Territory hits exploration slump
Explorers chase gold in 2018; diamonds, base metals lure big fish, few minnows
Last updated 3/1/2019 at 4:55am
Canada is the world's top destination for mining exploration spending, attracting more than 14 percent of global budgeted expenditures from explorers seeking to tap the country's vast mineral wealth. Yet in 2017, the three huge mineral-rich territories to the north, Nunavut, Northwest Territories and Yukon Territory, lured only about C$360 million, or less than one-fifth of the roughly $2.1 billion that junior and senior mining companies invested in mineral exploration and deposit appraisals across Canada.
In Nunavut, arguably the most remote of the territories, mineral exploration and deposit appraisal spending topped C$169 million in 2017, down from C$204 million in 2016 and C$215 million in 2015. In 2018, comparable investment in mineral exploration and deposit appraisals is expected to decrease further sharply in 2018 to about C$111 million, mainly due to explorers tightening annual budgets as they chase promising targets throughout the territory.
Still, economists believe Nunavut is on the cusp of a new mining boom.
Mining output is expected to nearly triple in the next five years, with annual economic growth in the territory averaging close to 10 percent, according to the Conference Board of Canada.
In 2018, Nunavut's economy is benefiting from mineral production increases at the centrally located Meadowbank gold mine and at the Mary River iron mine on Baffin Island. This upsurge reflects the fruits of recent near-mine exploration and ongoing efforts to streamline and ramp up average output.
Exploration and production successes at TMAC Resources Inc.'s Hope Bay gold mine in northwest Nunavut is delivering another economic shot in the arm. TMAC poured first gold from the Doris deposit at Hope Bay early last year and achieved commercial production in a 1,000-metric-ton-per-day processing plant on site in May 2017. Ongoing exploration successes at the Madrid and Boston deposits along with other exploration targets in the 80- kilometer-by-20-kilometer Hope Bay gold belt, are expected to further boost gold output at Hope Bay during the next few years.
"Despite only C$8 million of drilling expenses budgeted for 2018, including infill production drilling, TMAC has had significant success, thus far," TMAC President and CEO Jason Neal said in mid-June. Highlights from recent drilling include two drill holes within the Doris North BTD zone, intersecting 261.4 grams per metric ton gold over 7.1 meters including 2,710 g/t over 0.66 meters and 71.8 g/t gold over 1.4 meters; and 1,255 g/t over 1.5 meters. Results at Madrid North include two surface intercepts of 11.5 g/t gold over 25.1 meters, including 18.1 g/t gold over 14 meters; and 12.9 g/t gold over 50.0 meters, including 60.1 g/t gold over 8.5 meters. The Madrid and Boston properties are expected to commence production in 2020 and 2022, respectively, with processing capability up to 5,600 tpd.
Gold production also is expected to commence at the Meliadine gold mine near Rankin Inlet in 2019 and at the Amaruq gold deposit, a sizable discovery near Meadowbank, in 2020. These projects, owned by Agnico Eagle Mines Ltd., could deliver multiple decades of gold production and are currently on track to deliver a combined 750,000 ounces of annual gold output beginning in mid-2019.
"We won't chase mines everywhere in the world. We pick regions where we know there is gold, and we will try to be the best in those regions: where people want you to be – the communities and the governments – and where there is an opportunity to work together to create competitive advantage," Agnico Eagle President Ammar Al-Joundi told investors recently.
One key advantage Agnico Eagle believes it enjoys in Nunavut is massive land holdings (1.25 million acres) where to date its exploration team has only scratched the surface. This suggests unlimited mineral potential for generations to come, according to Al-Joundi.
"Amaruq already has more gold in its project than all of what Meadowbank has produced, and we've just scratched the surface. It's about 250,000 acres that we have up there and right now, we're talking about maybe 300 acres. So, the potential is quite substantial," he said.
Whale Tail, the larger of two known deposits at Amaruq, is already some 2.5 kilometers (1.6 miles) long and one kilometer deep, and the company reported its best drill results in the Whale Tail deposit to date at depth, he added.
Others hunt for gold
The far-western and smallest of three main regions in Nunavut is the 440,000 square-kilometer (170,000 square miles) Kitikmeot, which encompasses most of the Canadian western Arctic with a land mass about the size of California. One of the least populated regions in the world with roughly 6,500 people living in small hamlets and no road connections, the region relies on Yellowknife, Northwest Territories, for logistics and supplies.
As of November, an estimated 1.9 million hectares or 4.7 million acres were held in mineral claims, prospecting permits and leases in the Kitikmeot region. About 190,000 hectares, or 469,300 acres, of new mineral claims and prospecting permits offset 45,000 hectares, or 111,200 acres, of cancelled claims, permits and leases.
The Kitikmeot region has been explored historically for gold, base metals, uranium, platinum group elements, and diamonds, and the area boasts four past-producing mines, the Roberts Bay and Ida Bay silver mines near Hope Bay and the Lupin gold mine and Jericho diamond mine near the Northwest Territories border.
TMAC's Hope Bay mine project, the region's only current producing mine, is located near the Arctic Ocean in the northeastern corner of the western Kitikmeot.
Of the handful of juniors also looking for gold in the region, the most active is Sabina Gold and Silver Corp., which is continuing exploration of its Back River project located farther south, roughly halfway between Bathurst Inlet and the Nunavut-Northwest Territories border. Following successful exploration in 2017, Sabina announced the discovery of a new high-grade mineralized zone at Back River's Llama deposit with grades of up to 9.48 g/t gold over 38.55 meters within strongly altered iron formation rocks.
Silver Range Resources Ltd. is also seeking the precious metal with ongoing limited exploration at its South Kitikmeot Gold project, situated about halfway between Sabina's Back River project and the past-producing Lupin gold mine.
This gold project consists of seven separate properties totaling more than 60,000 hectares, or 148,260 acres, and underlain by rocks of the Archean Beechey Lake Group. Geophysical surveys completed on the Bling and Qannituq prospects, with additional prospecting and geological mapping on the latter, in 2017 revealed that both prospects contain gold showings with grab samples grading up to 47.4 g/t gold.
In early 2018, Silver Range significantly expanded the size of its South Kitikmeot project and optioned it to Amaroq Gold Corp. The project covers known gold occurrences along a 200-kilometer-long package of metasedimentary rocks, which host the Lupin Mine (3.4 million ounces gold, production to date), and the Back River project (5.3 million oz gold in measured and indicated resources) currently being advanced to production by Sabina Gold & Silver Ltd.
Silver Range picked up prospecting permits covering 47,460 hectares, or about 118,000 acres, near its Bling, Gold Bugs and Esker Lake properties. The project now covers 72,810 hectares, or roughly 180,000 acres, including both claims and permits. The new permits cover favorable host rocks near the project's claims with known high-grade iron formation gold occurrences and drill intersections.
In March, the junior optioned 100 percent interest in the project for C$1.725 million in cash and 5 percent of Amaroq's shares at the time of initial public offering and 1 million shares issued in tranches over the next four years. Silver Range retained a 3 percent net smelter return, up to 2 percent of which Amaroq can purchase for C$4 million. Silver Range will be the operator for exploration work during the first season, and beyond at Amaroq's discretion, and will be paid a management fee equal to 5 percent of exploration expenditures.
The companies planned a summer field program for 2018 involving systematic gold-in-till sampling, and magnetic and electromagnetic field surveys to locate targets on hitherto unexplored ground and to expand existing drill targets.
Auryn Resources Inc. is focused on its Committee Bay gold project located far to the east, about 180 kilometers (113 miles) northeast of the Meadowbank mine. Auryn obtained financing for the project in 2017 by entering into an agreement with Goldcorp Inc. for a strategic equity placement of US$35 million.
The explorer began its 2018 drilling program at Committee Bay July 15, hoping to test six targets with about 10,000 meters of diamond core (6,000 meters) and rotary air blast drilling (4,000 meters). The project covers more than 390,000 hectares (963,690 acres) situated along the Committee Bay Greenstone Belt. Auryn acquired the property from North Country Gold Corp. in 2015 and is following up a 2017 discovery of gold mineralization at the Aiviq prospect (12.2 meters of 4.7 g/t gold) as well as exploring the Kalulik, Tulugaq, Aarluk, Castle Pebble and Koffy prospects, identified through gold assays in 2017 high resolution (100-meter-by-100 meter) till sampling.
Following its 2017 exploration program, Auryn released a revised resource estimate for the Three Bluffs deposit at Committee Bay based on re-calculated operating costs, price of gold and cut-off grades. The Aiviq prospect is located 12 kilometers (about 7.5 miles) north of the Three Bluffs deposit.
Benchmark Metals Inc, formerly Crystal Exploration Inc., is a junior exploration company with a gold exploration property as well as three diamond properties covering 1,150 square kilometers (444 square miles) in the Kitikmeot region.
In early 2017, the company acquired the Contwoyto property from North Arrow Minerals Inc. It consists of four claims and leases to the west of Contwoyto Lake, and hosts four known gold occurrences previously explored by Cominco Ltd., Echo Bay Mines Ltd., and Bow Valley Industries Ltd. Three of the showings are hosted in iron formation and one in quartz stockwork. Benchmark said the cutoff grade used by the earlier explorers for defining the potential extent of significant mineralization at Contwoyto was at 5 g/t gold. Most of the drilling and historical results were at surface to a depth of about 50 meters, and the gold occurrences at the Contwoyto Gold Project remain open at depth, width and strike.
In October, the junior said it mobilized equipment and crew for an exploration program consisting of 500 meters of diamond drilling as well as ground magnetic and HLEM (horizontal loop electromagnetic) surveys. No results from this planned program were reported, however Benchmark recently said its near-term exploration plans include IP ground geophysics and core drilling to validate historical results and step-out drilling to target new gold zones.
Gold takes center stage
In Nunavut's centrally located Kivalliq region, several juniors are currently pursuing gold prospects. Kivalliq, situated just north of Manitoba, is slightly larger than the Kitikmeot region.
It hosted Canada's first Arctic mine at the North Rankin Nickel Mine, which operated from 1957 to 1962, and the Cullaton-Shear Lake gold mine, west of Arviat, which operated in the early 1980s. As of November 2017, land held under mineral claims in the Kivalliq region totaled 1,420,661 hectares (3.51 million acres), including some 281 new claims over 283,100 hectares (699,540 acres). Prospecting permits, all 26 new, cover 374,312 hectares (924,925 acres), and 118,396 hectares (324,523 acres) are held in mining leases.
Despite diverse geology with gold, uranium, diamonds, nickel, and platinum group and rare earth elements, explorers focused in 2018 on gold, perhaps drawn by Agnico Eagle's success with the Meadowbank gold mine and other gold projects in the region.
In addition to Meliadine and Amaruq, Agnico Eagle is also exploring the White Hills gold property, a 17,211-hectare parcel (42,528 acres) that hosts several gold prospects and the adjacent Greyhound precious and base metals property in which its holds a 51 percent interest. Both properties straddle the all-season road between Baker Lake and the Meadowbank gold mine, 35 kilometers (22 miles) to the north. Agnico Eagle explored the White Hills property in 2017 with 315 meters of drilling in four holes, an IP geophysical survey, and prospecting for 400 rock samples. The company has reported no plans for further exploration this season.
Auryn Resources Inc., which is also seeking gold in the Kivalliq region, acquired 19 prospecting permits along the Gibson MacQuoid greenstone belt, which lies about 125 kilometers (77 miles) from Baker Lake and 136 kilometers (87 miles) from Rankin Inlet. The permits encompass some 120 kilometers (74 miles) of strike length and a total of 329,000 hectares (813,000 acres), collectively. Acquisition of the prospecting permits cost about C$100,000 and provide Auryn with exclusive exploration rights over the area for three years. The junior plans to undertake an extensive till sampling program over the newly acquired ground this summer to identify key areas of gold mineralization.
Northquest Ltd., a subsidiary of Nord Gold SE, completed a total of 4,205 meters of drilling at its Pistol Bay gold project near the community of Whale Cove in 2017, but elected not to return to the project in 2018.
The drilling last year concentrated on new targets on the large license area, including Howitzer, which returned highly anomalous drilling intercepts. The junior released a mineral-resources estimate in December for the Pistol Bay deposit within a pit shell of 742,000 oz of gold averaging 2.94 g/t for total (measured + indicated + inferred) resources.
In 2017, Silver Range Resources continued to expand its land position in the Kivalliq region, adding three prospective gold properties (Noomut, Yandle, and Nigel) to its current holdings of Quartzite and Hard Cash. The junior did not report 2018 exploration plans for these properties, which encompass more than nine prospects.
NxGold Ltd. (formerly Lancaster Capital Corp.) sought unsuccessfully to mount a drill program in 2017 at the Kuulu gold project, which straddles the Dickson-Pyke fault, 20 kilometers (12 miles) from Agnico Eagle's Meliadine gold project. In November, the junior delivered notice of a "force majeure" event due to continued delay in renewal of existing land use licenses pertaining to the Kuulu project. NxGold holds all other required licenses and permits to commence drill testing high-priority gold targets at Kuulu.
The junior inked an earn-in agreement with Meliadine Gold Ltd. for the Kuulu project (formerly the Peter Lake gold project) in late 2016.
Cache Exploration Inc. acquired 100 percent of the Kiyuk Lake gold project in the southwest corner of the Kivalliq region where it conducted a drilling program in 2017 that returned 122 meters of 1.8 g/t gold from 188 meters down-hole in the Rusty Zone; and 64 meters at 1.5 g/t gold from 35 meters and 10 meters of 6.5 g/t gold from 248 meters in the newly discovered East Gold Point Zone. Prospecting samples returned 5.57 g/t gold from west of the Rusty Zone; 5.60 g/t gold from north of Kiyuk Lake and 1.1 kilometer (0.68 mile) from the newly identified Nansen target area. The junior planned to conduct additional field work last winter; however, Cache did not return to the project in 2018.
Diamonds steal the show
In Qikiqtani, Nunavut's far-eastern and largest region, explorers focused mainly on base metals and diamonds in 2018. The region, primarily Canada's Arctic Archipelago and the northern half of the Melville Peninsula, has a land mass roughly the size of Texas and Montana combined. It is home to Nunavut's capital, Iqaluit, which is located on southern Baffin Island.
Qikiqtani hosts deposits of iron, base metals, gold, platinum group elements, diamonds, and sapphires and boasts two past-producing mines, the Polaris zinc-lead mine on Little Cornwallis Island, and the Nanisivik zinc-lead-silver mine on northern Baffin Island.
In 2017, explorers focused on diamonds, iron, gold, and base metals in the region. As of November, an estimated 2.4 million hectares (5.93 million acres) of mineral claims, prospecting permits, and mining leases were held by explorers in the region, including more than 621,634 hectares (about 1.54 million acres) of mineral claims and prospecting permits issued in 2017. Roughly 1.6 million hectares (3.86 million acres) of mineral tenure, mainly in the form of prospecting permits, was cancelled in 2017.
Aston Bay Holdings Ltd., an active explorer in Nunavut since 2011, is working its 414,537-hectare (1.024 million acres) Aston Bay Property, located in the Polaris mining district on Somerset Island. Two helicopter-supported diamond drill rigs were operating at the Storm copper prospect early in the 2018 summer season, and along strike from the nearby Seal Zinc deposit. Aston Bay also planned to begin drilling several targets in the Seal area in August.
The junior's holdings cover the entire 140-kilometer (85 miles) strike length of the known mineralized zone. The 2017 work stemmed from results generated by the junior through C$4 million spent in 2016 on drilling and regional soil-sampling programs. That effort resulted in discovery of new soil anomalies and drill core, assaying 3.07 percent copper and 12.26 g/t silver over 16 meters.
In December, Aston Bay released an initial inferred resource for the Seal property of 1.006 million metric tons ore grading 10.24 percent zinc and 46.5 g/t silver, based on historical drill core from previous operators. The resource has a cutoff of 4.0 percent zinc, and Aston Bay has interpreted Seal to be a Mississippi Valley-type zinc-silver deposit.
Kivalliq Energy Corporation, which changed its name to ValOre Metals Ltd. in June, is exploring the 408,981-hectare (1.01 million acres) Baffin Gold project that covers 160 kilometers (100 miles) of the Foxe Fold Belt on central Baffin Island. ValOre acquired the project from Commander Resources Ltd. in May 2017 and conducted a 2017 summer field program that included collecting 424 grab and channel samples and 492 till geochemical samples and drone-generated high-resolution images of 65 square kilometers (25 square miles) of target areas.
In October, the junior reported results that confirmed gold in a variety of geological settings in Bravo Lake Formation rocks across 68 kilometers (42 miles) of strike length; identified a new 10 kilometer (six miles) long corridor of anomalous gold at the south Kanosak prospect; further outlined seven anomalous areas warranting follow-up at the Kanosak, Brent and Central Belt west prospects; and extended the strike length of known gold occurrences at Brent; confirmed gold in BIF (banded iron formations) over five kilometers (three miles) and six kilometers (four miles) at the west and north Kanosak prospects, and expanded anomalies around historic gold in till results.
At the Mel Diamond Project on the Melville Peninsula, North Arrow Minerals Ltd. is following up the discovery reported in October 2017 of ML-8, a diamondiferous kimberlite identified at the termination of a well-defined train of kimberlite indicator. A 62.1-kilogram sample taken from the float returned 23 diamonds larger than 0.106 millimeters in size, including a single, colorless diamond larger than the 0.85-millimeter sieve size.
Through staking in early 2018, North Arrow increased its landholdings in the area, between the North Mel and South Mel prospects to 56,000 hectares (138,376 acres) from 7,500 hectares (18,533 acres).
In early July, the junior reported the start of an exploration program comprised of ground geophysical surveys, collection of 400 till samples and a 1,200-meter drill program aimed at better defining ML-8 and testing a series of other targets in the area.
North Arrow is also exploring several other prospects in Canada's Far North, including its most advanced diamond project, the Naujaat Project that hosts the Q1-4 diamond deposit and is located on the Melville Peninsula about 210 kilometers (126 miles) southwest of the Mel project.
A decade of exploration at the Chidliak diamond project on southern Baffin Island is paying off for Peregrine Diamonds Ltd., which reported in July that it will be acquired by DeBeers Canada, a subsidiary of one of the world's largest diamond producers. The acquisition is valued at C$107 million.
Peregrine has discovered 74 kimberlites at Chidliak, including eight identified so far as potentially economic through drilling and microdiamond analysis. The inferred mineral resource for two of the kimberlites, CH-6 and CH-7, currently exceeds 22 million carats of diamonds.
Another explorer that is focused on diamonds in Nunavut is Dunnedin Ventures Inc., which optioned the Kahuna project located adjacent to Agnico Eagle's Meliadine gold mine project in central Nunavut in 2014. Dunnedin has significantly expanded the property since by staking an additional 66,047 hectares (163,202 acres)
In July the junior reported discovery of a new kimberlite pipe (KH10-11) at Kahuna and drill-testing two additional historic pipes.
It also began a 2018 summer RAB drilling program designed to test kimberlite pipe targets in areas with diamond indicator minerals previously identified in till. Dunnedin reported that 17 targets were successfully drill tested, three of which were kimberlite pipes. Some 1,081 meters of RAB drilling were completed in 20 holes, and 254.5 meters of kimberlite was intersected, yielding about 3.5 metric tons. The explorer also collected 800 kilograms of glacial till from the drill holes near the bedrock interface at each drill site. Selected samples of this sub-surface material will be processed for diamond indicator minerals to enhance existing till results and to assist with prioritizing more kimberlite targets.