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Ontario's Ring Of Fire, Formerly 'The Next Oilsands,' Sold For Peanuts

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A view of Matawa First Nation, near the Ring of Fire. At the height of the commodity boom, northern Ontario's "Ring of Fire," a 5,000-square-kiometre area rich in minerals, was estimated to be worth around $50 billion. | Sunny Freeman

A junior miner will soon be the biggest player in Ontario’s fledgling Ring of Fire mining development, after agreeing to pay US$20 million for the properties of Cliffs Natural Resources, a U.S. mining giant who has abandoned hope of developing the area.

Toronto-based Noront Resources is getting quite the deal for about 103 mining claims -- including Cliffs’ flagship $3.3 billion Black Thor chromite deposit -- in the region estimated to be worth $50 billion during the height of the commodity boom. Cliffs paid $240 million for the assets in 2009.

The market has since shifted and a lack of concrete movement in talks between First Nations, government and developers has turned many miners off of the 5,000 square kilometre area said to be rich with chromite, copper, zinc, platinum and other valuable metals.

The Ring of Fire was once touted as Canada’s next oilsands, but interest in the area has fallen off and the prospects for development in the remote region, located on First Nations land, have dimmed.

Cliffs decided to suspend its projects in the area in late 2013, citing numerous delays and difficulties that prevented the project from moving ahead. It was also drowning in debt amid a flagging market for commodities. It has shuttered its Toronto office and laid off many of its Canadian employees. In January, the company sought creditor protection for its Bloom Lake iron ore mine in Quebec after failing to find a buyer.

ring of fire road map

The people of the surrounding Matawa First Nations are ambivalent about the Ring of Fire. They have deep concerns about the impact a new mining region will have on their pristine land, on the animals and fish on which they rely and on their way of life which involves a deep connection to the land.

The area is not accessible by road. Ontario Premier Kathleen Wynne has promised $1 billion to build one.

Cliffs’ decision to suspend operations in the area was viewed as a death knell for the project by many analysts. The U.S. mining giant had called the project unprecedented both in the opportunity to open a new mining region and in the scale of the challenges the company faced.

Upon closing, Noront will own some 360 claims in the area, about 65 per cent of the Ring of Fire, located some 500 kilometres north of Thunder Bay.

“This purchase consolidates the world-class discoveries made in the Ring of Fire," said Noront President and CEO Alan Coutts.

“It also underscores Noront’s long-standing belief and commitment to the region. We have made significant investments in the Ring of Fire and our team has become experts in the region from both a technical and social point of view. We also believe in the considerable exploration upside which we are eager to develop.”

Noront is financing the deal with debt. It took out a US$22.5 million loan from miner Franco Nevada Corp., which -- in addition to interest -- will receive a three per cent royalty in the Black Thor chromite deposit and a two per cent royalty over all of Noront’s other properties in the region, except for its flagship Eagle’s Nest deposit.

For more on development in Ontario’s Ring of Fire, check out Huffington Post Canada’s award-nominated Staking Claim series.

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