Eagle One lands Noront 'good start' for mine
Nickel-Copper Find

Peter Koven, Financial Post
Published: Saturday, July 05, 2008


Industry experts are calling the first resource estimate from Noront Resources Ltd.' s Eagle One discovery a "good start," but will be watching for much more action in the months ahead to determine the future of the heavily hyped project.

Noront's initial resource for Eagle One was hotly anticipated, because the high-grade nickel-copper discovery ranks among the most promising Canada has seen in years. It triggered a big staking rush in the McFauld's Lake region in Northern Ontario last year that became the hottest topic in the junior mining world (the area is now known as the "Ring of Fire").

Noront reported an indicated and inferred resource from Eagle One yesterday of nearly three million tonnes of ore with an average grade of over 2% nickel. That includes smaller sections of about 200,000 tonnes grading more than 6.5% nickel.

While those grades are excellent, experts said this discovery on its own is not nearly big enough to justify building a mine at McFauld's Lake, especially since the remote area has no roads or power.

"Right now, they've got to expand very significantly to make this viable. It's a good starting point, but it needs a lot more work," said Dave Davidson, an analyst at Paradigm Capital.
However, the resource was also largely what investors expected. Eagle One is a very high-grade discovery, but it is relatively small.

To open up the area for potential mining, experts said it is likely a big discovery will have to be made. To date, there has been very little drilling by most of the junior companies in the region, and the Ring of Fire has lost momentum with investors.

The companies are finally going to ramp up drilling in the coming months, so the next round of results will be watched very closely. Geologists have pointed out that small deposits such as Eagle One are usually accompanied by much bigger ones.

"In my opinion, [the Eagle One resource] is just kind of a warm-up," said Warren Irwin, president of Rosseau Asset Management, which is a big investor in the Ring of Fire.

"The money's all raised and the companies all going to be out there aggressively spending it. And there are some great targets out there. All you need is the one big target to convince everyone that it will be the start of a new mining camp."

One advantage Noront has is that some of the ore from Eagle One is so high-grade it could potentially be shipped directly to a smelter in Sudbury without having to process it. Then the company could use the cash generated from that to build a concentrator at the site.

Noront shares were halted throughout the day and will resume trading next week.

pkoven@nationalpost.com