Peter Koven, Financial Post 
Published: Monday, April 14, 2008

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AT MCFAULD'S LAKE, Ontario -Thousands of investors have their eyes on the Ring of Fire. But on first visit, it is hard to believe.

The Ring of Fire, located in the McFauld's Lake area in the James Bay Lowlands, is as remote as it gets. Flying over in a helicopter reveals nothing but frozen lakes and forest stretching as far as the eye can see. James Bay lies about 150 kilometres to the east, and the closest community is Webequie (population 642), a First Nations village about 100 kms away.

But in a world where quality mineral discoveries are becoming increasingly rare, this place has captured the imagination of investors like no other in recent memory -- even if the idea of building a mine here is unfathomable at this point, and truly big discoveries have not been made.

The interest started last year when junior miner Noront Resources Ltd. made an ultra-high-grade nickel-copper discovery, also turning up significant grades of platinum and palladium.

That triggered a wild staking rush as a battalion of juniors swooped in and claimed almost every inch of prospective land in what became known as the Ring of Fire (after the Johnny Cash song). The staking continues and is thought to total about 4,000 sq. kms.

"I think it's the most exciting discovery of the last 10 years in Canada, no question," says mining veteran Pierre Lassonde. "It's got an enormous amount of potential and you've just got to love the grade."

Noront has become a phenomenon. Online message boards are filled with commentary posted on a minute-by-minute basis as retail investors track virtually every big trade of the stock.

The bigger players believe in it as well; Noront's major shareholders include celebrated names in the mining industry such as Mr. Lassonde, Eric Sprott, Rob McEwen and Sheldon Inwentash, Pinetree Capital founder.

Investors have been enticed by the incredible potential of the discovery: Richard Nemis, Noront's chief executive, compared the geology to the giant Voisey's Bay deposit in Labrador, and suggested it could be even bigger.

But at the Ring of Fire it is clear a lot of work has to happen first. Apart from the staking lines and a few small camps, from the air the ring looks indistinguishable from any other corner of Northern Ontario. While an incredible amount of land has been staked, only a few companies (including Noront) are active with drilling, and it will take a very long time to drill all the targets. While a few of the juniors have reported interesting developments, there has not been anything of the calibre of Noront's flagship "Eagle One" discovery that got the area going. And Eagle One, while high grade, is not enormous.

"Until you have a number of these deposits that can carry the burden of infrastructure, it's way too early to talk about [mining]. This is just a drilling play right now," Mr. Inwentash says.

Finding the resource in the Ring of Fire has been very hard, because there is no "outcropping" of metal on the surface. Many of the world's top geologists have identified the best targets, but they are educated guesses. The land position is so vast and remote that most of the geophysical work must be done with helicopters, which are constantly flying supplies to various camps. Just getting to Noront's camp requires a 10-minute helicopter ride from the main camp.

In the coming weeks, drilling will get even tougher as the lakes melt and the lowlands become a swamp. While the drillers on site have not enjoyed the -40° winter weather, they consider it a welcome respite from the plague of mosquitos and black flies around the corner.

This all means it will take a very long time for the full potential of the Ring of Fire to be realized, and key shareholders say they are committed for the long-haul. But as the news flow slows, trading volumes on Noront shares have eased and the initial excitement has worn off.

Some of that will return when the company completes an initial resource estimate (expected soon), but that is just the start. The question on everyone's mind now is how big this discovery will turn out to be.

Geologists say so-called "volcanogenic massive sulphide" occurrences like the one at Eagle One tend to appear in large and small clusters. Noront hit another one with Eagle Two, about two kilometres from Eagle One. But the really big targets, if they exist, have not been found.

"We still need confirmation this is a world-class district," says John Kaiser, publisher of the Bottom Fishing Online report. "But these things are not big and they can be very hard to find."

The Ring of Fire may turn out to be a collection of small, high-grade deposits that are collectively world-class, rather than anything as huge as Voisey's Bay, he says.

Mr. Lassonde has his own theory. He thinks the geology bears almost no similarity to the Sudbury Basin or Voisey's Bay, but that it looks a lot like old nickel mines discovered by Western Mining Corp. in Australia and Jinchuan Group in Asia. In each case, the largest deposits were found deep below the original discoveries.

"The key will be to first drill on surface and discover the ore bodies closest to surface, because that's where you will get your money back," Mr. Lassonde says.

"It will take two or three years to define that. After that, the key will be to start drilling down deeper."

He said he will be "absolutely the most surprised person in the world" if the discovery does not get bigger in the months and years to come.

In the meantime, everyone is just happy that the Ring of Fire has revived interest in Canadian exploration.

"It's very exciting for the company and Ontario to have these type of results," says John Hughes, an analyst at Desjardins
Securities.

"After several years in Canada of seeing exploration budgets increase on an annual basis, we're finally starting to see some new finds with potential new resources, which is really what we need in this country."

pkoven@nationalapost.com