nickel, chromite, vanadium and gold discoveries have continued
to add value to Noront’s Ring of Fire assets. The Ontario
government recently estimated the projected capital investment
required for the development of these assets to be roughly C$750
million. IBK Capital raised Noront C$96 million over the last six
years for its work in the Ring of Fire.
Cliffs Natural Resources (CLF: NYSE):
Cliffs, an international mining and resource company, has
been executing a strategy over the last several years to achieve
scale in its mining operations, with a focus on serving the world’s
largest steel markets. The company’s objective is to become the
sole North American chromite and ferrochrome producer and
exporter. In 2010, Cliff’s completed two transactions to solidify its
chromite position in the Ring of Fire.
The first was the acquisition of Freewest Resources for its
Black Thor and Black Label chromium projects. Freewest was
purchased for C$1.00 per share, valuing the company at $240
million (implied project value of C$500 million). When the initial
discovery was made, Freewest’s share price traded near C$0.25,
translating to a market value of C$60 million. The transaction
represented a 300% premium to market prices.
The second transaction was Cliffs’ acquisition of Spider
Resources for its Big Daddy chromite project at C$0.19
per share (total market value of roughly C$125 million) and
an implied project value of about C$400 million. When the
chromium was discovered, Spider’s share price was C$0.03,
meaning the final offer gave shareholders a 633% value return
from the point of discovery.
The Ontario government’s announcement of Cliffs’ plans to
invest a total of $5.1 billion to develop its Ring of Fire assets is a
very exciting development for companies operating or looking to
operate in the Ring of Fire. The investment will be split between
a $3.3 billion chromite mine development plan and a $1.8 billion
smelter facility to be built in Sudbury. The planned building of new
roads, rail expansion and general infrastructure development will
improve access to Ontario’s northern expanses and should lead
to the discovery of additional base-metal deposits. Since this
development will drive the creation of over 900 jobs, the ongoing
development of the Ring of Fire represents immense economic
potential for the province of Ontario as well as investors.
More than $500 million worth of exploration and mining
development has been completed since the announcement of
the first mineral discovery was made in August 2007. IBK Capital
has been privileged to be involved in $265 million worth of these
IBK Capital Corp. is a private, Toronto-based investment bank founded in
1989 by a group of professionals who previously worked for many years
as investment bankers at Merrill Lynch Canada’s global mining team.
IBK Capital provides a range of corporate finance and financial advisory
services, with private placement equity and debt financing representing
the company’s core business. IBK Capital looks for value creation through
all stages of development of companies and their assets and gets
involved with companies who can assemble large land packages in areas
where a new, significant discovery has been made, or re-discovery or
re-development of historical area(s) occurs.
For more information contact: