DAILY NEWS Sep 16, 2015 11:45 AM - 0 comments

Noront CEO outlines big plans in the Ring of Fire

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2015-09-16

VANCOUVER — Noront Resources (TSXV: NOT; US-OTC: NOSOF) has emerged as a leader across the Ring of Fire region in the James Bay Lowlands of Northern Ontario, and it has a long-term plan in the works it hopes will establish a world-class nickel sulphide and chromite camp in the region.

The company is knows it won't be a quick process, but a commitment to social license and First Nation partnerships could lead to successes where larger companies have failed.

Noront made headlines in late March when it acquired 103 claims in the Ring of Fire from beleaguered U.S. base-metal miner Cliffs Natural Resources (NYSE: CLF) for US$20 million. The deal was financed via a US$22.5-million loan agreement that saw Franco-Nevada (TSX: FNV; NYSE: FNV) pick up a 3% royalty on the Black Thor chromite deposit and a 2% royalty on Noront's properties in the region with the exception of its advanced-stage Eagle's Nest nickel platinum group metals project.

"We'd always had our eye on consolidating the Ring of Fire because we view it as an emerging camp. I mean you have a greenstone belt with a big ultramafic complex that seems to be chalk full of discovery potential," said president and CEO Alan Coutts during an interview.

"But from our point of view the prospectivity is only one attractive aspect of the big picture because when it comes to dealing with regulatory agencies and First Nations it becomes a lot easier when you have one industry voice with a singular vision in terms of development and infrastructure," he continued.

The Ontario government and Premier Kathleen Wynne have earmarked around $1 billion for infrastructure in the northern Ontario mining area, and had hoped a larger company like Cliffs might be able to fast-track a bulk-tonnage chromite project. The Ohio-based company orchestrated an unceremonious exit from Canada, however, following a fall in commodity prices and a proxy battle that saw a significant management turnover.

Coutts explained that the first message he had to convey to the Ontario government was that Noront was not prepared to immediately tackle a large-scale, infrastructure intensive project. The company remains focused on the more realistic goal of getting Eagle's Nest into production and working on permitting and licensing activities at its chromite assets to prepare itself for a potential rebound in commodity markets.

"Most of the world's chromite smelting, wherein you smelt chromite ore into ferrochrome, takes place in China, but interestingly they don't have any real domestic supply of note. The current chromite ore is imported predominantly from South Africa where it's a by-product of platinum-palladium reef mining. Right now markets appear to be in balance, but what if things go wrong South Africa?" Coutts elaborated.

“If that does happen and it curtails those exports there could very well be a dramatic impact on the global ferrochrome market. We have the world's best undeveloped resources and we really believe there will be a time and a place for these projects," he continued.

Meanwhile, Eagle's Nest represents a relatively near-term opportunity that could be developed at a fraction of the cost. The deposit is a sub-vertically dipping body of massive magmatic sulphide (pyrrhotite, pentlandite, chalcopyrite, magnetite) in a pipe-like form roughly 200 metres long, up to several tens of metres thick, and at least 1,650 metres deep. It strikes northeast-southwest and occupies the northwestern margin of a vertically-inclined serpentinized peridotite dyke.

Eagle’s Nest hosts proven and probable reserves of 11 million tonnes grading 1.68% nickel, 0.87% copper, 0.89 grams per tonne platinum and 3.09 grams per tonne palladium. In addition, the deposit has inferred resources of 9 million tonnes grading 1.10% nickel, 1.14% copper, 1.16 grams per tonne platinum and 3.49 grams per tonne palladium.

Noront's first step involves updating a feasibility study (FS) at the project that was released back in 2012. Commodity prices have plummted over the intervening three years, but Coutts said the high-grade quality of the asset makes it attractive even in today’s market.

Assuming current metal prices and exchange rates, the project has an after-tax internal rate of return (IRR) of approximately 14.9% and a $165 million net present value at an 8% discount rate.

The FS models a $609-million development that would have annual production of roughly 150,000 tonnes of high-grade nickel-copper concentrate with estimated operating costs — including road access fees — of $97 per tonne.

"The [FS] is a little bit dated at this point so we're in the process of updating it, but outside of the fact it’s around three years old I think it's important to note the playing field really changed following the acquisition of the Cliffs properties," Coutts elaborated.

"One of the issues we were dealing with was the lack of good, high ground in the James Bay Lowlands where we could construct facilities and infrastructure. The thinking was we'd construct the mill underground and that was built into our studies. Now that we have access to new ground we're looking at moving the facilities to surface and looking at whether we'd be better situated, from a marketing-and-sales angle, producing separate concentrates," he continued.

In late June the Ontario Ministry of Environment and Climate Change approved Noront's terms of reference at Eagle's Nest, which essentially allows the company to move forward on an environmental assessment process (EA) for what could be the first mine in the Ring of Fire. In addition, the company received permits to conduct regional geophysical surveys and drilling to advance property-wide exploration over a consolidated land package that covers 800-sq.km.

In early September Noront closed a $1.54-million non-brokered private placement wherein it issued 2.9 million units priced at 33¢ and 1.5 million flow-through shares priced at 38¢. Each unit consists of one share and one-half share purchase warrant exercisable for two years, with one full warrant allowing a holder to purchase a share at 47¢.

"I spent a number of years as operations manager up at the Raglan complex in northern Quebec, and there was just deposit after deposit along this favorable contact in the ultramafic rocks. We believe it's the same thing we're dealing. We have around 30 km of that favorable contact and we've effectively explored around four km of it," Coutts said.

"We're literally chomping at the bit to get back to exploration because we think we have a nickel camp. What our investors are telling us right now, however, is that they want to see progress on permitting and development of a single mine. Having said that we'll still be doing exploration work this fall," he added.

Noront's flow-through funds are earmarked for drilling on nickel-sulphide targets. The company has identified areas of interest and intends to complete ground-based geophysics. The drill program will consist of step-out holes along the contact corridor in search of new discoveries.

Noront has traded within a 52-week window of 25¢ and 67¢, and gained around 32% over the past nine months en route to a 36¢ per share close at the time of writing. The company maintains 237 million shares outstanding for an $85 million press-time market capitalization.

"There are a lot people out there that really get this story. When we were out looking for support and financing to complete the Cliffs deal Franco came to the table very quickly. They recognize the regional potential and really liked the multi-metal nature of the camp," Coutts concluded. "I think Franco wanted to get in early and backed us for in-ground royalties up there. What we've done is put this land package together so when the markets do turn we'll be positioned to take advantage."

http://www.northernminer.com/news/noront-ceo-outlines-big-plans-in-the-ring-of-fire/1003705893/