KWG Mining Partners with Bold Ventures on Black Horse Deposit

Finally, after a month’s absence, I’ve returned to post the following article about KWG Resources and their exploration program in the Ring of Fire. The month was spent productively researching and writing articles for the March Issue of Mining Life and Exploration News Magazine, which will be released at the Prospectors and Developers Association of Canada Convention. http://www.pdac.ca/pdac/conv/

The stories I wrote in January will be appearing on A Northern Blog shortly…

Mining Life and Exploration News will also be launching an online site with the latest news and features from the world of mining….stay tuned. http://mininglifeonline.net/

Glenn Dredhart the publisher of Mining Life and Exploration News also puts on The Canadian Mining Expo the largest mining industry show in Northern Ontario http://www.canadianminingexpo.com/

As for this story- the top part of the story is original and published here for the very first time. The second part of the story appears courtesy of Glenn Dredhart and Mining Life and Exploration News Magazine.

Please let me know what you think of the article and your comments are always welcome.

KWG Resources Signs Agreement with Bold Ventures Inc. to Fund Drilling Program at Black Horse Chromite Discovery  Site

By Frank Giorno

KWG Resources is the third company in the Ring of Fire that has advanced the most towards exploration of mineral potential and  towards finishing its feasibility studies and environmental assessment studies. Along with Cliff Natural Resources and Noront Resources,  KWG Resources Inc. (KWG) has found major sources of chromite at its Big Daddy property.

KWG-Bold Ventures  Agreement to Explore Black Horse Site  for Chromite

However a recent announcement made on February 4, 2013 could be a game changer. KWG Resources and Bold Ventures Incorporated – a fast rising exploration company – announced an agreement that will see Bold Ventures drill the Black Horse chromite discovery in the Ring of Fire, starting as soon as the transaction with Bold Ventures Inc. closes.

KWG_Bold Ventures_Coper Lake

The intent of the program is to determine whether this  chromite mineral deposit is of  sufficient quantity and quality to make it  feasible for mining. KWG is advocating the construction of a rail line as the best, most cost-effective method for transporting the chromite for refining.

“The Black Horse discovery encountered 55 meters of 45% chromite, the richest drill core recovered in the Ring of Fire”, said KWG President Frank Smeenk.

“There is compelling geological and geophysical evidence to suggest that this mineralization could be part of an extensive continuous emplacement. If this drilling program is able to confirm that, we would be the first Canadian company to develop markets for the Ring of Fire chromite by providing transportation over Canada Chrome Corporation’s contiguous claims, ” Smeenk said.

Bold Ventures Obtains Option to Acquire Black Horse from Fancamp Explorations Ltd.

Earlier in December, 2012,  Bold Ventures concluded a four stage option to acquire the Black Horse claims from Fancamp Exploration Ltd., subject to Fancamp retaining a price variable gross metal royalty (the “Fancamp Option”).

Under the terms of the recent agreement between  KWG and Bold Ventures,  KWG can acquire up to 80% of Bold Venture’s interest in the Fancamp Option by funding 100% of Bold’s earn-in expenditures and option payments. The current program has budgeted $2 million to drill the chromite horizon. An additional $1 million has been budgeted to drill a contiguous possible nickel target.

KWG – Bold Ventures  Agreement to Explore for Nickel and Other Non-Chromite Minerals

A joint venture between KWG and Bold Ventures was formed  for nickel and other non-chromite minerals identified during the exploration programs, in which KWG has a 20% working interest. KWG will have a right of first refusal to purchase all ores or concentrates produced by such joint venture whenever its JV interest exceeds 50%.
The agreement with Bold Ventures  is subject to due diligence, all necessary approvals and is expected to close by February 21, 2013. Bold Venture’s interest in the 20% carried interest for chromite and the 80% participating interest for nickel and other non-chromite minerals is subject to Bold Venture Option Agreement with 2282726 Ontario Limited (“Bold Venture’s Co-Venturer”), a subsidiary of Dundee Corporation. Under the Option Agreement,  Bold Venturer’s co-venturer may earn a 33 -1/3% interest in Bold Venture’s Ring of Fire (ROF)activities around the area of Bold Venture’s Ring of Fire claims in Ontario (the “Bold Venture ROF Project”) by funding $2.5 million of exploration work, over $2.0 million of which has been expended to date.

 

KWG’s Big Daddy Site Received a National Instrument 43-101 Compliant Resource Estimate

KWG working towards developing its Big Daddy site in the McFauld’s Lake area received a National Instrument 43-101 compliant resource estimate from Sibley Basin Group over the summer of 2012.
The report was based on an update of a 42-hole core-drilling program at the Big Daddy Mine in the Ring of Fire totaling 13,459 metres that was completed in March, 2012.

Objective of the Drilling Program

The objective of the program was to upgrade resources to the indicated and measured categories, suitable for use in mine design at Big Daddy.  The drilling program was managed by Cliffs Chromite Far North Inc. who are also developing the Black Thor chromite mine.

The results show that at a 15% cutoff, the measured resource is 29.5 MT (megaton), grading 29% chromium oxide (Cr2O3) the indicated resource is 7.9 MT grading 26.7% Cr2O3, and the inferred resource is 4.8 MT grading 25.0% Cr2O3.

“We are pleased to note that this updated resource calculation has now confirmed a measured resource category, an important step in determining feasibility of the Big Daddy deposit,” said Frank Smeenk, KWG President.

Helicopter landing at Big Daddy Site

Helicopter landing at Big Daddy Site – photo courtesy of KWG

“The overall size of the deposit has increased without drilling deeper. We are now presented with different options as to how best to mine the Big Daddy, including the possibility of ore sorting or selectively mining the high-grade massive domains with the potential for high-grade direct ship,” he added.

Previous Resource Estimates

The previous resource estimate prepared by Micon International (KWG PR, May 3rd, 2010) also modeled the deposit at a 15% cutoff and produced an indicated resource of 26.4 MT grading 39.37% Cr2O3. The Micon report indicated resource corresponds to the Sibley combined measured and indicated of 37.4 MT grading 28.5% Cr2O3. The lower grade and higher volume of the new model contemplates the use of a less selective approach to mining and incorporates lower grade material, resulting in a lower average grade.

The most significant difference between the two resource estimates is in the inferred category. The Micon model extrapolated the depth continuity to 250 to 300 m beyond the drilling intercepts, while the new model extrapolates the resource to only 50 m beyond drilling. For the purpose of mine planning, this conservative approach is more prudent.

The report entitled “National Instrument 43-101 Technical Report, Big Daddy Chromite Deposit, McFauld’s Lake Area, Ontario, Canada, Porcupine Mining Division, NTS 43D16, Miner Natural Resource Estimation Technical Report” has an effective date of June 1, 2012. The report has a signing date of June 27, 2012. The full report was filed on the System for Electronic Document Analysis and Retrieval (SEDAR) on August 13, 2012 along with the requisite material change report.

The Sibley Basin Group staff person responsible for this resource estimate is Mr. Alan Aubut, a Qualified Person as defined in 43-101 who is independent of KWG Resources Inc., and who has approved the contents of this press release.

Aggregate Permits Sought by Canada Chrome Corporation Along Route of Proposed KWG Railroad Right-of-Way

Meanwhile KWG Resources Inc. reported that its subsidiary Canada Chrome Corporation filed applications with the Ministry of Natural Resources (MNR) for thirty-two aggregate permits at sites that located within the mineral claims along the company’s 308 kilometre-long railroad right-of-way. The sites are located along the proposed route for KWG’s railway to the Ring of Fire region, and may provide material for the construction of the planned rail bed. An environmental assessment and consultation with affected parties have not yet been concluded.

KWG exploration team preparing ground prior to drilling...

KWG exploration team preparing ground prior to drilling. Photo courtesy of KWG

“In our meetings with Matawa First Nations Management Inc. officers and the Canadian Environmental Assessment Agency to review our draft Project Description, we have indicated our preference that the consultation requirements and protocols be developed in their entirety by the affected First Nations, to ensure the adequacy of the process,” said KWG President Frank Smeenk.

“To make that exercise meaningful, we felt that the physical consequences of the development should be described as fully as possible within the regulatory framework. For that reason we have prepared and filed preliminary aggregate borrowing plans to enable a relatively more informed determination of consultation requirements.”

Plan for Permanent Amphibious Aerodrome

Canada Chrome Corporation has also made application to MNR under the provisions of the Public Lands Act, for the grant of title to the lands it has tentatively designated as the “Port of Koper Lake” at the northern terminus of its right-of-way. The application covers two 16-unit claim blocks which include the western shore of Koper Lake where temporary float-plane docking facilities are now in use. As included in the draft Project Description, preliminary plans envisage the development of a permanent amphibious aerodrome at that location together with an adjacent and permanent East-West all-weather runway and heliport terminal as an adjunct to a railroad terminal, fuel storage compound, communications hub, accommodation services, and repair and maintenance facilities.

KWG has a 30% interest in the Big Daddy deposit. KWG also owns 100% of Canada Chrome Corporation which has staked claims and conducted a $15 million surveying and soil testing program for the engineering and construction of a railroad to the Ring of Fire from Exton, Ontario where the Trans Canada line of the Canadian National Railway can be connected.

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Cliffs Natural Resources May Delay Black Thor Start Up, Continues to Work on Environmental Assessment

Welcome to my 3rd A Northern Blog posting. This post will delve into Cliffs Natural Resources efforts to start up a chromium mine on its Black Thor Property.  As this story illustrates it takes a long time to start up a mine. There are oenvironmental assessments to be filed and approved. Ancillary works such as roads and electrical infrastructure need to be constructed or installed. Consultation with nearby communities need to held and agreements reached. Of all the companies working in the Ring of Fire, Cliffs Natural Resources has progressed the furthest, but still has a long way to go. In May, 2012 Cliffs chose Capreol, Ontario near Sudbury to be the location for its ferrochrome refinery.  This was an important step. Cliffs now will be focusing on getting environmental approvals, securing agreements with First Nations and other nearby communities and working with the provincial government to secure the construction of a road that will link Black Thor operations to Ontario’s highway system.

 I want to thank publisher Glenn Dredhart for the permission to  use the article on Cliffs Natural Resources that was originally published in the December, 2012 issue of Mining Life Magazine. For excellent coverage of mining issues in the North and throughout Canada visit the Canadian Mining Portal. Glenn’s company Canadian Trade Ex hosts the largest mining show in the North.

http://www.canadianminingexpo.com

 Glenn also is in the process of setting up the Canadian Mining Portal which will carry the latest mining information on the internet including e-versions of Mining Life and Exploration News.  http://mininglifeonline.net/

Cliffs Natural Resources May Delay Black Thor Start Up, Continues to Work on Environmental Assessment  

By Frank Giorno

Cliffs Natural Resources may defer some preparatory work on the Black Thor site as a result of an earnings call in the last week of October and in light of current iron ore pricing.

Image

Aerial view of Cliffs Natural Resources Black Thor property. Photo courtesy of Cliffs Natural Resources

“One of the levers Cliffs has to deal with market changes is related to our chromite project,  ” said Patricia Persico, Director of Global Communications for Cliffs, in a telephone interview with Mining Life.

“Despite the significant potential this project has for the company’s future, in light of the current iron ore pricing environment, we are reviewing the project’s timeline,” Persico said.

Cliffs is looking to open its chromite mine by the end of 2016, but it has decided to delay early construction work until completion of its feasibility study. This move could potentially delay start up of production into 2017 or even later depending on market conditions and Cliffs’ cash position. In the meantime Cliff will consider taking on a partner for the project. Cliffs still expects to complete the feasibility study and the environmental assessment by 2013.

Cliffs proposes to develop a chromite mine in the Ring near McFaulds Lake. It is currently undertaking a coordinated Environmental Assessment (EA) under the Canadian Environmental Assessment Act and the Ontario Environmental Assessment Act.

“There will be multiple opportunities for the public to participate in the environmental assessment process, “said Patricia Perisco.

Cliffs Resources must obtain approval for its environmental assessment from the Ontario and Canadian government before proceeding to develop the chromite mine, related processing and transportation components, and the ferrochrome production facility. In addition, it must also obtain approval permits for the design of water and wastewater treatment facilities, tailings management, site rehabilitation and air emission controls.

The Ring of Fire is located about 500 kilometres northeast of Thunder Bay and about 70 km east of the Webequie First Nation. It is about 150 km west of the DeBeers Victor Diamond Mine. The area consists of muskeg swamps and has the potential to become a major mining site for chromite, nickel, copper, gold, and other minerals.

Map showing the location of areas considered for mining in the Ring of Fire including Cliffs' Black Thor property. Map courtesy of Ring of Fire Secretariat

Map showing the location of areas considered for mining in the Ring of Fire including Cliffs’ Black Thor property. Map courtesy of Ring of Fire Secretariat

Draft Provincial EA Terms of References Released

In July 2012, Cliffs released its draft terms of references for the provincial environmental assessment for public comment to multiple interested municipalities, First Nation communities, federal and provincial government agencies, and non-governmental organizations. The comment period ended in August, 2012 and extensions were granted for some commentators into October. The Terms of Reference document will be updated based on the comments received during the comment period.

The Terms of Reference contains the description of Cliff’s proposal for developing the chromite mine, concentrate process facility, transportation system and the ferrochrome production facility. The operation of these components will be the basis for Cliffs’ Environmental Assessment if approved by the provincial environment ministries.

Addressing the public’s concern about possible negative impacts will be an important aspect of the environmental assessment.

The environmental assessment will help determine the best way to carry out the mining, transportation, processing and refining operations by evaluating potential impacts on the environment by the Project.  It also will contain information about how potential negative impacts will be mitigated or eliminated through Project design or utilization of alternatives.

The federal Environmental Impact Statement guidelines, the coordinated counterpart to the provincial EA Terms of Reference, were finalized in December 2011.

Cliffs Natural Resources’ Proposal

Cliffs proposes to operate an open pit mine that will be used to extract ore at a rate of approximately 6,000 tons to 12,000 tons per day. At that rate of extraction, Cliffs anticipates the open pit will operate for 30 years

Cross section of Black Thor Property showing chromium potential. Photo courtesy of Cliffs Natural Resources

Cross section of Black Thor Property showing chromium potential. Photo courtesy of Cliffs  Natural Resources

According to Persico, “One million tons per year of chromite concentrate will be produced at Cliffs’ concentrate processing facility located at the mine site and direct shipped to international ferrochrome producers.

The proposed Capreol ferrochrome production facility will produce 600,000 tons of ferrochrome per year for export to markets where stainless steel is produced. Persico explained the needs differ for the North American and Asian markets. In North America and Europe, ferrochrome is in demand, while in Asia where there is already ferrochrome processing facilities, it is demanding chromite concentrate.

 

 North-South All Season Road

A critical element in developing Cliffs’ Black Thor open pit mine and the ore processing facility will be the construction of a north-south road. It will be crucial for transporting supplies, materials and concentrate between existing infrastructure and the mine site.

The north-south road will facilitate the trucking of concentrate in sealed cargo containers from the ore processing plant to an existing rail network 340 km to the south of Black Thor via the combination of a new all-weather road and existing provincial resource roads.

The vehicles will travel 80 km of existing provincial resource roads on the southern end of the route to access the proposed transload facility located near an existing Canadian National Railway siding where the concentrate cargo containers will be transferred to rail cars and shipped to Capreol.

The Aroland First Nation is located west of the proposed transload facility. Over the summer, it was among the First Nations who threatened to issue eviction orders to companies doing exploratory work in the Ring.

Discussions between Cliffs and the Ontario government proceeded and agreement in principle was reached on key elements of the chromite mine development, including construction of an all-weather north-south road that will facilitate transportation to the transload facility.

At this time, Cliffs is engaged in discussions with the province of Ontario regarding a north-south All-weather Access Road that will connect the Project mine site to existing provincial road and rail infrastructure. It is anticipated that First Nations and other natural resource companies will be provided access to the All-weather Access Road. Cliffs expects that access to the All-weather Access Road will generally be managed in a manner similar to other provincial resource roads, although the exact terms of such access still need to be discussed between Cliffs, area First Nations and the Province. At present, Cliffs anticipates that it will design, construct, own, operate, and maintain the road. It is envisioned that the discussions with the province of Ontario will be completed in the near future.

Capreol Ferrochrome Facility

In May 2012, Cliffs announced, Capreol’s Old Moose Mountain as the location of its Ferrochrome Production Facility (FPF). In explaining its decision to choose the Sudbury location over other Ontario, Quebec and international locations, Cliffs said that the Sudbury area had greater potential due to various economic and technical factors, proximity to electricity supply, better transportation, and labour markets.

Cliffs produced a supplementary EA Terms of Reference for the environmental assessment on the FPF and released for public review. According to the Terms of Reference document, the FPF will use an enclosed electric arc furnaces to process approximately 3,000 to 4,000 tonnes of concentrate to produce about 1,250 and 1,750 tonnes of ferrochrome.

Cost of Developing and Operating the Mine

According to Persico, Cliffs estimates it will invest approximately $3 billion to develop the chromite mine and onsite processing facility, the transportation component and the Capreol FPF.

The mine is estimated to  cost $150 million and the near-mine processing facility $800 million. The ferrochrome facility in Capreol is slated to cost $1.8 billion and the transportation components $600 million.

Anticipated Benefits

Persico says the benefits to Northern Ontario include the creation of 1,200 jobs to construct the mine, processing plant and the ferrochrome facility. Another 1,200 jobs will be created once the mine, plant and facilities are operational.

The jobs would benefit Northern Ontario, including members of the First Nation communities. Additional benefits will arise through business opportunities for suppliers who will have the opportunity to bid on contracts both during the start up period and when the mine becomes operational.

Persico said that Cliffs is committed to ensuring the communities in the Ring of Fire, along the transportation route and near the ferrochrome facility benefit from its activities.

“Cliffs Natural Resources has a 160 year history in Michigan and Minnesota of successfully investing in the communities where it locates,” Persico said. “We are a sustainable company that invests generously in our communities.”

Working in Cooperation with First Nations

Before Cliffs chromite mine can be developed, it must receive approval for its environmental assessment, negotiate agreements with First Nation communities whose lands will be affected and reach a final agreement with the Ontario government on the provision of infrastructure that will make the mining project feasible.

Persico said Cliffs is working towards agreements with First Nations near the Project components.  There are multiple First Nation communities in the area and along the transportation route.

“Cliffs Resources is respectful of their heritage, lands, and traditional knowledge,” Persico said, “Negotiations are further along in some communities and others are evolving.”