we have the opportunity with four shears, multiple kilometres, you know, there’s lots of room to find, you know, a lot more of these living rooms.

James West:   So just to be clear, this is – you’re mining for nickel?

Mark Selby:   Yeah. We bought this as a nickel mine, but we really liked the exploration potential; that was what we bought it for, was the gold exploration potential.

James West:   Sure. Okay, so you’re mining for nickel underground and you bump into vertical shears that are mineralized with gold, and you just decide hey, let’s take a look at that, and boom, you’ve got this massive gold?

Mark Selby:    Yeah. We’ve been mining there for about two years, and so as we had just got down to the level where these gold shears existed. Historically, the sample I’ve got there, you know, you’d pull out 500, 600 ounces from underneath every little nickel sulfite lens, and it was, you know, being the first company down at this level anywhere in the district is where we hit the sulfite layer and, you know, found this 24,000 ounces.

James West:    Sure. So if I was to use some of those rudimentary calculators that are out there, which I have done, I keep coming up with a figure like 8 million ounces of gold, which I realize would be a forward-looking statement to get you to comment on, but suffice to say there is ample reason to be optimistic about continuing great mineralized pieces of gold like this showing up!

Mark Selby:    Yeah.

James West:    Fantastic!

Mark Selby:    Yeah, either we got really, really lucky and hit the only 5 metres across 2 kilometres that had this gold, or we’re going to find a lot more of it as we explore along that strike line. Then we’ve got four shears to be able to go and do the same thing again. You know, to give you an idea, the potential is that rock there comes from 3 km away from where we made this discovery.

James West:   Wow, that is promising. So are you fully capitalized? Is your mining operation profitable?

Mark Selby:    Yeah, so at this point in time, with the 24,000 ounces, that’s going to deliver almost $35 million in cash. We have warrant exercises this week which we announced, so there’s another $8 million of cash in the treasury. So we’re fully cashed up, and we’re going to be doing lots of exploration.

James West:    What was the warrant exercise price?

Mark Selby:    $0.50.

James West:    $0.50? Okay, so that explains why there was such a rush up to $1.15 and lots of supply to bring it lower, but obviously, this is potentially a long-term development story now in the gold setting, that’s born out of a nickel setting. That’s really interesting. So is there any reason why continuing nickel operations would interfere with pivoting to the gold exploitation?

Mark Selby:    We’ve wound down most of the nickel already and focused most of the people on the gold to start with. That’s where we’re going to just basically continue to focus on that high-grade area, hopefully pull out ounces as we move forward, and then we’ll drill those structures.

James West:   So with minor modifications, you could have your infrastructure ready to mine the gold right away, because all the infrastructure is in place from when you were mining nickel?

Mark Selby:    Yeah. We inherited 5 kilometres worth of ramp system, which is literally sitting at the top of the gold structures.

James West:    Wow, I wish I could inherit something like that! Interesting. Okay, so then, what is the immediate sort of agenda in terms of exploitation/exploration?

Mark Selby:    Yeah, there’s going to be two key focuses. One is obviously continuing to mine in the area that we found the 24,000 ounces; the nature of these deposits is, you’re not going to hit it every time, but, you know, we expect to be able to find more ounces as we go forward, and that’ll provide the cash we need to continue the exploration.

And then the second big thrust will be drill, drill, drill.

James West:     Have you conducted any metallurgical studies?

Mark Selby:    Oh, the nice thing is, again, we’ve been mining this for awhile, so we’ve run –

James West:    Oh, you’ve already been mining the gold?

Mark Selby:    Yeah.

James West:    Oh, okay.

Mark Selby:    So we’ve been processing at several different mills, so you know, 92 to 94 percent recovery depending on the mill.

James West:    So what’s your cash cost of production?

Mark Selby:   Well, I mean, on this stuff, I mean, we’ll see where the quarter ends; it’ll be very, very low –

James West:    How much does it cost to go like this?

Mark Selby:    [laughter] Well literally, I mean, of the tonnes we mined, they’ll end up grading probably over 100 ounces a tonne, and most of that gold came from just over a tonne of material that was hand-picked. So you’re looking at, what we shipped to the Perth mint directly, it was direct-ship gold ore, was 40 to 50 percent gold.

James West:    Wow, that’s fascinating. So we can expect, then, a very low cost of production in that respect. Okay, so then, what is happening right now onsite, and what’s happening in the weeks ahead?

Mark Selby:    So right now, I mean, again, once you get the lens right in terms of how the structures are there, you start looking back at various pieces of data which may not have looked connected before, but now you can start to connect the dots. And so, you know, the release this week was one of those connect the dots; there’s more dots to come in terms of being able to understand where these structures are sitting, and as I said, we’re going to continue to mine in that area.

And so we’ll just mine, mine, mine in that area, and then in our A-zone and Western Flank structures, we’re going to mobilize. We’ve got one drill coming next week, and we’ll continue to add drills through the fourth quarter, and it’ll be just a matter of drilling these structures off to build up the resource. So you know, we’re quite excited. We’ve always believed this mine has a lot of exploration potential; we had trouble raising the capital to be able to explore properly. We obviously now have, you know, have that capital coming in.

James West:   As much as you need! Now you’re self-capitalizing.

Mark Selby:    Exactly.

James West:   That’s interesting. Okay, so then, what is it – I mean, how many shares do you have outstanding right now?

Mark Selby:    Right now we’re about, total dilute is about 480.

James West:    480 million. Okay, so it’s not exactly a lean, mean machine.

Mark Selby:    No.

James West:    And how many of those shareholders are sort of legacy from the nickel mining days?

Mark Selby:   Yeah, so we’ve got sort of one core shareholder group that is about 25 to 30 percent of the story

James West:    Mr. Sprott?

Mark Selby:   No, no, there’s no one individual in that group who’s over 9.9, and then Sprott reported earlier last week that he was up over 10 percent.

James West:   Wow, okay, so he’s accumulating. Interesting. So what’s – I mean, it seems almost a silly question: what are the catalysts for the next 12 months, you know? It’s like, find more gold, obviously! I’ve been dealing with too many cannabis guys; I’ve got to look for catalysts that imply value. This is just a matter of finding more value.

Mark Selby:   Yeah.

James West:   Okay, great. Well, let’s leave it there, Mark. That was an excellent interview. We’ll come back to you in a quarter’s time if you have time, and you can show me more of these beautiful gold rocks!

Mark Selby:    That’d be great. And hopefully, we’ll have lots of bright, shiny rocks to show you.

James West:    Thanks for joining me today.

Mark Selby:   Thank you.

Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.

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