Editorial: Not all pleased with Ring of Fire sale (Northern Miner – April 29, 2015)

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.

April 28 saw the closing of Noront Resources’ acquisition of Cliffs Natural Resources’ chromite assets in northern Ontario’s Ring of Fire region. The deal saw a last-minute bump-up in the price to US$27.5 million from the US$20 million agreed upon in late March.

The assets are comprised of three chromite deposits and associated claims that were held by Cliffs. The U.S. iron ore major says the sale is “another step in divesting interests in non-core assets” and that the proceeds will be used to cover costs associated with its bankruptcy filing in Canada.

Noront had a little more to say on the final price, however, commenting that in between the first offer and closing, Cliffs “had received an unsolicited, competing bid which it determined, after consultation … could reasonably be expected to lead to a superior proposal.” Thus, the reason for the higher price upon closing on April 28.

Noront’s flagship project has been its 100%-owned, high-grade, nickel-copper-platinum group metals Eagle’s Nest deposit — the only deposit in the Ring of Fire with a positive feasibility study.

But across 800 sq. km, or 65% of the Ring of Fire, Noront has gained a 100% interest from Cliffs in the Black Thor chromite deposit, a 100% interest in the Black Label chromite deposit, a 70% interest in the Big Daddy chromite deposit and 85% of the McFaulds Lake copper-zinc resource.

To come up with the US$27.5-million in cash to pay Cliffs, Noront has borrowed US$25 million from Franco-Nevada at a 7% annual interest rate, with interest to be accrued and paid at the end of the five-year loan term. In return, Franco-Nevada gets a 3% royalty over the Black Thor chromite deposit and a 2% royalty over all of Noront’s property in the region, except Eagle’s Nest.

Noront and fellow Toronto-based junior KWG Resources have always been competitors in the Ring of Fire and gone about their business separately. But now they are partners, and the two most active mining companies in the region.

For the rest of this article, click here: http://www.northernminer.com/news/editorial-not-all-pleased-with-ring-of-fire-sale/1003597611/

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