'We could be talking about a $ 100 billion or more asset for a major to pounce on, just counting the chromite. And we all know how the world reacted to Noron't discovery of the Eagles. We can also safely say, that a major will want all the chromite together with all the Ni/ Cu deposits along the 14 km zone. Thus, any major interested, will have to negotiate with Noront, Spider, Freewest, KWG and possibly Fancamp. And as we have seen in the introduction to this analysis, a number of majors have woken up already. The recent takeover of the Noront board of directors by a hedgefund, is one indication of the majors stirring.
Another is a major's buying in on the Spider joint venture, as mentioned above. And Freewest has a good working relatio nship with a third major. History also dictates that a battling of majors will take place long before the whole area has been drilled to bits. Once they have seen enough potential, they often scoop up and get on with mining. Interesting times indeed.
Conclusions
Well, we've made quite a journey, just to prove our point;
- Chromite has great metal and political value.
- The Ring of Fire contains a variety of metals that together have a huge strategic importance.
- We expect future supply shortages from current producers.
- We expect increasing demand for metals that are in huge supply in the Ring of Fire.
- Canada is a stable country in a chromite world where political stability is an asset.
- And perhaps most importantly, the Ring of Fire has a huge potential metal value.
The combined market caps of the five players are:
Freewest (FWR.V) $ 51 mln
Spider (SPQ.V) $ 14 mln
Fancamp (FNC.V) $ 10 mln
KWG (KWG.V) $ 9 mln
Noront (N OT.V) $ 171 mln
Although we are not predicting a winner, we believe that all of them have a huge upward potential once the majors battle over the spoils. These discoveries are simply "too big to ignore".
A combined market cap of $ 255 mil for a set of assets potentially worth multiples of billions of dollars, is about as good an investment opportunity as you are ever likely to get.
Willem Middelkoop, February 7th 2009'
