TORONTO (miningweekly.com) – Northern Ontario’s emerging minerals-rich Ring of Fire (RoF) mining camp has a new champion after US-focused iron-ore producer Cliffs Natural Resources agreed to bow out of the prospective region by selling its claims to explorer Noront Resources for $20-million.

Noront, which was currently in the permitting phase of its flagship Eagle’s Nest nickel/copper/platinum group element mine, in the RoF, would buy from two Cliffs subsidiaries about 103 claims, including a 100% interest in Cliffs' prized Black Thor chromite deposit and a 100% interest in the Black Label chromite deposit.

The transaction would also give Noront a 70% interest in the Big Daddy chromite deposit and an 85% stake in the McFauld's Lake copper/zinc resource, both of which were held in partnership with explorer KWG Resources.

Noront in the end managed to score the coveted chromite deposits for a bargain, after losing a bidding war with Cliffs in 2010 for junior explorer Freewest Resources Canada, which at the time held the Black Thor and Black Label projects, as well as 50% in the adjacent Big Daddy Joint Venture (JV). Cliffs bought out Freewest for $211-million.

Upon closing, Noront would hold about 360 mining claims and roughly 65% (80 000 ha) of the RoF, located 500 km north-east of Thunder Bay. The assets, alongside Noront's Eagle's Nest deposit and its Blackbird chromite deposit, would allow Noront to advance its vision of becoming the leading resource company in the area.

"This purchase consolidates the world-class discoveries made in the RoF. It also underscores Noront's long-standing belief and commitment to the region.

“We have made significant investments in the RoF and our team [members have] become experts in the region from both a technical and social point of view. We also believe in the considerable exploration upside which we are eager to develop,” Noront president and CEO Alan Coutts said.

NYSE-listed Cliffs said the decision was in line with its strategy to divest of noncore assets as it focused on being a significant iron-ore pellets supplier to the North American steel industry.

Toronto-based royalty firm Franco Nevada would provide Noront with a loan of $22.5-million 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 would receive a 3% royalty over Black Thor and a 2% royalty over all of Noront's property in the region, except Eagle's Nest, which was excluded from the deal.

Noront would also receive $3.5-million in cash as part of receiving the royalty arrangements.

The deal was expected to close around mid-April, after getting approval from the Quebec Superior Court, owing to Cliffs subsidiary Cliffs Quebec Iron Mining being under creditor protection under the Companies' Creditors Arrangement Act.

ACCESS ISSUES
The RoF was a large, resource-rich area of about 5 120 km², in the James Bay Lowlands region of Northern Ontario, where significant deposits of copper, zinc, nickel, chromite, platinum, vanadium and gold had been discovered. The RoF had the potential to become the largest mining development ever seen in Ontario and had been estimated to hold multigenerational opportunities that could be worth more than $60-billion for the federal and provincial economies.

It included the largest deposit of chromite ever discovered in North America, which was a critical ingredient used to create stainless steel.

The emerging mining camp currently had little to no infrastructure, which represented the most significant barrier to development.

Cliffs, in November 2013, announced that it would indefinitely suspend its $3.3-billion Black Thor chromite project, citing an uncertain timeline and risks associated with developing the necessary infrastructure to bring this project on line.

The company had also become embroiled in a legal wrangle for access to mining claims held by KWG, a narrow strip of land over which the only viable access route to the mineral deposits could be constructed.

KWG had proposed a rail route connecting to the CN transcontinental rail line at the Exton rail siding to transport ore to consumers, while Cliffs had proposed an all-weather road south, connecting to the same rail line west of Exton. Cliffs’ plan was to transport chromite concentrate from there by rail to Capreol, in the Sudbury area, where it intended to build a ferrochrome production facility.

KWG on Monday said it had been invited to talks with Noront.

"This is positive news for us. Noront CEO Al Coutts has invited us to discuss our future plans to develop our properties in partnership with the First Nations. We are delighted with this evolution of the RoF's opportunities and are hopeful that our relationship with our Big Daddy JV partner will become more constructive and collaborative.

"We think that the transportation and processing options we have developed can now be pursued in concert with our two governments and the First Nations constituencies to see the mineral assets of both Noront and KWG go into production," KWG CEO Frank Smeenk advised.

The Ontario government had late last year established the RoF Infrastructure Development Corporation, mandated to bring First Nations, and the public and private sectors together to create partnerships and facilitate investment decisions in strategic transportation infrastructure around the RoF.

In its mature state, the not-for-profit corporation would be in a position to advise on crucial infrastructure investment decisions, including how to best use Ontario's $1-billion commitment to RoF infrastructure. While the provincial government had budgeted significant financial support to jumpstart development in the RoF, calls for the federal government to match the province’s contribution had, to date, remained unheeded.

Noront's TSX-V-listed stock on Monday jumped as much as 50% to an intraday high of C$0.54 apiece, while Cliffs' NYSE-listed stock closed up 12% at $4.81 a share.