KWG plans appeal of Ring of Fire court decision

"Whether or not it is in the public interest to grant an easement for a road is a matter for the Minister of Natural Resources to determine, after an environmental assessment and consultation with First Nations and other affected interests," said KWG Resources in a statement.

"It is for the Minister to determine whether the easement should be granted in the public interest and on what terms."

Canada Chrome Corporation (CCC), a subsidiary of KWG Resources Inc., served notice on Aug. 13 of its intention to launch a legal challenge in the Court of Appeal of Ontario. The appeal seeks to reverse another appeal decision made by the Divisional Court of the Ontario Superior Court of Justice on July 30. Counsel for KWG are reviewing the Divisional Court's extensive reasons for judgment.

The first appeal set aside a decision by the Ontario Mining and Lands Commissioner (MLC) on Sept 10, 2013.

Cleveland-based Cliffs Natural Resources is proposing to mine chromite from its Black Thor deposit, which is located about 535 kilometres northeast of Thunder Bay in the McFaulds Lake area. The MLC's original decision made it necessary for Cliffs to have consent of its rival KWG Resources Inc. to gain access to land that is needed for the construction of a 340 km all-weather road to its Black Thor chromite deposit.

"When it was announced that Ontario was negotiating terms to finance the construction of a road for Cliffs to ship chromite ore from the Ring of Fire, we reminded the Ministry of Northern Development and Mines that the use of KWG's claims for this purpose would need to comply with this further processing in Canada requirement of the law," said Frank Smeenk, president of KWG Resources, in a letter to shareholders dated July 29.

"The question of whether Cliffs may be granted an easement under the Public Lands Act over the KWG claims is still before the courts. No matter how that question is ultimately decided, it will not alter the law's intent that our claims may be used to exploit minerals only if their further processing is completed in Canada."

The road proposed by Cliffs would run over previously staked mining claims of KWG Resources. It is necessary to provide access for all mining and business opportunities to the Ring of Fire.

The Divisional Court of the Ontario Superior Court of Justice found no evidence that a road would interfere with KWG's exploration, since the claims were staked with the aim of building a railway to a proposed mine hundreds of kilometres away.

Smeenk is opposed to the road because one of the conditions of a mineral lease in Ontario is that further processing of what is mined must be completed in Canada. He argues that a forestry road from Mishkeegogamang to Marten Falls, and then north across the Attawapiskat River to the Ring of Fire should be built first.

This road would connect Eabematoong, Neskantaga, Marten Falls and Webequie to the Pickle Lake highway and enable the supply of construction materials and equipment for the development of the Ring of Fire. It would be used to truck nickel concentrates out of the region for processing.

According to Smeenk, the cost of this road would be more reasonable compared to the alternatives and it is highly desirable as an initial investment to set the stage for development of the Ring of Fire.

In addition, CCC has proposed that the Ontario Northland Railroad be given a new lease on life by being part of this transportation infrastructure.

In the current appeal, CCC will ask the Court of Appeal of Ontario for the right to participate in the environmental assessment under the Mining Act.

At this stage in the process, CCC will oppose Cliffs' easement application or ask for conditions that would protect its mining claims.

KWG has a 30 per cent interest in the Big Daddy chromite deposit and the right to earn 80 per cent of the Black Horse chromite where resources are being defined.

KWG owns 100 per cent of Canada Chrome Corporation which has staked claims and conducted a $15 million surveying and soil testing program for the engineering and construction of a railroad to the Ring of Fire from Exton, Ont.

KWG has also acquired interests in provisional patents including a method for the direct reduction of chromite to metalized iron and chrome using natural gas.

Chromite is used to make ferrochrome, an alloy that is a component of stainless steel.

Both KWG Resources and Cliffs Natural Resources have staked mining claims in the Ring of Fire, which is about 5,000 square kilometres in size and contains the largest known deposit of chromite ore in North America. Most of the mineral discoveries to date are located within a 20-kilometre–long strip.