Royal Nickel agrees deal for EPC work at Dumont Nickel Project in Canada

5 August 2015 (Last Updated August 5th, 2015 18:30)

Canadian mining company Royal Nickel (RNC) has signed a memorandum of understanding (MoU) with Spain-based Duro Felguera (DF) and the Australian company Ausenco for Dumont Nickel Project in Quebec, Canada.

Canadian mining company Royal Nickel (RNC) has signed a memorandum of understanding (MoU) with Spain-based Duro Felguera (DF) and the Australian company Ausenco for Dumont Nickel Project in Quebec, Canada.

Under the deal, RNC will award engineering, procurement, construction (EPC) and services agreement for the project to the DF-Ausenco alliance, provided the proposal is less than C$911m ($691m) and a 15 December 2015 deadline is met.

Works are expected to start in late-2015.

The EPC proposal covers 72% of the total capital cost and the cost of the remaining scope of work, which will not be covered by the proposal had a value of $C423m ($320m) in the feasibility study.

"We can significantly de-risk the project by having more than 80% of the project's capital cost fixed at the point when we start construction."

RNC expects the combined value of the proposal and its remaining scope of work to be $1.07bn.

RNC president and CEO Mark Selby said: "With the capital cost covered by the EPC proposal and a further 10% of the capital cost fixed once mining equipment orders are placed, we can significantly de-risk the project by having more than 80% of the project's capital cost fixed at the point when we start construction.

"This certainty and project performance guarantees provides significant benefit to advance the completion of our financing package."

Ausenco CEO Zimi Meka said: "We are confident the alliance will progress to the next stage given the quality nature of the project and combined strength of the DF-Ausenco offering and expertise."

The Dumont project is host significant amount of Nickel near the city of Amos, in the mining region of Abitibi in the province of Quebec.

The mine is expected to be large scale and open air, and is set to produce nickel for a period of over 30 years.