Thunder Bay Chronicle-Journal is the daily newspaper of Northwestern Ontario.
Even as it starts a new exploration program in the Ring of Fire this week, the mineral belt’s lone main player admits it’s never been tougher to secure the funds for such projects.
“I don’t want to sound gloom-and-doom, but it is a tough market out there and investors want to see progress,” Noront Resources CEO Alan Coutts said Wednesday.
Noront has earmarked $600,000 to resume exploration in the area of its existing proposed Eagle Nest nickel mine about 500 kilometres northeast of Thunder Bay.
Though metal prices, including nickel, are down, Coutts said the Toronto-based company remains committed to getting its mine up and running about four years from now.
It’s expected to cost $700 million to build the mine.
“We’re in a trough right now, but we know these things are cyclical and we want to be ready to go into production (when prices rebound),” he said.
Coutts was asked to respond to a National Post story which cited an unnamed source who suggested Noront might pull out of the Ring of Fire — as did former main player Cliffs Natural Resources — if the project stalls.
Coutts wouldn’t comment directly on the story, but acknowledged the company has been urging the province to make good on an earlier commitment to spend $1 billion on key RoF infrastructure, including roads and hydro.
An east-west access road, which would connect the Eagle Next mine site with Pickle Lake, is alone expected to cost $500 million.
“When I meet with our investors, these are the things they ask me about,” said Coutts. “They want to know if anything is happening up there, that we’re not just spinning our wheels.”
“They want to see tangible progress.”
Northern Development and Mines Minister Michael Gravelle said he’s aware of Noront’s concerns.
“On a personal basis, I’ve spoken to (Coutts) several times recently to discuss our mutual goals to achieve progress, while we ensure that the First Nations directly impacted by this major resource development project see real and tangible benefits,” Gravelle said in an email.
The province and the federal government earlier jointly set aside $800,000 for a study into the best location for a main access road. The study is slated to be complete sometime next spring.
Earlier this year, Noront borrowed US$2 million to advance exploration on its RoF properties. The loan is with Denver-based Resources Capital Fund (RCF), the same investment firm that earlier loaned Noront $15 million for work in the RoF.
The lender holds a 21.5-per-cent stake in Noront.
In April, Noront purchased major RoF chromite deposits, including the flagship Black Thor property, that were previously held by Cliffs for US $27.5 million.
“We feel $27.5 million is an attractive price for the acquisition of these strategic assets,” Noront president Alan Coutts said at the time.
On Wednesday, Coutts noted that chromite is among the metals in a down cycle price-wise.
Noront now holds 360 mining claims and roughly 65 per cent (80,000 hectares) of the Ring of Fire mining belt.
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