Cliffs to sell Ring of Fire assets to Noront
TORONTO (Reuters) - Canadian miner Noront Resources Ltd said on Monday that it would buy Cliffs Natural Resources Inc's chromite assets in the northern Ontario Ring of Fire district for $20 million, financed by a loan from Franco-Nevada Corp.
The deal is a boost for the district, which is has huge deposits of chromite, which is used to make stainless steel, and other metals, but little infrastructure. Mining companies have touted its potential for years, but they have yet to take any projects to construction.
Franco-Nevada has agreed to loan Noront $22.5 million for seven years at an interest rate of 7 percent. The loan will cover the cost of the Cliffs assets and $2.5 million for general working capital.
The royalty and streaming company will also pay Noront $3.5 million in cash, receiving royalties of 3 percent on the Black Thor project and 2 percent on all of Noront's property in the region, excluding its Eagle's Nest project.
Cliffs was the biggest company invested in the Ring of Fire, but in 2013 it suspended work in the region. Hit hard by a weak steel market and problems at its Bloom Lake mine in Quebec, Cliffs' Canadian subsidiary sought creditor protection in January.
Cliffs paid C$118 million ($94 million) for its Ring of Fire assets in 2009. The deal with Noront will need court approval as part of Cliffs' restructuring process.
($1 = $1.26 Canadian)
(Reporting by Allison Martell; Editing by Lisa Von Ahn)
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