Please note this article was originally published in Mining Markets in September 2009. Much has changed in the Ring of Fire since then and this article is posted for archival reasons. – Stan Sudol
If Las Vegas odds makers were handicapping the field to determine who will be first past the post in the ‘Ring of Fire’ Chromite Derby, Noront Resources (NOT-T) would be the surefire front-runner; Freewest Resources (FWR-V), the dark horse; KWG Resources (KWG-V) and Spider Resources (SPQ-V), the long shots; while Probe Mines (PRB-V) would be the pretender — at least for now.
The winner will publish Canada’s first National Instrument 43-101-compliant resource estimate for a chromite deposit — a feat that could be worth millions.
“I have got the first resource estimate, for sure,” claims Wes Hanson, president and CEO of Noront. “Certainly some of the other players in the camp have very interesting chromite discoveries. Unlike Noront, they are probably about two years behind us in terms of getting it drilled off to a level sufficient enough to allow them to do a 43-101 resource estimate.” While that may or may not be true, Noront’s leader-of-the-pack status did not happen without a plan.
After Noront’s original president and CEO Richard Nemis was toppled last fall in a coup led by institutional investors, stand-in co-CEOs, Joe Hamilton and Paul Parisotto, both of whom were replaced by Hanson in June, determined that a National Instrument 43-101 resource estimate on Blackbird One and Two would likely give the junior a share price bump and allow Noront to not only gauge the value of its chromite deposits, but others in the camp, too.
The Bay Street-friendly junior, by far the best financed in the camp, just completed a $25-million flow-through financing, and has hired Micon International to complete a resource estimate. Noront expects a draft by the end of November.
Noront has sunk 154 drill holes totalling more than 52,000 metres into Blackbird One and Blackbird Two. The deposits were found during follow-up drilling on geophysical anomalies similar to one that turned into Noront’s flagship project — the Eagle One nickel-copper- PGM magmatic massive sulphide deposit.
Some noteworthy results from early drilling on Blackbird One and Two include a15.7-metre interval grading 43.51% chromite with a chromite to iron ratio of 2.17 to 1; another hole returned 39.84% chromite over 30.6 metres; and yet another hit 39.64% chromite over 24.6 metres. The latter intercepts had similar chromite-to- iron ratios.
Some highlights from drill results released in late August showed similar promise. For example, hole NOT-09-1G157 returned 28.27 metres averaging 39.31% Cr2O3; hole NOT-09-1G159 found 25.13 metres running 35.99% Cr2O3; and hole NOT-09-1G168 hit 20.85 metres averaging 38.06% Cr2O3.
Noront’s intervals include massive chromite, zones of intercalated beds of chromite, and heavily disseminated chromite hosted by talc-altered dunite and peridotite.
Metallurgical tests conducted by Noront determined that massive chromite could be recovered using dense media separation. And bench-scale tests used conventional gravity separation to achieve recoveries of 87% with the massive chromite, and 80% with the disseminated chromite and intercalated beds.
Earlier this year Noront hired a South African chromite expert — South Africa is the world’s largest chromite producer — to help Noront assess its deposits. He said there was only one thing wrong with Noront’s chromite — that his company didn’t own it.
Freewest has three drills turning on its Black Thor chromite project, which could have easily fallen into Noront’s clutches.
Without enough cash to test the property, Freewest optioned it to Noront, which in turn sub-optioned it to Probe Mines. Probe kicked it around, eventually drilled a couple of holes, found squat, and returned it to Noront, which returned it to Freewest.
In September 2008, with cash created by the momentum of Noront’s high-grade Eagle-One Nickel-copper discovery nearby, Freewest drilled gravity anomalies along a 14-km ultramafic sill inside the Ring– the same intrusion that hosts all of the chromite deposits found so far.
“Given the dimensions, it’s a real district just on the chromite alone,” says Donald Hoy, Freewest’s vice-president of exploration, and a director.
Drilling at 200-metre centres — unusually large gaps between holes — traced the reclaimed Black Thor property over a 2.6-km strike length. The mineralization remains open along strike, in both directions.
Ongoing infill drilling on Freewest’s 100%-owned Black Thor at 100-metre centres, and soon at 50-metre centres, should provide enough data for a resource estimate. Hoy says it could happen by Christmas.
“The goal of all that is to, by the end of this year, have enough information in hand such that we too can calculate a NI 43-101-compliant resource,” says Hoy, stressing that his company is indeed racing against Noront.
Black Thor, apart from being a clever name for the project, lives up to its godly title. The discovery hole in September 2008 hit about 100 metres running 30% chromite. Hoy says that was the best intersection in the belt at that point.
Since then, Freewest has reported another hole on Black Thor running 34.1% Cr2O3 over a core length of 174 metres.
Freewest’s proximal Black Label chromite zone, discovered in February 2009, has yielded up to 32.4% Cr2O3 in a 37.2-metre intersection.
Freewest is also in a joint venture with Noront (see map on page 20), with Freewest as operator, but neither junior is working the property.
If Black Thor and Black Label were not enough, Freewest owns a 50% stake in the Big Daddy chromite deposit — the camp’s first chromite discovery, made in March 2006, by Spider Resources president and CEO Neil Novak (See A Brief History, page 18).
Freewest optioned the Big Daddy concession to the KWG Resources-Spider Resources Joint Venture in 2005. The JV spent $3 million on exploration, with Spider as operator, to earn a 50% stake (25% each). Having reached that threshold, the partners are now earning a 60% interest.
Big Daddy is about 5 km northeast of Noront’s Blackbird One and Two discoveries, and 4 km southwest of Black Thor.
The JV believes Big Daddy will get even bigger. Diamond drilling by the KWG-Spider JV has identified a northeast-trending zone of continuous chromite mineralization that extends from local grid line 9+00 metres northeast to 13+00 northeast. The mineralized zone dips towards the northwest and contains different widths of chrome mineralization in a series of stacked lenses. The JV says it needs more infill drilling to confirm that the lenses continue from section to section.
Big Daddy is open at depth as well as along strike in both directions.
This fall, the KWG-Spider JV is drilling Big Daddy with two drills as part of an 11,000-metre campaign. The JV plans to wrap it up before the cold weather sets in. If it doesn’t, drilling will cease and resume once ice covers the area.
Last January, the JV published results from the final two holes in last year’s exploration program: one hit 42.08% Cr2O3 over 34.8 metres, while another met 34.96% Cr2O3 over 42 metres.
It’s common for some nickel-copper- PGM mineralization to occur with magmatic stratiform chrome deposits and Big Daddy is no exception.
The results from 2008’s final holes showed promising PGM mineralization, including one intersection of 4 metres running 1.08 grams platinum per tonne, and 1.5 grams palladium.
Probing for chromite
Probe Mines and Noront are camp neighbours and both juniors recently released drill results from the Probe Mines-Noront Resources joint-venture property, situated between Black Thor and Big Daddy, now known as the Black Creek discovery.
Hole MJV09-03 at Black Creek was drilled on a 45-degree angle and intersected 40.1 metres of mostly massive chromite averaging 37.4% Cr2O3. Hole MJV09-04 was drilled under MJV09-03 at minus 60 degrees and intersected the same zone below surface.
The next two holes were drilled at minus 45 and minus 60 degrees, respectively, about 100 metres northeast of holes MJV09-03 and -04. Hole MJV09- 05 intersected a 50.6-metre interval averaging 32.2% Cr2O3, while hole MJV09-06 intersected 62.4 metres of 34.5% Cr2O3. Mineralization reached 186 metres depth, and is open in every direction.
Fancamp Exploration (FNC-V) is part of the camp’s mix, too, with its McFauld’s Lake property sitting along strike between Black Bird and Black Thor. Fancamp has yet to drill McFauld’s Lake but could nonetheless see a bump in its share price once Noront publishes the much anticipated spring drilling results from the Eagle 1 and 2 deposits, which abutt Fancamp’s concessions.
King of the Ring
If chromite is ever going to be mined in the Ring — and that is still a long way off — it’s likely to happen either after or in concert with nickel, copper, and platinum group metals ore flowing from Noront’s Eagle One and Two deposits.
“If we didn’t have (Eagle One), it’s extraordinarily difficult to develop the chromites,” says Noront’s Hanson.
An early economic assessment of Noront’s Eagle One nickel-copper deposit reported an estimated indicated resource of 1.8 million tonnes averaging 1.96% nickel, 1.18% copper and 5.1 grams combined platinum, palladium and gold per tonne.
In 2008, the Eagle One mineralization had an estimated in-situ value of $1 billion, leading Noront to trademark the tag line “King of the Ring.”
In late June 2009, Noront published results from Hole 49, which drilled underneath Eagle One’s known mineralization to a depth of 1,000 metres. The hole intersected two zones of disseminated, semi-massive and massive sulphides, one from 269 metres to 510 metres below surface and the other from 749 metres to 945 metres.
The hole more than tripled the down dip extension of known mineralization and revealed two more mineralized lenses — the Eagle’s Nest, as Noront is calling it — known as Eagle 1A and 1B.
“It’s a conduit system. You could get repeated lenses all the way down,” says Spider’s Novak, Noront’s former vice-president of exploration.
The Hole 49 news sent Noront shares soaring from a mid-July low $0.63 to a high of $2.70 on Aug. 4. By presstime on Aug. 27, Noront shares had retreated to $2.09.
The junior will likely publish a second resource estimate on Eagle One in late 2010.
Says Novak: “Noront just raised twenty-five million dollars. That’s the type of money they are going to have to spend to detail drill (Eagle One). To prove up the fifteen, twenty or thirty million tonnes or whatever it ends up being.”
No Roads Lead To Chrome
Getting the chromite to market will be an exercise in patience and fundraising.
The infrastructure in the James Bay lowlands is, at best, minimal. Makeshift trails and old logging roads. Diesel-generated electricity. A tiny labour pool. And the Ontario Northland rail line stops at Nakina, Ont., about 300 km due south.
A line linking the Ring with Nakina would cost between $500 million and $600 million (a dirt road would be about the same price). The last railway built exclusively to service a mining camp was completed in 1954 to bring iron ore from mines in Schefferville, Que., to the deep water port at Sept-Iles.
KWG has held talks with the Ontario Northland Transportation Commission (ONTC), a unit of the Ministry of Northern Development and Mines. The ONTC controls the Ontario Northland Railroad, which KWG president Frank Smeenk thinks is the logical choice for the would-be railroad’s operator.
There are several rail line funding ideas, both private and public, being discussed but perhaps the most interesting is a model being developed by KWG.
Smeenk plans to ask the Canada Revenue Agency for permission to establish a flow-through “mutual fund” that would effectively transfer the costs, recorded as business losses, to investors who would use them as tax deductions against income.
Even if that pie-in-the-sky notion gets off the ground, there is still the matter of funding a smelter or electric arc furnace needed to process chromite into ferrochrome, which is mostly employed as a strengthener in stainless steel. This is where Cliffs Natural Resources (CLF-N) enters the picture.
Cliffs is North America’s largest producer of iron ore pellets via six mines in Michigan, Minnesota and eastern Canada. It operates two coking coal mining complexes, one in West Virginia, the other in Alabama, and boasts a market cap of US$3.2 billion.
Cliffs owns 19.9% of KWG and, on a fully diluted basis, about 10% of Freewest.
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