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Noront interested in Cliffs’ Ring of Fire assets

If Cliffs Natural Resources has any interest in shedding its Ontario chromite properties in the Ring of Fire, Alan Coutts said Noront Resources is, potentially, a willing buyer.
Separated by the treeline, Noront Resources has acquired the exploration camp assets of its Ring of Fire neighbour, Cliffs Natural Resources. Supplied photo.

If Cliffs Natural Resources has any interest in shedding its Ontario chromite properties in the Ring of Fire, Alan Coutts said Noront Resources is, potentially, a willing buyer.

The president and CEO of Noront expressed a definite interest in Cliffs’ assets, but cautioned there have been no direct talks with Cliffs regarding the acquisition of its chromite claims on its Black Thor, Big Daddy and Black Label discoveries, but should the Ohio miner initiate a sales process, “we would be first in line.”

Toronto-based Noront announced May 23 that it had acquired Cliffs’ abandoned exploration camp at McFaulds Lake.

Both Noront’s and Cliffs’ camps are located within a few hundred metres of each other on some of few areas of high ground in the swampy James Bay lowlands.

Noront said the transaction is expected to close during the third quarter of 2014. The sale price is being kept confidential.

Noront plans to use the combined camps as a larger construction base to house more than 200 workers in the eventual development of its flagship Eagle’s Nest nickel, copper and base metal mine, and to carve out a road hundreds of kilometres west toward Pickle Lake in northwestern Ontario.

“We’re hoping to take advantage of the 2014-15 winter season to start work in earnest,” said Coutts.

The camp is within 500 metres of its flagship Eagle’s Nest deposit and its Blackbird chromite find.

Like the Noront camp, the Cliffs facility contains a kitchen, mess hall area, bunk houses, core shacks, a communications hut, and a water treatment plant.

Also included is an equipment fleet of backhoes, loaders and snowmobiles used by Cliffs to jointly build and maintain a winter ice airstrip.

Coutts said his company always maintained a collegial relationship with Cliffs.

“Often Cliffs would accommodate our people in their camp if it made more sense not to have both camps running. We worked closely together over the years.”

Last November, Cliffs announced it was shutting down all exploration and technical work at its flagship Black Thor chromite discovery, citing unresolved infrastructure issues with the province among other related risks in advancing its project.

While rumours persist that the Ohio mining company will eventually sell its chromite claims, Cliffs has officially maintained it has no intention of doing so.

But the company is fighting a backwater action with Casablanca Capital, a New York hedge fund, which is one of the mining company’s biggest shareholders.

Casablanca wants Cliffs to spin off its international assets, including its Ring of Fire chromite claims, into a separate business unit and focus more on its low-risk, core U.S. assets. All this will shake out at Cliffs’ annual general meeting on July 29.

If Casablanca were to get its way and Cliffs decides to divest itself of its Ontario properties, Coutts said Noront is prepared to jump in with a formal proposal.

“We would be very interested in having that discussion.”

Coutts said Noront has an equity ownership group with deep enough pockets to make a major move if necessary; namely the Baosteel Group, one of China’s largest steel producers, and Resource Capital Fund, which recently raised $2 billion for mining investments.

“We do have some depth when it comes to make acquisitions.”

Noront Resources bills itself as the leading player in the Ring of Fire, having completed a federal-provincial environmental impact statement and assessment report for Eagle's Nest late last year, a data-gathering process that took three years.

The company said it has also received approval of its mining lease application for Eagle’s Nest and Blackbird. The lease covers 4,100 hectares in the Ring of Fire and gives Noront the right to extract mineral products for a period of 21 years.

With support from area First Nations, the company expects Eagle’s Nest will eventually be the first mine to go into production by late 2017 or early 2018.

“We’re committed to the area and we have our own chromite play, the Blackbird deposit, that we have in our pipeline,” said Coutts. “But certainly if we can consolidate a position in the Ring of Fire, it’s very much in our interest.”