Scott Hand, chairman of Royal Nickel
The Inco name may have disappeared from the Canadian mining scene, but the team behind the once iconic firm is back with ambitious plans to build one of the biggest single nickel mine operations in the world.
Toronto-based Royal Nickel Corp., chaired by former Inco chief executive officer Scott Hand, is looking for investors and planning an initial public offering of up to $100-million to help build the $1.5-billion Dumont nickel mine in Quebec.
Even as commodity prices are falling, Royal Nickel is betting that nickel will see better days. The metal has fallen to about $9 per pound from $12.50 a few months ago, as a result of a global commodities correction. Nickel is still well above the $5 per pound range it hit during the global economic meltdown in late 2008.
"Our view is that nickel is underappreciated right now, but it is going to do very well going forward," said Mr. Hand, 68, who headed Inco when it was bought by Brazil's Vale SA for about $19.4-billion in 2007.
Mr. Hand joined Royal Nickel in 2008, a year after Tom Griffis, his business partner at investment firm Juno Special Situations Corp., founded the mining company and purchased the Dumont property.
After Mr. Hand came former Inco president and chief operating officer Peter Jones and former vice-president of marketing, Peter Goudie, both of who are also on the Royal Nickel board.
Last fall, Royal Nickel also hired away Tyler Mitchelson from Vale Inco to become Royal Nickel's president and CEO. Then, last month, the company hired Mark Selby, also formerly from Vale Inco, as its president of business development.
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"My role as an active and supportive chairman, giving my experience in the industry, is to help Tyler make this a very successful, growing, independent mining company," said Mr. Hand.
Mr. Hand said he could have retired when the takeover was complete, but instead decided to approach the business from a different angle, and on a much smaller scale.
"I found my career at Inco to be interesting and very rewarding in many ways, not just money, but in terms of what we do and the kind of industry that it is," he said. "Besides, I'm lousy at golf."
Royal Nickel's plans to go public will depend on a scoping study due in September, as well as market conditions, according to Mr. Mitchelson.
"I see [Royal Nickel]as a company that will publicly trade and hopefully will be a company that can grow and be an emerging publicly traded company headquartered in Canada," he said in an interview Monday, while promising that the firm will be on the hunt for acquisitions.
He said the company has been talking to strategic investors, including major nickel producers in China, to help fund development of Dumont, which was discovered in 1939.
Last fall, Ningbo Sunhu Chemical Products Co. Ltd., China's largest nickel trader, took a 15-per-cent stake in Royal Nickel through a $21.8-million investment. Sunhu is not a state-controlled Chinese company, but a private firm that trades and distributes nickel and other commodities in China.