Noront To Raise $20M In Equity Financing

The “Ring of Fire” multi-metals district in the James Bay lowlands of northern Ontario is getting hotter for shareholders of Noront Resources (NOT-V, NOSOF-O), who have watched their shares surge 287% since the middle of June.

On Aug. 5, Noront reported the discovery of two new lenses of resource-grade mineralization at its Eagle One deposit. That news followed reports a month earlier of “massive” chromite assay results at its Blackbird One and Two chromite deposits about 2 km away and next to its Eagle Two deposit.

Now Noront says it plans to raise $20 million in equity financing through a syndicate led by Wellington West Capital Markets. Flow-through shares of Noront will be offered at $2.80 on a private-placement basis. The news sent Noront shares down 3% to close at $2.44 apiece.

The proceeds from the offering will pay for exploration on the company’s McFauld’s Lake project. Noront anticipates closing the financing in late August.

The junior is the dominant landholder in the Ring of Fire area it discovered in 2007 and continues to delineate and prove up its discoveries with technical and economic reports and an aggressive drill plan this year.

Noront’s Eagle One deposit can be described as forming part of a much larger ultramafic intrusion (the Ring of Fire intrusion) where disseminated sulphides encapsulate a lens of higher-grade massive sulphides. The deposit remains open along strike and at depth.

With high nickel grades of between 6% and 7% within the massive sulphide zone of Eagle One, Noront believes it is possible to consider direct shipment of unprocessed ore to one of the existing concentrator/smelter facilities in Canada. Operating cash flow from direct shipping would then be used to pay for an onsite concentrator and further exploration of the Ring of Fire area, the company notes.

According to a 2008 scoping study on Eagle One, pretax payback could be reached in as little as 2.2 years with a pretax internal rate of return of 16% and a net present value of $464 million at a discount rate of 10%. The initial capital cost would be in the range of $173 million.

Eagle One has an indicated resource of 1.83 million tonnes grading 1.96% nickel, 1.18% copper, 1.12 grams platinum per tonne, 3.91 grams palladium and 3.81 grams silver. The inferred resource tallies 1.08 million tonnes grading 2.39% nickel, 1.27% copper, 1.37 grams platinum, 4.5 grams palladium and 4.21 grams silver.

Highlights from recently drilled holes include hole 49, which intersected two lenses of mixed disseminated to massive sulphides under the Eagle One deposit (now referred to as Eagle 1A).

Eagle 1B (the first lens), located vertically under Eagle 1A, returned 178.8 metres averaging 1.2% nickel, 0.5% copper, 0.9 gram platinum and 2 grams palladium, including a 2-metre section grading 2.5% nickel, 2% copper, 0.4 gram platinum and 4.7 grams palladium, and 4.7 metres of 5.3% nickel, 1.3% copper, 0.6 gram platinum and 5.3 grams palladium.

Eagle 1C (the second lens), also located vertically under Eagle 1A and directly under Eagle 1B, returned 149.5 metres averaging 2.4% nickel, 1.1% copper, 1 gram platinum and 5.1 grams palladium, including 23.7 metres of 5.2% nickel, 1% copper, 0.2 gram platinum and 7.9 grams palladium, and 21 metres at 2.5% nickel, 1% copper, 0.4 gram platinum and 5.3 grams palladium.