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Nickel Overview:
The Structural Shortfall in Supply Begins
Mark Selby, President & CEO
Royal Nickel Corporation
January 13, 2015
www.royalnickel.com
Disclaimer
Cautionary Statements Concerning Forward-Looking Statements This presentation contains "forward-looking information" including without limitation statements relating to the future price and supply and demand and the positive implications the Indonesian ore export ban will have on the outlook for nickel; and statements relating to construction and production at the Dumont Nickel Project. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual outcome, events, results, performance or achievements of RNC to be materially different from any future outcome, events, results, performance or achievements expressed or implied by the forward-looking statements. Factors that could affect the outcome include, among others: future actions taken by the Indonesian government as well as mining companies operating in Indonesia; general business, economic, political and social uncertainties; availability of alternative nickel sources or substitutes; and financing to complete construction and achieve production at Dumont. 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 outcome, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause outcome, events or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as of the date of this presentation 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.
1 TSX: RNX
All currency references in U.S. dollars, unless otherwise stated.
www.royalnickel.com
Summary
Nickel entering a multi-year period of structural nickel supply shortages
Nickel demand continues to be robust - growing at an average of 6.8% since 2010 Nickel demand forecast to grow by more than 6% in 2014. Strong demand expected to continue in 2015 Large increase in LME stocks more than compensated by massive destocking in China
Existing sources of nickel supply will struggle to provide required overall supply Supply to decline in 2015-2016 and net supply growth of just over 2% by 2020 “Big 15” nickel operations are shrinking with little prospect of potential expansions
Scrap supply deeply tapped the “pool” in 2006-2007; pool “contaminated” by significant 200 series production growth and indeterminate specifications
“Tidal Wave” of projects started in 2007-2010 continue to struggle
Project cupboard largely “empty” and pace of discoveries a fraction of what’s required -now need ~2 Voisey’s Bay and 3-4 Nova-Bollinger EACH year
Nickel market will depend on Indonesia, Philippines and lower grade sulphides Indonesia commitment to ban remains resolute
China took 6 years to get to current NPI levels – how many $ billions and how long in Indonesia given lack of infrastructure ? Indonesia to become world’s largest nickel producer but will be mid-2020s at least to get there
Philippines – possible ban? How much saprolite exports can be supported ?
Lower grade sulphides with significant infrastructure and low cost power a competitive alternative?
Long way to go in nickel cycle – only 14 months into cycle that typically takes 16-29 months to unfold Past cycles indicate that nickel prices could get to $30-$50,000 per tonne by early 2016 and structural supply
shortages to maintain prices at above average price levels through end of decade
2
www.royalnickel.com 3
Nickel Demand Evolution of Chinese Nickel Demand
As an economy industrializes, demand moves from more basic materials like carbon steel into stainless steels and ultimately into specialty alloys that require a lot of nickel and will drive non-stainless nickel consumption in China
Source: World Steel Association, INSG, World Stainless Steel Statistics, Woodmac, Macquarie Research, RNC Analysis
203
441 503
0
100
200
300
400
500
600
3.8
18.4
13.5
0
5
10
15
20
0.2
1.1 1.1
0
0.5
1
1.5
Carbon Steel Stainless Steel Nickel
China 2013
2010 Kg/capita consumption 2010 Kg/capita consumption 2010 Kg/capita consumption
China 2013
China 2013
China 2010
China 2010
China 2010
www.royalnickel.com
1.1 1.1
0.4
0.7
0.0
0.2
0.4
0.6
0.8
1.0
1.2
Nickel Consumption per Capita 2010 (kg/capita)
4
Chinese Nickel Demand At Least ½ Million Tonnes More to Go …
Source: Wood Mackenzie, RNC Analysis
Despite huge growth in demand, Chinese per capita consumption is still only just over half that of industrial economies such as Germany and Japan
At Japanese and German per capita consumption levels,
Chinese nickel demand alone would increase by nearly ½ million tonnes annually
from 2013 to 2020
www.royalnickel.com 5
LME Inventory Increase Dwarfed by Massive Destocking
143 137
99
?
0
50
100
150
200
250
300
350
400
YTD Nov 2014 LME NiStock Increase
YTD Nov 2014 ChinaNickel Destocking
LME Nickel Stock Increase and China Nickel Destocking (kt)
China Nickel Exports1
Indonesia Port Ore Stocks
1. YTD October 2014, adjusted for YTD November 2014
Other Ore Stocks
Source: metalprices.com, Antaike, GTIS, RNC analysis
A key market factor has been increase in LME nickel stocks – Qingdao trading scandal forced liquidation of known off-warrant stocks in China; however, this increase in visible stocks has been dwarfed by massive destocking of other nickel stockpiles in China
www.royalnickel.com
Nickel Demand Rest of World (ROW) Demand
ROW demand is forecast rebounded in 2014 for the first time since 2010
6
2000 2005 2007 2008 2009 2010 2011 2012 2013 2014F
Global Nickel Demand ex-China
2000 – 2014F (Kt) 1,067 1,060
987 915
842 918 894 Other
// //
907 909 954
U.S.
South Korea Taiwan
Japan
Western Europe
Source: Wood Mackenzie, CRU, RNC Analysis
www.royalnickel.com
WHERE WILL NEW NICKEL SUPPLY COME FROM ?
Existing sources of nickel supply will struggle to provide required supply; overall supply to decline in 2015-2016 and net supply growth of only just over 2% by 2020
“Big 15” nickel operations, more than 60% of supply in 2005, have actually shrank by 3% and are likely to continue to decline going forward with little expansion potential
Increased scrap supply requires significantly higher prices – market went deep into the scrap “pool” in 2006-2007. Scrap supply declined by 12% since 2006, “pool” contaminated by significant 200 series growth production and indeterminate specifications in China
“Tidal Wave” of projects started in 2007-2010 continue to struggle and will contribute only another 100ktpa of supply by the end of the decade
Project cupboard now largely empty and pace of discovery is only a fraction of what’s required to meet demand - ~ 2 Voisey’s Bay or 4 Nova-Bollinger EACH year (but only finding a few per DECADE)
Nickel market will depend on Indonesia, Philippines, and lower grade sulphide projects
Indonesia to become largest nickel producer and one of world’s largest stainless producers but how long and how many billions?
Took China 7 years to get to current levels, why expect Indonesia is going to do faster with far less infrastructure in place – should it take 10 years ? 15 years ?
Will Philippines also implement ore export restrictions ? What level of saprolite exports can physically be supported ? What level of mining activity will communities allow to occur ?
7
www.royalnickel.com
Core Nickel Mines Depleting
42%
25%
25%
8%
2013
8
65% 3%
32%
2006
NPI NPI
Other Other
“The Big 15”
“The Big 15”
The “big 15” nickel operations have experienced declining production, while NPI production in China, fed largely by Indonesian ore, met growth in demand through 2013
World Nickel Production
“Tidal Wave” (new projects commissioned
in 2007-10)
Source: Wood Mackenzie, RNC Analysis
www.royalnickel.com
Output from the “Big 15” Nickel Operation Has Declined Despite Strong Demand Growth
0
50
100
150
200
250
9
Output from the “big 15” nickel operations declined overall by 3% and declined in 10 out of 15 operations from 2006 to 2013
2006
2013
Nickel Production from Top 15 Operations (kt)
Source: Wood Mackenzie, RNC Analysis
www.royalnickel.com
Stainless Steel Scrap An Important Source of Nickel Supply
30%
18% 18%
6%
28%
2013
10
39%
2% 19%
40%
2006
NPI
NPI Other Other
“The Big 15”
“The Big 15”
As nickel prices have remained low relative to spike in prices in 2006-2007, scrap has declined significantly as a proportion of supply
World Nickel Production (including SS scrap)
“Tidal Wave” (new project s)
Source: Wood Mackenzie, RNC Analysis
Scrap Scrap
www.royalnickel.com
Nickel in Stainless Steel Scrap Higher Prices Needed to Generate Incremental Volume
35%
40%
45%
50%
500
550
600
650
700
750
800
850
900
Scra
p R
atio
(%
Ni s
crap
in s
tain
less
)
Ni S
crap
in S
tain
less
(to
nn
es)
Nickel in Scrap (t) Scrap Ratio
11
Nickel in Scrap (Scrap nickel contained in stainless steel output)
Nickel industry high-graded the “scrap mine” in 2006-2007. Market requires even higher nickel prices to generate a similar amount of incremental scrap in the future.
100+ kt increase equal to adding Vale Sudbury and Manitoba
Source: Wood Mackenzie
www.royalnickel.com
Scrap Pool is Getting “Contaminated”
10%
15%
20%
25%
30%
12
200 Series Stainless Steel Output ( % of austenitic stainless production)
25%
30%
35%
40%
45%
50%
Chinese Stainless Steel Consumption ( % of global output)
Source: Wood Mackenzie, RNC Analysis
Increased proportion of 200 series nickel, particular in China, with inconsistent specifications, will decrease relative amount of scrap available at a given price.
www.royalnickel.com
China NOT Self-Sufficient in Nickel
<5% 12%
18%
29%
54% 57%
67%
85%
PlatinumPalladium
Nickel Copper Iron Ore(62% Fe-eq)
Lead Aluminium(Bauxite)
Tin Zinc
Chinese Self-Sufficiency Mine Supply as a % of Demand (2012)
13
Source: USGS, Wood Mackenzie Ltd., Macquarie Research, RNC Analysis
Chinese domestic production not likely to add significant volumes of nickel
www.royalnickel.com
Nickel Supply – 2007-2010 Projects A “Tidal Wave” that was more like a “Little Ripple”
2014 was another year where the large projects of the “tidal wave” of ~500kt of new supply that began at the end of last nickel boom, continued to struggle
14
Despite more than 400kt
of capacity already built, production rates in 2013 remain at only a fraction of name plate capacity
www.royalnickel.com
248
242
Nickel SupplyIn Construction
2011-15
Potential Supply 2010-2020
490
15
Nickel Supply — “Tidal Wave” Projects
Source: Wood Mackenzie Ltd., RNC Analysis 2013F based on Q4 2012 data
New supply growth from the “tidal wave” of new projects is still ~50% of capacity and RNC expects that it can reach 60%+ by 2020
TSX: RNX
Project
Annual Capacity
2012
WoodMac 2013F
Actual 2013
WoodMac 2014F
RNC Forecast
2015 2020
VNC (Goro) 60 4 27 16 23
Ambatovy 60 0 33 25 42
Koniambo 60 0 16 1 14
Onca Puma 55 6 2 2 11
Talvivaara 50 13 22 9 10
Barro Alto 40 22 31 25 26
Ravensthorpe 39 33 41 38 46
Ramu 33 5 13 11 21
Taganito 30 0 0 0 25
Santa Rita 26 19 18 16 11
Eagle 17 0 0 0 3
Niquelandia 10 0 5 0 10
Kevitsa 10 4 10 9 10
Total 490 106 218 153 252 280 345
Nickel Supply “Tidal Wave” Ramping Up or In Construction 2010-2015 (Kt)
Specifics Removed Higher risk
Lower risk
www.royalnickel.com
“Tidal Wave” Cleaned out the Cupboard
The bulk of the current wave of projects have been known for many decades: either discovered/developed too late during the 1965–75 period or inferior to other projects that were developed
Most of the “Tidal Wave” sat “in the cupboard” for many decades (even back to the beginning of the last century)
16
Project Discovery
Koniambo Early 1900s
Goro Early 1900s
Ramu Early 1960s
Ambatovy Early 1960s
Barro Alto Early 1960s
Onca Puma Mid 1970s
Talvivaara Early 1980s
www.royalnickel.com
New Nickel Supply Fundamental Issue: An Empty “Project Cupboard”
The fundamental issue facing the nickel industry by 2015–2016 is an empty “project cupboard” outside Indonesia At the beginning of the last decade prior to the significant run-up in nickel prices, the
“project cupboard” was very full with many projects known for decades Today’s picture is very, very different, setting the stage for an exciting nickel cycle
Project Cupboard 2001 (20+kt)
TOTAL: 500+ kt
Project Cupboard 2013 (20+kt)
TOTAL: 150+kt
Barro Alto Weda Bay
Koniambo Dumont
Onca Puma Enterprise
Tagaung Taung Kabanga
Ambatovy Nova-Bollinger
Goro
Ramu
Ravensthorpe
Weda Bay
Talvivaara*
Kabanga
Voisey’s Bay Sulphide
Laterite (HPAL)
Laterite (ferronickel)
Sulphide
Laterite (leach)
*bioheapleaching process
17
www.royalnickel.com
Significant Nickel Discoveries by Decade A Fraction of the Required Pace
1990s 2000s 2010s
Voisey’s Bay Eagle Nova Bollinger
Enterprise Nickel Rim South
Musgrave
Araguia
Sakatti
18
Pace of discovery is only a fraction of what’s required to meet demand – now the equivalent of ~ 2 Voisey’s Bay or 4 Nova-Bollinger discoveries EACH YEAR
Industry has only managed to deliver a few discoveries per DECADE
www.royalnickel.com
Indonesian Ore Export Ban
19
In January 2014, RNC correctly predicted Indonesian ban would remain resolute through 2014 and little production capacity would be built in Indonesia in 2014
RNC January 2014
Market H1 2014
Market H2 2014
Indonesian Ore Export Ban
“Many commentators cite upcoming elections, various economic , and other issues which will cause Indonesia to water down the ban – none of which hold up well under closer observation.”
“Indonesian restrictions are likely to result in a higher cost curve for NPI in the medium to long term as producers source lower grade ore from elsewhere; however, we do not anticipate a material curb in NPI supply.”
“it is clear that Indonesian imports did collapse in 2014 and have never rebounded since the ban came into force.”
Indonesia Production
“Some commentators are also suggesting that substantial capacity could be added quickly in Indonesia. There are a number of key challenges that they may be failing to fully take into account.”
“there could be around 20kt Ni/a of new production capacity in Indonesia by the end of 2014, rising to over 190kt Ni/a by 2016.”
“progress is slowing and our 2015 forecasts have been downgraded from 30kt to 20kt.”
“following a visit to Indonesia in late September it became clear that the rate of progress on all of the projects, with the exception of that of Tsingshan, was much slower than had been indicated by the companies in question and so we have downgraded these to probable projects, thereby removing them from our base case.”
1. RNC, January 21, 2014 “Indonesian Ore Export Ban and Its Impact on the Nickel Market” 2. Scotiabank, January 16, 2014 “Updated Commodity Price Outlook” 3. Woodmac, April 2014 “NPI in Indonesia – When and at What Cost?”
4. Credit Suisse, November 19, 2014 “Steel/Raw Materials Update” 5. Macquarie, November 13, 2014 “Commodities Comment” 6. Woodmac, October 2014 “Global Nickel Short-term Outllook”
www.royalnickel.com 20
NPI Production Beginning to Decline and Declines Expected to Continue
Source: Antaike, RNC analysis
Chinese Nickel Pig Iron Production (Annualized Monthly Production, Kt)
0
100
200
300
400
500
600
145 kt decline; ~7% of global supply
152 kt decline;
~8% of global
supply
297 kt decline;
~15% of
global supply
www.royalnickel.com
What Will Be Capital Cost Intensity of NPI Projects ?
Will it be the $50-85,000 tpa seen in other recent FeNi projects, or will it approach the performance of NPI plants China ? Please note that Dumont and other open pit sulphide mine/mill operations are less capital intensive than other Western World projects.
21
Source: RNC technical report dated July 25, 2013, publicly available disclosure, Wood Mackenzie Ltd. (figures shown to two significant digits)
Capital Intensity For Selected Nickel Projects
Sulphide
Laterite
36 37 47
53 60
83
47
73 79
92
0102030405060708090
100
Sulphide – Open Pit Laterite – Ferronickel Laterite – HPAL
00
0s
per
to
nn
e in
itia
l cap
acit
y
www.royalnickel.com
Chinese Mining Projects Outside China Similar/Worse Performance to Western Producers ?
22
Project Location Construction
Initial Capex
Estimate Revised Capex
Expected Start
Actual Start Sources
Base Metals
North America
2007 ~$500 M $1 B (2013) 2010 2013
Woodmac; Company news release date November 5, 2013; Globe and Mail, Oct 16, 2009
Base Metals
South America
2011 $1.5 billion
(2007) $2.2B (2007) and $3.5 B in (2013)
2012 2013
Bnamericas.com, January 18, 2013; Worldal.com, June 13, 2007; Company
Bulk Materials
Australia 2006 $2.5 B (2006);
$4 B (2009) $9.9 B (2013) 2010 2012
Company; Wall Street Journal August 26, 2013; DOW JONES SEPTEMBER 16, 2014; Bloomberg, April 16, 2014
Selected Examples – Recently Completed Chinese Mining Projects Outside China
China’s recent track record outside China suggests it could be no better than other Western projects.
www.royalnickel.com
Indonesia is the Critical Factor for the Nickel Market
With the ore ban resolutely in place, Indonesia is in position to become the world’s largest nickel producer and one of the largest stainless producers
How quickly can 350kt of projects be built to replace NPI production from Indonesian ore in China ?
If China took 6 years to create 450ktpa of nickel production, how long would it take for that capacity to be replaced in Indonesia given the lack of infrastructure, skilled labour, and power ?
Will it happen by early 2020s ? Mid 2020s ? Late 2020s ?
How willing are financial institutions to provide the billions of financing required to replace 350kt of Chinese NPI production from Indonesian ore?
Financing requirements would be $17-28 billion (at recent global examples of $50-$85,000 per tonne)
Will they require projects to be successfully commissioned before financing the next ones ?
23
www.royalnickel.com
24
Nickel – Portside Indonesian Ore Stocks and Prices
Source: Ferroalloynet.com Limited
0
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
US$
/wm
t FO
B
Nickel Ore Prices (2014 )
Laterite 1.8% Ni Ore (12-18% Fe)
Laterite 1.5% Ni Ore (Philippines 25-30% Fe)
Philippines Laterite Ore Price Portside nickel ore stocks in China
Philippines ore
Indonesia ore
17
.0
17
.5
17
.4
17
.6
18
.1
18
.9
18
.3
17
.6
16
.9
16
.6
16
.2
15
.1
14
.7
14
.4
14
.3
14
.0
13
.5
13
.2
13
.1
12
.9
12
.4
11
.9
11
.3
10
.9
10
.7
10
.5
10
.3
10
.1
10
.0
9.8
9
.4
9.0
8
.7
8.7
8
.6
8.5
8
.2
7.9
7
.9
7.8
7
.8
7.6
7
.5
7.3
7
.0
7.0
6
.8
6.4
6
.3
6.3
8.4
8
.3
7.8
7
.4
7.2
7.2
6
.4
6.3
6
.5
6.0
5
.4
5.5
5
.6
5.6
5
.5
5.3
5
.8
6.1
6
.1
6.5
9
.9
10
.7
11
.4
11
.8
12
.3
12
.5
12
.5
12
.9
13
.2
13
.6
14
.1
14
.7
14
.9
15
.0
15
.2
15
.1
15
.8
16
.2
16
.2
15
.9
16
.1
16
.1
16
.0
15
.8
15
.6
15
.3
14
.9
14
.6
14
.5
14
.4
0
5
10
15
20
25
Chinese Nickel Ore Stocks Total (Mt)
www.royalnickel.com
Philippines Also Critical to Global Nickel Supply
The Philippines ability and willingness to increase saprolite supply to China is another critical issue for nickel supply
Will Philippines implement ore export restrictions as well ?
In absence of a ban, will Philippines attract additional investment ?
What level of mining activity will communities allow to occur ?
Will communities support significantly higher levels of mining activity ?
What level of saprolite exports can physically be supported ? Recent increase in shipments can come from two possible sources
Stockpiles ?
Given low 1.5% saprolite prices of <$20 in 2013 , a likely possibility
Additional mining ?
Given resource base, many deposits can generate 2+ tonnes of limonite per tonne of saprolite. What price will be required to profitably mine saprolite if limonite markets remain weak due to iron ore weakness ?
How much saprolite production can be sustained at new mine in Tawi Tawi ?
25
www.royalnickel.com 26
Philippines Providing Little Additional Ore to Market
Philippines ore imports into China have increased, but are providing only a fraction of the 50+ million tonnes imported from Indonesia. Portion of increase in exports believed to be previously stockpiled material.
0
1
2
3
4
5
6
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nic
kel O
re (
Mill
ion
s o
f to
nn
es)
Chinese Nickel Ore Imports from Philippines
(2012-2014)
Source: GTIS
2014
2013
2012
Philippines Nickel Ore Exports to China YTD November (Mt)
28.2
34.0
0
5
10
15
20
25
30
35
YTD Nov 2013 YTD Nov 2014
www.royalnickel.com
Seasonality of Nickel Ore Exports to China
27
Historically, seasonality of Chinese nickel ore imports from Indonesia and Philippines have been complementary. Following the January 2014 Indonesian ore export ban, Philippines shipping seasonality will become an important short-term market factor
Source: GTIS, Macquarie Research
www.royalnickel.com
Why Sulphides Versus Laterites ?
Simpler mine/mill operations rather than fully integrated smelting/refining operations
Conventional mine/mill operations have a long track record. Breakthrough by BHP Billiton (originally WMC Resources) at Mt. Keith in processing ultramafic ores has now operated successfully for almost 20 years
Capital intensity a fraction of largest scale laterite projects For examples, RNC Dumont’s upfront capital estimate of $1.2 billion and $36,000 per tonne of nickel output is a fraction of the $5+ billion and capital intensity of ~$90,000 per tonne spent at Goro, Koniambo, Ambatovy
Inherently, sulphide minerals require much less energy intensive to liberate nickel than laterites
Many deposits in more politically stable jurisdictions (e.g. Canada, Finland, Sweden, Australia) versus (Indonesia, Philippines, PNG, New Caledonia)
Higher grade, low impurity concentrates like Dumont can be used in a roasted form as a very high grade feed in any NPI / FeNi / stainless steel operation
28
www.royalnickel.com 29
RNC Forecast – Supply / Demand Balance
Nickel prices will once again have to rise to force demand in line with available supply as in 2006-2007 ($30,000-$50,000+/t), particularly 2016 when demand must DECLINE to balance the market
209 236 294
304 337 422
1,499
2,577
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
2,800
2010 2013 2014 2015 2016 2017 2018 2019 2020
Existing Supply
NPI
Demand (underlying)
Nickel Supply / Demand Forecast (Kt)
Structural deficit
Source: Wood Mackenzie Ltd, , RNC Analysis
Demand (constrained)
www.royalnickel.com
Summary
Nickel entering a multi-year period of structural nickel supply shortages
Nickel demand continues to be robust - growing at an average of 6.8% since 2010
Existing sources of nickel supply will struggle to provide required overall supply to decline in 2015-2016 and net supply growth of just over 2% by 2020 “Big 15” nickel operations are shrinking with little prospect of potential expansions
Scrap supply deeply tapped the “pool” in 2006-2007; pool “contaminated” by significant 200 series production growth and indeterminate specifications
“Tidal Wave” of projects started in 2007-2010 continue to struggle
Project cupboard largely “empty”
Pace of discoveries a fraction of what’s required – now need ~2 Voisey’s Bay and 3-4 Nova-Bollinger EACH year
Nickel market will depend on Indonesia, Philippines and lower grade sulphides China took 6 years to get to current NPI levels – how many $ billions and how long in Indonesia given lack of
infrastructure ? Indonesia to become world’s largest nickel producer but will be mid-2020s at least to get there
Philippines – no ban, no investment ? How much saprolite exports can be supported ?
Lower grade sulphides with significant infrastructure and low cost power a competitive alternative?
Long way to go in nickel cycle – only 14 months into cycle that typically takes 16-29 months to unfold Past cycles indicate that nickel prices could get to $30-$50,000 per tonne by early 2016 and structural supply
shortages to maintain prices at above average price levels through end of decade
30
www.royalnickel.com
Nickel Price Cycle Analysis — Consistent Rebounds
A 2nd half 2013 trough in nickel prices would imply a 1st half 2015 or 1st 2016 nickel peak as time from trough to peak is relatively consistent; either 16–19 months or 26–29 months (with 1 exception)
31
14
27
19
26
17
16
14
29
0 5 10 15 20 25 30
Nov 2013* to ?
Dec 2008 to Feb 2011
Nov 2005 to May 2007
Oct 2001 to Jan 2004
Oct 1998 to Mar 2000
Sep 1993 to Jan 1995
Jan 1987 to Mar 1988
Nov 1982 to April 1985
Nickel Market Price Cycle Trough-> Peak (months)
Source: MetalPrices.com, RNC analysis
*Note: November 2013 was deemed low as price approached within $100/tonne of prior July 2013 low before Indonesian news turned the market
www.royalnickel.com
Nickel Price Cycle Analysis — Explosive Price Moves
Nickel price moves have always been explosive even without China. Again, why would it be different this cycle? Remember that a 150-300% price increase from a $13,000 trough is $30-$50,000 !!
32
84%
595%
157% 184% 301%
371%
221%
39% 0%
100%
200%
300%
400%
500%
600%
700%
Q4 1982Q2 1985
Q1 1987Q1 1988
Q3 1993Q1 1995
Q4 1998Q1 2000
Q4 2001Q1 2004
Q4 2005Q2 2007
Q4 2008Q1 2011
Q4 2013?
Nickel Price Increase (Trough to Peak)
Trough Peak
Source: MetalPrices.com, RNC analysis
to Q3 2014
150%=$30,000
300%=$50,000
www.royalnickel.com 33
Notes
www.royalnickel.com
Corporate Overview
34 TSX: RNX
Share Structure:
Basic Shares Outstanding1: 109.6 million Options (average exercise price: C$0.70) 10.0 million Deferred/Restricted Share Units 2.1 million Warrants (exercise price: C$0.98) 5.7 million Compensation Warrants (ave. price C$0.60) 0.6 million Contingent Shares 7.0 million
Fully Diluted Shares Outstanding: 135.0 million
Directors and Officers Share Ownership: ~9%
Largest Shareholder –
RAB Special Situations (Master) Fund Limited: ~17%
Balance Sheet Highlights2: Cash and Cash Equivalents: C$6.1 million Current Tax Receivable: C$0.5 million Working Capital: C$4.2 million Market Capitalization: C$39 million
1. Shares outstanding, fully diluted shares outstanding and shareholdings as at November 6, 2014 2. Balance sheet highlights as at September 30, 2014; market capitalization at November 6, 2014
