North of 60 Mining News - The mining newspaper for Alaska and Canada's North

Mining exploration appears to be hotter than ever this season in the Northwest Territories and Nunavut, but the Canadian Arctic region's few producers are getting hammered by the strong Canadian dollar.

The discrepancy was particularly evident in the territories' mining production. The total value of metal and diamond shipments from the Northwest Territories and Nunavut Territory decreased to C$1.53 billion during the calendar year 2007 for the second consecutive year, down from C$1.63 billion in 2006 and C$1.79 billion in 2005, according to a Northwest Territories Chamber of Mines report on recently obtained statistics from corporate and government sources. The report was released in June.

The Northwest Territories had three diamond mines and one tungsten mine in production in 2007. The mines produced diamonds and tungsten concentrates in 2007 valued at C$1.412 billion and nearly C$17.9 million, respectively.

The largest diamond producer is the Diavik Diamond Mine, which is operated by Rio Tinto Plc. Diavik recovered nearly 12 million carats in 2007 from 2.4 million metric tons of ore grading 4.97 carats per ton.

The Ekati Diamond Mine, operated by BHP Billiton Plc, recovered nearly 4.6 million carats in 2007 from roughly 4.3 million metric tons of ore, grading 0.945 carat per metric ton.

The Snap Lake Diamond Mine, owned by De Beers Canada Inc., began production in late 2007. Some 81,000 carats were recovered from 113,000 short tons of ore processed.

The only other producing mine in the Northwest Territories is the Cantung Mine, operated by North American Tungsten Corp. Ltd. It produced 290,744 metric ton units of tungsten concentrates from 370,514 short tons of ore processed with an average grade of 1.18 percent tungsten oxides and a 7.3 percent recovery rate.

Nunavut's single producing mine, the Jericho diamond mine, reported 2007 output valued at just over $32.4 million, but its owners, Tahera Diamond Corp., sought bankruptcy protection from creditors earlier this year and ceased operations in the spring.

Smaller mining operations also contributed to total output with production of sand, gravel and other basic commodities.

Exchange rate eats into diamond profits

While worrisome, the decline in the value of diamond production does not reflect negatively on the territories' mining prospects.

"The strong Canadian dollar has been a real detriment to the diamond producers," said Mike Vaydik, general manager of the Chamber of Mines. "That's because they are selling their product in American dollars and having to buy equipment and services in Canadian dollars."

The difference is eating into cash flow and profits, but a recent increase in diamond prices is helping.

For example, Harry Winston Diamond Corp., 40 percent owner of the Diavik Diamond Mine, said its profits skyrocketed in the first quarter of 2008 to $21.3 million, or 35 cents a share, up from $3.3 million, or 6 cents per share, in the same period in 2007. The Toronto-based diamond producer said the results will help it meet its objective of increasing retail sales by more than 15 percent. Harry Winston also reported revenue of $156.1million, up 10.3 percent from $141.4 million for the three months ended April 30.

Even troubled Tahera benefited from the recent price surge. The Toronto-based company said June 6 that the last batch of diamonds produced from the shut-down Jericho mine in Nunavut contained stones with a total of 5,163 carats valued at just under $550,000, or an average of $105.84 per carat.

Regulations slow development

Exploration and development activities, meanwhile, appear to be continuing a resurgence that began in Northwest Territories and Nunavut several years ago.

Numerous companies are currently engaged in mining exploration projects that range across the mineral spectrum in the two territories, but only a handful of them may be nearing production.

Part of the problem is the regulatory environment in the territories, which Vaydik described as being stringent, slow and complex.

"We don't mind the stringent, but the slow and the complex are a problem," he said.

Still, companies such as Tamerlane Ventures, Fortune Minerals and Canadian Zinc are finding their way through the regulatory maze in Northwest Territories, while AREVA, Agnico-Eagle, Newmont Mining, Comaplex and Baffinland are making headway in Nunavut, Vaydik said.

These companies are on the brink of production, but a lot depends on how the permitting goes, he added

Tamerlane makes progress

Tamerlane Ventures Inc. June 12 said it has intersected extensive high-grade lead-zinc mineralization at the company's Pine Point property in the Northwest Territories in the course of testing its hypothesis that Pine Point can be mined using freeze perimeter technology.

Based on an independent consultant's recommendations, a total of 4 holes were drilled at the R190 deposit.

Tamerlane had originally intended to drill a single shaft condemnation hole at R190, but used the opportunity to drill an additional 3 confirmation holes (TV11, TV12 and TV13) to provide further confirmation of core recoveries.

Tamerlane intersected 35.3 percent combined lead-zinc over 36 meters, or 110 feet with positive recovery results.

Also, Tamerlane June 16 said it received from the Mackenzie Valley Land and Water Board a detailed work plan and schedule for obtaining land and water use permits for Pine Point.

The Board indicated that the land use permit, which is required to begin construction and development at Pine Point, may be issued on July 31, and that it will make a final decision on the water license, necessary to begin mining operations, in November.

Fortune posts improved economics

Fortune Minerals reported improved economics for its NICO Project in May. The NICO cobalt-gold-bismuth deposit is located 160 kilometers, or 99 miles, northwest of the City of Yellowknife.

NICO has been engineered primarily as an open pit mine, although higher-grade underground ores sourced from deeper parts of the deposit will supplement mine production during the first two years of the mine's life.

A plant will be constructed at the site to produce cobalt cathode, gold Dore and bismuth cement or metal using hydrometallurgical process technologies that have been verified from metallurgical test work and two pilot plant tests at SGS Lakefield.

Fortune has already purchased the Golden Giant Mine buildings, equipment and spare parts inventory that is being dismantled for relocation to NICO and submitted its land use and water license applications to permit the proposed mine.

Building on existing infrastructure

Canadian Zinc Corp.'s principal focus is its efforts to advance the Prairie Creek Mine, a promising polymetallic property, toward production. The Prairie Creek Mine is partially developed with an existing 1,000-metric-ton-per-day mill and related infrastructure. In 2006 and 2007, the company carried out major programs at Prairie Creek, including driving a new internal decline about 600 meters long, which enabled a significant underground exploration and infill drilling program to occur. A total of $18.7 million was invested in Prairie Creek in 2006 and 2007.

An independent technical report prepared in 2007 indicates that the Prairie Creek Property hosts total measured and indicated resources of 5.84 million metric tons grading 10.71 percent zinc, 9.90 percent lead, 161.12 grams silver per metric ton and 0.326 percent copper. In addition, the report confirms a large inferred resource of 5.55 million metric tons grading 13.53 percent zinc, 11.43 percent lead, 215 g/t silver and 0.514 percent copper and additional exploration potential.

Canadian Zinc's main focus for 2008 is to complete a pre-feasibility study and continue permitting activities in order to advance the project toward commercial production. A preliminary budget of C$7.5 million has been approved for 2008, which is in addition to regular, ongoing costs of maintaining the Prairie Creek site. Planned programs include further engineering and rehabilitation work on the road to the mine site and ongoing exploration.

Uranium mining in Nunavut

AREVA, one of the world's largest uranium producers, is working to advance the 148 million-pound Kiggavik uranium deposit in Nunavut.

AREVA Resources Canada Inc. is conducting a full feasibility study on the project.

Though AREVA Resources is exploring two other uranium properties in Nunavut, Sissons and St. Tropez, Kiggavik may be the one tagged for development first. The project is operated by AREVA Resources (99 percent) in joint venture with DAEWOO Corp. (1 percent).

Kiggavik is about 80 kilometers, or nearly 50 miles, west of Baker Lake. It consists of 17 mineral leases totaling 3,972 hectares, or 1,164 acres.

The joint venture partners in the Kiggavik Project have decided to proceed with a two-year feasibility study and to commence the regulatory process to obtain the necessary approvals for a uranium mine and mill. The project is at an advanced exploration stage, with a resource estimate of about 57,000 metric tons of uranium (148 million pounds of U3O8) at an average grade of about 0.24 percent. AREVA has begun the regulatory process for the Kiggavik project, and an environmental assessment process is expected to take about four years, followed by several years of construction, before mining could begin as early as 2015.

Companies eager for Nunavut gold

Agnico-Eagle's Meadowbank project in Nunavut has probable gold reserves of 3.5 million ounces (29.3 million metric tons grading 3.7 grams per metric ton). With a large additional gold resource, the project remains open for expansion. Initial gold production is anticipated by January 2010. Annual gold production is currently estimated to average 360,000 ounces over the estimated nine-year life of the mine.

An all-weather road from the deep-water port at Baker Lake to the Meadowbank project site was substantially completed in the first quarter of 2008.

Construction of permanent camp facilities got under way earlier this year.

Detailed engineering, sourcing and acquisition of the major capital equipment are ongoing.

Surface diamond drilling has resumed with four rigs in operation.

The immediate focus is to confirm the gold mineralization between the Goose Island and Portage Zones.

Additionally, targets include resource conversion at Goose Island and Goose South.

Exploration drilling in 2008 is expected to total about 25,000 meters.

Surface prospecting also is planned for the large 49,000-hectare, or 14,370-acre, property to follow up on about 40 other known gold occurrences recorded by the previous owner of the property, as well as anomalous base metal showings discovered late last year.

Newmont Mining acquired the Doris North gold project in 2007 with its takeover of Miramar Mining Corp. At the time, Miramar was in the midst of obtaining permits to start up a mine at Doris North, which would be the first step in developing the Hope Bay project, considered one of the largest gold deposits in North America. The Hope Bay project extends over 1,000 square kilometers and encompasses one of the most prospective undeveloped greenstone belts in Canada.

Comaplex Minerals Corp., a Calgary, Alberta-based junior, is exploring the Meliadine property in Nunavut near the northwestern shore of Hudson Bay. The center of the property is about 24 kilometers, or 15 miles, north of Rankin Inlet.

Comaplex has been exploring the property since the late 1980s. This year, the focus is on Meliadine West and Meliadine East, two major areas of gold mineralization.

The Tiriganiaq gold deposit within Meliadine West is estimated to contain a resource of 1.8 million ounces gold in the indicated category and another 1.4 million ounces in the inferred category.

At Meliadine East, the Discovery gold deposit is estimated to contain 259,000 ounces gold in the indicated category and 148,000 ounces of inferred resources.

Exploration is ongoing and an external scoping study on the Tiriganiaq gold deposit was expected to be completed this summer.

Iron mining on horizon

Baffinland Iron Mines Corp. completed a feasibility study on its Mary River Project iron ore deposits located on Baffin Island, Nunavut earlier this year.

The study outlined a 20-year mine project based on proven and probable reserves of 160 million metric tons and 205 million metric tons, respectively, and annual shipment of 18 million metric tons of high-grade iron ore (64.7 percent iron) primarily to the European market. A moisture content of two percent and a 75:25 lump-to-fines ratio are assumed and reflect metallurgical test work.

Baffinland said the project would have a capital cost of C$4.1 billion with a contingency of C$438 million, the company said.

During the third quarter of 2008, the company plans to deliver a bulk sample of 250,000 metric tons of lump and fine iron ore to certain European steel mills to further remove technical risks from the project.