Noront Resources
(TSX.V:NOT)
CEO: Wesley Hanson
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Interview Transcripts:
WSR: Good day from Wall Street. This is Juan Costello Senior Analyst at the Wall Street Reporter and joining us today is Wes Hanson the CEO for Noront Resources. The company trades on the TSX venture and their ticker symbol is NOT. Thanks for joining us today Wes.
Wes: No problem Juan. It’s a pleasure to be here again.
Juan: Great now starting off give us a brief history and overview of the company for some of our listeners that need your story.
Wes: Noront is a junior exploration company and in 2007 the management made a discovery in the Ring of Fire District of Northern Ontario. A very explaining discovery of the high grade nickel sulphide system that was discovered and that led to a significant rush into this region and eventually led to the discovery of significant deposits of chromate. Both chromate and nickel are essential components in the manufacturing of famous steel and of course the famous steel industry has grown significantly in the last decade largely due to the growth of China and India.
WSR: Well great and so in terms of the company’s key projects, bring us up to speed there on the Eagle’s Nest.
Wes: Our primary focus has been the Eagle’s Nest department which is a high grade nickel sulphide discovery. This is a billion; we worked the resource up to over a billion pounds of nickel equivalent. The system also includes copper, platinum and palladium. The average grade in terms of nickel equivalent again is two point two five percent so that place is the Eagle’s Nest is one of the highest grade undeveloped nickel resources in the world it’s a great deposit it’s extremely rare nickel in the sulphide form that is basically rare.
The great jurisdiction with in Northern Ontario has a rather established mining bond and Ontario of course has been one of the world’s leaders in terms of the nickel production for the last century so we feel we’re in a very good stage. Noront’s focus has always been to invest in the Eagle’s Nest due to commercial production and that’s currently what the team is working on.
We expect to have a feasibility study completed in the first quarter of next year and hopefully we’ll be able to move into detailed seamlessly into detailed engineering and environmental study without introducing any further delays. Our target as a management team is to achieve commercial production by 2016.
We believe that we have a very valuable project. This project is capable of an annual average cash flow of about between 150 and 175 million a year and we will plan on reinvesting that cash flow back into the company and do it for the previous discoveries of nickel sulphide [and also to allow it to consider developing other chromate deposits.
WSR: Well excellent and you talked about some of the trends right now as far as the nickel sector and have a position the company is to capitalize on them.
We’ve already had the good luck in that we’ve found a very significant mineral resource I mean there’s not a lot of exploration companies that have that success and now it’s all the question of timing as to when we bring it on the stream. We believe we’ll be bringing it on the stream at a point and a time when nickel prices are probably going to be between 10 and 12 dollars then or even higher so if that’s the case then this project should be more valuable than the current estimates which are based on the nickel price of about eight fifty cents.
WSR: Great and so what else makes the company unique from some of the other players in the sector?
Wes: In terms of that discovery again it’s a nickel sulphide I mean most of the new nickel discovery’s that are being brought into the commercial production these days and nickel laterites nickel latarites that have [Audio] through history some have been successful but the vast majority of them have under-performed.
Under-performed both in terms of the cash operating cost which will be completely higher than originally anticipated and also in terms of the capital of construction. Nickel in the sulphide form is increasingly rare as I know the barrier in the interviews but the benefits that we make of sulphide it’s a metallurgy that is very well known. It’s the commodity or it’s a deposit that’s been mined for centuries inFlorida and in Russia and elsewhere in the world.
So using you know taking the deposits from the ground and producing available products is quite well known and very easy it’s an established prospect. Nickel in the laterite form is a bit trickier and I think that’s the reason why you’re seeing such problems with nickel laterite producers.
We believe that the problems in the nickel laterite sector will continue and that will lead to a demand for nickel which could rise up these prices in the future. We’re very comfortable were we are at. We’ve got a great development team that has been working it up to attract some individuals to the company both as members of the management team and the board of directors who have been involved in building some of the world’s major projects in past; the billion dollar flash project.
We recently added Ted Bassett to our board of directors, head of project managers on Voisey’s Bay nickel project and the Goro nickel project. That in addition to our board certainly brings a lot of skill and a lot of knowledge in terms of project management.
WSR: Certainly and perhaps you can also walk us through your background experience was as well some of the other key members there at the management.
Wes: Sure I joined the company in May in 2009. I’m a professional geologist by training. I have about 30 years of experience in the business. I’ve worked with companies such as Kinross in the past. Built projects all over the world in Chile, in Brazil, in the Northern Russian and Northern Canada so I’m very well away of the challenges that are faced in your project where we do commercial production.
Our chief operating officer Paul Semple he’s a professional engineer, a metallurgist by training. Paul worked for about 25 years with SNC Lavalin and in Kilborn Engineering again building projects and managing projects around the world, huge budgets and in particularly challenging environment.
Mark Baker is our project manager. He’s basically managing our feasibility study and we’ll be managing the detailed engineering aspects to the project and Mark Baker has worked 25 plus years experience professional engineer.
Gregory Rieveley is our CFO. He has about 15 years of experience and dealt primarily with diamond companies. So this is a strong management team with a great deal of experience bringing projects from exploration right through the commercial production and that’s another advantage that the company has over a lot of the other companies in that space to, we build our own established management team with a great track record of delivering on their projects.
WSR: Right and so what are some of the goals and milestones that you and the team are hoping to accomplish over the course of the next year?
Wes: This year I mean our primary focus is getting that feasibility study completed by the first quarter of next year. That will allow the board of directors in the company to make a decision that’s well enough to proceed towards going out and finding the funding necessary to begin project construction. We will, may continue to work on our environmental assessment from our environmental assessments and our environmental affirmative to make sure there are no delays regardless of what the petition is in terms of the board of director’s decision.
We expect to get both the support from some of the local communities for the infrastructure that we proposed to develop into the region and we’re very optimistic that we’ll get some form of government support that will help us source some of the capital for community project specifically the cost associated with development of the infrastructure which will be a road and a power line.
So those are sort of the mile stones that we’re looking forward in the coming year on a shorter term basis then Noront continues to be the only company aggressively boring in the Ring of Fire. Deep there they have two drills operating, those are drilling some very favorable nickel sulphide baguettes that were identified from the ground base due to physical surveys that the company completed in December of last year. .
WSR: Good so you’re going to be participating in the upcoming Cambridge show in Vancouver coming up so as you continue to speak with investors and the financial community, do you believe that the Noront story and your upside are completely understood and appreciated by them and if not what do you wish investors better understood about the company or your sector?
Wes: I believe right now Noront has a significant value buying. It’s a long term buy and hold option again I believe we have both the deposit and the team to be able to achieve our goals which is commercial production by 2016. As I said, nickel isn’t exactly the brightest metal on the market today a lot of people are focused on gold and silver but that nickel has been the back bone of some of Canada’s greatest companies since we plan on following that model and building a new mining company in Canada that’s based on nickel and would expand from that.
As you noted we are participating in the Cambridge show we’ll be there a good number of one, five students fixed and we invite anybody interested in learning more about the Noront’s stories, if you want to buy a book and we’ll be happy to have to give someone in person.
WSR: Well great and so once again joining us today is Wes Hanson the CEO and President for Noront Resources. The company trades on the TSX venture ticker symbol is NOT currently trading at the eighty eight cents of share and before we conclude, I’ll ask to briefly recap some of your key points here. Why do you believe that the investors should consider the company as a good investment opportunity today?
Wes: Again just to reiterate we believe that we’re very undervalued at eighty-eight cents right now. We are actively exploring in the Ring of Fire and drilling some very favorable nickel sulphide baguettes which will have significant impacts on our project on economics. We have already have a sufficiently large enough reserves identified and reserve identified that indicates the value of the company of better than 550 million dollars which should be translated back into our current shares issue and our understanding would be put us in and above the two dollar and 25 cent range.
We have great management team. We have a good vision. We have excellent relations with the first nations and with a very strong corporate and social responsibility program and we’re very cognitive of the fact that we’re working in an environmentally sensitive area so all those factors may add up to a great deal of that for short term and long term and we’re looking forward to the tones of supply ahead.
WSR: Well we certainly look forward to continuing to track the company’s growth and report on your upcoming progress and I’d like to thank you for taking the time to join us today Wes, and update our investors on NOT.
Wes: No problem at all Juan. Thank you for the opportunity.