Mining Explorers 2016: Working ahead of the curve
Large programs by major miners spur Nunavut's 2016 exploration season
Last updated 2/3/2018 at 7:43pm
Nunavut seems to be ahead of the curve when it comes to recovering from the global downturn in mineral exploration spending. An estimated C$202.5 million was invested in unlocking this Canadian territory's mineral potential in 2015. This 28 percent increase over the C$158 million invested in 2014 came at a time when most jurisdictions around the world were continuing a four-year trend of sharp drops in mineral exploration.
While early estimates have Nunavut giving up some ground in 2016, a handful of big programs will help it top Canadian North destinations for mining explorers in terms of dollars spent.
"Among the three territories, Nunavut is expected to see the most exploration spending, the bulk of which will be done by senior companies," The Conference Board of Canada wrote in its summer report on the territories.
Nearly gold mines
With their eyes set on developing new gold mines, individual programs by TMAC Resources Inc. and Agnico Eagle Mines Ltd. combined for more than C$100 million of exploration spending in Nunavut during 2016.
TMAC Resources is on the final leg of developing a mine at its Hope Bay gold project in the Kitikmeot region of western Nunavut.
"We remain on track and on budget with our progress to advance the Hope Bay Project towards commercial production in early 2017," TMAC CEO Catharine Farrow told shareholders in August.
Oftentimes, a project on its last push toward production will set aside exploration until operations are established. This, however, is not the case for TMAC and the Hope Bay Mine project.
In July, this soon-to-be gold producer announced a C$56.5 million budget for an 18-month exploration and development program at Doris BTD (below the dyke), a deeper zone of high-grade gold adjacent to where mining has begun at Hope Bay.
Highlights from early 2016 drilling at Doris BTD include: 17.7 meters of 35 g/t gold in hole TM50003; 2.6 meters of 25.4 g/t gold in hole TM50007; 5.3 meters of 50.6 g/t gold in hole TM50010; and two meters of 97.7 g/t gold in TM50011.
"Management believes these results could significantly expand the current five-year mine life at the Doris mine and dramatically affect global reserves ... resources and annual gold production at Hope Bay," said Farrow.
Hope Bay currently hosts 14.19 million metric tons of proven and probable reserves averaging 7.7 g/t (3.5 million oz.) gold. Most of this gold (2.6 million oz.) is located in the Doris and Madrid deposits at the northern end of the Hope Bay property, with the balance found at Boston, a deposit about 40 kilometers (25 miles) to the south.
According to a pre-feasibility study completed in 2015, the Hope Bay mine is expected to produce 3.2 million ounces of gold over a 20-year mine life.
While TMAC geared up for initial production, Sabina Gold and Silver Corp. suffered a setback in its quest to develop a mine at Back River, a gold project about 125 kilometers (80 miles) south of Hope Bay.
After completing two feasibility studies for the Back River project in 2015 – one for a 6,000-metric-tons-per-day mill and a second that investigated starting with a less capital intensive 3,000-metric-tons-per-day operation – Sabina submitted an environmental impact statement for the financially robust but less capital-intensive project to the Nunavut Impact Review Board late in 2015.
While waiting on the NIRB determination, the company carried out a spring exploration program that tested three targets at Goose – Convergence, Kogoyok and Hivogani – one of several properties that comprise the larger Back River project.
While all of the new gold zones were showing potential as sources of additional gold in the area of deposits slated for development, an NIRB recommendation against advancing Back River to permitting dealt a blow to Sabina's plans.
In its report to the Nunavut Minister of Indigenous and Northern Affairs, the Review Board indicated that the Back River proposal could be reconsidered once uncertainties about effects the project might have on caribou and climate change were addressed.
Sabina contends that the NIRB findings are not consistent with the evidence provided and do not consider the local support for developing a mine at Back River. As such, the company believes there are strong grounds for the minister to reject the Review Board's recommendation and refer it back to the NIRB to consider terms and conditions for a project certificate.
As TMAC and Sabina worked to advance new mines in the Kitikmeot region, Agnico Eagle invested heavily into defining and expanding deposits that will provide additional feedstock for its mill at the Meadowbank gold mine in the Kivalliq region of southeastern Nunavut.
This year, Agnico is carrying out more than 125,000 meters of drilling at Amaruq, a satellite gold project about 50 kilometers (31 miles) northwest of Meadowbank.
Going into 2016, Amaruq had 16.9 million metric tons of inferred resources averaging 6.05 g/t (3.3 million ounces) gold. About 89 percent of this resource is found at Whale Tail, a deposit that is currently seen as an initial source of Amaruq ore to be trucked to Meadowbank, and the balance is hosted in the IVR and Mammoth 1 zones.
By the end of June, Agnico had completed 77,517 meters of drilling in 338 holes at Amaruq this year.
Nearly half of the phase 1 drilling for 2016 targets zones at the IVR deposit. Results have encouraged Agnico to consider the V zones at IVR – a series of parallel quartz vein structures immediately north of Whale Tail – to be a potential second source of open-pit ore at Amaruq.
Most of the balance of the phase 1 drilling targeted Whale Tail and zones immediately adjacent to the deposit.
Expanding Whale Tail and determining whether the V zones could become a second source of ore at Amaruq were the primary goals of a 50,000-meter second phase of 2016 drilling at Amaruq.
Agnico also began construction of a 62-kilometer (38 miles) road linking Amaruq to Meadowbank. The company was issued permits to begin this important haul route in March and expects to have it completed in 2017.
The company, meanwhile, has applied for permits to develop an exploration ramp and potentially collect a bulk sample at Whale Tail as well as submitted applications for permits needed for commercial production at the satellite deposit.
"We would expect to receive the permit in about two years' time, which would allow us to start production at Amaruq and start shipping to Meadowbank in 2019," Agnico President and CEO Sean Boyd said in August.
Agnico also continued to invest in exploration at Aura Silver Resources Inc.'s Greyhound property some 35 kilometers (22 miles) south of Meadowbank.
This year's program included mapping, prospecting, ground magnetic surveys and drilling and ground magnetic surveys.
At Meliadine, a gold project about 25 kilometers (15 miles) from the town of Rankin Inlet, Agnico advanced roughly 3,700 meters of underground development in 2016.
A technical study completed at the end of 2014 considers a mine for Meliadine that would produce roughly 350,000 oz. per year gold, based on extracting 1.39 million metric tons of proven and probable reserves averaging 7.44 g/t (3.3 million oz.) gold contained in the project's Tiriganiaq and Wesmeg deposits.
Boyd said management plans to present the board of directors "with recommendations on the entire Nunavut platform including Meliadine and Amaruq" early in 2017.
Earlier stage gold
In addition to Hope Bay, Back River and Amaruq, several earlier stage gold projects in Nunavut were targeted by mineral explorers this year.
About 180 kilometers (110 miles) northeast of the Meadowbank Mine, Auryn Resources Inc. continued to drill new gold discoveries identified at Committee Bay, a gold property that now blankets more than 380,000 hectares (939,000 acres) of the Committee Bay Greenstone Belt.
"The Committee Bay project represents one of the largest, high-grade gold endowed greenstone belts in the world with several preliminary gold discoveries to date," touted Auryn President and CEO Shawn Wallace.
Three Bluffs, the most advanced of the targets at Committee Bay, hosts 4.32 million metric tons of indicated resource averaging 4.91 g/t (683,000 oz.) gold; and 5.52 million metric tons of inferred resource averaging 5.43 g/t (965,000 oz.) gold.
Auryn, however, is focusing its exploration on understanding the larger potential of its expansive property.
"Our approach, in combination with the belt-wide reconnaissance exploration will be to put Auyrn in a solid position for the potential discovery of multiple high-grade gold deposits," explained Auryn Chief Geologist Michael Henrichsen.
Following up on these targets, the company completed 10,000 meters of drilling at Anuri and West Plains, both at the southwestern end of the property.
During a spring program, Auryn collected airborne geophysical data at Anuri, a prospect that lies about midway along Auryn's roughly 280-kilometer (175 miles) land package at Committee Bay. The company said the information from these magnetic, electro-magnetic surveys, coupled with drone imagery, and geochemical datasets has identified high-priority drill targets at Anuri.
Some 80 kilometers (50 miles) south of Agnico Eagle's Meliadine mine project, Nordgold is exploring similar gold mineralization at Pistol Bay.
Nordgold – a Netherlands-based gold producer – has been investing in Northquest Ltd.'s exploration of this 861-square-kilometer (332 square miles) property that blankets a trend of gold occurrences that extends 90 kilometers (55 miles) inland from Hudson Bay.
A maiden resource published in April outlines 7.79 million metric tons of inferred resource averaging 2.95 g/t (739,000 oz.) gold for Vickers, the most advanced deposit at Pistol Bay.
Following the completion of the resource estimate and technical report, Nordgold, which already owned more than half of Northquest's outstanding shares, offered to buy out the remaining shares of the Toronto-based explorer.
As of August, Nordgold owned roughly 97.6 percent of Northquest.
Howizter, a priority outlying target identified in the Pistol Bay technical report, was a priority exploration target for 2016.
Based on the results of sampling in 2015, it is now believed that Howitzer could be a larger and higher grade zone than Vickers.
Silver Range Resources Ltd., a company that transitioned its business model from exploring silver-zinc deposits in Yukon Territory to a project generator seeking gold, acquired a number of properties in Nunavut this year.
In July, Silver Range announced a deal with the privately held Panarc Resources to acquire seven gold properties, including four in Nunavut. Three of these properties – Esker Lake, Gold Bugs and Bling – collectively known as the Park Place Gold project, are iron formation hosted gold targets in the Contwoyto Lake – Back River area of Nunavut. The fourth – Hard Cash – is greenstone lode gold prospect in southwestern Nunavut.
Shortly following the deal with Panarc, Silver Range staked the more gold properties in Nunavut – Itchen, Happy Thought and Grumpy. The Itchen claims blanket nine gold targets about 78 kilometers (48 miles) west of the past-producing Lupin gold mine. Happy Thought and Grumpy are located near where a new road is being planned in the Kitikmeot region of western Nunavut.
The Nunavut government and Nunavut Resources Corp., a subsidiary of Kitikmeot Inuit Association, have signed a memorandum of understanding to build a port at Grays Bay on Coronation Gulf and a 350-kilometer (220 miles) road that links the deep-water arctic seaport to Contwoyto Lake, near the area of the Izok Lake zinc-copper mine project being advanced by MMG Ltd.
KIA, which is eligible for federal money that could help fund large portions of the project, is expected to build and own the port and road project.
It is hoped that the road would eventually be extended as an all-season road that follows the route of the ice road that currently services the diamond-rich areas of Northwest Territories, linking Nunavut's arctic coast to Yellowknife and Canada's road system.
MMG's Izok Corridor project consists of two deposits along the proposed route: High Lake, located about 50 kilometers (30 miles) south of the port; and Izok Lake at near the southern end of the proposed road.
High Lake hosts a resource of 17 million metric tons averaging 3.4 percent zinc and 2.3 percent copper; and Izok Lake has a mineral resource of 14.8 million metric tons averaging 12.8 percent zinc and 2.5 percent copper.
MMG submitted a project description to the Nunavut Impact Review Board to initiate the environmental review and permitting process for its Izok Corridor projects in 2012 but has since stalled the permitting and development process due to the high cost of establishing infrastructure.
All three of Crystal Exploration Inc.'s diamond projects in Nunavut – Hood River, Contwoyto and Muskox – are located near the proposed Izok Corridor road.
Early in 2016, Crystal drilled three holes at Muskox, a property located near the past-producing Jericho diamond mine. The best hole returned 1.13 carats of diamonds per metric ton.
In September, the company completed prospecting, till sampling, mapping, and ground geophysical surveys on all three of its properties with a particular focus on Muskox.
On Baffin Island, Peregrine Diamonds Ltd. is proposing the construction of a 160-kilometer (100 miles) road that links its Chidliak diamond project to Iqaluit, the capital of Nunavut.
In July, Peregrine published results from a preliminary economic assessment that envisions an open-pit diamond mine with an initial life of roughly 10 years by mining the upper reaches of the CH-6 and CH-7 kimberlite pipes at Chidliak. Production would start at the CH-6, a kimberlite with 4.64 million metric tons of inferred resource averaging 2.45 carats per metric ton (11.39 million carats) diamond to a depth of 260 meters; followed by CH-7, a kimberlite with 5.99 million metric tons of inferred resource averaging 0.85 c/t (4.23 million carats) diamonds to a depth of 240 meters. Both resources remain open at depth.
This proposed mine, which is forecast to average of 1.2 million carats of diamonds per year from kimberlite averaging 1.67 c/t, demonstrates robust economics and is expected to pay back the C$434.9 million of development capital in just two years.
"We are very pleased with the results of this preliminary economic assessment, which clearly establishes Chidliak as one of the premier undeveloped diamond resources, located in one of the world's safest and most supportive jurisdictions for responsible mining development," said Peregrine Executive Chairman Eric Friedland.
Building the road, however, is a priority.
"The road in is a critical piece of infrastructure, and we need that prior to commencement of construction to minimize our construction capital costs," Peregoodoff explained.
On the north end of Baffin Island, Baffinland Iron Mines Corp. is proposing a second phase of development for its Mary River iron mine that includes building a railway that would connect the mine to Milne Port north of the mine, where iron ore is loaded on ships bound for Europe.
The initial phase of development involved the shipping of roughly 3.5 million metric tons of iron ore per year from the northern Baffin Island project. A ship loaded with the first 53,624 metric tons of iron ore from this phase set sail for Germany in August 2015.
The second phase of development anticipates up to 12 million metric tons of iron ore being shipped out of Milne Port each year. This would include more infrastructure, including dock expansion and the proposed rail to transport the ore.
"Baffinland has determined the incorporation of a railway is an integral facet of the phase-2 proposal due to a number of environmental, technical and economic benefits," the iron miner explained in a letter to the Nunavut Impact Review Board.
About 350 kilometers (215 miles) west of Mary's River, Aston Bay Holdings Ltd. is exploring Storm Copper, an expansive property that blankets mineralized showings along a more than 100-kilometer- (60 miles) stretch of Somerset Island.
Following a late-2015 deal to acquire full ownership of Storm from Commander Resources Ltd., Aston Bay reached an agreement with BHP Billiton Ltd. to fund exploration of the copper property.
BHP Billiton can earn a 75 percent interest in Storm, by investing at least C$40 million on exploration at the project within nine years, including a minimum of C$2.5 million over the first two years. "This new partnership is a testament to the exploration potential at the Storm Copper Project," said Aston Bay CEO Benjamin Cox.
With deals such as this, Nunavut can look forward to senior companies continuing to be large contributors to mineral exploration spending across the vast and rich territory for years to come.