FIRST NATIONS AS EQUAL PARTNERS: RAIL, MINE AND NATURAL GAS CHROMIUM REDUCTION
TREATY RIGHTS: INFORMED CONSENT & SHARING THE FUTURE
In April of 2013, phase II of the Mining Act Modernization (MAM) of Bill 173, introduced a new regulatory system affecting plans and permits for early stage mineral exploration under Ontario’s Mining Act, (Click here) to promote mineral exploration and development in a manner that recognizes Aboriginal and treaty rights.
Accordingly, KWG Resources sought the possibility of equal ownership and partnership of the Ring of Fire railway through discussions with the First Nations of the area. The railway corridor would cross their traditional lands and the natural conclusion was that the First Nations should benefit in a meaningful way. KWG Resources supports a ‘non-profit railway utility’, as an operational model, and is committed to a full resource sharing formula with First Nation ownership and partnership in the mining and reduction operations as well.
NEGOTIATION PROTOCOL RESPECTING EARLY EXPLORATION IN THE RING OF FIRE
KWG Resources has discussed (Click here) an outline of principal terms for the possible creation of an equal partnership with the Chiefs of the Webequie and Marten Falls First Nations, through which to undertake the development and exploitation of mineral deposits in the Ring of Fire.
The parties have also agreed to discuss, at a later date, the opportunities for equity participation in KWG subsidiary Muketi Metallurgical LP, which is prosecuting two chromite-refining patent applications in Canada, India, Indonesia, Japan, Kazakhstan, South Africa, South Korea, Turkey, and USA.
ROF RAILWAY CORRIDOR
KWG Resources Inc. co-discovered the Ring of Fire chromite deposits and staked and assessed adjoining claims along a 330 kilometer-long series of sand ridges to insure the discoveries could access markets via an ore-haulage railroad on top of the sand ridges.
(Click here) KWG Resources Inc. signed agreements with China Railway First Survey & Design Institute Group C., Ltd. (FSDI), to assist KWG to secure financing in China for construction of the railroad upon completing a bankable feasibility study by 2017. FSDI had conducted a 9-man engineering site-reconnaissance on the Ring of Fire railway corridor during 2016.
As the various studies and plans are completed, they will be shared with the Chiefs of the Marten Falls and Webequie First Nations for dissemination within their communities to facilitate consideration of KWG’s proposal to create an equal partnership with them in the integrated mining and transportation operations.
KWG independently staked the railroad route to make all the ring of fire deposits viable and to acquire in-situ aggregates for railroad construction.
Rail construction supplies can be transported via a new industrial road branching off existing roads to the west, and provide numerous remote communities with economical new road-transportation.
As part of efforts to develop the mineral potential in Northern Ontario’s Ring of Fire and to allow for safe road-based access to northern First Nation communities, KWG Resources Inc. retained GreenForest Management Inc. (GFMI) to conduct (Click here) a preliminary scoping exercise to locate an all-weather access road network and provide an associated cost projection. This scoping exercise focused on the location of the most cost effective, feasible and efficient location of all-weather roads in the project area.
The (Click here) Tetra Tech study forecast that the rail option capital cost would be approximately $1.56 billion and have unit operating costs of $10. 50 per tonne based on 3 mtpy transported and that the road option would have capital expenditures of approximately $1.05 billion but would have unit operating costs of $60.78 per tonne based on a similar tonnage hauled. If 5 million tonnes per year are shipped, it is estimated that those operating costs per tonne would be reduced to $6.33 for rail and $59.28 for trucking.
Under a southern, single-site, natural gas ‘integrated concentrator/reducer operations’ scenario, 8 mtpy of chromite ore could be transported on the Ring of Fire railway, and then firstly be reduced to concentrate and subsequently be reduced to ferrochome in the Greenstone area.
SMALL MINE SITE FOOT-PRINT FOR THE BLACK HORSE DEPOSIT
Part of our mission for the development of the Ring of Fire, is to ensure that the whole project is environmentally and economically sustainable, which includes the mining operation.
A large regional project, such as the Ring of Fire, requires a truly holistic approach, where the role of each industry participant can not be oversimplified. The project components are inter-dependent. A ROF corporate project leader must oversee the chromite mining and reduction operations, the mining infrastructure corridor, and also facilitate planning and work closely with the province of Ontario and local communities to build the supporting all-weather roads. To be successful and to ensure that the whole project is environmentally, economically and socially sustainable, this momentous legacy project, must follow a multi-dimensional, comprehensive approach.
Due to the delicate environmental sensitivity in and around the Ring of Fire chromite mine area, most of the ore processing should occur 350 kilometres south, where the warmer weather and more easily contained milling operations, create favourable conditions for environmental control.
The Ring of Fire wetlands requires commitment to a very small mine ‘footprint’, where operations are mostly preformed underground.
The crushed, un-processed, run-of-mine (ROM) chromite ore, taken from underground through a relatively small mine shaft, will be directly loaded onto adjacent rail cars. There will be very little disturbance above ground.
A small mine footprint would not be possible without the “economies of scale” that come with rail transportation, enabling economic movement of large volumes of un-processed chromite ore. Even chromite concentrate requires rail transport, due to the nature of this heavy bulk commodity.
One of the most important elements of the vision is to become full and equal partners with the Webequie and Marten Falls First Nations, whose lands will be directly affected. A true resource sharing formula should include First Nation ownership and partnership in the mining, transportation and ore reduction operations. The result will produce positive financial impact for all parties of the partnership. Reducing the chromite ore in a southern location, well away from the Ring of Fire, makes sense from an environmental and economic point of view. The plants would be situated near existing infrastructure and communities, where their revenue benefits will be maximized in a Greeenstone chromite reduction location with a minimized environmental impact of the sensitive wetlands.
The possible extension of the (Click here) Black Horse chromite deposit to depth and along strike, remains to be drilled. This is also the case for all of the other chromite deposits controlled by Noront Resources. If all the chromite deposits in the Ring of Fire were drilled to a mining depth of two kilometers, the current near-surface 343 million tonnes of drill-indicated resources could triple and therefore an estimated 8 million tonnes per year might be mined from underground for a century or more.
Portions of the deposits not controlled by KWG Resources are held by Noront Resources, which has subjected them to royalties and mortgage loans to Franco-Nevada Corp. and Resource Capital Fund. All three companies are potential rail and refining customers for financing and mining the area’s deposits.
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