HIGH-GRADE NI-CU-PT-PD-ZN-CR-AU-V-TI DISCOVERIES IN THE "RING OF FIRE"

NI 43-101 Update (September 2012): 11.1 Mt @ 1.68% Ni, 0.87% Cu, 0.89 gpt Pt and 3.09 gpt Pd and 0.18 gpt Au (Proven & Probable Reserves) / 8.9 Mt @ 1.10% Ni, 1.14% Cu, 1.16 gpt Pt and 3.49 gpt Pd and 0.30 gpt Au (Inferred Resource)

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Message: Feb1/10 Genuity report; $350 target. Genuity sold 550K shares today.
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Feb1/10 Genuity report; $350 target. Genuity sold 550K shares today.

posted on Feb 01, 2010 07:23PM

This report was prepared by an analyst employed by a Canadian affiliate, Genuity Capital Markets, and who is not registered as a research analyst under FINRA rules. See last two pages for disclosure and share classification information.

Noront Resources Ltd.

NOT-V: $1.68

February 1, 2010

T

ARGET: $3.50

RECOMMENDATION: BUY

R

ISK RATING: SPECULATIVE

Michael Gray – 604.694.6961

Michael.Gray@genuitycm.com

Samuel Jang (Associate) – 604.694.6964

Samuel.Jang@genuitycm.com

Noront drilling halted due to First Nations logistics blockade and "denial of service"

(all figures in C$, unless noted)

Price (1/29/2010)$1.68Total return to target108%Shares O/S (m)165.4Shares F/D (m)176.8Market cap F/D ($m)$297.0Market float value ($m)$250.110-day Ave Daily Vol (m)0.5Debt ($m)0Working Capital ($m)$40.9FD cash ($m)$47.212-mo Burn-rate ($m)$25.2Shareholders10% Mgmt~9% Sprott Asset Mgmt~9% Rosseau Asset Mgmtless than 5% Pinetree CapCEOWes HansonDirectorPaul ParisottoDirectorJoseph HamiltonDirectorAlex DavidsonDirectorPatrick AndersonDirectorDarren BlasuttiDirectorKeith McKay

NOT-V$0.00$0.50$1.00$1.50$2.00$2.50$3.00JanMarMayJulSepNovJanPrice (C$)200 MA50 MA

Company Description:

Noront resources Ltd. (NOT-V) is a Canadian-based precious metals exploration company focused on northern Ontario, Canada. Its key asset is its 100%-owned McFauld’s Lake project that hosts the ultra high-grade Ni-Cu-PGE-Cr Eagle’s Nest deposits and the prospective Blackbird chromite deposits.

Investment thesis

  1. Last Friday, after market close, Noront announced that it has halted all drilling on its 100%-owned McFaulds Lake Ni-Cu-PGE-Cr Project, James Bay lowlands, northern Ontario, Canada. This decision was made to abide with the Marten Falls and Webequie First Nations logistics halt and ―denial of service‖ at Kopler Lake, which, in turn, has impacted Noront’s Esker Camp.
  2. Noront is not the root of the First Nations concerns – We understand that the First Nations of Marten Falls and Webequie have various concerns, including those related to a proposed Ring-of-Fire access route that may bypass their communities. We also understand that there have been issues related to operating the airstrip near McFauld’s Lake, with the Minister of Natural Resources apparently holding off on issuing certain landing permits. As a result of this halt, Noront intends to reduce staffing levels at Esker Camp until a settlement is reached with the surrounding First Nations groups. While disruptive to drill activity in the short term, Noront has indicated that its original 2010 exploration and development plans are still achievable.
  3. Impact is negative. However, in our view, it is in Noront’s best interest to support its neighbours and the logistics halt, thereby maintaining a strong, collaborative relationship with the Marten Falls and Webequie First Nations. We expect additional Eagle’s Nest drill results to be released in Q1/10, with the focus on infill drilling results to define the massive sulphides and zones of high-grade platinum and palladium.
  4. We value NOT mainly based on a DCF
  5. 8% conceptual direct-shipping model for 2.4mt of high-grade massive sulphides to derive our target price of $3.50. Our model is based on the forward curve and long-term metal prices, start-up in 2015, chromite resources at $0.25/share and an operating NAV multiple of 0.7x. We recommend NOT as a BUY with a $3.50 target price.
    6. 7 Recommendations
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