Big projects advance in Kitikmeot region
Explorers report 2013 progress, follow-up plans in 2014 for Izok Corridor, Hackett River, Back River, Hope Bay and other projects
Last updated 5/25/2014 at Noon
All exploration in the Kitikmeot region of Nunavut in 2013 was carried out in search of gold and base metals. Mid-tier and major companies conducted most of the work, with mineral exploration and deposit appraisal expenditures totaling an estimated C$121 million in the northern territory's westernmost region.
MMG Resources Inc. continued work at its Izok Corridor and Hood zinc-copper projects.
The Izok Corridor project includes the High Lake and Izok Lake volcanogenic massive sulfide deposits.
Exploration on the Izok Corridor primarily focused on regional target identification.
MMG submitted a project description in 2012 to the Nunavut Impact Review Board to initiate the environmental review and permitting process for the project.
The proposed plan includes a mine and mill at Izok Lake, a mine at High Lake, and a port at Grays Bay on the Coronation Gulf from which mineral concentrates would be shipped seasonally, all connected by a 325-kilometer (202 miles) all-weather road.
Following the submission, MMG requested a halt to the review process for the Izok Corridor project to examine options to improve the project's economic viability.
The company originally planned to submit a revised project description to the NIRB in late 2013, but has since indicated this submission will take place in late 2014 at the earliest.
The design options could include the addition of the Hood deposits to the project's NI 43-101-compliant resources. MMG had planned to submit the revised project description to Review Board by December 2013, but has now indicated that a status update will be provided in the fourth quarter of 2014. This revised project description will include consideration of alternative engineering options and will be provided after the completion of the 2014 exploration program which is intended to identify more mineral resources within the Izok Corridor.
The High Lake deposits are located within the High Lake greenstone belt in the northern part of the Slave Province. Three main mineralized zones, AB, D, and West, have been identified on the property from which an indicated mineral resource of 17.2 million metric tons grading 3.35 percent zinc, 2.25 percent copper, 0.31 percent lead, 70 grams-per-metric-ton silver, and 0.95 g/t gold is estimated. Both open-pit and underground mines are contemplated on the High Lake property, with an estimated mine life (as per the project description submitted to Nunavut regulators in 2012) of 12 years.
The last published resource for the Izok deposits estimates indicated resources of 14.4 million metric tons grading 12.9 percent zinc, 2.5 percent copper, 1.3 percent lead and 70.5 g/t silver, and 0.95 g/t gold and inferred resources of 369,000 metric tons grading 6.4 percent zinc, 3.8 percent copper, 0.3 percent lead, and 39 g/t silver. The 2012 project description suggested a mine life of 11 years for the deposits, but one of the design alternatives being considered would shorten that to five to seven years.
Much of the work completed on the Izok Corridor project in 2013 was focused on engineering studies to assess design alternatives. The exploration program concentrated on regional target identification along the proposed road route.
Work completed included geological mapping, prospecting, and ground and airborne geophysical surveys. No results from this program have been released.
Progress at Hackett River
The Hackett River silver-zinc project is owned by Glencore Xstrata plc, a company formed in May 2013 from a merger of Glencore International plc and Xstrata plc. In 2013, the company completed more than 38,000 meters of diamond drilling focused on identifying extensions of known deposits and testing geophysical and geochemical targets for new discoveries.
The Hackett River project includes three main silver-rich zinc deposits: Main Zone, Boot, and East Cleaver, as well as the Jo Zone satellite deposit. All of these deposits are located within a 2 kilometers by 5 kilometers area, and occur as tabular semi-massive to massive lenses of sulphide mineralization at, or near, the contact between underlying felsic volcanics and overlying pelitic sediments.
Hackett River is considered one of the largest undeveloped VMS deposits in Canada, and possibly the world. An updated NI 43-101 resource estimate was released in May 2013 that includes 25 million metric tons of indicated resources at average grades of 4.2 percent zinc, 0.6 percent lead, 0.5 percent copper, 130 grams per metric ton silver and 0.3 g/t gold, and 57 million metric tons of inferred resources grading 3.0 percent zinc, 0.5 percent lead, 0.4 percent copper, 100 g/t silver and 0.2 g/t gold. Compared to the previous resource estimate released December 2011, this represents a 34 percent increase.
About C$33 million was spent exploring Hackett River and Wishbone in 2013. The diamond drill program included 114 drill holes totaling 38,536 meters. Most holes were targeted at extending known deposits, and testing geochemical and geophysical targets for new discoveries. A geotechnical drilling program was also completed at the known deposits in support of a pre-feasibility study.
Glencore has indicated that submission of a draft environmental impact statement to the Nunavut Impact Review Board, previously planned for 2013, will be deferred until a PFS is completed.
The Wishbone property spans the 115 kilometers (71 miles) length of the Hackett River greenstone belt, alternatively referred to as the Wishbone greenstone belt, and is comprised of 238 mineral claims with a combined area of almost 200,000 hectares (494,200 acres).
The property also encloses the Musk VMS deposit, discovered by Noranda Mining and Exploration Inc. in 1979, and owned by Glencore. Exploration on Wishbone in 2013 was limited to electromagnetic and gravity airborne geophysical surveys to expand the geophysical coverage of the property and to generate targets to follow up in future programs.
More gold at Back River
Glencore has been working with Sabina Gold & Silver Corp., operator of the neighboring Back River gold project, to acquire permits for the Bathurst Inlet Port and Road project, which would support shipping infrastructure for both the Hackett River and Back River projects. The company planned to submit a draft EIS for the project to Nunavut regulators in 2013, but the results of a geotechnical drilling program at the proposed port site suggest that the foundation material at that site is not adequate. As such, the DEIS will be deferred until further geotechnical drilling has been completed to assess the foundation material at an alternate port site.
Glencore also partnered with Sabina to advance the Bathurst Inlet Port and Road, which proposes to construct a road to connect the two projects and a port at Bathurst Inlet.
Sabina continued aggressively advancing its Back River project in 2013. An updated resource estimate was published in February 2013, a substantial drilling program was carried out, and a preliminary feasibility study was completed for Back River in October. The company has initiated a feasibility study, and is expected to submit a draft Environmental Impact Statement to Nunavut regulators in early 2014.
The Back River gold project comprises six properties, including Bath, Boot, Boulder, and Del, and is located in the northeastern corner of the Slave structural province.
The project is currently focused on the other two properties, George and Goose. Both properties host multiple deposits of banded iron formation-hosted gold mineralization.
The 2013 program at Back River had a budget of $70 million and included 82,000 meters of diamond drilling, engineering and environmental studies, and infrastructure work. Much of this work was designed to support the PFS, released October 2013, and the subsequent feasibility study, as well as the DEIS which the company plans to submit in the first quarter of 2014.
The Goose property includes the Goose Main, Llama and Umwelt deposits each of which have a NI 43-101-compliant resource, as well as a number of earlier stage targets, including the Boomerang, Camp, Echo, Goose Neck, Goose Hook, Goose Tail, Resurgence, and Wing zones.
Some exploration drilling in 2013 targeted Echo, a mineralized zone discovered in 2009, as well as the Boomerang and Wing zones.
Drilling at the Llama deposit in 2013 was focused on converting existing resources to the measured and indicated categories within the proposed pit shell. Thirty-three drill-holes were completed for this purpose, with best results of 19.86 g/t gold over a 16.65-meter interval from hole 13GSE292, and 11.56 g/t gold over 32.40 meters from 13GSE285B. Additional resource conversion drilling to upgrade from the inferred to indicated resource categories was targeted at the portions of the Llama deposit that are proposed to be extracted via underground mining.
Sabina released an updated NI 43-101 resource for Back River in February 2013 that incorporates results of the 2012 drilling.
The estimate consists of measured and indicated resources of 24.2 million metric tons grading 6.0 g/t gold, as well as inferred resources of 7.7 million metric tons grading 7.8 g/t gold, for more than 6.5 million total contained ounces.
The positive PFS received by the company in October 2013 only incorporates a fraction of that resource, as it does not consider inferred resources.
The PFS outlines an operation which would process 5,000 metric-tons-of-ore-per-day, for an average production of 287,000 ounces-per-year gold.
This would continue over a mine life of more than eight years, for a total production of 2.4 million oz gold.
The base price of gold used in the study was US$1,350 per ounce, with scenarios at US$100 and US$200 above and below the base price also being considered.
The PFS proposes mining from six open pits (Goose Main, Llama, Umwelt, Locale 1, Locale 2 and Lone Cow Pond North), with most underground mining occurring at Umwelt.
Sabina reported an updated mineral resource estimate for the Back River project in March based on results from drilling in 2013 and geologic modeling on all deposits. This new estimate consists of a measured mineral resource of 10.4 million metric tons grading 5.2 g/t for more than 1.76 million contained oz gold, an indicated mineral resource of 17.9 million metric tons grading 6.1 g/t for nearly 3.54 million contained ounces gold and an inferred mineral resource of 8.2 million metric tons grading 7.3 g/t for a contained 1.93 million oz gold.
In 2014, Sabina planned to conduct a C$19 million exploration program that includes 8,600 meters of drilling, engineering for the feasibility study, environmental and permitting activities, other development studies and property holding costs. Including corporate general and administrative and other project--elated costs, the annual budget for 2014 is expected to be about C$24 million.
Sabina April 28 reported finalizing two important agreements with the Kitikmeot Inuit Association, including one that forms a development trust fund with an objective of contributing funding towards short and long term KIA development projects and initiatives including training and education as well as infrastructure projects that will serve to support sustainable economic development in the Kitikmeot region.
Under terms of the other pact, a capacity funding agreement, Sabina will fund the KIA based on an agreed work plan and budget for the environmental assessment and permitting processes at Back River. Funding will occur over an estimated period of three years ending in 2016, which is the anticipated completion of the project's permitting process.
The KIA is the surface title holder of 104,278 square kilometers (40,251 square miles) of Inuit -owned lands in the Kitikmeot Region, including the majority of the lands which comprise the Back River Gold Project. The KIA represents the interests of Inuit beneficiaries in the region under the Nunavut Land Claims Act and is a participant in the environmental assessment process of Back River.
Charlie Evalik, president of the KIA, acknowledged Sabina for its support of KIA's ambitions to create opportunities for the beneficiaries of the region. "The KIA is committed to principles of economic sustainability and environmental stewardship in respect of Back River. We view these agreements as important steps to establishing a cooperative long-term relationship which is aligned with these principles. Sabina is a welcome participant in this process."
Gold exploration at Hackett River
Sabina's Wishbone Gold project occupies the southeastern portion of the Wishbone greenstone belt that also hosts the Hackett River deposits. The company sold the Hackett River project and a substantial portion of Wishbone to Glencore Xstrata (formerly Xstrata Zinc Canada) in 2011, retaining those claims viewed as prospective for BIF-hosted gold, analogous to the primary host rocks at the Back River project. Sabina also acquired additional claims to bring the property to its current size of approximately 79,000 hectares (195,209 acres).
Multiple gold prospects have been identified on the property over the last several years, including Rocky, Bullwinkle, Lucky 7, Haunaco, Tauntaun, Malley, Dark Side, and Hawaii.
In 2012, 33 holes were drilled for a total of 7,479 meters on the Lucky 7, Tauntaun, Rocky, and Haunaco prospects. A variety of surface exploration work including ground geophysical surveys, geological mapping, prospecting and soil sampling also was carried out at the Dark Side, Lucky 7, Malley,
Hawaii, Hawaii South, and Haunaco prospects; anomalous gold values were returned from samples collected at Dark Side, the Hawaii prospects, Malley and Tauntaun.
A reconnaissance surface exploration program was carried out on three blocks of claims within the property in 2013, and included prospecting and 1:10,000 scale geological mapping. Program objectives were to confirm the presence of BIF on the claims, and sample any BIF if found, as well as to map and characterize historically identified volcanic rocks. A total of 58 samples were collected in 2013, some
Further mapping and follow-up of gold anomalies is planned for 2014.
Hope Bay bounds forward
The project occupies most of the 80 kilometers long and seven to 20 kilometers wide Hope Bay greenstone belt, and is located within the Bathurst structural block of the northeast Slave Structural Province.
The Hope Bay belt includes three major target areas. From north to south, they are the Doris deposits, the Madrid trend, and the Boston deposit.
With the completion of the project acquisition, TMAC inherited more than C$800 million worth of exploration data, development, and infrastructure from previous operators.
This total includes underground development at both Doris and Boston.
In 2013, TMAC re-opened the Doris camp in April, initiated a drill program in June, and activated a variety of environmental monitoring studies. The company also negotiated renewal of the commercial lease for the site from the Kitikmeot Inuit Association, and renewal of the Type A water license from the Nunavut Water Board.
A total of 29,622 meters of diamond drilling was completed in 63 holes. The focus of work in the first half of the season was on "greenfields" exploration targets, which had little or no drilling completed in the past. In the latter half of the program, when limited daylight and increasingly inclement weather made helicopter-supported drill moves difficult, the focus shifted to expanding the resource at the Doris deposits. A sealift program also re-supplied the Doris camp and returned equipment to site that had been in storage.
In November, TMAC reported completion of a preliminary economic assessment and an updated NI 43-101 resource estimate for the Hope Bay project.
The preliminary economic assessment includes sequential development of the Doris, Madrid and Boston deposits, with relatively low start-up capital costs due to the infrastructure already in place. These operations would have a combined mine life of 10 years, and produce an average of 224,000 oz of gold per year. The estimate includes 8.2 million metric tons of measured and indicated resources grading 10.56 g/t gold as well as 5.1 million metric tons of inferred resources at an average grade of 10.94 g/t gold, for more than 4.5 million total contained ounces of gold.
In terms of permitting, TMAC signed a five-year renewal of the commercial lease for Doris North with the Kitikmeot Inuit Association, and received approval for a 10-year renewal of its Type A Water License for that deposit. Combined with the Doris North project certificate already in place, all necessary permits are secured to allow mining and milling to start at that deposit. This work could begin as early as the fourth quarter of 2015.
The company May 1 reported raising C$78 million in equity financing to further advance the Hope Bay project.
Net proceeds of the offering will be used to fund TMAC's 2014 program including exploration, engineering, environmental permitting and compliance, a pre-feasibility study and for working capital and general corporate purposes. Coincident with the closing of the financing, the company repaid a C$15 million convertible loan, plus interest owed to Newmont, which was scheduled to mature on Dec. 31, 2014. The financing, along with current funds, after the loan repayment, leaves about C$72 million in the company's treasury.
TMAC Executive Chairman Terry MacGibbon said the financing "clearly demonstrates the strong endorsement by investors of the quality of Hope Bay and the strength of the company's management team and its operating philosophy.
Pending 2014 results, TMAC plans to conduct a pre-feasibility study by early 2015, which, when completed, will allow the company to consider equity and debt project-financing options.
"With new funds on hand, no debt, and the support of two strong, strategic shareholders in Newmont and Resource Capital Fund, the company looks forward with great confidence to realizing its goal of developing Canada's next gold district at Hope Bay," said TMAC CEO Catherine Farrow.
"Since acquiring the property in March 2013, the Kitikmeot Inuit Association and TMAC have worked together to establish a mutually beneficial relationship on which to advance Hope Bay in the best interest of all stakeholders.
We are very fortunate in having regulatory approvals in place that allow us to put Doris North into production and other permits that allow underground advanced exploration including bulk sampling at Boston and surface exploration drilling at Doris, Madrid and Boston," she said.
TMAC officials hope to significantly de-risk the Hope Bay project by carrying out an extensive surface drill program designed to upgrade mineral resource classifications, add to the global gold resource, re-open the existing Doris underground infrastructure, advance engineering and planning for the mine environments and the processing plant, advance the environmental permitting process for Madrid and Hope Bay as a whole, and conduct a pre-feasibility study.
"A large portion of the approved 2014 plan and budget will consist of surface drilling to upgrade the mineral resource estimates to higher classifications and to add to our global gold resource," Farrow said in a May 13.
Much of the work will be conducted at Doris and Madrid, initially from ice-based platforms on lakes while conditions permit and then from land-based platforms until the drilling is terminated at the end of October.
Farrow said drilling began April 30 at Madrid South with four diamond drill rigs that were left onsite over the winter.
Two deeper capacity rigs were airlifted to Hope Bay on May 6 and both have initiated drilling on Doris targets.
The six diamond drill rigs are expected to complete a total of 57,000 meters as part of a planned total expenditure of C$28 million and average all-in cost per meter drilled of about C$408 per meter, including helicopter transportation, assaying, etc., as well as camp and corporate-related allocations.
The intersections of high-grade gold mineralization at depth over mineable widths in the later part of the 2013 drilling program at both Doris and Madrid South confirmed the high potential for the discovery of additional mineral resources at Hope Bay, she added.
Work, meanwhile, is underway to re-open the Doris portal and ramp to facilitate future underground mapping, underground drilling and mine design. In addition, work has begun on environmental permitting of the Madrid and Boston trends for advanced exploration, engineering and project execution planning and will continue throughout 2014.
Strategic alliance at Itchen Lake
The Itchen Lake gold project, which straddles the Nunavut-NWT border, is being explored under a strategic alliance between Transition Metals Corp., newly merged with HTX Minerals Corp., and Nunavut Resources Corp. In the past, the property has received considerable exploration interest, with about 80 drill holes completed on the property between 1963 and 1995, and 74 gold occurrences defined over a 40-kilometer strike-length of banded iron formation-hosted mineralization.
Before the Transition-HTX merger, HTX completed two sampling programs in 2012 on known occurrences to verify historic sampling results.
A total of 102 samples were collected from nine showings.
The best results were returned from showing R61 which is 200 meters long and up to 4.2 meters wide.
Nine samples collected in 2012 had assays between 0.09 g/t gold and 59.00 g/t gold, as compared to 13 historic samples with assays between 2.4 and 42.9 g/t gold.
The company also undertook a compilation of historic exploration data for the property.
Nunavut Resources provided about C$1.0 million in funding to Transition in 2013 for an exploration program that included an 800 line-kilometers airborne electromagnetic and magnetic geophysical survey over the property. More than 60 conductivity anomalies were identified, with some located along the same trends as known gold occurrences.
Reconnaissance surface exploration, including prospecting, 1:10,000 scale geological mapping and sampling was completed on the property in August, and results are intended to help with drill targeting. The Transition Metals-Nunavut Resources strategic alliance also initiated a remote predictive mapping research project that will incorporate Earth observation data, geophysical data, and geochemical surveys and other geoscience information to produce predictive maps. These maps will aid in targeting for future field activities.
Inactive projects in 2013
Other mineral projects in the Kitikmeot region did not see significant activity in 2013.
These include MMG Resources Inc.'s owns the Gondor copper-lead-zinc deposit, located southeast of Izok Lake; the Hammer project operated by Stornoway Diamond Corp., and is named for the Hammer kimberlite discovered in 2009; Shear Diamonds Ltd.'s past-producing Jericho diamond mine, which closed indefinitely in September 2012; Adamera Minerals Corp. (formerly Diamond North Resources Ltd.'s) Amaruk diamond, gold and nickel potential project, and the neighboring Halkett Inlet gold project; the Oro (Hope Bay) gold project owned by North Arrow Minerals Inc. and located adjacent to TMAC Resources' Hope Bay project; and Hornby Bay Mineral Exploration Ltd.'s Coppermine uranium project.
Some new projects, however, may see activity in 2014. These include Tundra Copper Corp., which aggressively staked more than 70,000 acres covering several showings within a 2,500-square-kilometer (965 square miles) area in the Coppermine District in 2013 in search of high-grade copper mineralization. Historical data from these showings indicate that extremely rich copper grades exist and that the area possesses the fertile geological environment required to host major copper deposits. The group of geologists and prospectors, who founded the junior visited the property in August, say they plan to carry out a substantial exploration program in 2014.