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Noront sees some light from the Ring of Fire

Mine developer pleased First Nation partnership, government getting traction on access road
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What a difference a year makes.

Early last year, Noront Resources president-CEO Alan Coutts delivered a doom-and-gloom speech to a Sudbury crowd that cast doubt about whether the Toronto mine developer even saw a future in the Ring of Fire.

There was frustration over government inaction in planning an access road to reach the isolated James Bay mineral deposits, the glacial pace of dialogue with First Nation communities with the Regional Framework talks seemed to be going nowhere, and Coutts was dropping hints that the project could be shelved if the company’s financial backers weren’t seeing progress. 

This time, an upbeat Coutts was striking a more optimistic tone as the featured headliner at the Greater Sudbury Chamber of Commerce's Procurement, Employment and Partnerships Conference on Feb. 6.

Noront has aims on becoming North America’s first chromite miner and ferrochrome producer with a stable of base metal deposits in the James Bay region. Semi-finished ferrochrome is an essential ingredient in the making of stainless steel.

Coutts and Steve Flewelling, Noront’s chief development officer, both Falconbridge alumni, envision creating Canada’s next great mining company, built on the strong fundamentals in developing ore bodies that were practiced by their former employer. 

Coutts’ presentation at the Indigenous-themed event touched on the company’s social licence-to-operate efforts in connecting with First Nation communities by including them as exploration participants and signing them on to be eventual business partners in the mine development.

Commodity markets for nickel and chromite appear to be turning in the company's favour, he said.

Their financiers have given Noront a vote of confidence and they're seeing an election-bound provincial government that's determined to show tangible results on development in the Far North.

“The Kathleen Wynne government is very, very motivated to get outcomes,” said Coutts in an interview after his presentation.

“What I’m seeing is a huge undertaking to support the First Nations and to get those roads built and show that there’s progress.”

Last August, the province announced planning had begun on two Ring of Fire road corridors – one coming northeast from Pickle Lake, another heading north from Aroland – with the communities of Webequie, Marten Falls, and Nibinamik being the proponent leads in selecting the routing.

Environmental assessment work was to begin in January with road construction starting sometime in 2019.

“Everything we’re seeing is that there’s a massive effort to get this done and get this moving, and get this done quickly,” said Coutts.

Noront generated plenty of hype over the last year in its pan-Northern search and competitive bid process to find a suitable site and a welcoming community to host a $1-billion ferrochrome smelter.

In shortlisting from six communities down to four, Noront closed the bid process on Feb. 2. 

Together with engineers from Hatch, they’ve started their evaluation to assess proposals from Sault Ste. Marie, Sudbury, Timmins, and Thunder Bay-Fort William First Nation. The company expects to announce their decision on a site in three to four months.

The Ring of Fire and the Noront’s smelter site search became hot-button political issues in 2017. But Coutts waves off any suggestion that the announcement of their smelter site nicely brackets the timing of a June provincial election.

“We’re not trying to pick and choose winners. We’re working with the government in power.”

The mining company is counting on Queen’s Park to provide workforce training funds and finally make good on that long-promised $1-billion investment for mining-related transportation infrastructure.

Noront’s timelines are to be mining in the Ring of Fire by 2022 with the first production coming from its Eagle's Nest base metal deposit. 

About 15,000 tonnes of nickel concentrate annually will be smelted in Sudbury. Those negotiations with the unnamed processor will begin closer to the start of Noront’s production. The cash flow generated will be earmarked to develop the chromite deposits.

While Eagle’s Nest has a 20-year mine life, the more extensive and rich chromite deposits offer a 100-year to 200-year mine life and will be a massive regional and provincial wealth generator.

But trying to explain the benefits of their project to residents of far-flung Indigenous communities, who have never experienced any kind of economic development forced, Coutts and his veteran management team to readjust their thinking.

“It’s a changing landscape,” Coutts told the crowd. “The way we are doing business in resource development in Canada…in the 21st century doesn’t look like it did in the last century.”

Over the past five to seven years, Noront devoted time and money in its community outreach efforts to engage, educate, and hire locals to participate in their exploration program as a means to develop the core of a home-grown workforce.

Sixty per cent of Noront's 30-person exploration camp consists of folks from nearby Marten Falls and Webequie First Nations.

Coutts said they had to make an effort to listen to the communities’ needs and desires to get involved and to prosper from resource development on their traditional land.

Noront is working with Marten Falls on a pre-development agreement that involves making them part owners in the mines and opens up discussion on what roles they can play as business service partners.

As integral as roads are to the mine development, affordable electricity is to the smelter and its potential 350 jobs.

Coutts maintains that Noront won’t build a ferrochrome plant in Ontario unless it gets a favourable long-term power price agreement from the province that lasts for “decades.”

“We’re looking for a substantially improved price than what’s currently available,” said Coutts, who’s met twice with energy minister Glenn Thibeault.
“He knows what we’re looking for and is well aware of the importance of it.” 

Coutts said it’s premature to get into details since a smelter site hasn’t been chosen.

“But that conversation has to happen, and there has to be an agreement in place that makes this enterprise viable, otherwise it’s not going to happen.”

Developing the smelter has a five-to-10-year horizon given the time it’s expected to take get through the extensive environmental review and permitting process.

A new smelter hasn’t been permitted in Ontario since the Kidd Metallurgical Site in Timmins during the late 1970s.

Through this whole process, Coutts said Noront’s largest shareholder, Resource Capital, has demonstrated “tremendous patience.”

“I don’t think when they made the original investment in Noront that they thought it was anything like this in timeline and complexity.

“They know what we’re doing, they like what we’re doing.”

Their investment puts them on the ground floor of the only new chrome discovery in the world.

The company has enlarged their holdings to become the biggest player in the mineral belt after acquiring the claims of Cliffs Natural Resources in 2015 and MacDonald Mines in 2016.

Coutts now feels their development timelines will neatly mesh with an expected surge in mineral commodity markets.

The forecast is for the current $6-per-pound nickel price to soon jump to $8.50 or beyond, as huge global supply deficits are anticipated, fueled by demand coming from the electric vehicle battery sector.

Similarly, in chromite, the relatively healthy $1.40 per pound price is expected to go much higher with stainless steel market growing at a four to five per cent annum rate.  

“That’s a bit fortuitous. The stainless market, chromite, and nickel prices in the electric vehicle battery revolution are all conspiring into our timeframes."

Their exploration work in the Ring of Fire hasn’t been lost on the owners of the Outokumpu mine and mill complex in Finland, one of the biggest producers in the ferrochrome space.

The Finnish company ships a portion of its Scandinavian production to its stainless steel rolling mill in Alabama.

Given Noront’s advantageous position, Coutts said a discussion has started about possibly feeding Ontario-processed ferrochrome into that plant, allowing Outokumpu to focus solely on the European market.

Potentially, those same customers could come aboard as strategic partners to help Noront bankroll their developments. Coutts said those talks have taken place but nothing at an advanced level.