Cliffs takes a beating
Ontario’s much-touted Ring of Fire mineral district in the remote James Bay Lowlands may take a little longer than originally thought to yield its vast treasure.
The schedule for the development of Cliffs Natural Resources’ chromite deposit in the Ring of Fire has been delayed, as volatility in the iron ore market severely impacted the company’s operating performance through 2012.
A feasibility study and environmental assessment on Cliffs’ Black Thor project 540 kilometres northeast of Thunder Bay are still underway and scheduled for completion this year, but the timeline for production has been stretched from 2015 to 2016, or beyond.
A decision to move forward with the project will be made at the end of this year and will be based on market conditions, as well as the company’s cash position and outlook at the time. The company has also said it will look at the possibility of taking on a partner.
Cliffs saw its net income for the third quarter ending September 30th plummet to $85 million, down from $601 million for Q3 2011. Consolidated revenues fell 26 per cent largely due to a 36 per cent decrease in year-over-year pricing for seaborne iron ore, while the company’s stock price plummeted from a high of just under $100 in July, to $35.71 on January 25th.
Cliffs has also announced plans to take a $2 billion charge in Q4, half of which is related to its $5 billion purchase of Consolidated Thompson Iron Mines in 2011.
The plan for Cliffs’ Black Thor chromite deposit in the Ring of Fire includes the delivery of between 6,000 and 12,000 tonnes per day of crude ore to a concentrator at the mine site and the transport of between 3,600 to 7,200 tonnes per day of chromite concentrate by truck to the CN Rail line approximately 300 kilometres to the south.
The close to $3 billion project includes the construction of a permanent all-season road from the mine site to the CN Rail line and a $1.8 billion ferrochrome processing facility in Sudbury.
Eagle’s Nest
Meanwhile, junior miner Noront Resources produced a positive feasibility study for its Eagle’s Nest copper-nickel-PGM deposit in the Ring of Fire in September and is expecting to conclude an environmental assessment for a proposed underground mine with a one million tonne per year throughput rate by the second half of this year.
The project, which boasts proven and probable reserves of 11.1 million tonnes grading 1.68 per cent nickel, .87 per cent copper and approximately 4 g/t platinum and palladium, will cost $609 million to bring into production, with an additional $160 million for sustaining capital.
However, financing for Eagle’s Nest will have to be sought and timing for startup will likely depend on the increasingly uncertain timeline for Cliffs’ chromite project, as both would likely make use of the same transportation corridor.
MacDonald, Bold
Several other junior mining companies, including Bold Ventures Inc. and MacDonald Mines, are busy in the Ring of Fire.
MacDonald Mines is zeroing in on its Butler property, 36 kilometres west of Cliffs’ chromite deposits. The company has already drilled approximately 150 holes on the property and was scheduled to drill an additional six to eight holes in February.
“We have gone through a progression of drilling, geophysics, downhole probing and geochemical analysis …and we believe we have what looks like a VMS Kidd Creek-type deposit,” said company president and CEO Kirk McKinnon.
“We’re hoping that one more discovery on top of what Cliffs and Noront have will be a catalyst to drive the whole infrastructure activity.”
Also focused on the Ring of Fire is former Noront Resources president Richard Nemis, and his new company, Bold Ventures Inc., which recently optioned Fancamp Exploration Ltd.’s Koper Lake property, located between Noront’s Eagle’s Nest and the Cliffs-KWG Big Daddy chromite property.
Bold Ventures also has several other properties throughout the Ring of Fire on which it has conducted airborne surveys and identified a dozen or more priority targets for drill testing.
The absence of road access, the swampy terrain, the distance from existing infrastructure and negotiations with First Nations make the Ring of Fire a challenging place to build a mine, but with one world-class chromite deposit, a high-grade base metal deposit and numerous indications of additional mineralization, its development is bound to happen. When will depend on the vagaries of the market.
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