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RNC Minerals ditches debt, equity raise for possible Dumont JV dilution

RNC Minerals dropped plans for a previously announced debt package and equity raise and said instead it would pull US$12 million out of its Dumont nickel joint venture in Quebec, which may mean it sacrifices a bigger slice of the project down the road.

Meanwhile, the company said it would no longer buy a 2.25% nickel royalty on the Beta Hunt gold mine in Western Australia from Pala Investments Ltd.

On May 31, RNC announced a C$6 million equity financing and a US$13 million bridge loan with Auramet International LLC.

But, in ditching those plans, RNC said in a June 18 release that it would withdraw US$12 million from its Dumont joint venture that it has with Waterton Precious Metals Fund II Cayman LP and Waterton Mining Parallel Fund Onshore Master LP.

To do so, RNC said it agreed to give up a conversion cap on US$10 million in convertible notes owned by the Waterton funds. Under the cap, RNC said it could have been diluted to about 40% from 50%, but without it, the company's stake in the Dumont joint venture could fall to 28% should Waterton fully exercise its conversion rights and RNC pay back US$5.5 million of the note in cash.

At 28% ownership, RNC said it would still have the right to manage Dumont but would lose veto rights on some things such as "fundamental joint venture matters" and the right "to trigger certain exit rights."

RNC President and CEO Mark Selby said in a statement the move would limit equity dilution while also allowing the company to reduce debt.

In pulling the U-turn on the debt and equity proposals outlined May 31, Selby pointed to "improved visibility" on the ongoing sale process of Beta Hunt. RNC noted it had received "multiple" nonbinding proposals.