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Nunavut takes stock in 20th year

Government and mining industry seek best way forward Mining Explorers 2019 – Published Nov. 1, 2019

Twenty years ago, Canada created the territory of Nunavut, carving out the easternmost part of the Northwest Territories to form the country's northernmost jurisdiction.

A vast land of lakes and tundra sprawled across the North from the Hudson Bay to the Arctic Ocean and east to Baffin Bay and the coastal waters of Greenland, Nunavut is home to only about 38,000 people, of whom 85 percent are indigenous Inuit who have lived in this frozen land for millennia.

Since 1999, Canada's youngest territory has made significant strides toward building a thriving economy based on the vast mineral resources of an area roughly one and one-half the size of Alaska. Recent development of large commercially viable mines in all three of the territory's major regions and the resulting high-paying jobs and support positions filled by local residents, as well as local spending played a major role in this progress.

Mining is the largest private sector driver in Canada's Arctic, employing about 8,500 people, or one in every six workers, according to The Mining Association of Canada. MAC also cited mining's direct gross domestic product contributions to the three territories' respective economies, including 21 percent for Nunavut in 2016 (most recent statistics available).

In recent years across Canada's Arctic, mining companies have invested or committed to invest more than C$9 billion.

"While the contribution is great, the potential is even greater given the right policy and investment environment," said Brendan Marshall, MAC's vice president of economic and northern affairs.

As evidence, he cited the value of all mine projects planned and under construction across Canada between 2018 and 2028 dropping by 55 percent since 2014, from C$160 billion to C$72 billion.

In Nunavut, indicators have been mixed in recent years. Mineral exploration spending in the territory has dropped 33 percent year-over-year since 2015, from a high of C$215 million to C$144 million planned in 2019. Capital investment in mining, on the other hand, has jumped 182 percent since 2016, from C$344 million to C$968.5 million in 2018.

Mining's direct contributions to Nunavut's economy are very large when compared with other sources, said Alex Buchan, Nunavut Vice President of the NWT & Nunavut Chamber of Mines.

"Mining's contribution is even larger when you consider benefits to sectors like construction and transportation," Buchan told an audience at the biannual Northern Lights conference in Ottawa in February.

He noted that Nunavut had no mining industry before 2009. Four mines now operate in the territory – Agnico Eagle Mining Ltd.'s Meadowbank and Meliadine gold mines in the Kivalliq region, Baffinland Iron Mines' Mary River Mine in the Qikiqtani region, and TMAC Resources Inc.'s Hope Bay gold mine in the Kitikmeot region, where Buchan is TMAC's director of community relations.

Agnico Eagle President and CEO Sean Boyd echoed these sentiments in July but cautioned that Canada is missing out on developing its rich mineral resources in the North.

If the Canadian government doesn't ramp up investments in its resources at home, foreign entities – which are already circling Agnico's projects – may step in, he warned,

For example, Agnico recently hosted U.S.-based visitors at its Nunavut projects as well as investors representing "large funds from Beijing," he added.

"Other countries have taken a real keen interest in what's going on in Nunavut," he told a reporter.

"There's just easy things that should be done. The federal government is in a situation now where they transfer massive social payments to Nunavut. Why don't you create industry? ... We'll do our part, but we can't do everything."

Boyd said that it's on the mining industry itself to make a better case for the investment possibilities in the Arctic.

"We have to do a better job articulating the benefits of resource development in Canada," he said. "The problem is that there's no vision. There's no strategy. You really don't get the government support you should be getting based on the potential for big payoffs for modest amounts of investment," he added.

The development of three other mine projects in Nunavut, meanwhile, have been advanced to the brink of production – Amaruq, which Agnico is ramping up as a satellite of Meadowbank; Chidliak, a diamond project that De Beers Canada Inc. is advancing toward commercial operation; and Back River, a gold project that Sabina Gold and Silver Corp. hopes to bring on line by 2022.

The chamber's statistics show that since 2009, Nunavut's mines have provided 2,365 person years of mining employment; in 2016, there were 1,946 mine jobs of which 388 (20 percent) were held by Nunavut residents, Buchan said.

Total mine spending since 2007 exceeds C$4.8 billion, of which C$2.2 billion was in Nunavut. In 2016, comparable mine spending totaled C$582 million, of which $252 million (43 percent) was in Nunavut.

Mining is also generating industry royalty and benefit agreement payments, another way in which Nunavummiut are benefitting from mining.

"Advancing opportunities at Meliadine, Back River, Amaruq, and Chidliak have potential to generate even more employment and business benefits and tax and royalty revenues to government and Inuit organizations," Buchan added.

Still, Canada urgently needs to address falling exploration investment in Nunavut, which industry officials link to major challenges across the North, including a troublesome land use planning process; a huge transportation and infrastructure deficit, including no road system, that inflates exploration and development costs; looming environmental constraints; urgent need for improving food security; education and skills training among Nunavut residents; as well as removing cultural, racial, logistical and economic barriers to successful mining employment.

Officials say addressing these challenges is critical to achieving Canada's goals of addressing climate change, achieving reconciliation with its indigenous population and accomplishing the broader social and economic development priorities of the Arctic.

The Inuit people of Nunavut own 356,000 square kilometers (944 parcels) under terms of the 1999 Nunavut Agreement, the largest Aboriginal land settlement in Canadian history. The Government of Canada administers sub-surface rights for 98 percent of Nunavut, including prospecting permits, mineral claims, and mineral leases. Inuit also hold fee simple title, including mineral rights to 38,000 square kilometers (150 parcels) of land. Mineral exploration agreements and production leases on this land are negotiated by Nunavut Tunngavik Inc, while access permission and land use licenses are granted by the territory's three regional Inuit associations.

Juniors seek gold in Kitikmeot

The Kitikmeot region has been explored for base metals, uranium, platinum group elements, and diamonds, but 2019 exploration is all about gold.

Four past-producing mines have operated in the region – the Roberts Bay and Ida Bay silver mines, the Lupin gold mine and Jericho diamond mine.

As of November 2018, mining companies held 2.7 million hectares (6.7 million acres) of mineral tenure in the Kitikmeot region, including 808,000 hectares (2 million acres) of mineral claims and 1.64 million hectares (4.05 million acres) of prospecting permits.

Currently, TMAC Resources' Doris North gold mine, located at the northern end of the Hope Bay greenstone belt, roughly 125 kilometers (77 miles) southwest of Cambridge Bay, is the sole operating mine in the region.

TMAC Resources Inc. is one of the most active exploration and development companies in this region. Following the startup of commercial production at the Doris North mine in 2017, the company has focused on improving gold recoveries as well as advancing exploration and permitting for the Madrid and Boston projects and regional exploration.

TMAC also reported encouraging results from winter drilling at Doris and Madrid North as well as 2019 underground exploration of the Doris North BTD Extension, along with more drilling at the Madrid and Boston projects and regional exploration.

Sabina Gold continued development and exploration activities in 2019 at its Back River gold project. Last year, Sabina received the necessary permits and licenses to construct a marine laydown area at Bathurst Inlet that it completed in August in time for three sealift shipments.

Sabina also has continued to drill-test new targets, which resulted in the discovery last fall of gold mineralization at the Nuvuyak target, located roughly 1,000 meters west of the Goose Main deposit. A 6,400-meter exploration program was conducted at three target areas at the Goose property – a discovery area at Nuvuyak-Hook; high-grade opportunities up plunge from the Vault zone at the Umwelt underground; and scoping at the Llama Extension zone. Sabina believes the presence of a significant high-grade core within the Umwelt underground could provide opportunities for early advancement of underground resource extraction that could have positive impacts on the economics of the project.

Blue Star Gold Corp. has undertaken a 2019 exploration program on the Hood gold property north of the historic Lupin Mine.

Blue Star holds an agreement with Nunavut Tunngavik Inc. for the exclusive right to explore the IOL parcel. Priority drill targets within the Hood Property are on strike and north of the Ulu Mining Lease's advanced Flood gold zone and are related to the five-kilometer- (three miles) long Ulu regional fold. The Hood leases are contiguous to the Ulu Property, which hosts an advanced gold project. Between 1989 and 2006, explorers including BHP Billiton, Echo Bay Mines Ltd., and Wolfden Resources Inc., completed significant exploration and development of the Ulu gold property.

In late July, Blue Star exercised an option to acquire 100 percent of the Ulu property in exchange for C$450,000 in cash and other considerations.

Other mining explorers working in the Kitikmeot region in 2019 include:

Auryn Resources Inc. continues to focus on its Committee Bay gold project located in the eastern Kitikmeot, about 180 kilometers (110 miles) northeast of Agnico Eagle's Meadowbank gold mine.

Auryn reported in February using artificial intelligence to identify 12 new gold targets at Committee Bay, including two targets that overlap Auryn's geologist-derived targets adjacent to the Aiviq and Kalulik discoveries, which are effectively drill ready.

The machine learning technique also identified two important targets that create east and west extensions of the Three Bluffs deposit; multiple targets hidden beneath shallow lakes and glacial-fluvial cover, and a third structure (in addition to the Three Bluffs structure and the Aiviq and Kalulik structure) with 15 kilometers of strike length that offer new opportunities.

In 2018, the junior drilled a 1,500-meter gold-bearing hydrothermal system at the Aiviq target. Auryn said it plans to advance to drill stage the two new targets east and west of Three Bluffs in hopes of significantly expanding that deposit.

Mini-mining boom in Kivalliq

Kivalliq, the central region of Nunavut, saw exploration for both diamonds and gold in 2019, with gold the major focus of explorers.

The Kivalliq has a long history of mining and hosted two of Canada's first major north of 60 mines – North Rankin, a nickel mine that operated from 1957 to 1962, and Cullaton-Shear Lake, a gold mine that operated in the early 1980s.

Agnico Eagle's Meadowbank gold mine has produced nearly three million ounces of gold since it began production in 2010. Gold production at Meadowbank slowed as the mine approached its end of life in 2019, while the company advanced nearby Amaruq (2.9 million oz in reserves) as a satellite deposit, supplying ore to the existing Meadowbank mill by Sept. 30. Amaruq is expected to produce 165,000 oz gold in 2019.

Agnico Eagle, meanwhile, continued exploration drilling at Amaruq and results show potential for underground mining as well as a planned open pit.

Agnico Eagle also owns the Meliadine Mine, which achieved commercial production ahead of schedule in mid-April and is expected to produce 240,000 oz of gold in 2019.

Meliadine, located near Rankin Inlet in the eastern Kivalliq region, is expected to produce 5.3 million ounces of gold over its 14-year lifespan.

Northquest Ltd., a subsidiary of Nord Gold SE, continues to explore its Pistol Bay gold project near the community of Whale Cove.

Dunnedin Ventures Inc., which carried out an active 2018 program of till sampling at its Kahuna diamond exploration project located 26 kilometers north of Rankin Inlet adjacent to Agnico Eagle's Meliadine Mine. This program defined a three-square-kilometer target area for potential diamond sources at the head of the Josephine Target Area – a trend of abundant high-quality diamond indicator minerals for which no source is yet known. Dunnedin also said its next diamond-focused exploration campaign will be aimed at discovery of kimberlite pipes within this discrete area.

On the heels of an active early stage exploration program in Nunavut in 2018, Silver Range Resources Ltd. is focused this year on project generation and cost-effective early stage exploration, while maintaining sales efforts to option drill-ready prospects in the territory. In June, the junior said it looked forward to receiving news from several of its optioned projects, notably the Hard Cash property in southwestern Nunavut where Canarc Resources Corp. planned a maiden drill program this summer.

Iron, diamonds take center stage

Qikiqtani, the largest of Nunavut's three administrative districts, is primarily comprised of the islands of the Canadian Arctic Archipelago,

In 2018, companies explored the region for iron, diamonds, base metals, and gold.

Mineral claims, prospecting permits, and mining leases covering a total of 1.74 million hectares were held in the region as of November 2018, down from 2.4 million hectares held a year earlier.

Baffinland Iron Mines Corp.'s Mary River iron mine on northern Baffin Island has been in production since 2014.

In 2018, the company produced and shipped a record 5.1 million metric tons of iron ore from the Milne Inlet port to markets in Europe, Japan and Taiwan. Although this amount exceeds the 4.2 million metric tons allowed to be shipped through Milne under the 'early revenue phase' amendment to Baffinland's project certificate, the company received a variance increasing this amount to an annual maximum of 6 million metric tons ore for 2018 and 2019.

Citing concerns about the economic viability of the project and with support from the Qikiqtani Inuit Association and government of Nunavut, Baffinland was granted this variance as a temporary measure while a phase 2 amendment to the company's project certificate is being considered by the Nunavut Impact Review Board. The phase 2 amendment proposes to increase further the shipping limit from Milne Inlet to 12 million metric tons annually, and to construct a rail line from the mine site to allow for more efficient transportation of ore than by the existing tote road.

In April Baffinland signed a memorandum of understanding with the government of Nunavut, pledging to maximize Inuit employment at the Mary River Mine. The MOU focuses on four priority areas for collaboration – reducing barriers to employment; the development of employment and training opportunities; community wellness programs; and infrastructure and transportation.

At the signing ceremony, Economic Development and Transportation Minister David Akeeagok said, "The government of Nunavut strives to develop our infrastructure and economy in ways that support a positive future for our people, our communities and our land."

With the purchase of Peregrine Diamonds Ltd. in September 2018, De Beers Canada took up the challenge of developing a diamond mine at the Chidliak property north of Iqaluit, Nunavut's capital, in the Qikiqtani region.

Before the sale, Peregrine had filed an updated inferred resource estimate for the CH-6 kimberlite, the most developed of numerous kimberlites at Chidliak, that jumped 58 percent to 17.96 million carats. The company also released an updated preliminary economic assessment involving a 13-year open pit mining operation that could extract 16.7 million carats of diamonds from the CH-6 and CH-7 kimberlites.

Later in the year, De Beers indicated it is considering alternative mining technologies with smaller footprints for Chidliak.

ValOre Metals, formerly Kivalliq Energy, fulfilled the terms of its option agreement with Commander Resources to gain 100 percent ownership of the Baffin Gold project.

In December, the explorer said it has defined several new, large-scale gold anomalies in till, and the significance of these is enhanced by a greater understanding of the geological setting based on new airborne data collected in 2018, according to ValOre President Jeff Ward.


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