VMS Ventures Inc. (TSX.V:VMS) is a mining and mineral exploration company currently in partnership with Hudbay Minerals on the producing Reed mine near Flin Flon Manitoba. VMS holds a 30% interest in the Reed mine which is operated by Hudbay Minerals and achieved full production in 2014.



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Royal Nickel to acquire VMS Ventures

Royal Nickel Corp. plans to complete two acquisitions that will transform the company into a cash-generating low-cost nickel, copper and gold producer.


Salt Lake Mining: RNC has agreed to acquire a 67% interest in Salt Lake Mining Pty Ltd. ("SLM") in exchange for 32.5 million RNC common shares and CDN$2.5 million in cash (subject to certain conditions). SLM is a private company whose main asset is a 100% interest in the Beta Hunt Mine, a low-cost nickel and gold producer located in the prolific Kambalda mining district of Australia. Beta Hunt resumed nickel production in 2014 and gold production at the end of 2015.


VMS Ventures: RNC has also entered into a definitive agreement ("Agreement") pursuant to which RNC will acquire all of the issued and outstanding common shares of VMS Ventures Inc. ("VMS") by way of a plan of arrangement. Under the terms of the Agreement, VMS shareholders will receive 36.0 million RNC common shares, approximately CDN$3.5 million cash, and the payment of a dividend in-kind of approximately 29.98 million North American Nickel ("NAN") common shares currently held by VMS. Upon closing of the transaction VMS shareholders will receive consideration representing a value of CDN$0.081 for each VMS common share based on the 20-day volume-weighted average price ("VWAP") of RNC on the TSX and each of VMS and NAN on the TSX-V as at January 29, 2016. The offer represents a premium of approximately 39.3% to VMS' VWAP. VMS is a public company whose main asset is a 30% interest in the Reed Mine, a fully ramped-up copper producer, located in the Flin Flon/Snow Lake greenstone belt in central Manitoba. HudBay Minerals Inc. ("Hudbay") owns the other 70% interest in the Reed Mine and is the operator. The transaction will be implemented by way of a plan of arrangement under section 288 of the Business Corporations Act (British Columbia).


"The RNC Board fully supports Mark Selby and his team in our strategy to make RNC a multi-asset, cash-flow generating base metals producer. We believe that our strategy to add quality assets at this point in the commodity cycle offers great value to our shareholders. The Board, Mark and his team continue to be focused on advancing our Dumont nickel project. We continue to believe this is the most exciting nickel development project in the market and will be required to help meet an emerging nickel market shortage in the next few years. We will also evaluate every opportunity to build RNC and put it in a strong position, as we emerge from the current conditions we face in the metals industry, as a growing Canadian-based mining company" said Scott Hand, Executive Chairman of RNC.


Highlights of the Transactions:Transformational: Immediately transforms RNC into a nickel, copper and gold producer, consistent with strategy to become multi-asset mining company Quality Producing Assets: Beta Hunt and Reed mines are cash generating mines in excellent mining jurisdictions and are among the highest grade nickel and copper mines the world Strong Operating Teams: Both Beta Hunt and Reed mines have existing strong operating teams that will remain intact following the transactions Diversification: The combined assets of SLM and VMS with RNC's existing assets will create a diversified, multi-asset mining company with a strong footprint in key established mining camps in Canada and AustraliaPlatform for Growth: The combined assets will provide a platform for further growth either organically or by opportunistic acquisitions


"The acquisition of SLM and VMS will provide RNC with cash generating operations, leveraged exposure to nickel, gold and copper production, and serves as a platform for potential growth in two promising and prolific metals producing regions in excellent mining jurisdictions," said Mark Selby, President and CEO of RNC. "With the addition of the SLM and VMS assets, RNC will benefit from exposure to current nickel, gold and copper production, RNC's large scale, shovel ready, Dumont Nickel Project, management synergies, and a pipeline of compelling nickel, copper and gold exploration projects."


In 2015, these two operations produced (recovered metal, 100% basis for Beta Hunt and 30% basis for Reed) approximately 4.0 kt of nickel, 4.0 kt of copper and 3.3koz of gold.


In 2016, production from these two operations (100% basis for Beta Hunt and 30% basis for Reed) is expected to be approximately 3.5 {A –} 4.5 kt of nickel, 4.0 {A –} 4.5 kt of copper, and 35 - 45 koz of gold as production at Beta Hunt ramps up during 2016.



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