A major U.S. mining company is making a play for chromite deposits in Northern Ontario, that could translate into mining and ore-processing jobs for First Nations in the James Bay lowlands and Lake Superior‘s Northshore communities.

Cliffs Natural Resources Inc. has announced a bid to acquire chromite properties from Montreal-based Freewest Resources Canada, Inc. in the Ring of Fire mining district.

The deal would position Cliffs as a major producer of ferrochrome, an essential ingredient in the production of stainless steel.

Under the terms of the agreement, Cliffs will acquire Freewest‘s interests in three world-class chromite deposits: Black Thor and Black Label and 50 per cent of Big Daddy, an adjacent deposit held by a joint venture of Freewest, KWG Resources and Spider Resources.

Freewest‘s other assets would be spun off into a “New” Freewest company which would exist independently and its common stock would continue to trade on the TSX Venture Exchange.

“This long-term project is consistent with Cliffs‘ stated strategy to broaden its mineral diversification and opens the door to a new universe of customers,” company president Joseph Carrabba said in a press release.

“In addition to furnishing the raw-material needs of carbon steel producers, we will become a supplier to producers of stainless steel,” he said, explaining that “ferrochrome is imported by the world‘s fastest growing steel markets and many countries have categorized it as a strategic resource.

“We believe this discovery represents one of the premier chromite deposits in the world. Given the operation‘s unique location, our objective will be to supply ferrochrome to stainless steel producers around the world,” Carrabba added.

Shares in Freewest jumped by 16.36 per cent or nine cents to 64 cents after the American mining giant recently announced it had emerged to save the Canadian junior mining company from a hostile takeover.

Cliffs said it fast-tracked its offer after Freewest was targeted for takeover in October by Noront Resources Ltd.

Noront had offered to exchange its shares for Freewest. Based on the Oct. 2 price of Noront shares, the deal would initially have been worth about 40 cents per Freewest share, and was worth about 57 cents based on closing prices on Nov. 20

Freewest president Mackenzie Watson said the company‘s board of directors “believes this transaction is clearly superior to the proposal put forward by Noront.

“It will provide Freewest shareholders with highly-liquid shares in a company with a market capitalization in excess of US$5 billion, while allowing New Freewest to continue as a well-financed exploration company focused on the high-grade Clarence Stream gold property and an attractive suite of early-stage exploration properties.”

Cliffs said the acquisition would allow the company to apply its expertise in open-pit mining and mineral processing to a chromite ore resource base which would form the foundation of North America‘s only ferrochrome production operation.

Cliffs believes the Black Thor, Black Label and Big Daddy deposits are the highest quality deposits in Canada‘s Ring of Fire district, and would provide a significantly long mine life and expansion potential. The company estimates that a mining operation there could produce up to two million tonnes of high-grade chromite ore annually, which will be further processed into up to 800,000 tonnes of ferrochrome.

Freewest said the offer would value it at $150.6 million or 70 cents per Freewest share.

Under the terms of the arrangement, each Freewest shareholder will receive a fraction of a Cliffs share representing a fixed value of 55 cents and one share of New Freewest to be managed by the current board and management. The New Freewest will have an implied value of 15 cents per share.

Cliffs already owns 6.9 per cent of Freewest‘s outstanding shares and has warrants that would allow it to boost its holdings to 9.75 per cent. Cliffs also intends to invest $4.1 million into Freewest, subject to approval by the TSX Venture Exchange, bringing its potential stake to 12.7 per cent.

Pending shareholder and regulatory approvals, a formal study of the Freewest‘s chromium deposits would commence in early 2010. The study will meet industry standards and be comparable to an NI 43-101 Technical Report or a Joint Ore Resource Committee (JORC) assessment of the mineral resource. Diamond-drill core samples within these deposits have consistently intersected significant chromite zones with world-class thickness, grade and chromium to iron ratios to supply a low-cost, open-pit mining operation.

Cliffs expects commercial plans to bring the deposit to market would include construction of the open-pit mine and mine-site processing facility, as well as a remote electric arc furnace (EAF) to further process the ore into high-grade ferrochrome. The EAF facility is anticipated to be located somewhere on the north shore of Lake Superior.

Should the project go ahead as planned, the permitting process is anticipated to take three years, with production commencing around 2015, Cliffs said.

Cliffs is a producer of iron ore pellets in North America, a supplier of direct-shipping lump and fines iron ore out of Australia, and a producer of metallurgical coal. Its core customers include ArcelorMittal USA, Algoma, Severstal and U.S. Steel Canada.