Ring of Fire: Ontario Embarking on a Major Economic Development Project – by Geophysicist R.S. Middleton, P.Eng.

Map Courtesy KWG Resources Inc.This article originally appeared in the Fall/Winter 2010 issue of the Ontario Prospector which is published by the Ontario Prospectors Association.

R. S. Middleton is a well-known and respected geophysicist who has been involved with many mining projects around the world and in Canada over the past 40 years.

For an extensive list of articles on this mineral discovery, please go to: Ontario’s Ring of Fire Mineral Discovery

A New Chromite Industry for North America

Ontario has been blessed in that a number of world class mineral discoveries have been made over the past 125 years which has brought wealth and prosperity to its citizens and Canada.  These discoveries have sustained thousands of support industries that have manufactured and supplied the implements to extract the metals, industrial minerals and gemstones that form the Mining Industry of Ontario.  Revenues from these mining operations make up approximately 30% of government tax revenue and were the foundation and beginning of the financial industry based in Toronto.

The discovery of the Sudbury nickel-copper-cobalt-PGE (Platinum Group Element) deposits at the end of the 19th century are the largest contributor of revenue with a gross metal value of over $190 billion.  The multitude of silver mines found in 1903 in Cobalt, Ontario generated millions of ounces of silver with by-product cobalt, arsenic, nickel and bismuth and became the strength of the Toronto Stock Exchange in the early 1900’s.  By 1909 prospectors operating from the Cobalt Camp found the famous Porcupine Gold Camp (Timmins) which has now produced over 70 million ounces of gold from 100 years of production.

Prospectors from both Timmins and Cobalt then found the Kirkland Lake – Larder Lake gold mines and the Noranda Camp in Quebec.  Also from Timmins the Kidd Creek copper-zinc-silver mine (1963) with a gross metal value reaching $75 billion, the Kamiskotia (1915), Detour gold (1974) and Hemlo (1979) camps were found.  Geraldton-Beardmore and the Red Lake gold camps were developed in the 1920’s-1930’s in part with the financial base built by Timmins.

Numerous other discoveries were made elsewhere in Manitouwadge (1956), Sturgeon Lake (1969), Schreiber, Wawa and Shebandowan to name a few.  Iron deposits were developed for the Hamilton based steel industry in Red Lake (Griffis Mine), Kirkland Lake (Adams) and Temagami.  Money from the Hollinger Gold Mine in Timmins started the Iron Ore Company of Canada in Labrador.  In Wawa the iron ores were the basis of the Algoma Steel operations in Sault Ste. Marie.

Ontario has been built on the financial strength of mining and a network of communities in the North.  These world class discoveries have maintained Ontario as Canada’s leading mineral producer.  Total gold production from Ontario has reached 166 million ounces worth over $90 billion or ($199.2 billion at today’s prices) and 1.7 million ounces per year.  Northwest Ontario accounts for 34% of the total production.  Ontario’s production of all minerals was $6.3 billion in 2009 and over $10.0 billion in 2007, with 22,500 people employed directly.  Indirect spinoff jobs are often forgotten, but an old “rule of thumb” is for every miner there are 10 other jobs created.  Total mineral production in Ontario now exceeds $365 billion from the metal prices received at the time, or over $1.0 trillion at today’s metal prices.

Mining is the one industry that has produced on a steady basis, even in times of war and depression.  In the Great Depression of the 1930’s people from all over the world came to Ontario seeking work in the gold mines of Timmins, Kirkland Lake, Geraldton and Red Lake.  People came from the depressed farms on the prairies by train to Timmins and stood in line at the Hollinger Gold Mine to be hand-picked for work.

Ontario and Canada became enriched by the many new immigrants from Europe, Scandinavia and beyond and this gave cultural diversity to Canada.  The sky-line of Timmins is marked by Church spires of every religious denomination.  From this population of northerners came future business leaders of the nation, members of Parliament, the military, the Canadian Senate and of course hockey players and famous entertainers.

Present Day Far North Developments-New Discoveries

It should not be surprising that new and different types of discoveries would be made in the relatively unexplored expansive territory lying to the North of all of these previous finds.  In an area the size of France and half of Germany north of the Albany River lay a series of hidden greenstone belts beneath stunted trees, fly infested wet muskeg and string bogs.  The Albany River marked the northern boundary of Ontario in 1905 with the signing of Treaty Nine and eventually expanded to the present day Manitoba boundary in 1929 with various adhesions to Treaty Nine.

The 21st Century saw an unprecedented series of discoveries starting with Ontario’s first diamond mine, the Victor, at Attawapiskat and this was followed by a series of small zinc-copper-silver finds in 2002-2003 during the search for more diamond bearing kimberlite pipes.  Expanding exploration resulted in an unappreciated intersection of chromite in 2006 on what is becoming known as the Big Daddy chromite zone being explored by KWG Resources, Spider Resources and Freewest Resources.  However, in August 2007 while drilling another kimberlite shaped magnetic anomaly which was interpreted to be a VMS target, 5 km to the west of the Big Daddy, Noront Resources found a rich nickel-copper-PGE deposit called Eagle One which lead to drilling another target 3 km to the south in March 2008 and a 40 metre chromite horizon was intersected on the south side of the Eagle Two nickel zone.

Realizing the possible connection of the new chromite intersections being hosted in ultramafic rocks, KWG and Spider drilled a 12 hole program on the Big Daddy zone in the summer of 2008, which was followed by Freewest  drilling near McFaulds Lake in September 2008 on 100% owned claims it held immediately north of the Big Daddy zone and outlined the Black Thor chromite zone over 2.6 km in length and open toward the southwest.  It had an aggregate thickness of chromite layers exceeding 100 metres making it the thickest chromite deposit in the world.  Drilling continued in 2008-2009 on the Black Thor resulting in a parallel Black Label zone and definition of the Big Daddy (1.3 km long and up to 100 metre thickness).  To the west Noront defined what is now called the Black Bird One and ‘Two deposits.  Definition drilling is to continue in 2010. Southwest of the Black Thor, a small section of the extension was drilled by Probe Mines in 2009, followed by more work in 2010.

Published resource calculations in January 2010 indicate 69,554,960 tonnes of 31.9% Cr2O3 in the Black Thor deposit and an additional amount in the Black Label (not published).  The Big Daddy is defined as 39.5 million tonnes as inferred and indicated ore grading approximately 40% Cr2O3 in May 2010.  This is “direct-shipping” ore, requiring little upgrading before transporting it to the steel mills.
The Black Bird One and Two deposits have been calculated as 7.6 million tonnes of 36%Cr2O3 as of December 2009,

In all cases the bodies are open to depth beyond the 300 metre drill depth.

A New Industry for Canada and North America

The overall resource estimate indicates that there is enough chrome ore to supply the North American market for the next 150-200 years. This will continue the Ontario Legacy of continuous mining production.

Annual production of chromite from these new deposits could range in the 4 million tonnes per year and possibly up to 10 million tonnes when supplying the Asian markets.

The quality and grade of the chromite is superior when compared to other world producers.  Chrome to iron ratios are typically 2:1 as compared to South African chromite, which is1.5-1.6 :1 Cr/Fe.  Ore grades in Ontario are higher than Finland, for example the Black Thor is 31.9% Cr2O3, Big Daddy is 40.66% Cr2O3 with sections up to 43% Cr2O3 and Finland’s Kemi mine is only 26% Cr2O3.

World production presently comes from South Africa and Zimbabwe where 70% of the world’s resource is contained.  Brazil, Russia, Madagascar, Turkey, Sweden, Finland, India, Kazakhstan and Albania also produce.  The world production is now 22.4 million tonnes per year.

China consumes 50% of world production of chromite, and North America has never had significant commercial production with all the chromite presently being imported from Africa, in the form of ferrochrome.

The chromite deposits in the “Ring of Fire” 75 km east of Webequie First Nation await the construction of a rail link to Exton near Nakina, Ontario where the main CNR line extends from British Columbia to Toronto.  This 350 km route crosses 60 rivers and streams and the present route under study is relatively equidistant from 5 First Nation communities originating from Aroland First Nation 16 km west of Nakina and extending north between Marten Falls First Nation (Ogoki Post), Eabametoong First Nation (Ft. Hope), Neskantaga First Nation (Lansdowne House) and Webequie First Nation.  It is envisaged that the roads and power lines will extend from a central corridor to each of these communities.  That will eliminate the use of diesel generator power in each community saving millions of dollars in cost to the First Nations, and giving road access to allow workers from these First Nation communities to reach the mining and processing operations.

The ore would be initially mined by an open pit followed by underground large open stope extraction.  Milling of the ore is principally crushing and grinding followed by a gravity separation.  This is a non-chemical, environmentally sustainable process similar to that used for iron ore in Labrador.  It is possible that some ore material may be high enough grade and quality to be shipped directly as “lump ore”.  The disseminated chromite and lower grade ore and other “fines” may be concentrated by gravity in spiral classifiers, and could be pelletized if the market requires.  No chemical reagents are necessary in this type of process.

Conversion to ferro chrome which is the product used in steel making involves an electric furnace where raw chromite is combined with a carbon reductant (coke).  There is no large smoke stack such as that used for conventional sulphide ore smelting.  Coke used in the process is a fine-grained variety called “Breeze” and is a by product of coke produced by the steel industry for blast furnaces.  The finer-grained coke cannot be used by the steel makers and is sold to other buyers.

Ninety percent of chrome is used for the production of stainless steel and there is no other substitute.  There are 2300 varieties of stainless steel containing 8-28% chrome.

In order to develop the deposits, build the mine and processing facilities, furnaces, rail infrastructure, power lines, and bring expertise in marketing the product you need a major company to be involved. Cliffs Natural Resources (formerly Cleveland Cliffs), the oldest listed company on the New York Stock Exchange is such a company that has the fiscal ability and knowledge of the North American market. Cliffs is the largest pellet iron ore producer and supplier to the North American steel industry, has been involved in railroad networks, and is financially sound. In early 2010 Cliffs took over Freewest Resources which gave it control of the Black Thor and Black Label Zones, and bought a19.9% position in KWG Resources Inc.
On May 24th, 2010 Cliffs announced a take over bid for both KWG Resources, and Spider Resources, and  has now completed the Spider Resources take over to gain control of the Big Daddy zone. The final steps in this corporate acquisition process are still underway at the time of writing, but with a major company involved it assures the development of the project. This is another example of how the junior explorers find the deposits and the majors then step in to develop the mines.

Infrastructure Development

Chromite is a black dense mineral usually occurring in small rounded grains or massive zones and because of the high density it is difficult to move any large amount by truck or boat.  Rail transport is the most practical way of moving large tonnage.  Hence a railroad is in the early planning stages and a route has been selected based on available Quaternary geology that follows glacial features and sandy areas and attempts to avoid string bogs and stay on higher ground.  The whole route has been flown by LIDAR survey to measure the topography accurately.  This route has had large sections soil tested by Auger drills every 1000 feet (300 metres) in early 2010 with particular attention to the large river crossings being the Albany, Ogoki, Attawapiskat and Current Rivers.  Permits were issued by the MNR Ontario and the work was supervised by Golder & Associates and co-ordinated by Krech Ojard Engineers of Duluth.  Funding was by KWG Resources Inc. through its subsidiary Canada Chrome Corporation.  Engineering studies are expected to continue through another winter season in 2011.

Construction of a railroad and service road to the McFaulds Lake Chromite deposits is expected to take 3-5 years after engineering studies are completed.  Prior to construction approvals must be granted after environmental assessments and public consultation. The cost of construction is estimated to be up to $2.0 billion or over $2.0 million per kilometre plus bridge construction.  Mine and mill costs as well as electric furnace installation, power lines may bring the total construction cost to $2.6 billion.

This project would be considered a “major” project by Federal Economic definition.  It is the first Mining Project to be mentioned in a Throne Speech and has been discovered by Junior Mining Companies run by imaginative individuals with foresight.  These 5 individuals were recognized by the PDAC in March 2010 by being awarded the “Prospector of the Year Award”. Direct employment to build and operate the mine, furnace, railroad, power lines and maintenance is estimated to be 4000-5000 people with trade skills.  Production may employ 5-6 generations of workers with skills that include backhoe operators, welders, concrete and steel construction, electricians, railway workers, engineers, metallurgists, mill technicians and accountants to name a few skills.  First Nations have the opportunity for employment in all of these fields hence education and training is an important first step and a must to prepare for the upcoming developments.

The economic prosperity of the Province is dependant upon a robust mining industry which in turn requires access to the land and a solid Land Tenure policy. All land in the Province requires an economic evaluation and review for mineral potential. Land Use Planning can then follow in a sensible manner to address all other concerns allowing everyone to benefit from the wealth that is hidden below.