Genuity
posted on
Apr 03, 2008 05:47AM
NI 43-101 Update (September 2012): 11.1 Mt @ 1.68% Ni, 0.87% Cu, 0.89 gpt Pt and 3.09 gpt Pd and 0.18 gpt Au (Proven & Probable Reserves) / 8.9 Mt @ 1.10% Ni, 1.14% Cu, 1.16 gpt Pt and 3.49 gpt Pd and 0.30 gpt Au (Inferred Resource)
See last page for disclosure and share classification information.
Noront Resources Ltd.
NOT-V: $5.30 April 3, 2008
TARGET: $7.00
RECOMMENDATION: BUY
RISK RATING: SPECULATIVE
Michael Gray, MSc – 604.694.6961
michael.gray@genuitycm.com
Visual drill results for Double Eagle; Vale
Inco stakes claims in belt (all figures in C$, unless noted)
Price (4/2/2008) $5.30
Total return to target 32.1%
Shares O/S (mm) 125.4
Shares F/D (mm) 136.8
Market cap F/D ($mm) $724.8
Market value ($mm) 631.3
0.4
Debt ($mm) $0.0
Cash ($mm) $50.0
FD cash ($mm) $76.3
$24.0
Shareholders
President & CEO Richard Nemis
Executive VP John Harvey
VP Exploration Neil Novak
~9% Sprott Asset Mgmt
~9.7% Pinetree Cap
5% Mgmt
10-day Ave Daily Vol (mm)
12-mo Burn-rate ($mm)
NOT-V
$0
$2
$4
$6
$8
Dec Feb Apr Jun Aug Oct Dec
P
r
ic
e
(
C
$
)
200 MA 50 MA
Company profile
Noront Resources Ltd. (NOT-V) is a Canadian
base and precious metal exploration company
focused on Northern Ontario and Quebec,
Canada. Its key asset is the new Ni-Cu-PGE Eagle
One discovery on the Double Eagle project,
James Bay Lowlands, Ontario. The discovery is
attractive, as it represents a rare new nickel-
copper-platinum-palladium discovery in an area
that is underexplored.
Highlights
• Double Eagle project update; Vale Inco stakes claims in
belt – Visual results were reported for the Eagle Two discovery,
the AT-3 target “Eagle Three”, and the AT-1 target. Vale Inco
has staked claims in the greater “Ring of Fire” belt.
• Eagle Two results – 13 holes drilled. Seven have intersected
sulphide mineralization and documented a 75m long zone.
Chromitite has been intersected in three holes over up to a
48.4m core length. Assays are pending.
• Eagle Three intersected – Stringer and disseminated
sulphide mineralization has been intersected at the AT-3 target
located two kilometres west of Eagle Two. It qualifies as
another zone we call “Eagle Three” given the sulphide source
documented. Assays are pending.
• Target AT-1 was a “miss” – This EM conductor failed to
intersect sulphide mineralization in four holes. NOT’s
management interprets the EM anomaly source to be at depth.
• Vale Inco joins the Ring of Fire staking fray – We note
that Vale Inco has apparently staked a land position and
become part of the “area play”. We are not surprised to see a
senior nickel miner enter the belt via the staking route.
• Recent visual drill results, albeit without assays, support our
view that NOT will document new “clusters” of nickel-copper
bearing sulphide mineralization. We continue to recommend
NOT as a BUY with a $7.00 target price based on our 12-
month NAV. NOT is Speculative and suitable for risk-tolerant
investors only.
Genuity Capital Markets www.genuitycm.com
416.603.6000 2
Background
Events
Yesterday, Noront Resources (NOT) provided an update on its Double Eagle
project by reporting visual drill results for Eagle Two and targets AT-3 (Eagle
Three) and AT-1.
We also became aware that Vale Inco has staked claims in the greater Ring
of Fire belt.
Results
We have summarized the visual drill results below in Exhibit 1.
Exhibit 1: Synopsis of visual drill results from April 2, 2008 news release
Zone /
Target
Purpose and
# of drill holes Results Comments
Eagle 2 13 holes to test a strong,
short magnetic-EM target - 7 holes have intersected sulphide
mineralization described as a“Shear
Hosted Sulphide Zone” (SHSZ)
- intersections include semi-massive to
massive sulphide bands with
pyrrhotite, pyrite “copper and nickel”
sulphides 3m, 4.4m, 7m, 8m, 17.8m,
20.6m, and 21m thick (not true
thickness)
- SHSZ has been documented as a
shallow 30 degree NW dipping zone
75m long by up to 21m thick “oval-
shaped body” to a vertical depth of
190m
- 5 holes tested the strike potential of
Eagle Two and were barren
- Significantly, three holes intersected
chromitite zones of 20m, 39.1m, and
48.4m core lengths within “layered
peridotite” at depth – below the SHSZ
The sulphide mineralization is described
as being associated with a fault breccia
and hosted by a peridotite sill. We will
especially be interested in the PGE
assays for these zones along with the
chromitite zones. All assays are pending.
Drilling to depth is ongoing and directed
at testing a peridotite-granodiorite
contact that management believes is
favourable (Eagle One setting).
Eagle 3/AT-3 4 holes to test a
moderately strong 1,000m
long airborne anomaly –
coincident ground
magnetic-EM response
- all four holes intersected minor to 5%
stringer to disseminated sulphide
mineralization (including chalcopyrite)
in a steep north dipping peridotite sill
- hole 1G10 - 71.1m of “minor
sulphides”
- hole 1G12 – 33m of “5% sulphides”
- hole 1G14 – 9m of “1-2% sulphides”
- hole 1G18 – 74m of “1-5% sulphides”
Management interprets the sulphide
intersections to have explained the EM
anomaly associated with AT-3.
We will look for PGE assays given the
extensive disseminated mineralization.
AT-1 4 holes to test a strong,
short EM target near the
west Fancamp (FNC-V:
$2.10, Not Rated) property
boundary
- All holes encountered the peridotite.
- None of the holes intersected sulphide
mineralization that would explain the
EM conductor.
- drilled to a vertical depth of 150m
Borehole EM will be conducted to test for
off hole conductors
Deeper detection EM ground surveys will
be carried out to resolve this target
Source: Noront news release, Genuity Capital Markets estimates
Genuity Capital Markets www.genuitycm.com
416.603.6000 3
Impact – Mixed – assays will be important
It is positive that a third sulphide-bearing zone, “Eagle Three”, has been
intersected. However, massive sulphides (potentially high-grade) have not
been documented in this target. Platinum and palladium assays from Eagle
Two and Eagle Three will determine how significant these new zones might
be.
Discussion
We note that the April 2, 2008 news release is a departure from Noront’s
past drill hole disclosure, where each drill hole was described in more detail.
This detail included the geological units (and intervals) and mineralization
(and intervals).
Short -term catalysts
1. Assays for Eagle Two and Eagle Three.
2. Ongoing drilling of Eagle Two and Eagle Three with a third drill being
brought in to test target AT-5 and other targets.
3. Resource estimation of Eagle One.
Recommendation
Recent visual drill results, albeit without assays, support our view that NOT
will continue to document new “clusters” of nickel-copper bearing sulphide
mineralization on the Double Eagle Ni-Cu-PGE project.
We continue to recommend NOT as a BUY with a $7.00 target price
based on our 12-month NAV. NOT is Speculative and suitable for risk-
tolerant investors only.
Genuity Capital Markets www.genuitycm.com
416.603.6000 4
Member of the Investment Dealers Association of Canada and the Canadian Investor Protection Fund
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Share Classification
NV – non-voting shares RS – restricted voting shares SV – subordinate voting shares UN – units
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