Ring junior miner looks to China: Chinese railroaders going in-depth on transportation corridor.

• Author: Ross, Ian
• Position: Mining

KWG Resources' ultimate dream of building a Ring of Fire railroad may have to be realized through a Chinese bank.

A spokesman for the Toronto junior miner is hyping that a "turning point" has been reached that will jumpstart the stalled development process of the untapped mineral belt in Ontario's Far North.

KWG announced Dec. 29 that a Chinese railroad engineering firm, China Railway First Survey & Design Institute Group, is conducting a feasibility study to determine if it makes economic sense to run rails north to reach the rich chromite and nickel deposits of the James Bay region.

"The odds are extremely high," said Bruce Hodgman, KWG's communications director, in categorizing the likelihood of his company securing offshoring financing with a "bankable feasibility study" of KWG's railroad concept.

"I think we're making it happen. I think this is a huge turning point for the Ring of Fire."

Last fall, KWG gave China Rail all-access to its technical data for a proposed chromite ore haul railway. The company is now promoting that the Chinese want to take the next step with a more in-depth study.

Besides looking for rail infrastructure money, when KWG president-CEO Frank Smeenk travelled to China in mid-January to discuss the parameters of the study, he was also looking to secure chromite offtake agreements from the Chinese.

In return for the design and construction of a railroad, Hodgman said the Chinese could be paid in ferrochrome (processed chromite used in stainless steel production), or possibly semi-finished products.

"Do we just make ferrochrome or do we carry this further, as Frank has described in the past, and make stainless steel ingots and take it that far, or billets. Everything is on the table."

Whether China Rail takes an equity stake in KWG will be part of the negotiations, he said.

"If we bring the financing for the Ring of Fire railway infrastructure, and we bring the Chinese in with an offtake agreement so you're guaranteeing the market, that's huge."

KWG is also hoping the Chinese can help them commercialize a patent-pending chromite reduction technology that uses natural gas.

The cold reality is that building a chromite mine in the Far North is a long way off.

KWG only holds a 30 per cent stake in the Big Daddy chromite deposit, which it shares in a litigious partnership with Noront Resources, and has the right to earn a substantial interest in another nearby chromite deposit through an arrangement with Bold Ventures.

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