By Rose Ragsdale
For Mining News 

Mining Explorers 2009: Economy dims North star in 2009

Diamond, metals exploration continues, albeit at somewhat slower pace in Northwest Territories

 

Last updated 11/1/2009 at Noon



Hampered by a recession-driven drought in capital markets, mineral explorers in the Northwest Territories met the challenges of 2009 with a variety of survival strategies. With significant diamond, precious and base metal projects and prospects at stake, some companies entered a holding pattern in hopes of waiting out the economic storm, while other forged ahead, adjusting to the new cash-strapped environment as the year progressed.

Thanks to record commodity prices, the economy of the Northwest Territories has outpaced the rest of Canada for a number of years. Mining is the major economic sector in the NWT, and it is a significant source of employment, creating more than 2,000 direct jobs, according to Government of Northwest Territories figures.

Industry wages and salaries are the highest in Canada. Aside from direct benefits, the industry generates significant employment in the transportation, services, and trade and construction sectors. While the NWT is a major diamond producer, the overall potential of mining remains largely untapped, with only a small portion of its vast potential being developed.

Unlike other sectors of the economy, little or no government incentives or financial support is required. However, the mining industry does require consistency in the application of regulations and environmental review, stability in land access and tenure processes, a modern geological database, and a positive investment climate, according to the GNWT's Economic Review 2009.

Successful exploration projects are critical in terms of future potential, since existing mines will close at some point in the future. Encouraging significant exploration creates a sustainable mining industry, the report noted.

Diamond mining is the largest economic activity in the NWT, accounting for over $1 billion of the territory's gross domestic product. Mining industry growth also has had similar positive impacts on transportation and construction.

However, the impact of the recent economic recession has affected industry sales and employment. In an effort to remain in operation, all of the NWT mines scaled back operations and employment this year.

Currently the NWT has three diamond mines and one tungsten mine; 96 percent of the value of production originates with diamonds.

NWT officials say diversification of the industry and its future are dependent upon exploration and identification of new resources.

However, NWT exploration is low compared to provinces with similar mineral potential.

For example, C$76 million is being invested in Nunavut precious metals exploration in 2009, compared with only C$5 million in the NWT. While more than C$207 million is being invested in uranium exploration in Canada, only C$3 million comparable investment made its way to the territory.

Overall, planned NWT exploration expenditures for 2009 decreased to less than C$30 million as of July 2009, and are expected to finish the year at only 2 percent of the total outlay for mining exploration in Canada, the lowest level in more than 16 years.

While this decline is partly linked to commodity prices and capital markets, it also fell further than comparable decreases in other regions of Canada.

"The world economic downturn over 2008 and 2009 significantly reduced commodity prices, and export sales," said GNWT Industry, Tourism and Investment Minister Bob McLeod. "While the economy still benefited from record prices in 2008, we can expect a decline in economic performance and investment over 2009. However, we can be expected to weather the economic recession better than most regions of Canada, and there are encouraging signs for a recovery, with most commodities showing renewed strength."

Still, the NWT remains an economic star within Canada. Employment, incomes, per-capita GDP and most other indicators remain positive. The territory also remains a storehouse of resources now keenly in demand around the globe, including gold, rare earth metals, uranium and lead-zinc.

Ancient land, rich history

Part of the reason is that the Northwest Territories, 13.48 percent of Canada's total land mass, is a remote place of breathtaking beauty with little infrastructure such as roads, ports and power plants. Primarily located in the Arctic region of the Far North, the territory encompasses more than 4 billion years of the earth's geologic history. The oldest rock in the world, in fact, is located just north of Yellowknife and is more than 3.962 billion years old.

B.A. Blakeney, a prospector on his way to the Klondike, staked the first claim in the Yellowknife area in 1898. For the next 93 years, base and precious metal mines served as the backbone of the territory's economy, until the early 1990s when the diamond exploration and mining industry mushroomed to its current dominance.

Explorers first discovered diamonds in 1991 at Lac De Gras, resulting in the largest staking rush in Canadian history. BHP Billiton's Ekati mine was Canada's first diamond mine. Construction began in 1997 and it officially opened 11 years ago on Oct. 14, 1998. Since 1998, about 78,947,507 carats worth of gem quality diamonds have been mined in the Northwest Territories with an estimated value of C$11.368 billion.

Diamonds still shine

Today, the territory is primarily responsible for Canada's ranking as the world's third-largest diamond producer by value after Botswana and Russia.

De Beers' Snap Lake Mine, which officially opened in 2008, is Canada's first fully underground diamond operation - and the first mine ever built by the world's diamond giant outside of Africa. The collective operations of the Ekati, Snap Lake and Diavik diamond mines produce 15 percent of the world's rough diamonds. Diavik is jointly owned by Rio Tinto plc and Harry Winston Diamonds Inc. Diamond production for 2007 reached 16.6 million carats worth C$1.4 billion.

The territory also has at least one advanced diamond project, the Gahcho Kue Project, a joint venture of De Beers Canada and Mountain Province Diamonds Ltd., along with several attractive diamond exploration projects.

Diverse player, diverse minerals

The Northwest Territories is also home to a diverse group of mineral exploration projects funded by explorers who believe in the Far North's potential to someday deliver major payloads in gold, zinc and lead, uranium, tungsten, rare earth elements and more.

Among other important players in the territory are BHP Billiton plc, North American Tungsten Ltd. Fortune Minerals Ltd., Tyhee Development Corp., North Arrow Minerals, Avalon Rare Metals Ltd. (formerly Avalon Ventures Inc.), Almaden Minerals, Canadian Zinc Corp. and Tamerlane Ventures.

All of these companies have invested substantially in ongoing mining production or exploration projects in the Northwest Territories and have much riding on the future of the territory's mining industry.

Other key companies are also plowing their funds into exploration and development mineral properties. Among them:

Sanatana Diamonds Inc., a Vancouver, B.C.-based junior focused on its 1.9-million-acre, or 788,382-hectare, Mackenzie Diamond Project located north of Great Bear Lake about 700 kilometers, or 434 miles, northwest of Yellowknife.

The company has been an active explorer of this area since early 2004 and has an agreement with Rio Tinto's diamond-focused subsidiary, Kennecott Canada Exploration Inc., to help fund and develop this project.

The results of four extensive till sampling programs from 2004 to 2007 have recovered superior kimberlite indicator mineral results and have led to the discovery of what is now called the Dharma kimberlite.

Additional exploration results from 2008 led Kennecott to approve a C$2.2 million exploration budget for the project in 2009.

This year, Sanatana has focused efforts on locating the source of a new prominent indicator anomaly in the Greenhorn area of the project; drill testing indicator targets in the Colville and Simpson areas of the project; and conducting additional exploration and analysis on the Mackenzie Diamond Project.

Sanatana had working capital of C$3.81 million and nearly C$4 million in cash and short-term deposits at June 30.

Snowfield Development Corp. mobilized drill crews in April to its Ticho Diamond Project, located about 50 kilometers, or 33 miles, southeast of Yellowknife on the north shore of Great Slave Lake to drill test a promising kimberlite target located on the Wire claim at the northern extent of the property.

The project consists of about 16,000 hectares, or 40,000 acres.

The target to be tested was first identified by an airborne magnetic survey flown in 1995, and confirmed by a detailed ground magnetic survey in 2005.

The anomaly is located roughly in the center of a circular lake with reported overburden depths of 150 feet.

Snowfield said it has identified at least two other targets that will be followed up with detailed ground magnetic surveying and drill testing.

These targets are circular magnetic high responses identified from airborne magnetic survey data, and occur both on land and under a small lake.

The Vancouver, B.C.-based junior also acquired four promising uranium claims in June that are located on Simpson Island within the East Arm of Great Slave Lake.

Snowfield said it viewed the acquisition very positively, "especially in light of the recently increasing spot price for uranium."

Diamonds North Resources Ltd. continues to explore its Hepburn Project located 300 kilometers, 195 miles, north of Yellowknife.

This project has potential for both diamondiferous kimberlites and uranium.

In May, the junior reported high copper-silver mineralization from drill core and trench samples on the Hepburn property.

Historic drill holes intersected zones with 1- 4 percent copper and silver as high as 203 grams per metric ton.

Regional exploration by Diamonds North identified additional copper-silver mineralization along strike for 1 kilometer and in stratigraphically similar rocks 1.5 kilometers, or about 1 mile, south of the historic drill holes.

In addition, five separate geophysical magnetic anomalies with copper-silver potential have been identified over a 12.5 kilometer-, or 7.75 mile-long area, potentially defining a new large-scale copper-silver district, the company said.

No further exploration was reported for 2009.

TNR Gold Corp. reported acquisition of the Maximoose 1 and 2 claims located 115 kilometers, or about 71 miles, east-southeast of Yellowknife in August.

The 4,086-acre, or 1,695-hectare, Maximoose property surrounds TNR's 551-acre Moose 2 property, which TNR recently staked, and lies in an area known for lithium, tantalum, niobium with minor tin and beryllium mineralization associated with zoned pegmatite dykes.

The Vancouver, B.C.-based junior also said it contracted Aurora Geosciences of Yellowknife to prepare a National Instrument 43-101-compliant report on the project.

A key component to the work program to be performed will be the re-sampling of known showings and the confirmation of historic grades.

Compilation of all the historic data combined with the grade confirmation will enable TNR to plan further development of the project.

Denver-based Ur-Energy Inc. reported geophysical and survey crews starting work in August at the Screech Lake Project in the southern Thelon Basin, Nwt. The junior said the geophysical program will provide necessary information to assist in better planning a future drilling program.

Strongbow Exploration Inc. reported an NI 43-101 resource estimate in February for the Main zone of its Nickel King Project located about 550 kilometers, or 279 miles, southeast of Yellowknife and undertook a metallurgy study of the deposit in May.

Other explorers with significant projects in the Northwest Territories that chose to focus their attention elsewhere in 2009 included Alberta Star Corp., Bayswater Uranium Corp., Uranium North Resources Corp., Uravan Minerals Inc., Encore Renaissance Resources Corp. (formerly Consolidated Gold Win Ventures Inc.), Sidon International Resources Corp., Diamondex Resources Ltd., Diamond Exploration Inc. (formerly Patrician Diamonds Inc.)

 

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