U.S. miner Cliffs selling ‘Ring of Fire’ exploration camp to Noront

Cliffs Natural Resources Inc. is selling its exploration camp in Northern Ontario’s “Ring of Fire” mineral belt, suggesting it has little desire to spend more money in the region anytime soon.

Junior miner Noront Resources Ltd. announced Friday morning that it will buy the Cliffs camp for an undisclosed price. The deal is expected to close in the third quarter.

The transaction shows that Toronto-based Noront is committed to developing its “Eagle’s Nest” project in the Ring of Fire, which could become the first mine in the area. And it confirms that Cliffs has other priorities.

The Ontario government was counting on Cliffs, a large U.S. miner, to be the first major company to kickstart development in the remote Ring of Fire, located in the James Bay Lowlands. But Cliffs halted work on its US$3.3-billion project Chromite project in the Ring last November after failing to make traction in its negotiations with Queen’s Park. Cliffs is also dealing with an activist shareholder, excess debt and problems at its Bloom Lake mine in Quebec that require immediate focus.

The Cliffs decision raised questions about the future of the Ring of Fire. It is a vast discovery that could hold $60-billion of minerals, but development has been very slow since it was first discovered by Noront in 2007. With Cliffs moving on, Noront is again the province’s best hope in the area.

The Ring of Fire has become an election issue in Ontario, as it is viewed as a crucial economic opportunity for the North. Last month, the Liberals committed $1-billion to infrastructure development in the Ring of Fire and asked the federal government to do the same. Officials hope that firm infrastructure commitments will convince more senior mining companies to invest in the region.

Negotiations with local First Nations groups over Ring of Fire development are also ongoing. Former Premier Bob Rae is representing the Matawa First Nations, while the province is being represented by former Supreme Court Justice Frank Iacobucci. A breakthrough in those talks could be a key catalyst for development.

The Cliffs camp is located next to Noront’s existing Esker camp. Noront plans to use it as a construction base for development of Eagle’s Nest.

http://business.financialpost.com/2014/05/23/u-s-miner-cliffs-selling-ring-of-fire-exploration-camp-to-noront/