The Ontario-based junior miner said it will buy the shares of two Cliffs subsidiaries that own 103 claims, adding to the TSX Venture-listed company's own holdings in the Ring of Fire area, about 500 kilometres northeast of Thunder Bay, Ont.
Its shares (TSXV:NOT) closed up 13 cents at 48.5 cents on the TSX Venture Exchange. Over the past 52 weeks, Noront's shares have ranged between 24.5 and 70 cents, far below their peak of $6.95 in 2008.
After the deal closes, Noront will have about 360 mining claims covering 80,000 hectares or 65 per cent of the Ring of Fire, a mining area that holds one of the world's richest chromite deposits as well as nickel, copper and platinum.
Chromite is used to make stainless steel.
While the area holds promise, critics fear it will be years from development without adequate transportation and power services.
The Ontario government has earmarked $1 billion for infrastructure but there is no agreement with First Nations and Ottawa is reluctant to commit federal funding.
Noront president and CEO Alan Coutts said the deal with Cliffs "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.”
Noront says it will receive financial backing from Franco Nevada Corp. (TSX:FNV), a prominent Canadian mining royalty company based in Toronto.
Franco-Nevada has agreed to lend US$22.5 million to Noront and will receive seven per cent interest and royalty payments over time. Noront will also receive US$3.5 million in cash as part of the granting of the royalties.
Cliffs said in late 2013 that it had suspended investment plans for the Ring of Fire area. In November, it vowed to completely withdraw from Eastern Canada, including its Bloom Lake iron mining operations along the Quebec-Labrador border.
The sale to Noront is expected to close around mid-April, pending approval from the Quebec Superior Court because subsidiary Cliffs Quebec Iron Mining was under protection under the Companies' Creditors Arrangement Act.