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With its feasibility study complete, Noront Resources is poised to move into the Ring of Fire area. But the company will have to pay a road usage fee in order to gain the access it needs.
Noront released its feasibility study this week on its deposit containing copper and nickel. The study showed promising economic impacts for the company’s Eagles Nest project.
In an effort to access that project, Noront hoped to propose an east-to-west, all-season road that would run from Pickle Lake to the Ring of Fire area. But officials with the mining company believe Ontario might be making an eventual commitment to a north-south road proposed by Cliffs.
That potential decision became a major factor in the delay of the study.
But even if the province goes with the Cliff’s-proposed north-south route instead of having east-to-west access, all will not be lost for Noront. The Ministry of Northern Development and Mines told the company it would have access to the road by paying a toll.
Noront’s Paul Semple said the base-case of the study was to take advantage of that corridor.
“We always believed that a road that was going to be built and that it was going to be used more than just by us, so we’re looking to support any road that is in the best interest of the North and the communities in order to get the infrastructure built,” Semple said.
“In the EA we put that the north-south is our base-case and we will retain the east-west as an alternative. If, for environmental or other reasons, we are unable to use the north-south then they have a different route.”
Although they will likely have to pay a toll to use the road, Semple said he wasn’t worried about it and that the company has already taken that into consideration. He said they expected to pay one way or the other, whether that’s in the form of building a route or paying for access.
He said they were happy with the results and looked forward to moving the project along.
Some of the other details listed in the report included:
• An estimated initial capital investment of $609 million
• An estimated life of mine sustaining capital cost of $160 million
• An estimated operating cost including road access fees of $97 per ton.
John Mason, project manager for mining service with Thunder Bay Community Economic Development Commission, said he’s excited by what he saw because it means the company can get up and running by its targeted time of 2015 - 2016.
“When I see a three year payback, for example, on cost I get excited because that’s tremendous in terms of capital cost,” Mason said.
“The capital costs have dropped well over a $100 million. I think this is a good path going forward. It’s time to get on with business privy if they want to hit timelines in 2016.”
With nickel prices sustaining, Noront wanted to make sure their deposit was operational as soon as possible, he said.
Mason wasn’t sure how the fee would work with road usage but he said the president of Noront was confident that they will continue forward. He said the change of routes is probably only a concern for those in Pickle Lake and Ignace.
With a life expectancy of around 11 years and given the price of nickel, Mason said the project has a lot going for it.
The city has already started its own study on the proposed Ring of Fire development. The Mining Readiness Strategy is looking at what kind of impact the development will have on the city as well as what the city should expect.
Mason said what Noront has reported will definitely make an impact on the study.
“We see this being one of the 13 mines that will be ready to produce in the next five years,” he said. “They are part of that target group. They are going to drive needs on labour pressure. The Noront piece is very stellar that the pathway is going forward.”
The first company that is expected to start production will be Rubicon Minerals Corporation in Red Lake in the fourth quarter of 2013 followed by Gold Eagle Mines’ Bruce Channel Discovery. Mason said in 2015 a whole group of projects involving iron, gold, nickel and copper will be starting.
He added during that year of development, those projects are going to constrain engineering and labour capacity.
“Those will be challenging times,” he said. “It’s already going to be tight on the labour front and that’s not going to go away any time soon.”
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