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Repost-Genuity Report.....enjoy...July 8th-just out

Posted by: Goldilox on July 09, 2008 05:01PM

value” disseminated mineralization. As the company alluded to in its news release, there is a real opportunity to focus on the massive sulphide mineralization as a direct shipping ore and mine it first with a shallow underground mine.

• The 450,000 tonnes of massive sulphides grading 6.75% Ni contains 30,375 tonnes of Ni. This is the “nickel tonnes equivalent” of an approximately 2mm t nickel deposit with an average grade of 1.5% Ni. The point is that while the Eagle One massive sulphide zone is small, it is relatively large in terms of contained nickel. Additional “Eagle One” type of deposits are therefore very attractive.

Impact – Positive overall

While the resource estimation was in line with our expectations, we believe the main take-away is that the high grade massive sulphide zone may be viable as direct shipping ore via underground mining and trucking to a southern concentrator/smelter.

Discussion – Direct shipping option

Given the remote northern Ontario location and general bog-like terrain, the establishment of a concentrator plant on the Double Eagle project will require a large tonnage of high grade mineralization to make it worthwhile.

Therefore, we like the short-term “direct shipping option” of the very high grade massive sulphide material as highlighted by Noront in its news release because:

• A new road from the Double Eagle project would likely follow a series of eskers over an approximately 200 km distance to the community of Martin Falls. It is believed that such a route is likely able to be permitted in a reasonable amount of time (less than two years?).

• Potential very low capital costs for road construction and ramp access to the massive sulphide zones.

• The permitting bar will be very high for any plant in the Double Eagle project area that would involve waste dumps and tailings.

• The massive sulphide mineralization is probably high grade enough to truck directly to a smelter (i.e., Sudbury).

At this time, we believe NOT will need to find significantly more high grade mineralization on the Double Eagle project before a concentrator plant could be justified. Therefore, the lower grade mineralization is unlikely to be mined until additional deposits can be discovered by Noront on the Double Eagle property.

Catalysts – What’s next?

VTEM helicopter airborne survey partially completed – NOT is conducting a new airborne survey over the Double Eagle property, according to management. The previous ATEM survey coverage was appropriate for Cu-Zn volcanogenic massive sulphide mineralization, but not appropriate for Ni-Cu sulphide mineralization-type conductors. It is our understanding from talking with various industry sources that VTEM is the best airborne

electromagnetic (EM) direct detection technique for Ni-Cu sulphide mineralization.

Eagle Two (E2) assays and visual drill results – There have not been any assays from the Eagle Two sulphide occurrence reported since May 27, 2008. Drilling has apparently continued on this target with one to two drills, therefore, we expect a significant amount of pending assay data to be reported for the sulphide-related target. Initial mineralization was mainly disseminated to net textured, but did not return high grade Ni assays and reported very low Pt and Pd assays. NOT has interpreted Eagle Two mineralization, documented to date, to be related to a magma conduit, and that potential for massive sulphides may exist at depth. No borehole geophysical results for the initial Eagle Two drilling has been reported.

Assays are also pending for additional drilling at the Eagle Two chromitite occurrence that were first reported in February. To date, only one of six chromitite intersections has assays reported in a May 27, 2008 news release.

Drill results for other EM Targets (drilling ongoing) – Noront has drilled a number of other EM targets, including AT-6, for which assays are pending. Documentation of new massive Ni-Cu-Pt-Pd mineralization would be a major catalyst.

Eagle One expansion drilling to the south (will commence shortly) – The Eagle One deposit appears to be open to the south, albeit dominated by granodiorite.

Valuation and recommendation

With the documentation of a 43-101 resource for the Eagle One deposit, NOT now has an asset of retained value. We are in the process of developing a rough NPV DCF model estimate for the 450,000 tonnes of massive sulphide mineralization which has the potential to be “direct shipping ore.”

At this time, we reiterate our BUY recommendation and target price of $7.00.. Noront is Speculative and suitable for risk-tolerant investors only.