PDAC 2014: In Ring of Fire, Cliffs remains elephant in the room – by Peter Koven (National Post – March 4, 2014)

The National Post is Canada’s second largest national paper.

TORONTO – In Northern Ontario’s Ring of Fire, Cliffs Natural Resources Inc. remains the elephant in the room that no one wants to talk about.

A Tuesday lunch panel at the Prospectors and Developers Association of Canada (PDAC) convention focused on the giant undeveloped deposit in the James Bay Lowlands and what has to be done to move it forward.

There were some encouraging comments in that regard from former premier Bob Rae, who is representing the Matawa Tribal Council in its negotiations with the province over Ring of Fire development. He said the two sides are “making good progress at the bargaining table,” and he is optimistic that they will reach a framework agreement soon. That is good news for all involved.

But the panel largely ignored the broader questions investors have about the Ring of Fire: Does it make economic sense for a major mining company to invest the capital required for this highly remote project? And do any of them want to?

Those concerns came to the forefront last November, when Cliffs suspended all work on its Chromite project in the Ring. Some analysts said this was a smart move given the high risk and potentially low returns associated with the project.

The PDAC panel chose not to address this. Apart from being mentioned once in passing, the word “Cliffs” never crossed the mouths of any of the speakers.

Yet Cliffs is the only senior company to take a serious interest in the Ring of Fire. Without Cliffs, the Ring is full of nothing but small juniors poorly equipped to tackle such a remote, high-risk project.

Mr. Rae was the one speaker who addressed the question of whether a large mining company can generate a decent return from the Ring of Fire.

For the rest of this article, click here: http://business.financialpost.com/2014/03/04/pdac-2014-in-ring-of-fire-cliffs-remains-elephant-in-the-room/

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