Trading volume of shares of Noront Resources (TSXV:NOT22) surged23 to more than 1.6 million shares on September 17, after the base and precious metals explorer announced positive results for a feasibility study at its nickel24, copper25 and platinum26 Eagle’s Nest project in the Ring of Fire region of Northern Ontario. Shares of the company have risen from 36.5 cents at the close on September 14 to 38.5 cents on September 17.
In its feasibility study27, Noront forecasts an after-tax net present value of $543 million at an 8 percent discount rate, an initial capital expenditure of $609 million, a $160 million life-of-mine-sustaining capex and a three-year payback period. The estimate is based on prices of $9.43 per pound nickel, $3.60 per pound copper, $1,600 per ounce platinum, $599 per ounce palladium26 and $1,415 per ounce gold.
Noront said Eagle’s Nest contains proven and probable resources of 11.1 million tonnes grading 1.68 percent nickel, 0.87 percent copper, 0.89 grams per tonne platinum and 3.09 g/t palladium. The mine is forecast to produce 1 million tonnes per year, producing 150,000 tonnes of nickel-copper concentrate annually over 11 years at $97 per tonne or $2.34 per pound of nickel equivalent.
With a market cap of around $85 million, Noront could be a takeover target, especially after this positive feasibility study. Responding to this issue, Wes Hanson, CEO of Noront, told the Financial Post in an interview28 that the company’s shareholders are committed for the long term.
“We have some very strong shareholders. Resource Capital Funds has an 18.5% interest in the company, and Baosteel is sitting at 10%, and both have indicated to us that they’re committed to the long term and want to see value added to advancing the project through the various stages of feasibility and permits.”
Hanson added, “[t]hat is our focus, and so it always helps to have a couple of very strong shareholders with very large interest sitting in your corner, sympathetic to the long-term objectives of the company.”
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