The Ring of Fire’s slow burn (Global Business Reports – July 2014)

Global Business Reports is an international provider of industry specific reports to the global trade and investment community. This article is from a profile about Ontario mining for Engineering & Mining Journal.

Making progress in the mineral-rich region despite setbacks

Development of the Ring of Fire has experienced its share of setbacks recently. In November 2013, Cliffs Natural Resources decided to halt its Big Daddy chromite project, citing risks associated with developing infrastructure in the frontier area of northern Ontario. Companies in the mineral-rich area are dependent upon getting federal and provincial support to fund badly needed infrastructure to the region.

“Obviously, having an industry participant leave the region is never a positive development but we are hoping that there is a
silver lining and this event will underline the need for more timely- decision making regarding key issues such as environmental permitting and infrastructure,” said Alan Coutts, president and CEO of Noront Resources Ltd., whose Eagle’s Nest project is the most advanced in the Ring of Fire.

A number of developments in early 2014 may be the starting point to solving the dilemmas that caused Cliffs to suspend its operations. First, the province of Ontario announced the formation of the Ring of Fire Development Corp. to assess various possibilities to fund infrastructure development and engage with First Nations communities affected by development in the region. The Liberal government went even further, announcing a C$1 billion investment to fund a transportation solution.

Furthermore, the Matawa First Nations signed a framework deal in March 2014 with the provincial government that allows the two
sides to move forward in a community-based approach to resource development in the region.

These steps are critical to moving projects forward in the Ring of Fire, which potentially represents $25 billion in new economic
activity for the province. For stakeholders who are invested in the region, these announcements could not come soon enough.

Neil Novak, a former executive at Noront Resources, spent years exploring in the Ring of Fire before it was known as such. His former company, Spider Resources, was sold to Cliffs in 2010 after he uncovered mineralization that looked to be chromite. “Even though there is a lot of chromite found around the world, we need geographical diversification of chromite mines,” said Michael White, president and CEO of IBK Capital, that has raised more than $140 million for companies active in the Ring of Fire. “At the moment, chromite production is concentrated in a few global clusters, and some are not doing so well in terms of guarantee of supply: South Africa, one of the largest global producers, has power issues that can affect deliverability. The industry would very much like to see chromite produced in Ontario, a stable jurisdiction where we have discovered a 100-year plus supply.”

Richard Nemis was the CEO of Noront at the time of the company’s discovery and gave the region its name as a tribute to his
favorite singer, Johnny Cash. His new company, Bold Ventures Inc., is exploring at a number of sites in the Ring of Fire, most
notably the Black Horse chromite deposit in conjunction with KWG Resources Inc. Although he was a key player in the initial Noront discovery, Bold Ventures is more interested in what else there is to find in the Ring of Fire. “We are more interested in base or precious metals; our focus is on extending the Ring westward between the sub-provinces,” he explained.

MacDonald Mines Exploration Ltd. is using down-hole geophysics to explore their properties, which include the Butler VMS
project. According to Richard Schler, CEO of MacDonald Mines, the Butler project has a similar mineralization to Glencore Xstrata’s
world-class Kidd Creek base metals mine in Timmins. “We got Dr. Jim Franklin, a respected geoscientist, to take a look at it and he
feels like the geology lends itself to a Kidd Creek-type of deposit.

We have gotten some good copper grades in the feeder zone, and we hope the grade will improve. The size of the heat engine to
produce this alteration zone is big, so the potential in this could be anywhere from 50-100 million mt.”

How to solve the infrastructure puzzle

The debate surrounding infrastructure development in the region is currently centered upon transportation solutions to access the
area. However, there is the additional challenge of building once you get there: the Ring of Fire is essentially marshland, which
means that traditional methods of building mines on solid ground would not work.

Global engineering firm Hatch sees the Ring of Fire as one of the most exciting areas of opportunity for the company in Ontario.
“There are many challenges presented by the geography, lack of infrastructure and social licensing which require new ways of thinking, and that makes it so exciting,” explained Jan Kwak, Hatch’s managing director of mining and minerals processing. “For instance, a construction strategy would probably require starting in the winter when the ground is frozen and it is easier to transport materials to the site. During the winter, we would need to create an island of solid ground where we can set up camp, store material and equipment and use as a base to expand from when the ground thaws in summer.”

Complicating matters, many people in Ontario and across Canada wonder if the value of the chromite in the ground is enough to
justify the level of infrastructure spending in the region. According to James Siddorn, vice president at SRK Consulting, logistics
and location are decisive factors for any project in Canada’s North. “When producing chromite and nickel, bulk tonnage movement is needed. Therefore, Ring of Fire’s geographical location, as well as the quality of the deposit are critical issues,” he said.

Sudbury-based XPS Consulting and Testwork Services, a Glencore company, worked with KWG Resources on their Black Horse
deposit to convert the chromite into a metalized chrome and iron alloy. “Processing facilities have used the conventional route, which is an electric-furnace approach where the raw ore is smelted at 1,700 °C with a high energy input of 60 to 80 MW of power,” said Dominic Fragomeni, director at XPS Consulting & Testwork Services.

“In our work with KWG we were asked to think outside the box and consider alternatives to a conventional ferrochrome smelter,
which is what drove us to look at direct reduction technologies. This technology is not new, however we have added a twist to take
advantage of the lower cost natural gas available in Ontario. We are currently developing technologies to increase the rate of reaction and reduce the temperature of the direct reduction process, as well as considering downstream processing options.”

Whether or not it is a road that runs east to west, as favored by Noront, or a railway, which KWG Resources advocates, infrastructure development in the Ring of Fire is critical to the success of these projects and the province of Ontario as a whole.