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2010 Mining Explorers: Explorers flood mining hot spot

Friendly regime, under-explored ground and higher prices lure industry

Primed for booming exploration for several years, the Yukon Territory appears to have hit big in 2010, both literally and figuratively.

Emerging as one of the world's mining hot spots, the Northwest Canada jurisdiction is reporting industry investment exceeding C$120 million.

Propelled by record gold prices and key gold discoveries, as well as surging demand in Asia for base metals and a mining friendly government, miners flocked to the territory in growing numbers, bringing generous exploration budgets and fresh theories about where major mineral deposits might be found. Individual prospectors, junior exploration companies, consultants and representatives of at least one major mining company trooped into the field. Adding to the frenzy of exploration activity was the proposed production startup in the fourth quarter of both the Wolverine silver-zinc-lead project near Ross River and the Bellekeno silver mine north of Mayo.

In short, Yukon Territory's mining industry had one of its best years ever in 2010.

"Yukon Territory is an exciting place to be. It's incredibly busy," said Mike Burke, head of Mineral Services, Yukon Geological Survey.

"We're having a very strong year, and a lot of it is powered by the price of gold," said Carl Schulze, president of the Yukon Chamber of Mines. "The Yukon's economy has picked up slightly, and that is likely due to mining."

In response to explorers' demands for faster turnaround times on assay results, five of Canada's top analytical laboratories - Acme Analytical Laboratories Ltd., ALS Chemex, Inspectorate, Agat Laboratories Ltd. and Eco Tech Laboratory Ltd. - opened offices in Whitehorse in 2009 and 2010. In addition, more geological and environmental consultants and at least one First Nations expediter picked up new contracts during the year.

"Of the amount of money the mining companies spend, a lot of it is staying in the territory now," Schulze said.

A super-busy mining sector, however, had little impact on the territory's unemployment figures even though the Yukon's work force of 17,800 grew by about 100 individuals and mine training programs spawned a score of skilled workers.

In August, Yukon officials made a preliminary estimate of total mining investment in the territory in 2010, observing that spending is up substantially from the recession-hampered C$90 million that the territory attracted in 2009.

But final figures for 2010 total spending won't be tallied before early 2011, said Schulze.

More mines

Leading the call for more mine workers were Chinese-owned Yukon Zinc Corp. and Alexco Keno Hill Mining Corp., both companies that expected to start up mining operations in the territory this fall. Yukon Zinc aims to commence production at a newly built 1,700-metric-ton-per-day underground mine to tap the zinc/silver-rich Wolverine deposit, which contains measured and indicated resources of about 4.46 million metric tons grading 12.14 percent zinc, 354.8 grams per metric ton silver, 1.16 percent copper, 1.69 g/t gold and 1.58 percent lead.

The private company had hoped to begin production in the second quarter, but a worker's death in late April shifted its focus to underground testing and geotechnical modeling as well as developing enhanced safety protocols and procedures to ensure a safe work environment. Yukon Zinc also sought to develop a comprehensive plan for a range of ground conditions.

Alexco Keno Hill, a subsidiary of Alexco Resource Corp., planned to begin underground mining in October at the Bellekeno silver project in the historic Keno Hill silver district in east-central Yukon. Bellekeno, the first of potentially numerous silver deposits that Alexco hopes to develop in the area, will be a 250 t/d operation for years 1 and 2 and increase throughput to 400 t/d in years 3 to 5. The Keno Hill district, once home to at least 35 small mines, produced about 217 million ounces of silver between 1921 and 1988.

In addition to indicated and inferred resources of 400,000 and 111,000 metric tons, respectively, grading 921 g/t and 320 g/t silver, 9.4 percent and 3.1 percent lead, and 6.9 and 6.5 percent zinc, in the Bellekeno deposit, Alexco aims to mine a nearly 2.5 Mt of historic tailings stockpiled that average 119 g/t silver, 0.12 g/t gold, 0.99 percent lead and 0.70 percent zinc with contained precious metals of more than 9.5 million ounces of silver and 9,600 ounces of gold. Alexco also aims to mine additional high-grade silver and gold deposits on its extensive claims in the district.

Both Wolverine and Bellekeno expect to employ up to 200 workers.

Capstone Mining Corp., Yukon's sole producing mine since its startup in 2007, is exploring for more deposits at its Minto copper-gold-silver mine in western Yukon.

The miner undertook a property-wide Titan-24 deep penetrating induced polarization survey in early 2010 that identified several chargeability anomalies in areas untested by previous drilling.

These include the Wildfire discovery, one of the strongest and most extensive IP anomalies yet identified at Minto.

Drilling results at Wildfire in August identified high-grade copper-gold mineralization 76-110 meters deep, and Capstone embarked on follow-up exploration with two drills and increased its budget by C$1.5 million to systematically drill test the prospect and other targets generated from the IP survey.

The addition boosted total annual exploration spending at Minto to a record C$7 million.

Capstone, meanwhile, continued efforts to resolve problems caused by unexpected flooding by seeking permission from regulators to remove the 160,000 cubic meters of water by year's end that covered about 500,000 metric tons of high-grade ore at the bottom of the main open pit at Minto.

More activity

An important sign of activity in 2010 was a jump in mining claims staked during the year. Yukon's active quartz claims, including 32,692 claims staked during in the first seven months of 2010, jumped to nearly 110,000, up about 38 percent from last year's record total of just under 80,000 claims.

A score or more of explorers joined prospectors in scouring the region. This activity was especially robust south of Dawson, where explorers are following up on Underworld Resources' White Gold discovery in search of potentially bigger gold deposits in the unglaciated area known as the White Gold District.

But the territory's mining rush is bigger than the White Gold play. A growing crowd of juniors also searched for yellow metal on claims in other Yukon mining districts. Still other explorationists hotly pursued commercial quantities of lead and zinc, copper and gold, silver, rare earth elements and other minerals across the territory.

Exciting gold plays

Gold fever is the only way to describe much of the mining exploration activity in Yukon Territory in 2010 as a score of juniors fanned out over the hills.

ATAC Resources Ltd.'s Rau Gold Project north of Mayo and Kaminak Gold Corp.'s Coffee Project south-southwest of the White Gold Project were the year's two big standouts with significant gold discoveries and expansions of previously defined deposits.

Atac spent more than C$15 million to drill more 15,000 meters in several areas of the 1,500-square-kilometer, or 579-square-mile, Rau property and not only made new gold finds but also discovered new styles of gold mineralization.

"Rau is the largest exploration play in Yukon, and arguably in western Canada, with the exception of the Selwyn Project," said Atac President Rob Carne. "The Yukon is at the forefront of brand-new discoveries and that is part of the reason that the territory is on everybody's radar screen."

Atac identified more than eight new areas of gold mineralization in 2010.

Chief among these are the Osiris and Iris showings discovered in July in the far eastern section of the Rau property.

The junior reported discovery of Carlin-type gold mineralization Sept. 1 on the Osiris target.

Atac also completed a 12-square-kilometer detailed soil sampling grid over the discovery area resulting in the expansion of the Osiris and Isis targets to 250-by-1,000 meters and 200-by-700 meters, respectively.

Two additional gold anomalies called the Conrad and Eaton showings were found to have gold-bearing mineralization in outcrop associated with orpiment and realgar.

A third anomaly called the Isis East Zone also was identified.

Atac also reported new drilling results Sept. 30 that expanded to the northwest the high-grade oxide mineralization known as the Tiger Zone that it discovered in 2008.

The Rau Project is situated at the northern edge of the Tintina Gold Belt, a curved swath of intense gold mineralization that stretches from southwestern Alaska through Yukon into northeastern British Columbia. Huge gold deposits, including the 33.5-million-ounce Donlin Creek and the Fort Knox and Pogo gold mines in Alaska lie within the Tintina belt, but "the geology doesn't stop at the border," Carne said.

Atac is eager to demonstrate that deposits on the Rau property contain a multimillion-ounce gold resource.

Kaminak, likewise, is pursuing a multimillion-ounce gold resource at its Coffee Project which lies some 25-30 kilometers, or 16-19 miles, south of Underworld Resources Inc.'s 1-million-ounce-plus White Gold discovery that Kinross Gold Corp. purchased earlier this year. Of the 11 targets identified on the Coffee property, Kaminak is focusing on five - Kona, Americano, Latte, Supremo and Double Double - where it has found high-grade gold mineralization. The junior drilled 76 holes covering more than 15,000 meters in 2010 in all five areas with spending that exceeded C$8 million.

The junior's recent drilling results include the discovery of two zones of gold mineralization in the Latte trend, an Upper Latte bulk-tonnage gold zone and a Lower Latte high-grade gold zone. The Latte trend is one of three significant gold discoveries made to date by Kaminak in 2010 on the Coffee property. The other two discoveries are the Supremo and Double Double trends, which are located about 1.5 kilometers north and east of the Latte trend, respectively. To date, 17 drill holes have been completed at the Latte Zone over a 600-meter strike length and all holes have intersected gold mineralization.

"Drilling has confirmed a high-grade zone is present at Latte," Kaminak President and CEO Robert L. Carpenter said Oct. 4. "Both the upper and lower zones begin at surface and can be traced for at least 600 meters along trend, while remaining open at depth. Furthermore, the most westerly holes of the upper zone appear to have the widest mineralized intervals to date suggesting the system may be larger than currently known."

Other gold explorers also reported encouraging progress on various projects across the Yukon, including Golden Predator Royalty & Development Corp., which attracted attention in 2010 with the aggressive acquisition a dozen or so mining projects plus additional acreage across Yukon and northern British Columbia, including 750 square kilometers of claims near the eastern border of Yukon. The junior also implemented exploration programs on at least six of the projects, spending at least C$7 million at the Eureka, Clear Creek, Antimony, Brewery Creek, Gold (Scheelite) Dome and Cynthia projects.

In September, Golden Predator reported encouraging drill results at the Brewery Creek and Clear Creek projects. The Clear Creek Project is located 65 kilometers northwest of Mayo and 59 kilometers, or 40 miles, due east of Brewery Creek, the site of a former gold producer with known mineralization to which Golden Predator aims to add ounces with more drilling.

Of particular significance were drill results from three of five targeted zones at Clear Creek, said Golden Predator Chairman and CEO William Sheriff.

Referring to Kinross's acquisition of the 1-million-ounce-plus White Gold deposit, Sheriff said: "Our objective is not to sell to Kinross. Our objective is to be Kinross."

Advanced gold exploration

Victoria Gold Corp. Sept. 28 reported exploration results from its 2010 summer program conducted at the Dublin Gulch property in the Mayo Mining District of Yukon. Diamond drill hole DG10-377C returned an intercept, starting 5.6 meters below surface, of 30.5 meters grading 12.03 g/t gold and including a 12.2-meter interval grading 27.98 g/t of gold. Several other anomalous gold values were intersected further down this hole including 0.6 meter grading 5.68 g/t of gold and 1.7 meters grading 10.02 g/t of gold. The total length of the hole was 226 meters. Anomalous gold values also were found on surface over a width of about 100 meters and a length of roughly 600 meters.

Field indications led Victoria to believe the area known as the Shamrock Zone is part of a significant mineralized trend that has been traced for over 7.5 kilometers in length and 3 kilometers in width.

Shamrock is located 3 kilometers northeast of the Eagle gold deposit, which is also within the 28-kilometer-long by 15-kilometer-wide Dublin Gulch property.

Eagle, described as being nearly a twin to the Fort Knox gold deposit, hosts a NI 43-101-compliant probable gold reserve of 1.75 million ounces gold contained in 66.1 million metric tons grading 0.82 g/t calculated using a gold price of C$900 per ounce.

The junior envisions starting production in 2013 at an average rate of more than 170,000 ounces of gold per year at total cash cost of under US$500/oz. Two diamond drill rigs were turning in October on the Dublin Gulch property, which covers 34,576 hectares, or 85,403 acres.

Drilling historically has shut down in the fall due to weather conditions.

However, in order to extend the drilling season and start preparation of a site for eventual mine construction, Victoria purchased for about C$5 million a 200-person, all-season camp facility, which it plans to erect at the proposed mine site in the fourth quarter.

Other major gold projects include the Freegold Mountain Project in central Yukon where Northern Freegold Resources Ltd. spent C$3.5 million in 2010, chiefly to delineate the Revenue Zone, a giant copper-gold deposit beneath its 1-million-plus-ounce Nucleus gold deposit. Northern Freegold has discovered at least eight substantial mineral deposits on the district-scale Freegold Mountain Project where Nucleus and Revenue are located.

Like many of Yukon's explorers in 2010, the junior commissioned a deep-imaging induced polarization survey in hopes of gaining a better understanding of the Revenue Zone to depths of up to 750 meters.

Northern Tiger Resources Inc., a spinout of Firestone Ventures Inc. in 2008, turned its attention in 2010 to the 3Ace Property which it acquired from longtime Yukon prospector Alex McMillan. The junior released spectacular assay results from nine grab samples gathered on the site that returned values up to 4,820.6 g/t (140.60 ounces per ton) gold.

3Ace is located about 270 kilometers, or 167.4 miles, north of Watson Lake in southeast Yukon Territory. Northern Tiger said historic work on and near the 3Ace property performed toward the end of a five-year exploration program that ended in 2003 identified a number of large gold-in-soil anomalies that warrant further exploration.

On Sept. 21, the junior reported the start of diamond drilling at 3Ace to follow up on a successful 2010 surface exploration program that discovered high-grade gold mineralization in four separate zones on the project (the Main, North, Green and Sleeping Giant zones) and where soil and stream geochemistry indicate further potential for discovery.

"Results of our first surface exploration program on the property were impressive and management felt that an immediate drill program was warranted," said Northern Tiger President Greg Hayes. "It is very encouraging to see a project advance so quickly, and the results of this drill program will give us significant additional information to aid in planning what we anticipate will be a much larger program in 2011."

In ongoing exploration of its principal project, Sonora Gulch in central Yukon, Northern Tiger said it also has identified a near-continuous gold-in-soil anomaly over 6 kilometers by 1.5 kilometers, or 4 miles by 1 mile, with average gold values in 1,971 samples of 56 parts per billion.

More than gold

In August, Tarsis Resources Ltd. reported a grassroots discovery of significant copper, gold and silver mineralization on its White River property in western Yukon. Rock specimens were collected with visible sulphide mineralization and alteration and assays confirmed the presence of strongly anomalous copper, gold and silver values, including one select prospecting sample containing 4.41 grams per metric ton gold, 0.47 percent copper and 391 g/t silver. Another sample contained 0.58 g/t gold, 1.93 percent copper and 1,120 g/t silver.

Tarsis also owns the Prospector Mountain Project, where it made a high-gold discovery in the Bonanza Zone in 2009. Tarsis subsequently optioned that property to Silver Quest Resources.

Rockhaven Resources Ltd. Sept. 21 reported additional encouraging assay results from excavator trenching on its Klaza property located 50 kilometers, or 31 miles, west of Carmacks, Yukon.

The program continues to uncover high-grade gold and silver vein and bulk tonnage bedrock exposures and visually promising diamond drill results.

New trench results extend the Klaza Zone to a length of 375 meters, and the zone remains open to further extension along strike in both directions and downdip.

Through trenching, another substantial discovery was made at the Herc Zone, located 400 meters south of the Klaza zone and new results from 13 samples collected over other zones on the property range from 0.79-3.28 g/t gold and 5.8-282.9 g/t silver over 1.50-14.50 meters.

Rockhaven recently expanded the Klaza property to 30 square kilometers, or 7,413 acres, through additional staking to cover projected extensions of the vein zones.

The 2010 program was conducted by Archer, Cathro & Associates (1981) Ltd.

Western Copper Corp. is working to advance the 1 billion-metric ton Casino porphyry copper-gold-molybdenum-silver project toward becoming a 90,000-metric-ton-per-day mine that would pay off its projected C$2.1 billion in capital costs in 3.2 years. The junior hopes to apply for operating permits in early 2011 with the goal of beginning mine production in 2014-15.

Western Copper spent about C$6 million on exploration at Casino in 2010, bringing to more than 27,000 meters new drilling on the property since 2008. The drilling has extended the property's flat-lying, shallow copper and gold-enriched supergene zone to a 2.0-kilometer by 1.2 kilometer, or 1.24-mile by .75-mile, area.

Western Copper said the average core length of the supergene is about 80 meters, and the copper and gold-enriched zone remains open to the north for further expansion.

"We believe the discovery of significant additional near-surface supergene mineralization has the potential to considerably improve the project's economics," said Western Copper Chairman and CEO Dale Corman.

Of the 33 holes drilled and assayed during phase 1 of 2010 exploration, 29 holes returned significant mineralization. Highlights include assay results from hole CAS-073, which returned 114 meters of 0.97 percent copper-equivalent mineralization in the supergene zone and 110 meters of copper, gold and moly mineralization for a copper-equivalent grade of 0.69 percent in the deeper hypogene zone.

The company also determined that Casino hosts a significant silver resource

"We did the prefeasibility study without silver," Corman said. "This time, it's in the model at a grade of 1.5-2.0 g/t silver, resulting in about 2 million ounces of silver production per year.

That enough silver output, according to Corman, to pay for the transportation of concentrates shipped from the proposed mine.

Western Copper also encountered difficulties navigating its smaller Carmacks Copper Project through Yukon's permitting process. The junior was denied the final authority needed to advance toward start-up of the 5,000 t/d open pit mine in central Yukon even though it was granted all of its earlier permits, and independent studies indicate that the project poses little risk to the environment. Western Copper has appealed the decision.

Base metal behemoth

To the east, Selwyn Resources Inc. is nibbling at the edges of a super-giant at the Selwyn Project, the world's largest undeveloped lead-zinc deposit.

"Very few systems in the world are on the scale of 10s of kilometers," said Jason K. Dunning, vice president exploration at Selwyn. "We've drilled it off at 40 kilometers now, and there's probably 60 to 80 percent of the basin that's still virtually unexplored."

Dunning said no words can adequately describe the property. "Everything is open ended. Nothing has been closed off. It's still open to interpretation and that's the beauty of it." Because of Selwyn's recent efforts to finalize a C$100 million, 50-50 joint venture deal with China-based Yunnan Chihong Investment Co., the company's 2010 exploration budget remained a moving target. The JV is required to produce a bankable feasibility study for the project.

"Since 2005, we've drilled almost 94,000 meters of core in 373 drill holes, and we spent almost C51.5 million directly on exploration," Dunning said. "If the budget holds true over the next couple of years, we'll probably spend another C$50-65 million, depending on the level of development and depending on what we have to do to meet that bankable feasibility."

Two drills were spinning at Selwyn in mid-August, and Dunning said he was preparing to start a third drill.

"I've also been given approval to start looking for three more (rigs) to start in September," he told Mining News. "That's going to change the equation on what our 2010 budget will be."

Dunning said the junior plans to continue exploring the property all winter.

"We're not going to stop. Our camp is fully winterized, and we can drill all year round. We're set up to go all winter," he added.

Hunt for other metals

True North Gems last November confirmed the presence of REEs and niobium at its True Blue aquamarine property in the Yukon Territory. Grab samples collected from the property, located 55 kilometers, or 34 miles, south of Ross River, returned assays of up to 6.02 percent TREO and 2.52 percent Niobium oxide.

In March, True North optioned the REE property to Great Western Minerals Group, a Saskatchewan-based junior company specializing in REE exploration. Great Western began work on the property in mid-July with a C$1 million program aimed at determining the surface dimensions of currently known REE mineralization and identify new areas of mineralization in the area encompassed by the True Blue syenite and host rocks, said John Pearson, vice-president of exploration for Great Western.

Largo Resources Ltd. Sept. 28 returned to its Northern Dancer tungsten-molybdenum property with a nine-hole (2,500 meters) diamond drill program. Northern Dancer, a 1,500 hectare, or 3,705-acre, project that straddles the Yukon-British Columbia border 290 kilometers, or 180 miles, east of Whitehorse, hosts one of the world's largest known tungsten-molybdenum porphyry systems.

Largo said it would further test higher-grade tungsten and molybdenum zones intersected in 2006, 2007 and 2008 with a series of angled drill holes across the deposit to test the higher-grade zones.

The higher grade zones at Northern Dancer are estimated to contain measured and indicated resources of 60.3 million metric tons grading 0.137 percent tungsten oxide and 0.045 percent molybdenum (WO3 equiv 0.215 percent) and inferred mineral resources of 5.4Mt grading 0.134 percent WO3 and 0.047 percent moly (WO3 equiv 0.214 percent) at a 0.17 percent WO3 equivalent cut-off grade. Largo also planned to drill the Marilyn Creek showing, an untested exploration target that lies 500 to 1,000 meters north-northwest of the Northern Dancer deposit. A preliminary economic assessment for the project currently underway is making good progress and anticipated by year's end, Largo added.

Prophecy Resource Corp. Sept. 27 reported the start of drilling at its Wellgreen Platinum group minerals-nickel-copper resource project about 35 kilometers northwest of Burwash Landing, Yukon. Prophecy acquired a 100 percent interest in Wellgreen by merger with Northern Platinum, effective Sept. 23.

John Lee, Prophecy's CEO said the Wellgreen property has a rich history of platinum group minerals and nickel-copper-rare earth elements exploration with more than 600 drill holes over the past 50 years. Prophecy planned to assay 2,112 meters of drill core from Northern Platinum's six-hole drill program earlier this year and focus on expanding the eastern limit of the Wellgreen deposit with additional drilling. Prophecy also said it would follow up on earlier discoveries with additional drilling in 2011, evaluate Wellgreen as a potential bulk-tonnage, open-pit PGM target, and issue an NI 43-101 resource estimate by early 2011.


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