Alan Coutts, President and CEO, Noront Resources

GBR Connect Series

What has changed for Noront Resources since Cliffs Natural Resources’ 20th of November announcement that it will suspend its Black Thor chromite project in the Ring of Fire?

AC: From Noront Resources’ perspective, not much has changed since Cliffs Natural Resources’ announcement. Our Eagle’s Nest project is fundamentally different from what Cliffs had envisaged for their open-pit, bulk-transportation model Black Thor Project: Noront is focusing on a high-grade nickel-copper-platinum group underground mine – from a logistics point of view, this means small volumes of high-grade concentrate. Consequently, our project economics and infrastructure needs are completely different than those of Cliffs. Furthermore, during our permitting process, we developed our environmental assessment not only for the mine site itself, but also for our transportation corridor and we continue to believe that an East-West route is more appropriate for our needs at this time. Obviously, having an industry participant leave the region is never a positive development but we are hoping that there is a silver lining to that and this event will underline the need for more timely-decision making regarding key issues such as environmental permitting and infrastructure. These questions cannot remain unresolved forever and we hope that Cliffs’ decision is going to galvanize the process and hopefully bring the federal government to the table as well.

What is Noront Resources’ current focus at the moment and what are the key elements that make the company’s projects economically feasible in the Ring of Fire?

AC: Noront Resources’ focus at the moment is on advancing its Eagle’s Nest project, for which we published a NI 43-101 in September 2012. We are looking at a mine life of 11 years at roughly 1 million tonnes per year of throughput, which would consequently produce 150,000 tonnes per annum of high grade nickel-platinum concentrate. We have proven and probable reserves of 11 million tonnes but beyond that we have resources at below 1,000 meters that would add another 10 years of mine life at the same rate. Overall, we think our operation will have a total mine life of somewhere between 11 and 20 years. In terms of economic feasibility, typical developments in remote areas deal with gold and diamonds, which do not require heavy infrastructure to be transported out of the mine site. Eagle’s Nest is different however, and its main advantages are its high grade reserve and the fact that it will have by-products. Noront Resources expects this mine to produce within the first quartile of nickel operations around the world and moreover, we will not rely exclusively on the economics of nickel for our success.

Could you tell us more about Eagle’s Nest’s unique aspects that allowed it to be designed as a low-environmental-impact operation?

AC: One of the key things when you are developing a mine is to design it in a way that will attract the fastest permitting. We looked at Eagle’s Nest’s unique aspects that would allow us to take away the concerns that the First Nations, authorities, and NGOs had. First of all, we designed an underground mine with a small surface footprint. Secondly, we are going to be recycling virtually all of the water so the only discharge to the environment will come from our camp activities. All our processing water will leave the project in the form of concentrate or will go down the hole as moisture for our paste. Most operations have a tailings pond on the surface but in our case, all of our tailings will go underground – we will be able to do so due to the extra volume that our underground aggregate producing quarry will give us. In summary, the small footprint, the underground mill, the fact that we will not be discharging any processing water and the underground placement of our tailings make our project very unique. Noront believes these aspects make Eagle’s Nest a very acceptable operation in the minds of regional players in terms of attracting permitting.

Infrastructure development is one of the key items on the agenda for the Ring of Fire. What are the advantages of the East-West corridor that Noront Resources is advocating for?

AC: The North-South corridor is, without a doubt, the quickest way to the markets. However, it does not tie in a lot of the local communities to all season roads. Additionally, it has three major river crosses that are costly and somewhat sensitive from an environmental and First Nations’ point of view. The East-West corridor, on the other hand, comes off an existing winter road infrastructure, north of Pickle Lake, and ties in more communities. It does not have any river crossing so it is lower-cost and more environmentally friendly. The secret with the infrastructure situation here is to meet the needs of many – whatever the preferred route will be, it will have to provide development opportunities for the First Nations as well; it cannot be an exclusive resource-road that takes simply takes minerals to the market.

Could you tell us more about Noront Resources’ approach to collaborating with the Matawa First Nations?

AC: A lot of the success in the Ring of Fire will depend on the level of involvement of the local communities, which are currently very isolated. Building capacity is the buzzword and we need to provide education to these people so they can make the best decision about how to participate in these projects. We need to let them understand the information they are receiving and so Noront supports all the training and education initiatives currently going on. Forming a bond and a level of trust with these communities takes time and dedication. Ultimately, the idea is to provide opportunities and create a framework that benefits everyone. Whenever you develop a big project, there will be an impact; our expectation is that the positive consequences of that impact will far outweigh the negatives ones, which we try to reduce as much as we can.

The year 2013 has brought forth several governmental initiatives for the Ring of Fire, among which the appointment of Frank Iacobucci as lead negotiator on behalf of the Ontario government in discussions with the Matawa Tribe Council, and the creation of the Ring of Fire’s Development Corporation. How do you asses these developments?

AC: We have seen progress since this new negotiation framework was implemented, but, as always, we would like to see it happening at a faster rate. We recognize however that with nine communities spread across a wide geographic region and with all their distinct ideas on how things should progress, it is difficult to obtain one single galvanized view. The best solution forward is to have these communities speak with one unified voice: this will accelerate the negotiations and hopefully, there will be a good distribution of the benefits among them. The concept behind the Development Corporation is good but we are still in the early days: we have to acquire a clearer understanding of who is going to be represented and how decisions will be made. We have seen situations in which development corporations ran assets before, but this group has also been tasked with the design of the infrastructure plan, which is a more complex role.

What are the dynamics of nickel at the moment and how is Noront Resources currently positioned in the market?

AC: Demand for nickel in the following years will stay at a CAGR of 4-5% but the problem is the current market oversupply. There is not a lot of market discipline out there and we have not seen as many closures as we would have expected. Ultimately though, if the price goes down to $6/lb, that will trigger the regulation on the supply side of the market. Our expectation is that there will be a deficit starting in 2017 and that by the time we will be running at full capacity at Eagle’s Nest, we will have a more buoyant nickel environment. Again however, we have the tremendous advantage of being shielded by our platinum/palladium by-products, which are independent of nickel dynamics.

Minister Gravelle and Ontario Premier Wynne have repeatedly asked for a deeper federal government involvement in the Ring of Fire. How important is the federal authorities’ commitment in the region?

AC: We would want a more active federal involvement in the Ring of Fire: the infrastructure will be costly and having both levels of government participate is essential for its successful development. We must keep in mind that the federal authorities are interested not only in resource development but also in providing opportunities (roads, power, water access) to the First Nation communities.

What will the year 2014 bring for Noront Resources and what is the final message that you would like to convey to the 63,000 readers of the Engineering and Mining Journal?

AC: Completion in December 2013 of a Federal/Provincial Environmental Impact Statement and Environmental Assessment Report (“EIS/EA”) for its Eagle’s Nest Project marks an important milestone for Noront. We believe that Eagle’s Nest will be the first mine developed in the Ring of Fire and this brings us one step closer toward achieving that goal. We look forward to receiving comments from the provincial and federal governments as well as any other interested parties. NGOs, First Nations, and interested public will be able to review the EIS/EA; overall, it will take somewhere between six months and a year before the final document will reach the minister’s table. Apart from that, in 2014, we would also like to negotiate the benefit agreement with the First Nations. Noront Resources will be looking at synchronizing the timing of these events so as to approach the financing-market backed up by solid results. Our final message is that we intend to be the first mine in the Ring of Fire. Through our novel approach, our reduced environmental impact and by being sensitive to the needs of the First Nations, we believe we are at the forefront of development in the Ring of Fire.

This interview was conducted as part of GBR’s research on the mining industry of Ontario, including a special feature on “Toronto: Mining Capital of the World”, to be published in Engineering & Mining Journal magazine. To participate in this report, please contact Gabrielle Morin at gmorin@gbreports.com