hello friends,

    last week we covered why a typical rule of thumb is that the in situ value of the minerals in the ground is worth 10% in terms of shareholder market cap.  this is based on historical experience in the mining community of what it costs to get it out of the ground and converted to shareholder wealth.

in my view noront IS MUCH DIFFERENT from a "typical" valuation model. and as such obviously worth more than the 10% often accorded average mining firms.  this was noted and explained in #1 covering grade of ore, we will continue to discuss why in:

2.  type of ore
3.  quantity of ore (or tonnage)

(if you have not already had a chance to read #1 "grade of ore" you can still do so by clicking on the photo of errol, above left, that will take you to my list of prior posts, go down to october 26, click and read.  it has 45 thumbs up so far, so some readers have found it informative.)

a further note,  after you have read #1 of 5, to further validate in your mind that most mines are nothing more then a financing activity for the benefit of the banking industry ie "typical mines" go look at how many 10 and 20 year old mines are still encumbered with debt.  most mines are nothing but sheep, kept alive to be sheared.  in the mining industry, sheared by the banks.  that is why grade of ore, and the other factors we discuss are so useful to understand what sets noront apart IF IT CAN CONTINUE TO FIND ORE LIKE THEY HAVE SO FAR.

#2 type of ore

there are two major types of ore encountered when nickel is located, sulphide (think voisey's bay and norilsk finds) and laterite (think goro in new caledonia or ravensthorpe in western australia). both sulphide and laterite have various subcategories.  

noront has found  sulphide ore.  sulphide ore is well understood when it comes to refining. when compared to laterite ores sulphide ore is much cheaper to extract.  that is  important.  first find the ore, then hope you found the easiest to extract type of ore.  noront has found the easier of the two, BY FAR, THE EASIER OF THE TWO.

laterite (about 70% of the nickel found is laterite) is a pain to extract financially because it requires a lot of energy (yes, i am aware they are still trying to do high  pressure acid leaching, time will tell if this is cost effective. the 1990's trials resulted in prematuture equipment failures so cheap laterite extraction is still a ways away, if ever.) ,  some firms walk away from nickel concentrations in laterite which if it had been magmatic sulphide, they would have built a mine.

noront has the cheaper of the two major types of nickel ore to extract.  thats all you need to know about "type of ore"

#3 quantity of ore (tonnage)

this ties closely to post #1  grade of ore.  in simple terms, you need a certain quantity or tonnage of ore in order to build a mine. HERE IS A KEY FACT, it does not matter if it is all your ore OR YOUR NEIGHBORS.  if the ore is in the neighborhood a mine will be built and you will realize the value of your firms ore.  obviously it is better if you have only one stock in an area play to have all of the ore located on your land.  however, if noront or a neighbor finds more ore it adds geometric value to the entire area play IN THE EARLY STAGES as it validates the idea that the area is a mining district.  my personal belief is based on the fact that most nickel finds are located in several distinct areas, not usually in 1 well defined pod if you will, but many distinct pods.  noront may have many distinct pods if we are lucky.  only the drilling will tell for sure.

anyone (including noront) in the area finding another high grade pod will greatly increase the value of noronts double eagle find.  THIS IS CRITICAL TO UNDERSTAND.  this will really give noront and the other firms a chance to realize FULL VALUE of their potential before they are picked off by a takeover in the early stages of discovery, before the full value is realized.  that to me is the greatest risk right now, being picked off to early.

does noront have the tonnage now at double eagle to build a mine today.  not quite, but they are close in my view.  all it will take is an extension of double eagle or the discovery of one other high grade pod in the area, by noront or a neighbor, and i think it will be a done deal.  that is my opinion.  what are the chances of more ore found in the area?  i know which way i am betting.

4.  where the ore is located geographically
5.  where the ore is located on the site

will follow in a week or so.

don't believe what i or anyone writes, do your own due dilegence, verify your facts to see what i and many others think we see.

be right and sit tight.

regards,

jsq