Noront has done enough Chromite drilling and results to attract the early interest of ‘Majors’. Recent FWR hits when added to the SPQ/FWR/KWG early and recent Chromite hits must have some of them ‘drooling’. So far it looks like a 10K long (perhaps more) strike length of Chromite with excellent grades. Nickel and PGMs are definately associated.
So what’s the overall view of Chromite in the ROF? No one ‘player’ with proven 30+ million tones of Chromite and since economic likely means 50+ Million perhaps no one ‘player’ has that OR has money to prove they have it. BUT add Noront, FWR, SPQ, KWG and probably FNC together and it must look like enough of a good bet for a Major to toss some chips into the pot.
So what can be done RIGHT NOW to get the ball rolling AND add luster to the depressed share price of the above mentioned companies.
My feeling is that a framework agreement has first be ironed out between these companies as to how they could each contribute the Chromite and likely other minerals on their claims into one ‘POT’ which a major will option and run with.
This is going to be difficult but not necessarily impossible. The difficulty arises because not one ‘player’ really knows at this time the extent or value of Minerals on their claims. They will not wish to get less than the fair value but on other hand have to spend a ton of money to prove up what they have or even might have.
So lets say thinking BIG could be the answer. Bring the Federal/Provincial Governments to the table because a huge mega project would be an economic and employment boost needed in the current environment (and their support of transportation link a big factor). Don’t limit this to Chromite but add Nickel into the equation because Noront’s E1 and E2 add immediate extra value to economics of a mega development.
If put together, at this early stage, there will have to be a lot of dollars/percentages/commitments structured on an if/when/providing basis with complicated payout and commitments based on milestones to be reached on each of the claims involved. Difficult to hammer out but could be done to satisfy all players. Risk to anyone opting out would be sever.
A start would be for all players to meet and put cards on the table face up with some values put on those cards for discussion and adjustment. Some of those cards will be dollars available and needed for exploration. Others aerial, ground and drill geophysics on hand. Some might involved dollars already expended and definitely dollars required to properly evaluate identified deposits on claims involved. Add up all the cards and dollar value HUGE.
OK now sit down with Major and say ‘look right now' we can show you E1 value and part of E2 value along with a potential of 100Million + tonnes of economic Chromite if x dollars are spent proving up the Chromite. It's also likely that if x dollars are spent drilling a lot more Nickel and PGMs will be proven.
Here is what you have to do to participate in this and when you have to pay it out. When master commitment is entered into, covering Nickel/PGM’s, Chromite etc. on claims involved, a value is to be setup for each proven resource which will be payable to the company holding such claims but not paid until economic justification for mining is made and/or road/rail infrastructure work started. This would be based on 25% (or as agreed) of insitu value at time of triggering payment. Existing ‘inferred’ resources and resources found after date of entering into ‘master commitment’ will be paid for when ‘proven’ at 15% (?) of insitu value less cost of exploration/drilling expended by ‘Major’ to move to ‘proven category’.
In addition there would be minimum dollar drilling/exploration commitments made by 'Major' for claims held by each participant in the master commitment.
Now this isn’t a joint venture between the ‘Major’ and the ‘Exploration Company’ but a guaranteed structured buy out of deposits if and when they are found based on value found AND with assurance dollars will be spent to find them. OK some of the ‘players’ are going to want to see some up front cash because they have other properties to explore and waiting a few years for cash is going to be tough even though as resources are found they can talk these up to increase their share value. Also has to be some penalty clauses so Major can’t drag their feet in proceeding to mining stages.
Biggest thing here is the large dollar commitment required up front by major to fund required exploration to prove up resources for all the participating juniors. Still a cheap way to buy another Sudbury. Likely to have structured payment for proven deposits over a certain value since if something totally huge is found which will take 20 years to mine then the major won’t pay 15% up front, or will they?
