Thanks largely to its burgeoning mining sector, Nunavut is leading the Canadian territories in economic growth. With the start-up of the Mary River iron mine late in 2014, Nunavut now has two operating mines and a number of advanced stage gold, uranium, diamond and base metals projects poised to join the ranks in the coming years.

"All in all, real gross domestic product (in Nunavut) is expected to grow by 3.8 percent in 2015, the highest rate of growth among the provinces and territories," The Conference Board of Canada wrote in its summer report on the territories.

Despite a sharp drop in mineral exploration spending in recent years, more than C$1.8 billion has been invested in exploration and deposit appraisals in Nunavut since 2010, according to figures compiled by Natural Resources Canada. This includes an estimated C$174.3 million on such expenditures this year, roughly a 21 percent uptick from the C$144.6 million spent last year.

Agnico Eagle CEO Sean Boyd said Nunavut has the "unique combination that many companies in the industry are looking for … the ability to do business combined with significant exploration potential."

In July, Honorable Leona Aglukkaq, minister of the Canadian Northern Economic Development Agency, and Member of Parliament for Nunavut, announced federal funding for the Iqaluit Marine Infrastructure Project, a roughly C$84.9-million upgrade to the port facilities at Nunavut's capital.

"Our government will continue to work with the government of Nunavut to ensure infrastructure funding continues to flow in our territory as we focus on creating jobs, promoting growth, and building strong, prosperous communities across Canada's North," said Aglukkaq.

When completed, this facility is expected to significantly reduce offload times; increase safety; provide safe harbor; serve as a potential base of operations for military or search and rescue operations; enhance the feasibility of resource and economic development in the North; and build on Canada Arctic sovereignty.

Peregrine Diamonds Ltd., which has outlined an inferred mineral resource of 8.57 million carats of diamonds at its Chidliak diamond project about 120 kilometers (75 miles) from Iqaluit, said the port would provide an important supply point for construction and operations, if a mine is developed at its southern Baffin Island project.

"In addition to being a key component of the infrastructure required to construct and operate a diamond mine at Chidliak, the efficiencies that the port will bring will improve the quality of life and lower the cost of living for the people of Iqaluit and the communities on Baffin Island," noted Peregrine President and CEO Tom Peregoodoff.

Coming gold mines

Roughly C$126.5 million, or roughly 72 percent, of the anticipated exploration expenditures in Nunavut this year is being invested in the search for precious metals.

A 100,000-meter drill program at Agnico Eagle Mines Ltd.'s Amaruq gold project in the Kivalliq District accounted for more than C$30 million of the precious metals exploration spending in Nunavut.

After completing an initial 50,000 meters of drilling through May, Agnico published an updated inferred resource of 9.7 million metric tons grading 6.47 grams per metric ton (2 million ounces) gold for Amaruq, a 35 percent increase in gold content since the end of 2014. Most of this resource - of 9.1 million metric tons grading 6.56 g/t (1.9 million oz) gold - is located in the Whale Tail deposit.

Agnico is evaluating the potential of developing Amaruq as a satellite to the Meadowbank Mine about 50 kilometers (30 miles) to the southeast.

In July, the company reported plans to include the Vault Pit in the mine plan for Meadowbank, which is expected to extend the life of the mine by about one year, to the third quarter of 2018.

The added year is expected to help bridge the gap between the end of production at Meadowbank and the potential start of a satellite operation at Amaruq.

Amaruq is becoming a key component in Agnico's larger strategy for Nunavut. Meliadine, a large gold project located near Rankin Inlet, is another.

In March, Agnico published an updated technical report that details a plan to mine 3.3 million ounces of gold in 13.9 million metric tons, averaging 7.44 g/t gold, of proven and probable mineral reserves in the Tiriganiaq and Wesmeg deposits at Meliadine.

With an eye on starting production at Meliadine in 2019, Agnico budgeted US$85 million for underground development; construction; infrastructure and permitting during 2015. The company said the underground development will allow for more cost-effective exploration and conversion drilling of the deeper parts of the Tiriganiaq and Wesmeg deposits and help to optimize potential mining plans.

"In Nunavut, we continue to focus on moving several of the pieces forward so that we're in a position in the first part of next year to decide how we move that large Nunavut platform forward," Boyd explained in August.

TMAC Resources Inc.'s Hope Bay project in the Kitikmeot region of Nunavut, however, will likely be the next Nunavut gold mine to go into production.

In January, the company published an upgraded resource of 14.73 million metric tons of measured and indicated resources grading 9.6 grams per metric ton (4.44 million ounces) gold for the Hope Bay project; and 5.39 million metric tons of inferred resources grading 7.6 g/t (1.65 million oz) gold.

This summer, TMAC closed C$155.1 million initial public offering.

"Our priority now is to continue advancing the Hope Bay Project towards planned first production by the end of 2016," said TMAC Executive Chairman Terry MacGibbon.

To achieve this, TMAC has budgeted C$165 million for "path to production" expenditures during 2015. More than C$15 million of the 2015 budget will be invested in exploration, which will include both delineation and resource expansion drilling.

Roughly 125 kilometers (80 miles) south of Hope Bay, Sabina Gold and Silver is looking for the ideal scale of operation for its Back River gold project.

In May, the company announced positive results from a feasibility study that envisions a 6,000-metric-ton-per-day mill producing an average of about 346,000 ounces of gold annually over a 10-year mine life.

To build this mine, Sabina would need to raise roughly C$695 million, which would be challenging in current capital markets.

In July, the company commissioned a second feasibility study to evaluate the potential of a smaller, 3,000-metric-ton-per-day operation that would produce an estimated 250,000 ounces of gold annually over a 10-year mine-life.

Golden prospects

In addition to the Nunavut gold projects that look to be tracking towards production over the next five years, three early stage gold exploration projects in the territory saw significant drilling in 2015.

Roughly 180 kilometers northeast of the Meadowbank Mine, Auryn Resources Inc. invested C$4 million in exploration at the Committee Bay gold project.

Auryn became involved in the project as part of joint venture with North Country Gold Corp. By June, however, the JV had transitioned into a full-fledged merger.

Over the past two decades North Country Gold and earlier iterations of the company has identified more than 50 gold occurrences along the 300-kilometer- (185 miles) long Committee Bay Greenstone Belt, including the 1.6-million-ounce Three Bluffs gold deposit.

With an eye on the larger potential of the expansive property, Auryn's 2015 program tested high-priority exploration targets stretching for some 100 kilometers (60 miles) southwest of Three Bluffs.

Northquest Ltd. completed a 7,800-meter drill program at its Pistol Bay gold project, a 861-square-kilometer (332 square miles) property covers 90 kilometers (55 miles) of the Pistol Bay Trend, a west-trending series of surface gold occurrences and gold zones parallel to, and 80 kilometers (50 miles) south of a similar trend that hosts Agnico Eagle's Meliadine gold mine project.

Northquest has completed three airborne geophysical surveys and 13,660 meters of drilling in 66 drill holes over the previous four field seasons. This work has turned up what the company considers economically interesting drill intersections at three targets - Sako, Vickers, and Bazooka - that occur over a 20-kilometer (12 miles) segment of the Pistol Bay Trend.

This year's program primarily targeted Vickers, a zone where drilling has cut broad intercepts with good gold grades including: 156.5meters averaging 8.23 g/t gold in hole PB-12-22; 138.4 meters grading 3.79 g/t gold in hole PB-13-06; and 221.7 meters of 1.65 g/t gold in hole PB-14-08.

"The next phase of exploration includes the largest amount of drilling ever completed at the Vickers gold zone in a single drilling season, and we are confident that the program will have a great impact on defining the size of the gold zone," said Northquest President and CEO Jon North.

Idling zinc projects

While gold projects in Nunavut continue to forge ahead, a pair of base metals projects on the verge of development has idled.

MMG Ltd., which submitted a project description to the Nunavut Impact Review Board to initiate the environmental review and permitting process for its Izok Corridor zinc-copper project in 2012, has retrenched for further analysis.

The Izok Corridor project includes two massive sulfide deposits: Izok Lake, which has a mineral resource of 14.8 million metric tons averaging 12.8 percent zinc and 2.5 percent copper; and High Lake deposit, which hosts a resource of 17 million metric tons averaging 3.4 percent zinc and 2.3 percent copper.

MMG's original plan was to develop 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.

The company has since advised Nunavut regulators that it is evaluating engineering alternatives aimed at improving project economics.

One hurdle to an economically viable project at Izok, according to the MMG, is the cost of building the road and other infrastructure. The company says there would be many benefits for the improved regional infrastructure the company needs in the Kitikmeot region where the project is located, including a C$5.1 billion increase to the gross domestic product of Nunavut and a C$2.5 billion bump to the GDP of Canada.

Hackett River is another large base metals project in the Kitikmeot region that is being delayed in the midst of permitting.

According to the most recent published resource, Hackett River hosts 25 million metric tons of indicated resources averaging 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.

In February, Glencore Canada Corp. informed the Nunavut Impact Review Board that it is delaying the submission of a draft environmental impact statement for the Bathurst Inlet Port and Road, a key piece of infrastructure for this enormous volcanogenic massive sulfide project.

"Developing a project of this size is complex, especially in the context of uncertain economic growth and volatile metal prices," the company explained.

Iron and diamonds

A bright spot for the Nunavut mining sector is that Baffinland Iron Mines Corp. loaded 53,624 metric tons of iron ore from the Mary River project on a ship bound for Germany. This is the first shipment from one of the richest and northernmost iron projects in the world.

"Iron ore from the Naluujaak pit at Mary River mine will soon become an ingredient in European steel, and Nunavut's role in contributing to the global economy has just increased," said Baffinland CEO Tom Paddon.

The company anticipates shipping roughly 3.5 million metric tons of iron ore per year from the northern Baffin Island project for an initial mine life of 21 years.

On southern Baffin Island, Peregrine Diamonds Ltd. carried out a C$3.75 million exploration program chiefly focused on collecting the information needed to complete a preliminary economic assessment for the potential mining of the CH-6 and CH-7 kimberlites at its Chidliak diamond project.

North Arrow Minerals Inc. turned up some rare and beautiful yellow diamonds at its Qilalugaq project on the Melville Peninsula.

Qilalugaq encompasses Q1-4, a kimberlite with 48.8 metric tons of inferred resource averaging 53.6 carats per hundred tons for a total of 26.1 carats, to a depth of 205 meters.

This year's Qilalugaq program primarily focused on valuation a 1,353 dry-metric-ton sample collected from Q1-4 during 2014.

While the sample produced a number of rare yellow diamonds, the overall per-carat value averaged only US$36 per carat. The company said the sample size was too small to properly evaluate a kimberlite with two distinct diamond populations - rare Type Ib yellows and non-yellow diamonds.

"Additional evaluation of the project will require the recovery of a larger diamond parcel including sufficient carats from each of the two populations to allow for a more confident assessment. North Arrow will review options for the cost-effective collection of a larger sample, taking advantage of Q1-4's large size and advantageous location near tidewater and the Hamlet of Repulse Bay (Naujaat)," said North Arrow President and CEO Ken Armstrong.

Author Bio

Shane Lasley, Publisher

Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.

• Email: [email protected]
• Phone: (907) 726-1095
• https://www.linkedin.com/in/shane-lasley-ab073b12/