Noront Resources consolidates Ring of Fire

One of the more well-known junior resource companies on the TSX Venture in the past decade, Noront Resources, announced on March 23rd that it is consolidating its assets in the James Bay Lowlands of Northern Ontario, in a mineral region it dubbed the 'Ring of Fire'.

Noront Resources’ (NOT:TSXV) agreement announced this morning will see it acquire additional mining claims in the Ring of Fire mining district.

Franco Nevada, (FNV:TSX) an approximate $10 billion market cap company and a leading royalty and streaming company, put up the cash to finance the acquisition. It was reported that, “Franco Nevada will loan US$22.5 million to Noront for a five-year period at a 7% interest rate with interest to be accrued and paid at the end of the loan term. In return, Franco Nevada will receive a 3% royalty over the Black Thor chromite deposit and a 2% royalty over all of Noront's property in the region with the exception of Eagle's Nest, which is excluded.”

Click here to read the entire press release.

Noront Resources’ stock was up 35% to $0.48 per share on volume of more than 2 million shares traded by 1:06 PM EST.

Franco Nevada teamed up with Sandstorm Gold to help finance True Gold Mining’s Karma Gold Project in West Africa back in mid-2014. The two companies committed up to $120 million to the project and are expected to be paid back in gold. While many juniors have attempted to raise desperately needed capital to advance assets by forward selling minerals in the ground, few have been successful.

Franco Nevada steps up for Noront Resources in Ring of Fire bet

Noront’s success speaks volumes to its current holdings in the Ring of Fire, but also to the mindset of an industry leading metals streaming company such as Franco Nevada.

For Franco Nevada, a leader among its peers in respect to gold-focused royalty and streaming companies, and with one of the largest and most diversified portfolio of cash-flow producing assets, to step up and invest in Noront is significant.

A few years after the peak hysteria and landrush associated with the Ring of Fire, when investors had all but forgotten about the mining district in Ontario's far north, Tony Clement, Canada's Treasury Board President and the FedNor minister responsible for the Ring of Fire, commented that, “You’re looking at $120 billion, right in line with the oil sands or some of these other major developments.”

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"Upon closing the acquisition deal with Cliffs Natural Resources’ subsidiaries, Noront will hold a total of approximately 360 mining claims and roughly 65% (80,000 hectares) of the emerging mining camp known as the Ring of Fire, located 500 kilometres northeast of Thunder Bay. The company reported that, “these additional assets, alongside Noront's existing Eagle's Nest nickel-copper-platinum group element deposit and its Blackbird chromite deposit will allow Noront to further its vision of becoming the leading resource company in the area."

Noront President and CEO Alan Coutts, clarified things further in a comment from this morning’s press release:

"This purchase consolidates the world-class discoveries made in the Ring of Fire."

Click here to read more.

Noront secures $22.5 million despite First Nations concerns and mining downturn

The mining downturn which began in 2011 has soured many small and large companies alike to exploration or pre-development assets. This has become even more prevalent as commodity prices have fallen and investors move their speculative cash into other sectors.

In the last year alone, Cliffs Natural Resources has fallen from a 52-week high of $21.25 to a 52-week low hit last week of $4.12 per share.

The Company is a major supplier of iron ore pellets to the U.S. steel industry from its mines and pellet plants located in Michigan and Minnesota.

Warning signs that Cliffs Natural Resources’ commitment to the property were waning surfaced in June 2013.

The company's senior vice-president Bill Boor, for Global Ferroalloys, a division of Cliffs, announced it would be putting its $3.3-billion project, including the Comprehensive Assessment, on hold for one year pending results of negotiations between First Nations and Queen's Park.

source: http://resourceclips.com/tag/clf/

Franco Nevada still willing to risk capital in exploration

While a lack of infrastructure, weak commodity prices and the potential of future First Nations issues may have persuaded Cliffs Natural Resources to abandon the claims, Franco Nevada appears to be taking the long view. This is good news for junior resource investors.

Noront Resources – 10 Year Chart

Judging by Noront’s 10 year chart above, shareholders in the company will be hoping Franco Nevada’s involvement will bring additional confidence to the company and its ambitions to develop a new mining camp in and around the Ring of Fire.

On March 1st, 2015, Noront Resources released a statement, commenting, "that the Federal and Provincial governments have agreed to jointly invest funds to further economic development and community access in Northwestern Ontario."

source: http://norontresources.com/noront-resources-statement-on-federal-and-provincial-funding-for-ring-of-fire-intrastrucutre-study/

While the extend of support is still unknown, this has bolstered confidence in the region of late.

Another small sign that retail investors still remotely care about the 'Ring of Fire' and exploration stocks such as Noront, is that there has been an uptick in queries on google for Noront Resources over the past 3 months.

The number of searches for the company has increased month over month since bottoming in December.

In case you missed the Pinnacle Digest Podcast: Spring Cleaning on the TSX Venture over the weekend, click here.

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