Mining Explorers 2013: Explorers still chase projects in 2013
Mineral exploration activity in northern region defies market doldrums
Last updated 11/3/2013 at Noon
Market-defying mineral exploration grabbed the spotlight in British Columbia throughout 2013, despite the doldrums that appeared to set in north of the 60th parallel.
"British Columbia is blessed with an abundant supply of the resources the world needs and the most innovative mining and exploration sectors," British Columbia Premier Christy Clark touted the phenomenon at the 2013 Mineral Exploration Roundup in January.
Still, Clark told the crowd that she doubted B.C. exploration could top the record C$462 million spent in 2011. Yet mineral exploration spending was forecast to reach C$680 million, according to estimates at the beginning of 2013, Clark added.
"We are stable in British Columbia, despite a very difficult international economy, and we're growing. It happened because we were purposeful; because we set a goal; because we knew it was important to unleash the dreams, the investment and the energy of the private sector," Clark told the gathering.
She also said the B.C. government deserves some credit for the health of the province's mining industry, noting that "Canada Starts Here: The BC Jobs Plan," an initiative implemented in September 2011 includes a commitment to the creation of eight new mines and the expansion of another nine mines already operating in British Columbia by 2015.
"When we set those targets in the jobs plan - 17 new and expanded mines by 2015, there were skeptics. There were many people who said it wasn't worth the paper it was written on," said Clark. "We are already halfway there. Since 2011, three new mines are in production and three are under construction; five major mines have received approval to expand - Highland Valley, Huckleberry, Quincel, Elk View and Endako."
Though total mineral exploration expenditures this year for northern British Columbia will not be tallied until late 2013, the outlook in October was still relatively positive, according to Bruce Madu, director of the Mineral Development Office in the B.C. government's Ministry of Energy and Mines.
"The northern regions were relatively more active than would have been expected," Madu told Mining News Oct. 2. "We will have to wait and see how the January estimates play out."
Among recent steps taken to support natural resource development activities, the B.C. government has substantially reduced regulatory backlogs in the province's permitting process and eliminated bottlenecks and streamlines permitting for low-impact mining projects. In addition, B.C. officials have moved to inaugurate revenue-sharing with First Nations affected by mining activity.
B.C. officials also cite ongoing construction of the 344-kilometer (213 miles) Northwest Transmission Line from Skeena Substation (near Terrace) north to a new substation near Bob Quinn Lake as a key impetus in boosting mineral exploration, development and mining activity in the copper and gold rich northwest corner of British Columbia.
The conduit, currently projected to cost C$561 million, is expected to bring affordable power within reach of many mine projects being developed in Northwest B.C. BC Hydro anticipates offering electricity via the 287-kilovolt conduit at Bob Quinn Lake in spring 2014.
Officials say the first beneficiary will likely be the Red Chris project, which is under construction by Imperial Metals Corp.
A number of other promising copper and gold projects in northwest British Columbia - KSM (Seabridge Gold), Galore Creek (NovaGold Resources-Teck Resources), Schaft Creek (Copper Fox Metals), and Brucejack (Pretium Resources) - are among the potential mines expected to benefit from low-cost power being delivered by the Northwest Transmission Line.
These projects pursued significant exploration programs in 2013.
Exploration and mining activity in the Skeena Region attained a record high level of expenditure in 2012, one not likely to be repeated in 2013. However, a dozen or more projects in northwestern British Columbia attracted substantial investment in 2013.
Geoscience BC said the apparent high-risk capital drought that plagued the sector in 2012 carried over into 2013, resulting in fewer implemented grassroots stage projects and the scaling back of some early stage ventures. However, advanced stage exploration projects managed to maintain a high level of activity.
Finite exploration budgets forced companies to explore smarter, generating higher quality targets before incurring the expense of drill testing, using innovative techniques to get increased mileage out of limited funding and offering some less-explored, high-quality projects for joint venture options.
While at least 82 significant exploration projects were active in the region in 2012, that number was expected to decrease in 2013, along with exploration spending from the more than C$285 million that explorers invested a year earlier.
About 90 percent of the 2012 dollars was spent on advanced-stage projects as those 15 projects underwent mine evaluation. The remaining 10 percent, or roughly C$28.5 million, was spent on grassroots, and early-stage exploration in 2012; about half of what a healthy exploration pipeline should be to ensure steady graduation of projects from early stages, according to Geoscience BC.
Mine construction and development expenditures, meanwhile, continued to be robust in 2013 as projects such as the Red Chris project where construction continued and work on hydro power-related projects, including the Northwest Transmission Line advanced toward completion in spring 2014. In 2012, spending on this type of activity reached unprecedented levels, totaling more than C$1 billion.
The trend toward shrinking numbers of active early stage projects continued in 2013 and reflected a corresponding reduction in exploration drilling, with notable exceptions. Numerous juniors also ventured forth with more modest programs of geochemical and geophysical surveying and mapping.
Colorado Resources Ltd. reported a discovery in April at its 5,188-hectare (12,820 acres) North ROK property that appeared to capture the attention, at least briefly, of otherwise apathetic investors. The junior reported drilling a 335-meter interval grading 0.51 percent copper and 0.67 grams per metric ton gold in the junior's first-ever drill hole at North ROK. Drill hole NR13-001 also included a 242-meter interval of 0.63 percent copper and 0.85 g/t gold.
Formerly known as the "Rose Klappan" property, North ROK is located 70 kilometers (43 miles) south of Dease Lake, B.C. and straddles Highway 37, 15 kilometers (nine miles) northwest of the Red Chris development.
After the North ROK discovery, explorers rushed to the areas, acquiring and exploring nearby properties.
These include Orex Minerals Inc., which optioned the 3,082.38-hectare (7,616.6 acres) Persistence Claims from Cazador Resources Ltd .; Entourage Metals Ltd., which optioned the 6,499-hectare (16,059 acres) Odin copper-gold property; Victory Ventures which reported drilling on its 448-hectare (1,107 acres) Copau property to test a prospective IP anomaly; Granite Creek Gold Ltd. purchased the 654-hectare Railway property, Romios Gold Resources Inc. acquired another 2,900 hectares (7,166 acres) "in the vicinity" of Red Chris, bringing its northwestern B.C. land package up to 80,000 hectares (197,680 acres); in May Ashburton Ventures Inc. acquired 1,500 hectares (3,706.5 acres) adjacent to and contiguous with North ROK and staked 852 hectares (2,105 acres) contiguous with the Hat copper-gold project being drilled by Doubleview Capital Corp. West Cirque Resources Ltd. reported follow-up exploration on its 431-hectare (1,065 acres) Castle copper-gold property.
Under a deal signed in March, Freeport-McMoRan Copper & Gold Inc. can earn an initial 51 percent interest in Castle and two other northwestern B.C. properties held by West Cirque by funding a total of $8 million over four years.
Revolver Resources holds a 60 percent option on the 1,394-hectare (3,445 acres) Summit B property, contiguous with North ROK; Firesteel Resources reported optioning 70 percent of its ROK Coyote property to ASX-listed OZ Minerals; and Redhill Resources Corp. optioned an initial 50 percent of Yellow Chris South from Teton Resources Corp. Graphite explorer Canada Carbon Inc. also holds the 5,260-hectare (12,998 acres) Red Chris South copper-gold prospect that is contiguous to Red Chris.
Significant events in Northwest B. C. in 2013 include:
Brucejack gold project, 15,000-metric-ton bulk sample program and a 15,000-meter underground drill program in the Valley of the Kings, completed feasibility study in June, and discovered the Cleopatra Vein (bonanza-grade intercepts uncut over 0.5 meters up to 27,000 g/t gold over 85-meter strike);
Extensive exploration program at the KSM gold-copper project, including drilling in new Deep Kerr discovery, expected to run until the beginning of the fourth quarter of 2013;
Red Chris copper-gold project, continued mine construction, engineering more than 91 percent complete, installation of process plant due by Oct. 31 and winter work planned due to spring 2013 delays in road work;
Huckleberry porphyry copper-molybdenum mine, in 2013 continued drilling both deep and shallow targets in the mine site area, using historical drilling and geophysical data as guides and regional work including soil sampling on the Huckleberry North claims, directed toward developing new geophysical or drill targets for 2014/2015;
Ootsa, ongoing drilling of extensive copper-gold-molybdenum-silver porphyry mineralization at the Ox deposit, with 14,000 meters in 85-plus holes completed by Aug. 29;
Kitsault molybdenum project, Environmental Assessment Certificate issued in March, construction permits anticipated in late 2013;
Tulsequah Chief polymetallic project, extensive geological, geochemical and geophysical review generates two new anomalies;
Arctos Anthracite project (formerly Klappan), environmental baseline studies began in July to support environmental assessment process;
Large generative exploration programs being conducted by major mining companies, including Agnico-Eagle Mines Ltd. in partnership with Homestake Resource Corp. at the Homestake Ridge and Kinskuch gold-silver projects and Hecla Mining Co., which invested in the Dolly Varden Project where Dolly Varden Silver Corp. undertook a 3,063-meter (14 hole) summer 2013 exploration program targeting extensions of the historically mined Torbrit deposit.
Mineral exploration in north-central British Columbia had a varied focus in 2013. Several advanced projects and mines are expected to reach significant milestones during the year, including production startup at the Mt. Milligan Mine; planning for future exploration outside area of current resource at Kemess Underground; and completion of a feasibility study for the Blackwater project.
There is considerable mineral potential across the region in a variety of commodities and many attractive projects with potential for development given improved global economic circumstances and venture capital accessibility.
BC geologists say grassroots and early stage exploration may see an upsurge with the Mt. Milligan mine coming online and the Blackwater gold project being developed. Recent exploration activities encompass epithermal gold-silver in the Nechako Plateau and Toodoggone Region; nickel alloy in the Cache Creek Terrane; copper-gold porphyry in the Quesnel Terrane and Toodoggone; and zinc-lead-silver and niobium-enriched carbonatite along the Ancestral North American margin. Exploration was particularly intense in the Nechako Plateau and Toodoggone Region.
Junior companies with copper-gold projects in the Quesnel Terrane continue to face financing challenges in an adverse market, and several projects shelved in 2012 remained on hold in favor of flagship projects elsewhere.
Some companies, however, commenced programs late in 2012 and others forged ahead in 2013.
West Cirque Resources, for example, reported discovery of two new zones of high-grade copper-gold-silver mineralization during a mapping and rock sampling program at the 1,419 hectares (3,506 acres) Heath copper-gold porphyry project located 108 kilometers (67 miles) northwest of Fort St. James.
Mapping and rock sampling carried out in September documented widespread potassic (biotite-magnetite and K-feldspar) and sodic (albite) alteration and veining associated with chalcopyrite mineralization.
Samples from the new mineralized zones assayed up to 7.7 percent copper, 2.33 grams per metric ton gold and 78.5 g/t silver.
The property is in the Hogem Batholith in the prolific Quesnel Trough, 30 kilometers south of the Kwanika deposit (142 million metric tons of 0.31 percent copper and 0.29 g/t gold indicated resource) and 74 kilometers (45 miles) northwest of the Mt. Milligan mine (482 million metric tons of 0.20 percent copper and 0.39 g/t gold proven and probable reserve).
Serengeti Resources Inc. completed a preliminary economic assessment on Kwanika in March that envisions an open pit and underground mine that would produce 545 million pounds copper, 489,000 ounces gold, 2.45 million ounces silver and 5.25 million pounds molybdenum over 13.5 years of mine life.
A large mineralized envelope exists outside of the Kwanika resource currently included in the mine plan which offers the project expansion potential.
Serengeti continued its ongoing staking spree in Northwest and North-central British Columbia in 2013, snagging a 100 percent interest in the 5,675-hectare Red Chris North Property located 10 kilometers (six miles) north of Colorado Resources' North Rok property.
Serengeti mounted an ambitious 2013 exploration program of geochemical sampling, prospecting and geological mapping on several properties in the region, including Red Chris North, Osalinka (located 75 kilometers (46 miles) northwest of Kwanika, and the recently acquired the Rottacker claim block (adjacent to Kwanika) and the Fleet Property (adjacent to the Kemess North gold-copper deposit) that yielded attractive drill targets.
At Rottacker, for example, three rock samples returned 6.6 percent copper, 141 g/t silver, 1.0 g/t gold; 2.2 percent copper, 73 g/t silver, 0.72 g/t gold; and 0.38 percent copper, 0.11 g/t gold, respectively.
Molybdenum-copper projects in the Nechako Plateau saw limited work.
Other 2013 exploration highlights in north-central B. C. include 97.3 percent gold recovery in metallurgical studies and completion of a 12-hole, 3,863-meter diamond drilling program for 3Ts (Independence Gold Corp); completion of geochemical and geophysical surveying that expanded a deposit-scale anomaly to 600-meter-by-1,400 meter and identified other interesting geophysical targets in West Grid 4 at Blackwater West (RJK Explorations Ltd.) (A late 2012 two-hole drill program partially delineated the anomaly, reporting metal values up to 23 grams silver, 0.64 percent zinc, 0.45 percent lead an 0.22 percent copper ; and discovery of barium, zinc and lead mineralization in the Sitka showing on the Eastern Akie panel in extensive exploration at Akie (Canada Zinc Metals Corp).
Metallurgical coal is British Columbia's biggest export commodity, representing over 60 percent of mineral production in 2011. Metallurgical coke is a solid carbonaceous residue produced from low-ash, low-sulfur bituminous coal and is a key ingredient in steel production where it is used as a reducing agent in the smelting of iron in blast furnaces. As such, global economic trends in metallurgical coal reflect the state of manufacturing and construction sectors.
In the Northeast region, 2012 was a record year for exploration investment and activity due to continued mine development and exploration activity in the coalfield, operating mines continued to advance expansion plans, and other projects moved toward opening new mines. Year-on-year exploration expenditure in 2012 more than doubled (2.7 times) to C$109.3 million; and drilling meterage nearly doubled (1.8 times) to about 120,250 meters.
Though the jury is still out on exploration spending in the region in 2013, the presence of majors such at Teck Coal and Glencore-Xstrata plc, in active coal projects bodes well for local industry's outlook.
Ridley Terminals, the main port servicing the Peace River Coalfield, is in the third year of an expansion project that will double the total annual terminal capacity to 24 metric tons by the end of 2014. This expansion will accommodate rising export coal volumes from existing and new mines in Northeast B. C.
2013 exploration highlights include: Completion of completed drilling and coal quality sampling program and coal quality database over the past 24 months for Carbon Creek Metallurgical Coal deposit (Cardero Resources Corp); and completion of preliminary economic assessment for a proposed open-pit operation with a 31-year mine life at the Huguenot Project (Colonial Coal International Corp.