Explorers guard 2018 spending
Projects that attract investment offer more than rich mineral deposits
Last updated 3/1/2019 at 4:55am
Explorers seeking new mineral discoveries in the Northwest Territories are expected to spend less in 2018 than the C$90 million they shelled out collectively last year. Natural Resources Canada projects spending this year for mineral exploration and deposit appraisals in the northern territory will total C$81.3 million.
But some observers expect to see an uptick in hardrock mining exploration in 2018, especially in the highly prospective Slave Province where the Northwest Territories' only producing mines are located.
"Exploration is actually looking stronger this year, once again," said Mike Westwick, a Government of Northwest Territories spokesman. "As far as the numbers go, since 2015 we've seen a strong rebound in recorded mineral claims per calendar year."
Activity jumped 268 percent in 2017 to 193 claims staked in the Northwest Territories, and the pace of claim-staking appears to have accelerated in 2018, with 198 mineral claims already staked by July 23. Eight new prospecting permits covering more than 2,000 square kilometers (772 square miles) also have been issued this year.
"The trend is continuing in 2018 and includes companies new to our North," Wally Schumann, minister of industry, tourism and investment for the Government of Northwest Territories, said in June. "While more exploration is needed, we are learning more about our NWT geology, including the world-class diamond potential of the Dehcho (region) that is worth exploring. Meanwhile, we are seeing a return of major players to staking and exploration in the Slave Geological Province."
The number of mineral claims allowed to lapse also decreased this year, down from the 456 cancelled claims covering 406,075 hectares (about 1 million acres) in 2017. Much of the decrease stemmed from the release of uranium prospects located west of the Thelon Game Sanctuary.
Work reported to maintain mineral claims in the territory so far this year has surpassed 2017 spending by roughly 20 percent.
Schumann also cited a recent rise in grassroots exploration that is continuing in 2018.
The NWT government's Mining Incentive Program, now in its fourth year, has realized more than C$9.8 million in leveraged spending for exploration and deposit appraisals since its inception. In 2018, 34 applicants, evenly split between prospectors and companies, sought nearly $3.5 million in funding, marking the largest applicant and funding pools the program has ever attracted.
Diamonds drive NWT economy
Diamonds are the only commodity currently mined in the NWT. Thus, global changes in diamond markets can have a major impact on the territory's economy. Still, there have been no major diamond finds since the Ekati, Diavik and Gahcho Kué deposits were discovered during the 1990s, despite diamond exploration expenditures worldwide exceeding C$7 billion since 2000. Given that, plus the long lead time needed to develop a mine once a commercial-size discovery is made, the outlook for NWT diamond production is bright.
Owners of the territory's three operating diamond mines have continued to advance ongoing expansion projects in 2018.
De Beers and Mountain Province completed the first full year of commercial production at the Gahcho Kué Mine in March and a month later, took steps to acquire Kennady Diamonds Inc., owner of the Kennady North advanced exploration project. The neighboring project hosts the Kelvin-Faraday corridor, which boasts an indicated resource of 13.62 million carats of diamonds in the Kelvin kimberlite and an inferred resource of 5.02 million carats in the Faraday kimberlites, along with additional exploration potential.
Gahcho Kué, the territory's largest and newest diamond mine, is setting records in its first full calendar year of production. Jointly owned 51/49 percent by De Beers Group and Mountain Province, the venture posted strong results for the first half of 2018, including record-setting output of 1.9 million carats during the second quarter. The JV believes the mine's production will exceed 6.3 million carats in 2018, in keeping with previously posted estimates.
Gahcho Kué's operators began exploration last fall of the previously overlooked southwest area of the mine property with a ground gravity survey that identified an exploration target in the corridor between the Tuzo and Tesla pipes. An exploration drill program in the Southwest Corridor, originally planned for 17 holes, subsequently increased to 18 holes and based on 50-meter by 50-meter spacing, commenced in November. This August, Mountain Province reported encouraging preliminary results from the drilling, including the presence of kimberlite in the area.
The long-operating Diavik and Ekati mines, meanwhile, pursued major mine expansions designed to extend production beyond their respective mine lives.
Total diamond production from the three mines, located in the Lac de Gras region of the Slave Province, exceeded 19.2 million carats in 2017.
As of 2018, Koala, Lynx, Misery, Pigeon, and Sable are the actively mined pipes at Ekati, which is located north of Lac de Gras and 316 kilometers (196 miles) northeast of Yellowknife. Lynx, Pigeon, and Sable are open pits, while Koala is an underground operation. Misery operations are expected to transition from open pit to underground mining in 2018, subject to permitting approvals.
Ekati's owner, Dominion Diamond Mines (acquired in early 2018 by The Washington Cos.), reported discovery in May 2017 of an undeveloped section of the Ekati mine with an estimated 16.3 million carats of diamonds. The miner recovered a parcel of 224 carats in about 680 metric tons of kimberlite extracted from the Leslie pipe, its highest-priority area for exploration at the mine complex.
"Our renewed focus on exploration is generating strong results along the entire project pipeline, reflecting near-, mid- and longer-term potential," Dominion Chairman Jim Gowans observed recently.
Summer exploration on the Ekati leases in 2017 included ground geophysics, airborne magnetic surveys using an Unmanned Aerial Vehicle and diamond drilling. One drill hole on the Kodiak pipe recovered 530 kilograms of kimberlite, which has been submitted for microdiamond analysis. Two other exploration targets were drilled but failed to intersect kimberlite.
Ekati's mine life, including the Misery underground and the Jay project, currently ends in 2034, though the mine property still has numerous unexplored kimberlites. Several exploration and project evaluation activities are ongoing, including the Fox Deep project which would extend the diamond mine's output to 2042. As of January 2017, Ekati had produced 67.8 million carats of diamonds.
The Diavik mine, located 30 kilometers (19 miles) southeast of Ekati, is operated by Diavik Diamond Mines (2012) Inc., a subsidiary of Rio Tinto plc, which owns a 60 percent stake in the mine. Under the joint arrangement with 40 percent owner Dominion, Rio Tinto has operated the mine since it began production in 2003.
Diavik is built on four diamond-bearing kimberlite pipes, and the three kimberlite pipes currently being mined, A154 South, A154 North, and A418, are very high grade. A fourth pipe, A21, opened Aug. 21, culminating a four-year, C$350 million investment by Rio Tinto and Dominion. The current mine plan is expected to take the mine's production to 2025. While it will bolster production, A21 is not expected to extend Diavik's mine life.
A new diamond find
Several other explorers are investigating diamondiferous prospects in the territory, primarily in the Lac de Gras area.
North Arrow Minerals Inc., for example, recently reported the discovery of 465, a new kimberlite, during a winter exploration drilling program at its Loki diamond project located about 30 kilometers (18 miles) southwest, and 24 kilometers (15 miles) west of the Ekati and Diavik diamond mines, respectively, and immediately adjacent to the west of North Arrow's LDG joint venture diamond project with Dominion.
Winter drilling at the Loki project wrapped up with completion of four drill holes over 607 meters testing three targets.
"To my knowledge, today's news represents the first public announcement of a new kimberlite discovery in the Lac de Gras region in over 5 years," said Ken Armstrong, North Arrow's president and CEO, in April.
North Arrow said it planned additional drilling at Loki in 2018 as well as exploration of its nearby Lac de Gras Joint Venture property with partner Dominion Diamond Mines."
Previous work on the Lac de Gras project included airborne surveys, till sampling, ground geophysics and limited diamond drilling. Untested geophysical anomalies and unexplained geochemical anomalies remain, but the glacial history of the project area south of Lac de Gras is complex, having been exposed to multiple glacial events.
In 2013, Dominion earned its interest in the project by conducting an extensive, C$5 million program of reverse circulation overburden drilling intended to fully evaluate basal tills for kimberlite indicator minerals.
In 2017 Dominion conducted airborne and ground geophysical surveys of the Lac de Gras JV project including a 5,567-line kilometer VTEM Plus survey of the southern part of the project area where previous airborne geophysical coverage consisted only of wide spaced fixed wing magnetic surveys. Additionally, 22 ground geophysical survey grids were completed during spring and fall field programs last year. The ground surveys consisted of magnetic, electromagnetic and/or gravity surveys testing priority targets selected from compilation work completed in 2016 and preliminary survey results from the 2017 airborne. Results of the airborne and ground geophysical surveys were used to prioritize targets for spring exploration drilling in 2018. A summer drilling program was planned for the project, but North Arrow said it elected not to fund its proportionate share of the costs of the C$2.88 million 2018 field program. Assuming the full 2018 budget is spent, North Arrow's diluted interest in the project is expected to be about 31 percent.
Trio of gold explorers hit pay dirt
With an improved outlook for precious and base metals in 2017, prices have increased or held steady into 2018. Gold prices have held relatively constant, while copper and zinc prices have steadily increased since the summer of 2017.
Several gold explorers in Northwest Territories have been very active during the 2018 field season.
In May, Seabridge Gold said it identified new gold zones, Olsen and Marsh Pond, in a winter exploration program at its Courageous Lake gold project located 240 kilometers northeast of Yellowknife. The project covers nearly all the 53-kilometer (33 miles) long Mathews Lake Greenstone Belt, which hosts Seabridge's Felsic-Ash-Tuff (FAT) deposit. A July 2012 prefeasibility study estimated that the FAT deposit contains 6.46 million ounces of proven and probable gold reserves over some 2.5 kilometers (1.5 miles) of strike length.
Seabridge said the new zones have widths and grades suggesting they could contribute to project resources like the Walsh Lake Deposit discovered by Seabridge in 2012. This year's drill program also identified two other target zones, Bulldog and Perrson, that with additional work could potentially contribute to the resource base. Three targets did not return positive results. Walsh Lake has a near-surface inferred resource of 482,000 oz of gold (4.6 million metric tons grading 3.24 grams per metric ton). Metallurgical testing has demonstrated that the material is free-milling with cyanide recoveries as high as 95 percent.
The 2018 winter drill program at Courageous Lake was designed as an initial drill test of seven targets reporting historical gold occurrences to determine which ones had sufficient grade, strike and width within 200 meters of surface to potentially replicate the Walsh Lake deposit. Seabridge has now tested the favorable stratigraphy over 7.5 kilometers (4.7 miles), but it can be traced through the entire Seabridge claim block.
Among the best holes from the two most prospective targets: CL-284 at Marsh Pond, which intersected 14 meters grading 3.08 g/t gold from a depth of 105 meters; and CL-285 at Marsh Pond, which cut 9.0 meters grading 5.02 g/t gold within 24.0 meters grading 2.13 g/t gold from a depth of 75.5 meters. At Olsen, CL-286 cut 40.4 meters grading 3.04 g/t gold from a depth of 43.8 meters, including 27.2 meters grading 4.14 g/t gold from 57.0 meters.
Seabridge Chairman and CEO Rudi Fronk said the explorer sees potential for a more economic project at current gold prices by mining higher-grade, free-milling satellite deposits at Courageous Lake such as Walsh Lake as well as the refractory (or difficult-to-extract fine gold) reserves in the much larger FAT deposit.
"We are therefore very pleased with the results from this year's drilling because we now have two more attractive targets for follow-up work as well as some potentially significant new target ideas we need to evaluate. Our next step is to develop a conceptual design for a greater Courageous Lake operation that could exploit the satellite deposits early in the project life," he added.
Another gold explorer, Nighthawk Gold Corp., reported in early August encouraging results from a 2018 exploration program at its Colomac gold project, a district-scale land position it holds within the Indin Lake Greenstone Belt located roughly 200 kilometers (120 miles) north of Yellowknife. The Colomac project has a current inferred resource of 2.6 million ounces of gold (50.3 million metric tons averaging 1.62 g/t gold).
Nighthawk said it completed 11 holes this summer in a 25,000-meter drill program that it recently expanded to more than 30,000 meters at the Grizzly Bear deposit, one of five deposits that comprise the Colomac property. All the drill holes intersected gold mineralization, including several broad zones which remain open to depth. One hole, GB18-02, returned 6.25 meters of 4.04 g/t gold, including 2.50 meters of 7.78 g/t gold, and 1.50 meters of 9.06 g/t gold; and hole GB18-02B, which returned 17.25 meters of 2.00 g/t gold, including 4.50 meters of 5.13 g/t gold.
In 2017, the explorer drilled two holes into the central portion of the deposit to undercut historical higher-grade intervals and intersected 12.60 meters of 4.96 g/t gold, including 8.00 meters of 7.32 g/t gold, and 4.00 meters of 13.40 g/t gold, giving credibility to the deposit's potential and laying the groundwork for the 2018 campaign which has focused on expansion potential to depth and along strike beyond known historical shallow occurrences. Near-surface mineralization remains open in all directions.
Nighthawk said Grizzly Bear is a good example of the Colomac project's exploration upside where one of its near-surface deposits remains largely untested.
"Drilling to-date has largely focused on the Colomac Main sill, which contains the majority of the ounces in the current resource estimate," said Michael Byron, Nighthawk's president and CEO. "The smaller and lesser known Grizzly Bear accounts for about 1 percent of the total contained ounces; however, its historical higher-grade gold intercepts remain unexplored, and given its shallow nature and proximity to the Colomac Main sill, we consider it as a promising candidate for resource expansion. Grizzly Bear is not a silicified competent sill like the Colomac Main and Goldcrest sills, but being a brittle host, it has the capacity to house higher-grade mineralization. Initial drilling has confirmed this, raising the possibility that a high-grade gold system may be present. We look forward to the continued exploration of its untapped potential."
Nighthawk said in August it had enough working capital to complete its goals and objectives over the next 18-24 months.
TerraX Minerals Inc. is exploring its Yellowknife City Gold project this year with a summer field program that included assay results from channel sampling and prospecting in an area immediately northwest of the past-producing Ptarmigan Mine on Eastbelt. The YCG project encompasses 772 square kilometers (298 square miles) of contiguous land immediately north, south and east of the city of Yellowknife, which is the capital of Northwest Territories. The YCG property lies on the prolific Yellowknife greenstone belt, covering 70 kilometers (43 miles) of strike length along the main mineralized break in the Yellowknife gold district, including the southern and northern extensions of the shear system that hosted the high-grade Con and Giant gold mines.
The junior said its work extended the Ptarmigan zone 400 meters northwest of previously reported channel sampling with a 19.00 g/t gold grab sample along the Ptarmigan trend. Channel sample results (24.75 g/t gold over 5.50 meters, including 44.82 g/t gold over 3.00 meters) were cut from outcrop southeast of channels with results reported in July that followed the Ptarmigan vein trend and sampling across the gold mineralized structures. The assay results ranged up to 124 g/t gold in a 0.70-meter channel sample from Channel ECH18-039.
"The summer program continues to yield results that confirm the potential of the Yellowknife City Gold Project as a district-scale camp," said David Suda, president and CEO of TerraX. "Surface results, magnetic imaging, and geochemistry data will provide a roadmap to future drilling on our most prospective targets. The Northbelt remains our core area of focus, but we are systematically sampling 10 kilometers (six miles) away on the Eastbelt with encouraging results."
An additional grab sample was collected from a gossanous quartz vein 2.7 kilometers (1.5 miles) due west of the Ptarmigan Mine that assayed 5.17 g/t gold.
TerraX said further work is warranted in this area, and more results from the Northbelt and Eastbelt properties are expected in 2018.
The assays reported in August came from 313 samples with gold grades ranging from nil to 124 g/t gold and included 138 channel samples.
Lithium, zinc, rare earths attract interest
Only one explorer mounted substantial early-stage exploration for minerals other than gold and diamonds in Northwest Territories this year, but several others pressed forward with advanced projects targeting base metals and rare earths.
Far Resources is seeking lithium, a mineral highly coveted for use in electronics, batteries, nuclear physics and other applications because of its high electrode potential and its low atomic mass, which gives it a high charge- and power-to-weight ratio.
In June, the junior reported drilling 1,079 meters in 10 holes at its 1,659-hectare (4,099 acres) high-grade Hidden Lake Lithium Project near Yellowknife, Nwt., and encountering spodumene mineralized pegmatite, a desirable form of lithium, in every hole.
The Hidden Lake property is comprised of five contiguous mineral claims in central parts of the Yellowknife Lithium Pegmatite Belt along Highway 4 about 40 kilometers (25 miles) east-northeast of Yellowknife.
Far Resources targeted pegmatite with high-grade lithium assays in surface outcrop channel samples and assessed the widths and extent of four target pegmatite dykes at depth. Channel samples defined significant lithium mineralization over substantial intervals for each of the four surveyed dykes, with values up to 1.75 percent Li2O over 6.01 meters. Surface exposures of the pegmatite are laterally continuous for up to 800 meters but are locally overlain by organic and inorganic soil, thus Far Resources believes their total strike length is likely greater.
"The presence of spodumene at depth in every hole shows the potential for making a significant discovery at Hidden Lake," said Toby Mayo, Far Resources CEO and president, who also noted that its exploration program marked the first-ever drilling on the Hidden Lake property.
Far Resources optioned the Hidden Lake Lithium project from 92 Resources Corp. in March, agreeing to acquire up to a 90 percent stake in the property. The 2018 exploration program met requirements for the first stage of the agreement and boosted the junior's ownership interest to 60 percent.
Meanwhile, Osisko Metals Inc., Canadian Zinc. Corp. and Fortune Minerals Ltd. worked to move their respective base metal projects through final stages of development, while Avalon Advanced Materials Inc. dusted off plans for its dormant Nechalacho Rare Earths Elements project.
Of these companies, only Osisko carried out significant 2018 exploration by August.
The Quebec-based junior completed acquisition of the zinc-lead Pine Point project located in the southcentral region of Northwest Territories near Hay River in February, a move that furthers Osisko's strategy of consolidating and developing base metal assets on the mining district scale in Canada. Osisko hopes to develop a multi-deposit asset base at Pine Point that could feed a central concentrator.
For 2018, the explorer is conducting a 50,000-meter drill program at Pine Point that it is funding from its cash balance. The zinc-lead property hosts more than 50 million metric tons of open-pit historical resources with a strong exploration upside.
The objective of Osisko's initial exploration program is to confirm, upgrade and expand the portfolio of over 40 historical deposits on the property.
In May, Avalon, formerly Avalon Rare Metals Inc., said it will re-activate its Nechalacho Rare Earth Elements project at Thor Lake, NWT in 2018 in response to strong demand for the "magnet rare earths" neodymium and praseodymium.
While Avalon's 2013 feasibility study focused on the underground accessible, heavy rare earth-rich Basal Zone of the Nechalacho Deposit, the property hosts several other easily accessible, near-surface, rare earth mineralized zones, including high-grade neodymium-praseodymium-rich resources.
Avalon said these include the T-Zone and Tardiff Lake Zones, which have potential for near-term, small-scale, low-impact development to produce the rich concentrates for export and will be the focus of renewed development work planned for the project in 2018.