Mining Markets


Noront keeps its cool under First Nations eviction threat

Like all the companies working in northern Ontario's Ring of Fire, Noront Resources (NOT-V) may be about to receive an “eviction notice” from a coalition of six First Nations communities in the remote area of the James Bay lowlands.

Like all the companies working in northern Ontario’s Ring of Fire, Noront Resources (NOT-V) may be about to receive an “eviction notice” from a coalition of six First Nations communities in the remote area of the James Bay lowlands.

On June 22, six northern Ontario First Nations communities issued a press release, warning that they were in the “final stages of issuing a 30-day eviction notice to all mining companies with exploration and development camps in the region.”

But for now, Noront president and CEO Wesley Hanson says it’s “business as usual,” noting that consultations regarding the company’s advanced-stage Eagle’s Nest nickel-copper-PGM project are ongoing.

“In fact, the day after they issued the (warning of an) eviction notice, we were in one of the communities doing our consultations,” Hanson said in an interview yesterday, after a Richmond Club luncheon presentation in Toronto.

“Nothing’s official yet, so we’re going to basically conduct business as usual until we get an official notice,” Hanson said. “The government of Ontario is certainly aware of the threat of the eviction notice. My hope would be they would be proactive and try to nip it in the bud and address the concerns as quickly as possible.”

Two of the three communities closest to Noront’s projects, the Marten Falls and Webequie First Nations, did not take part in the notice. The third community, Neskantaga, did, along with the Aroland, Constance Lake, Ginoogaming, Longlake #58 and Nibinamik First Nations.

“Cliffs, Noront and all the other mining companies active in the Ring of Fire will have thirty days from the time the eviction notice is served to pack up their bags and leave our lands,” Chief Sonny Gagnon of the Aroland First Nation said in the release.

The communities want “government to government” talks with the provincial and federal governments, a joint-panel environmental assessment with hearings in the region instead of the currently contemplated comprehensive review, and to negotiate a resource revenue sharing agreement.

The provincial government, for its part, has indicated it’s open to revenue sharing. It also appears eager to see the Ring of Fire developed, and has put in place a “Ring of Fire Secretariat” to get things moving.

Asked about the tensions over development in the Ring of Fire at a recent event in Sudbury, Ont., Premier Dalton McGuinty told the Sudbury Star: “We need to find a way to work through any differences. It’s not an option not to find a way.”

Much of the First Nation coalition’s ire seems to be directed at a lack of consultation regarding Cliffs Natural Resources‘ (CLF-N) proposed 340-km north-south road from Nakina to the Ring of Fire.

The Neskantaga First Nation is intervening in a dispute over the proposed road between Cliffs and KWG Resources (KWG-V). The proposed route would go through some of KWG’s claims. The case is set to be heard by the Mining and Lands Commissioner in Toronto on July 5. KWG has a 30% interest in Cliffs’ Big Daddy chromite deposit.

Cliffs’ announcement in May that it will build a ferrochrome smelter for its Black Thor chromite deposit in Sudbury, rather than in the Ring of Fire itself, has been another disappointment for First Nation communities who want maximum benefit from development in the area.

However, Hanson doesn’t believe the actions are aimed at Cliffs per se.

“My sense is it’s more of a reaction to the fact that the government perhaps — and I’m not trying to throw anybody under the bus here — but it seems to be more frustration aimed at government, so industry always pays the price.”

The duty to consult with and accommodate First Nations communities over developments on their traditional land belongs to the government, although some aspects of consultation can be delegated to the private sector.

U.S. giant Cliffs Natural Resources is the biggest company in the camp, having made its entry with takeovers of Freewest Resources in 2009 and Spider Resources in 2010. It controls rich chromite deposits in the area, including its feasibility-level Black Thor project, where it plans to begin open-pit mining in 2015. While Noront is a tiny junior in comparison with a market cap of $100 million, it is the biggest landholder in the Ring of Fire with 1,120 sq. km of claims. The company made the high-grade Eagle’s Nest (formerly Eagle One) nickel-PGM discovery in the Ring of Fire in 2007, setting off a staking rush and the formation of a new camp.

While Noront was expecting to have released a feasibility study for its Eagle’s Nest project by now, an announcement by the Ontario government that it supports Cliffs’ preferred road route has put the study in temporary limbo.

Noront’s August 2011 prefeasibility study for Eagle’s Nest looked at building an east-west road starting about 100 km north of Pickle Lake and connecting five First Nations communities before ending in the Ring of Fire. Not only would that route have benefitted more northwestern Ontario communities, it would also have been built largely on stable Canadian Shield rocks. Cliffs’ route is more direct, but will involve building bridges over three rivers. Noront is looking for some hard numbers from Cliffs and the government before it can gauge the effect on its feasibility study. Hanson says the company now expects to release the study within the next couple of months.

Noront recognized the importance of engaging the Ring of Fire communities early on, and developed the novel website The website aims to make information about the company’s project and activities more accessible. The company funds bursaries for post-secondary education for aboriginal students, and says the Mining Matters program, which it brought into the Webequie and Marten Falls communities starting in 2010, have reduced dropout rates. Hanson believes the communities, which suffer from high, chronic unemployment, high dropout rates and endemic abuse of prescription drugs, want to see projects move forward, despite the eviction threat.

“On the one hand, you have this happening, on the other hand you have all these communities standing up and saying ‘we’re in favour of development,’” Hanson says. “What they’re seeking is consultation. They want to be involved in the process.”

While he concedes there has been a backlash against the north-south road proposed by Cliffs and the decision to build its smelter in Sudbury, he believes the problems are not insurmountable.

“The key to overcome those challenges is to basically get in there, open up direct lines of communication,” Hanson adds. “This is an opportunity that, quite frankly, Ontario can’t afford to lose, certainly northwestern Ontario communicates can’t afford to lose, and Noront shareholders can’t afford to lose.”

A prefeasibility study last August showed that Eagle’s Nest has an after-tax net present value of $560 million, using a discount rate of 6%. An initial capital investment of $734 million (assuming that the cost of some infrastructure is shared) would generate an after-tax internal rate of return of 20%. The underground operation would have a mine life of 11 years, with a payback period of three years. Operating costs were estimated at US$75-80 per tonne, or US$2.75 per lb. nickel equivalent. The Eagle’s Nest deposit is a nearly vertically dipping magmatic massive sulphide body, with reserves defined to the 1,200-metre level. Ore would be accessed by underground ramps at a rate of 1 million tonnes per year.

Proven and probable reserves come to 11.1 million tonnes grading 1.68% nickel, 0.87% copper, 0.89 gram platinum per tonne, 3.09 grams palladium and 0.18 gram gold. Additional inferred r
esources come to 9 million tonnes grading 1.1% nickel, 1.14% copper, 1.16 gram platinum and 3.49 grams palladium per tonne.

Hanson says the company is aiming to begin commercial production at the project, 300 km north of Nakina, in late 2016.

Eagle’s Nest would have a very small environmental footprint, with the mill built underground (like Codelco’s Andina mine in Chile) and no tailings pond (they would be stored underground as paste-backfill).

To deal with the total lack of aggregates in the area, which is all wetlands, Noront plans to build “aggregate stopes” to supply construction materials for the project. The stopes, to be located 170 metres from surface, would also double as a hands-on training ground for Noront workers.

Noront shares recently traded at 48.5¢ in a 52-week range of 41¢-94¢. The junior has 230 million shares outstanding.

The company also holds the Blackbird chromite deposit, 2 km south of Eagles Nest, where it has outlined measured and indicated resources of 20.5 million tonnes grading 35.76% Cr2O3, plus inferred resources of 23.5 million tonnes grading 33.14% Cr2O3, as well as other projects in the Ring of Fire.