The “Ring” Revisted

Richard Fink, Vice President, Technology, with Cleveland-based Cliffs Natural Resources, is a mining industry veteran who knows that discretion is sometimes the better part of valour when it comes to discussing mineral deposits, and the business of putting them into production. Yet, he is eloquent and forceful when describing the potential of the company’s Black Thor chromite deposit and its nearby Big Daddy ore body, both located in northern Ontario’s “Ring of Fire” mineral district.

“We have a set of major league ore bodies,” says Fink. “The discovery hole on Black Thor was only drilled in September, 2008 so the paint is still wet on this, but you couldn’t ask for a better project. It’s arguably the best open pit chromite deposit in the world in terms of tonnage, grades and mineable widths.”

He also foresees significant socio-economic spinoff if the discoveries can be turned into producing mines. Indeed, Cliffs is looking at estimated capital investments of $3 billion to build a mine and related infrastructure and the projects would create up to 1,250 permanent jobs.

“If we do this right,” said Fink, “it’s going to be of phenomenal benefit to all the First Nations communities up there. It’s going to be a real shot in the arm for the province’s revenues and it’s going to be great for Cliffs.”

Some observers believe, based on published resource estimates, that the Ring of Fire chromite deposits may be big enough to support multi-generation mining operations comparable to the nickel mines of Sudbury or the gold mines of Timmins and Kirkland Lake. They note that Black Thor and Big Daddy are the first major chromite discoveries in North America and may alter the balance of world production, currently centred in South Africa and Zimbabwe.

The Ring of Fire also hosts other significant ore bodies. In August, 2007, Toronto-based Noront Resources Inc. discovered its Eagle’s Nest nickel-copper-platinum-palladium resource and former chairman Richard Nemis is credited with hanging the Ring of Fire label on the district. (According to those who know him, Nemis plucked the name from the famous song by Johnny Cash, although the volcanic origins of the deposits lend credence to the catchy name). 

In any event, the Noront discovery started a staking rush that brought dozens of junior mining companies into the area. Most have not advanced beyond exploration, but Noront President and Chief Executive Officer Wes Hanson contends that his company is developing its Eagle’s Nest reserves and is aiming to be the first to put a mine into production. All of this has generated considerable excitement among both federal and provincial politicians.

“We want to maximize the potential of the Ring of Fire,” says Rick Bartolucci, Ontario’s Minister of Northern Development and Mines. “Our premier has said consistently over the last four years that we have a unique opportunity to open up that part of the Far North.”

Hanson says his company has completed a pre-feasibility study for Eagle’s Nest and expects to have a feasibility study finished by the end of the first quarter this year. He adds that Noront is aiming for production from an underground mine by the end of 2016.

Cliffs is running about a year behind with a pre-feasibility set for completion at the end of March this year and the feasibility in March 2013. Beyond that, Cliffs base case scenario calls for open pit mining to commence shortly after the completion of all construction by the third quarter of 2015.

Those timelines may be overly optimistic by a considerable margin. Both the Cliffs and Noront properties are located near a small body of water known as McFaulds Lake, some 550 km northeast of Thunder Bay. More to the point, they are situated in the heart of a vast, remote, sparsely populated and under-developed part of Ontario known officially as the Far North.

The region begins roughly at the 50th parallel of latitude, just beyond the CNR’s main east-west transcontinental rail line. It stretches from the shores of James Bay and Hudson Bay in the east to the Manitoba border in the west.

The landscape is characterized by boreal forests and swamps, bogs and muskeg, which, in the summer months, are infested with mosquitoes, black flies, horseflies and other misery-inducing insects. The region is home to some 49 Cree and Ojibway First Nations living on scattered reserves that are accessible only by air and winter roads. The one all-weather transportation corridor is Ontario Road 599, which begins at Ignace on the Trans-Canada Highway, some 225 km west of Thunder Bay, and zig-zags north to Pickle Lake before ending at a body of water called Windigo Lake.

Before anyone builds a mine in the Ring of Fire, federal and provincial environmental assessments must be conducted. Socio-economic agreements must be reached with the First Nations most directly affected. At the moment, that would appear to be nine bands belonging to the Mattawa Tribal Council.

“Nothing has happened so far other than the companies going out to the communities and making presentations and allowing people to ask questions,” says Richard Ferris, Mattawa’s Ring of Fire coordinator. “If there’s a need for hearings we should negotiate the structure and timing. We want a joint-review panel and we want to appoint people to the panel.”

As well, all parties (governments, First Nations and the companies themselves) must reach a consensus on infrastructure; the big issues being where to locate a transportation corridor and who pays for it? Currently, there are at least three different views.

Noront is pushing for an east-west route. Chief Operating Officer Paul Semple says there is an existing 200-km winter road that runs eastward from the end of Road 599 to the Webequie First Nation on Winisk Lake. Semple says it could be upgraded for year-round use and would end at a staging area south of Webequie and about 100 km from Noront’s Eagle’s Nest ore body.

From there, Noront would ship supplies in by winter road. The company also proposes to build a power plant at the staging area and a transmission line to supply the mine with electricity. It would build a slurry pipeline to move about 150,000 tonnes of concentrate annually from the mine to the staging area and then on to trucks.

Hanson argues that the provincial government should build an all-weather road and pay for it because it would provide tremendous benefits to First Nations communities.

“I don’t think it should be a private road because of the number of users that would gain from it,” he says. “It would open the region to tourism, fishing lodges, and other developments, not just mineral exploration. Government’s role is to build infrastructure that benefits society. Quebec, Manitoba, Saskatchewan, Alberta and B.C. are all building roads into their northern regions to open them to resource development.”

Cliffs and Toronto-based KWG Resources, a co-discoverer of Black Thor and Big Daddy and a 30 per cent owner of the Big Daddy, are both advocating a south to north route. It would begin near either Extor or Nakina, two communities on the CNR mainline, and continue north some 350 km to McFaulds Lake. Moe Lavigne, KWG’s Vice President of Exploration, says his company has found a ridge of sand and other sedimentary materials that runs almost unbroken from the CNR line all the way the mine site and represents the only viable route for north-south road.

KWG formed a subsidiary, Canada Chrome Corporation, to stake the land and has since spent $15 million on engineering studies to demonstrate the viability of the route. That included hiring Golder and Associates in the summer of 2010 to drill some 811 holes and collect soil samples along the full length of the sand ridge.

But building a road will be no simple task. As Lavigne notes, there are 90 water crossings, most of them requiring culverts. However, su
ch a route would also have to traverse the Albany and Attawapiska Rivers and a number of creeks and lesser rivers ones, meaning that 12 small bridges would have to be erected and four big ones, the longest being some 1,200 feet.

Lavigne says that a railway would be the most efficient method of moving chromite ore from Black Thor and Big Daddy and KWG is pushing for a rail link to the CNR line. But Fink says a railway isn’t feasible. It would cost about $2.2 billion with interest charges. Investors would be looking at a five-year payback period. Cliffs would have to produce between six and 10 million tonnes of ore and concentrate annually to meet those terms, but the company’s base case mining plan calls for production of about 2.3 million tonnes.

“Everybody would love a railway,” he says. “The concept is wonderful, but we don’t see anybody who would finance it.”

Like Noront, Cliffs and KWG believe that the federal and provincial governments should help pay for the transportation corridor because of the socio-economic benefits to First Nations communities.

“There’s got to be some kind of public-private-First Nations venture,” says Richard Fink. “We expect to build the road, but we’re not looking at a private route that restricts access.”

To date, neither level of government has made a commitment and Bartolucci says Ontario will have to await the completion of feasibility studies before any real negotiations can begin.

“There are obviously going to be sizeable investments on everybody’s part,” he says. “Those are subject to ongoing discussions with other ministries, the federal government and industry.”

At this point, Cliffs is working on a mine plan for the Black Thor deposit that envisions two open pits, each with a 10-to 15-year lifespan, and beyond that the company would begin working underground.

The base case scenario also calls for construction of an airstrip, on-site roads, a power plant and an ore processing facility. The company will mine between 6,000 and 12,000 tonnes per day and will ship 3,600 tonnes of ore and concentrate daily in 70-tonne haul trucks.

The company will first have to prepare the site by clearing the organic and inorganic materials, which can be up to 10 metres thick, to get down to the bedrock. According to KWG’s Lavigne, Cliffs may have to build 10 to 15 km of berms around the operation.

“The Black Thor and Big Daddy are under total swamp,” he says. “If you’re going to build an open pit, you have to have to hold back the swamp.”

None of this has raised any alarms with Cliffs. “It’s a cost factor, but it’s not a significant technology issue,” says Fink. “I’ve worked in Schefferville, Quebec with Iron Ore Company of Canada and it was total muskeg and string bogs. Canada is state-of-the-art in how you deal with mines in muskeg or poorly drained terrain.”

One other issue is lurking in the background and could become very contentious once this project begins to move into the construction phase. Cliffs’ mine plan also includes a $1.8-billion ferrochrome production plant and the company has tentatively targeted a rural site in the municipality of Capreol, just outside Sudbury. Its plan also includes backup locations in Timmins, Thunder Bay and the Township of Greenstone.

Municipal officials in those communities have taken note of the 350 to 450 permanent jobs and the tax revenues that would come with the plant. They have made it known that they would welcome the facility within their jurisdictions and Timmins and Thunder Bay have identified potential sites.

However, some outside observers have suggested that Cliffs may decide to build it in Quebec or Manitoba or even the U.S. to take advantage of more favourable power rates. Fink acknowledges that the cost of electricity in Ontario presents a challenge and says the company has discussed the issue with provincial officials, but adds that Cliffs intends to choose a site before starting the feasibility study.

Meantime, federal Minister of Northern Development Tony Clement weighed into the debate during visit to Timmins in mid-January, saying: “We’d like to see more of the processing here, but one of the major impediments is energy costs,” said Clement. “That’s Mr. McGuinty’s bailiwick. He’s got to do his job as premier of this province and get energy costs more in line.”

But Bartolucci thinks that kind of talk is unduly alarmist. “We are very, very confident that when you consider all the facts Ontario competes very well with other jurisdictions,” he says.

The Cliffs chromite project has commanded most of the attention in the Ring of Fire because of the size of the deposits and the potential socio-economic benefits of developing them. But Noront has been quietly developing its Eagle’s Nest resource, a pipe-shaped formation that measures some 60 metres across by 200 long and continues to a depth of 1,125 metres. The company is contemplating an underground mine that would produce about 3,000 tonnes of ore per day and have a life of just over 10 years.

Noront estimates that construction will cost $102 million, the capital equipment $41 million and the operation will employ some 200 workers.

A technical report prepared for the company states that: “The mineralized zone is overlain by three to 20 metres of generally saturated organic matter, glacial till and sandy gravel.” Therefore, Noront has decided to minimize its surface footprint and build a mill and concentrator in two long, narrow underground chambers that will be reached by twin ramps.

Noront may well be the first to begin tapping the wealth of the Ring of Fire, but there is no question that the mammoth Black Thor and Big Daddy chromite deposits will provide the foundation for infrastructure investments and further mineral exploration that could transform Ontario’s Far North.

“The wonderful thing about having a world class ore body is that it will allow true sustainable development up there,” says Fink. “Once somebody has a large enough operation to get the fundamental infrastructure in, and we believe it’s Cliffs, then small base metal mines will start to come on. At sometime in the future you’ll get a railway and a power grid.  You’re not going to have the typical small gold or base metal mine where there is suddenly an influx of money and everybody gets a new snow machine, everybody does well for 10 years and then it’s gone.”