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Cliffs Natural Resources is considering selling its Ring of Fire chromite properties, and a Toronto junior miner operating in the remote region of Ontario said it’s arranging the financing to take control of the project.
KWG president-CEO Frank Smeenk told the Globe and Mail newspaper he has discussed a transaction with new Cliffs boss Lourenco Goncalves, who is eager to sell the dormant Far North project as the new corporate blood at the Ohio miner looks to divest itself of its international projects and focus on its core U.S. iron assets.
Smeenk declined to tell the newspaper of his source of funding, but he expects it to be in place very soon. Goncalves was named chairman, president and CEO on Aug. 7 after a New York hedge fund, Casablanca Capital, toppled management in a proxy battle. He replaced Gary Halverson, a Sudbury native, as CEO.
Smeenk had met with Casablanca officials at Cliffs’ annual shareholders meeting in July and pitched the concept of a partnership with the fund with KWG being the development vehicle in the Ring.
Earlier this week, rumours began circulating that Cliffs had sent a letter to First Nation chiefs that it was considering selling its chromite properties in the James Bay region.
A Cliffs spokeswoman categorized those rumours as “not accurate,” adding the letter was sent only to the Marten Falls First Nation band, a remote community near the exploration camps.
The spokeswoman said the letter was intended to provide Martin Falls with a business update. “It did note that Cliffs is exploring alternatives for the chromite project,” she said.
The letter, obtained by Globe, included a statement from Cliffs vice-president of corporate development Bill Boor, that a sale of the project was among those options.
Since 2010, Cliffs has spent $500 million to acquire and prove up the mineral potential in the Ring where no rail and road connections exist. At the early stage of development, there were tentative plans to place a ferrochrome refinery in Capreol.
Despite Cliffs’ denials, the company appeared to have been performing a slow withdrawal from Ontario. Last fall, Cliffs halted all exploration and technical work on its Big Daddy chromite deposit and suspended project spending. Earlier this summer, it sold off its remote exploration camp to Noront Resources.
Cliffs has also been tied up in the courts with KWG, an adversarial development partner on the Big Daddy chromite deposit, over having access to KWG’s mining claims to run an access road to reach Black Thor.
Talks with Queen’s Park over a power pricing agreement, the terms of reference for the provincial environmental assessment, and the lack of expediency in committing to mine-related transportation infrastructure have stalled Cliffs.
The Wynne government has committed $1 billion to provide access to the remote camp through its fledgling Ring of Fire development corporation, but it’s still uncertain what that money will be spent on.