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By Rose Ragsdale
For Mining News 

Mining Explorers 2009: Explorers seek Arctic riches

Far North minerals, diamonds still beckon to investors in down year

 

Last updated 11/1/2009 at Noon



Mineral-rich Nunavut Territory celebrated its 10th anniversary in 2009 and mining explorers seeking diamonds and precious and base metals brought their drills to the party.

The territory, home to only 31,000 people living in 25 small, scattered communities, covers 1.9 million square kilometers, or one fifth the land mass of Canada and dwarfs Alaska by nearly 200,000 square miles.

Of the young territory's economic prospects, mineral resource development offers perhaps the most long-term potential.

"When I started work in Nunavut in the 1990s before there was a territory, mining didn't have much of a future," said Gordon MacKay, director of the Government of Nunavut's Division of Minerals & Petroleum Resources. "There were three operating mines in the territory and almost no exploration or development projects; geoscience and mapping were dramatically poor, and the mines had 10-15 percent local employment."

Though prospects for mining 10 years ago "weren't very bright" in Nunavut, MacKay said the huge territory with its Archean greenstone belts still offered the best geology in the world.

In 1999, mining investment in Nunavut totaled less than C$30 million and by 2008, comparable investment in the territory had climbed two-fold to more than C$300 million. At more than 130 mining projects across the territory, explorers searched for gold, silver, base metal, diamonds and iron ore deposits.

Mineral exploration spending decreased substantially for 2009 in Nunavut, dragged down by the global economic recession. But the miners who are pursuing projects key to the future of Canada's newest territory resumed their work, while some newcomers also made the long trip north.

A preliminary estimate for 2009 mineral exploration in Nunavut is about C$168 million, slightly more than half the 2008 total. However, the actual amount will not be tabulated until March, government officials say.

Gold production on horizon

Though mining development in Nunavut has progressed slowly in recent years, a large, open-pit gold mine is scheduled to begin commercial production in early 2010 and at least five more major mine projects are working toward startup within the next five years.

"If the recession had hit two years ago, it would have been very bad," MacKay said. "But the message has gone out. Now, Nunavut is recognized as very prospective by industry. We have almost no private land ownership. It's all territorial, federal and Inuit-owned lands, though the land is still managed by the federal government."

Though Nunavut has no mine in production today, government leaders are hopeful that the Jericho Mine, which closed in 2008 after less than two years of production, will soon reopen. Owner Tahera Diamond Corp., a Toronto-based junior, is currently seeking a buyer or strategic partner to help transform the financially troubled operation into a profitable venture.

Cumberland Resources Ltd., Miramar Mining Corp. and Comaplex Minerals Corp. spent most of the past decade working to develop gold mines in Nunavut before being gobbled up by larger mining companies as they neared their goals. As a result, leading gold producers Agnico-Eagle Mines Ltd. of Toronto and Denver-based Newmont Mining Corp. are now advancing the Meadowbank and Doris North gold mine projects, respectively, toward production.

An economic engine at Meadowbank

On track to begin initial gold production in early 2010, the Meadowbank Project promises to deliver the best of what those who pressed for the creation of the territory had in mind - a mining venture capable of doing the heavy lifting needed to improve the local standard of living by providing steady, good-paying jobs along with significant public revenue.

The Meadowbank property is located in the Kivalliq region of Nunavut and lies in the Third Portage Lake area, about 70 kilometers, or 43 miles, north of the community of Baker Lake, near the western shore of Hudson's Bay.

Agnico-Eagle Mines Ltd., owner of LaRonde, Canada's largest operating gold mine based on reserves, holds a 100 percent interest in Meadowbank, which has probable gold reserves of at least 3.6 million ounces in 32.8 million metric tons at 3.5 grams per metric ton. Meadowbank's deposits are open on strike and at depth. Meadowbank is expected to produce an average of 350,000 ounces of gold per year over a 10-year mine life with total cash costs of production well below the industry average.

Agnico-Eagle committed a sizable portion of its C$54 million exploration budget for 2009 to activities at Meadowbank, focusing on mine site exploration adjacent to the main Portage and Goose Island gold deposits, regional exploration along the Meadowbank Trend (which hosts the bulk of the current gold reserves and resources), and also along the Northwest Trend (which hosts the PDF deposit). Drilling results from this program will be incorporated into an expansion study currently underway.

Results were still pending in September from the mine site and regional exploration programs and will be compiled into the year-end resource and reserve estimates and the current expansion study for Meadowbank. Plans for further Meadowbank exploration in 2009 and 2010 are also in progress, the company said.

Comaplex awakens another gold giant

With more than 25 continuous years of mineral exploration in Nunavut, Comaplex Minerals is also deeply immersed in developing sizable gold properties.

The Calgary, Alberta-based junior carried out an aggressive 2009 exploration program of 23,500 meters of surface drilling, designed to expand and upgrade current mineral resources at its Meliadine West gold project located about 25 kilometers, or 16 miles, northwest of Rankin Inlet.

The Tiriganiaq deposit at Meliadine West hosts an estimated indicated resource of 2.4 million ounces gold and an inferred resource of 893,000 ounces gold, while the property's F zone hosts an indicated resource of 111,000 ounces gold and an inferred resource of 113,600 ounces gold.

Drilling began in early April with three drills and continued into September, targeting new resources up and down plunge of existing resources in the Western Deeps part of Tiriganiaq, as well as infill drilling as required. Upgrading of open pit-able resources in the F Zone is also ongoing. About 3,000 meters was devoted to reconnaissance targets on the Western end of the property (about 7 kilometers along strike west of Tiriganiaq). Comaplex also completed significant pre-development geotechnical drilling.

"The company remains very excited by the progress and results obtained to date and is confident in its ability to rapidly advance the project to a level that will support initiation of a feasibility study as soon as possible," Comaplex President and CEO George F. Fink told Mining News.

Hope Bay hosts elephant-in-waiting

With the completion of its US$1.353 billion acquisition of Miramar Mining Corp. in 2008, Newmont Mining Corp., the world's second-largest gold producer, controls the Hope Bay Project, one of the largest undeveloped gold properties in North America.

Hope Bay has a 10.7 million-ounce gold resource and three significant gold deposits have been discovered in the greenstone belt: Doris North, Madrid, and Boston.

Miramar's plans had called for a mining operation with annual output up to 600,000 ounces of gold by 2012. Denver-based Newmont said it anticipates funding development of gold production at Hope Bay. But an extensive assessment of the project favored waiting to proceed with development. Newmont said it is working to complete some of the permitted infrastructure to provide improved environmental, safety and operational practices at the site. The major cut its overall 2009 exploration budget to US$165 million-US$175 million, down substantially from US$214 million in 2008. However, Newmont spent US$16 million on exploration at Hope Bay this year, up 23 percent from US$13 million in 2008.

Diamond exploration shines

A particular bright spot in mining exploration in Nunavut is diamond exploration underway on various properties in 2009.

Peregrine and partner BHP Billiton began a C$9.2 million exploration program at Chidliak located about 120 kilometers, or 74 miles, northeast of Iqaluit on Baffin Island. BHP, which owns most of the huge Ekati diamond mine in Northwest Territories, committed to spend C$22.3 million to earn 51 percent interest in the project, and can gain another 7 percent stake by funding a feasibility study.

In September, Peregrine Diamonds Ltd. reported discovery of seven more kimberlites on the 9,800-square-kilometer, or 3,784-square-mile, property. A 398.8-kilogram sample collected from the CH-6 kimberlite yielded 2,730 diamonds larger than the 0.075-millimeter sieve size, including 131 diamonds larger than 0.60 mm. The largest diamond recovered from the sample was a 0.62 carat white, transparent aggregate. Peregrine also said Chidliak's CH-5 kimberlite also was determined to be diamondiferous with a 423.7-kilogram surface sample yielding 49 diamonds larger than the 0.075 mm sieve size.

Other diamond explorers active in Nunavut in 2009 include Stornoway Diamonds Corp., Shear Minerals Ltd. and Indicator Minerals Inc.

Explorers chase silver, base metals

Exploration is ongoing at two giant iron properties that Toronto-based juniors Baffinland Iron Mines Corp. and Advanced Explorations Inc. are busy advancing to development. Baffinland planned to conduct a nearly C$30 million exploration program this year, including a 2,200-meter drill program on Deposit No. 3. Advanced Explorations completed a new resource estimate for its Roche Bay magnetite project in March, reporting an inferred resource of 357 million metric tons averaging 28.07 percent iron with a 25 percent iron cut-off grade.

Sabina Silver Corp. is pursuing the Hackett River Project, one of the largest undeveloped massive sulphide deposits in Canada, located 104 kilometers, or 63 miles, south-southwest of Bathurst Inlet in Nunavut.

Indicated open pit and underground mineable resources at Hackett River total at least 40.1 million metric tons grading 4.72 percent zinc, 147.9 grams per metric ton silver, 0.34 percent copper, 0.58 percent lead and 0.33 g/t gold. An additional inferred open pit and underground mineable resource totals 8.8 million metric tons grading 3.89 percent zinc, 153.1 g/t silver, 0.28 percent copper, 0.55 percent lead and 0.31 g/t gold.

In September, Sabina completed 12,600 meters of drilling in the second phase of its 2009 exploration campaign. Drilling focused on extending mineralization in known deposits. Hole SHR-09-39, for example, was drilled at the Main Zone West to the north of all previous drilling and targeted an inferred structure identified in the resource model. The hole intersected 288 g/t silver, 8.28 percent zinc, 0.90 percent copper, 1.41 percent lead, 1.29 g/t gold over 20.10 meters, starting at a down-hole depth of 4.30 meters. This hole continues the high-grade Main Zone West mineralization and remains open to the north.

Uranium explorers persist

Despite the downturn in markets, a number of juniors returned to Nunavut to explore for uranium in 2009.

In July, Forum Uranium Corp. began a summer exploration program on its North Thelon Project in Nunavut, including claims and property optioned from Agnico-Eagle Mines Ltd., Tanqueray Resources Ltd. and Nunavut Tunngavik Inc.

Forum has assembled a strategic land position surrounding the Kiggavik mine development project, which is currently under feasibility, permitting and environmental assessment by Areva Resources Canada Inc. Areva had three drills on site at Kiggavik completing geotechnical work as part of the feasibility study. The Kiggavik property hosts 134 million pounds of uranium grading 0.27 percent U3O8, and hosts one of the largest undeveloped uranium deposits in the world.

Forum said its goal is to discover adjacent deposits that can feed the proposed mill that Areva expects to produce 7.8 million pounds of uranium per year over a 17-year mine life. The junior planned to do mapping, prospecting, and till and outcrop sampling on high-priority areas identified in Forum's 2007 and 2008 geological, geophysical and diamond drilling programs. Work will be conducted where diamond drilling intersected 79.5 meters of anomalous uranium and strong illite alteration on the Tarzan showing along the structural trend hosting the Kiggavik deposits.

Cameco Corp. also returned to Nunavut this season to conduct diamond drilling at its Aberdeen and Turqavik projects. The uranium producer said it would explore for mineralization similar to that found within deposits at Areva's Kiggavik and Sissons properties to the east; prioritize deep basement targets similar to Areva's End Grid and Andrew Lake at the south end of the Turqavik-Aberdeen claims; and test drill targets in the north part of the project claims.

Other explorers met success

Some explorers pursued rare earth element deposits and at least one met with some success.

In September, North Arrow Minerals Inc. confirmed high-grade lithium mineralization from channel samples within its McAvoy pegmatite in Nunavut.

Two rock sawn channel samples collected returned 6.0 meters grading 4.5 percent Li2O and 7.0 meters grading 3.3 percent Li2O. The channels were located 78 meters apart and oriented perpendicular to the north-south strike of the pegmatite, which can be traced over a minimum strike length of 400 meters.

The McAvoy pegmatite is located within North Arrow's Torp Lake project area, about 30 kilometers southwest of tidewater on the Arctic coast.

The Vancouver, B.C.-based junior also said it is drawing up exploration plans for the lithium property in the spring 2010 exploration season.

 

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