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Few seek new mineral deposits

COVID-19 restrictions cast pall over 2020 exploration season Mining Explorers 2020 - Published January 19, 2021

Already headed toward the lowest level of annual mineral exploration spending in nearly two decades, the mining industry in Nunavut got broadsided by the coronavirus pandemic in 2020.

Travel and workplace restrictions quickly imposed last spring by federal and local authorities to prevent the spread of the disease to the northern territory led some companies to cancel or postpone planned exploration programs until 2021.

In February, Natural Resources Canada released figures indicating mining companies had planned to spend C$52.1 million in Nunavut on mineral exploration and deposit appraisals in 2020, reflecting a sharp decrease from comparable spending of C$123.2 million carried out in 2019 and the lowest level since 2003.

Further, NRCan figures show that annual mineral exploration spending in Nunavut has decreased steadily since 2011.

In March, federal and local authorities placed restrictions on all travel and established public health procedures aimed at preventing outbreaks of the coronavirus in Nunavut and the rest of Canada. The new rules included requiring mine workers to undergo frequent screening for the virus and those living in southern Canada to fly directly to and from mining camps via air charter rather than travel through local airports and Nunavut communities.

The policies, so far, have been largely successful in detecting and controlling the spread of the disease in the territory. By early November, no coronavirus cases had been reported in Nunavut's indigenous communities.

The additional cost of the strict lockdowns and protocols, however, dissuaded some mineral explorers from following through with their 2020 exploration plans.

North Arrow Minerals Ltd., for example, is exploring the Q1-4 diamond project located about nine kilometers (five miles) from the hamlet of Naujaat, in partnership with Australia-based EHR Resources Ltd.

Ken Armstrong, president of North Arrow and the NWT & Nunavut Chamber of Mines, told a reporter in August that his company postponed its 2020 work plans for Q1-4 until next year.

"We're in a tough spot because investors look at an investment in North Arrow as dead money right now," he said.

North Arrow's partner, however, raised C$5.6 million to help pay for a bulk sampling program the two companies have planned for the Nunavut project in 2021.

Still, a few explorers launched various size exploration campaigns in 2020 anyway. The programs ranged from early stage work by Silver Range Resources Ltd. to extensive drilling and other activities by Sabina Gold and Silver Corp. at the Back River gold project.

Some of the explorers had workers commute directly in and out of their mining camps, while a few others had their workers undergo the government's 14-day quarantine requirement, but only if nearby communities agreed to the exceptions in writing.

Nunavut suffers spending decline

Reasons for the ongoing decline in mineral exploration spending in Nunavut run deeper than the recent pandemic, however. Observers cite Nunavut's sparse infrastructure, frigid arctic temperatures and high costs of exploration, as well as generally fluctuating mineral prices as key factors.

Studies show that in Nunavut, four or five dollars of exploration spending accomplishes what one dollar would in a road-accessible project in southern British Columbia, or northern Ontario, according to Armstrong. As a result, mineral exploration investment appears to be flowing into more developed mining friendly jurisdictions such as British Columbia, Ontario, Quebec, and Saskatchewan.

Another big reason for the ongoing spending decline is uncertainty. If a territory's mining rules and regulations are unclear, investors tend to shy away from that jurisdiction. Nunavut's lack of a land use plan is an example of the lack of clarity in the territory.

The Nunavut Planning Commission started work on the plan in 1993, yet 27 years later, it is still being developed.

"No one really knows what ultimately that's going to look like," Armstrong said. "I think it's come to where companies say, we don't really know what the goal posts are here, maybe we should go explore somewhere else."

Despite all these drawbacks, mining companies rate Nunavut as a mining-friendly jurisdiction because of the Nunavut Land Claims Agreement. The modern treaty, signed in 1993, details how land-use decisions in the territory are made, governed and controlled by the local indigenous population.

The agreement gives title to the Inuit people of Nunavut about 350,000 square kilometers (135,100 square miles), or nearly one-fifth of the territory's total 1.9 million square kilometers (733,400 square miles). About 35,000 square kilometers (13,510 square miles) of the Inuit-owned lands include mineral rights.

Ottawa mineral rent relief

In August, Canada issued an order extending time limits for mining companies to pay rent for mineral leases in Nunavut under the regulations that become due between March 13 and October 29, 2020.

There are about 500 mineral leases held in Nunavut, and the waiver of lease payments is valued at roughly C$1.5 million, according to the chamber.

Upon request in writing to the Department of Crown-Indigenous Relations and Northern Affairs Canada, the federal government amended the territory's mining regulations to waive for one year, the payment of annual rent on mineral leases due in the period from March 13, 2020 to March 12, 2021. Any rent paid before the amendment comes into force is waived in the following year.

This payment extension allows mineral leases to not be in default for unpaid rent due to the pandemic. Also, time limits to initiate rent collection procedures, as well as time limits for holders of recorded mineral claims to apply for a mineral lease that falls in the same time period are equally extended in the same way.

Canada's goal in ordering the extension "is to ensure that everyone, including Indigenous peoples and Northerners working in the mining industry, get the help they need to weather this crisis, and that the North is well-positioned for a strong recovery from the impacts of COVID-19 across all sectors of the economy," Canadian Minister of Northern Affairs Daniel Vandal said in an Aug. 13 statement.

While the leases themselves aren't that expensive - some C$2,500 to C$5,000 annually depending on the amount of land leased, chamber leaders say the waiver will help mining and exploration companies that cannot work in Nunavut this year because of COVID-19.

Under Nunavut's mining regulations, companies must conduct a certain amount of work on their mineral claims every year and prove the work occurred in order to maintain the claims.

Miner decelerates at Hope Bay

The Hope Bay Mine operated at reduced levels for most of 2020 with less than half of its pre-pandemic workforce of about 350 people. Mine production, scaled back to allow for managing risks related to the pandemic, was expected to continue at least until 2021, mine owner TMAC Resources Corp. said in late October.

At the end of July, the company began operating the processing plant at Hope Bay on a campaign basis, for three weeks at a time, with about three weeks in between campaigns. The mine produced 18,420 oz gold and poured 21,200 oz in the third quarter. As of Oct. 14, gold output in 2020 totaled 79,680 oz, mined at a rate of 670 metric tons per day at an average grade of 10.6 g/t gold.

Third-quarter gold recovery averaged 88% at a processing rate of 1,630 metric tons per day on operating days and a feed grade of 9.8 g/t gold. Hope Bay is expected to produce about 95,000 to 100,000 oz of gold for the full year 2020.

"As part of the reduced operating plan, we continue to mine and develop in the available stopes and headings in Doris Connecter and Doris BTD and achieved a rate of 670 tpd at a grade of 10.6 g/t," said TMAC Resources President and CEO Jason Neal. "Leveraging just completed studies, an additional diamond drill rig has been deployed to provide further data to inform the water management and mine planning at Doris Central which will be an important ore source in 2021. Development at Madrid is only planned to restart in early 2021, with preparations now underway. We expect to produce sufficient ore, combined with low grade stockpiles, to be able to operate at a reduced level for the foreseeable future and until at least the 2021 sealift."

TMAC suspended its exploration drilling March 30 in response to the COVID-19 pandemic. Underground production drilling associated with a reduced operating plan resumed at the end of June and will focus on the Doris Central, Doris Connector and Doris BTD Extension zones. The miner also said all surface exploration programs have been deferred to 2021.

Due to restrictions related to the pandemic, annual exploration spending commitments for 2020 have been waived under terms of a mineral exploration agreement that TMAC has with its Inuit-owned landlord, Nunavut Tunngavik Inc.

In 2020, TMAC conducted limited delineation diamond drilling to support mining activities as part of its reduced operating plan.

Hope Bay began the year with estimated measured and indicated resources totaling 4.8 million oz gold in the Doris, Madrid and Boston deposits.

The company is also working to close its sale of the Hope Bay mining operation to China-based Shandong Gold Mining Co. Ltd. for C$230 million by year's end 2020, but finalizing the transaction may require more time and extend to the first quarter of 2021. Neal said the sale will provide Hope Bay with the operational improvement and capital investment needed for a robust and long mine-life.

Some 97% of TMAC's shareholders approved the deal at a special meeting held June 26. The transaction remains subject to the approval of several Canadian regulatory bodies. The federal cabinet ordered a national security review of the proposed sale in mid-October under provisions of the Investment Canada Act.

Hope Bay manages COVID-19 outbreak

TMAC said it implemented several initiatives to manage through the COVID-19 pandemic and protect its employees and contractors, their families and local communities from the virus, including a screening process at its personnel muster point in Edmonton, AB.

Designed to detect coronavirus among its workers before they travel to Hope Bay, the company said screeners detected the first positive cases of the virus at the mine in September. Two camp services workers tested positive for the COVID-19 virus on Sept. 8 after arriving at camp, though their tests five days earlier in Alberta had been negative. The employees were immediately quarantined.

On Sept. 28, seven more workers at Hope Bay also tested positive for coronavirus. The original two camp services workers remained asymptomatic, but at least one of the seven additional workers who tested positive exhibited symptoms of the disease. The group had traveled to Hope Bay Sept. 8, on the same charter flight from Edmonton. The company said no other link had been established with the previous two positive coronavirus cases.

TMAC ordered a temporary travel embargo in hopes of avoiding further spread the virus.

By mid-October, the company reported 14 confirmed positive and two presumptive positive cases of COVID-19 among the mine's crew members who had arrived at the mine Sept. 8. Most of the positive cases had no symptoms and the workers with active virus cases remained well, the company said.

All 14 of the workers who tested positive have now returned home, and TMAC had the camp disinfected and cleaned before the next crew arrived.

"We have on-site rapid testing equipment at Hope Bay, and we expect to implement a technology for employee proximity data that would accelerate any future contact tracing before the end of the current rotation," Neal said.

Little focus on exploration at mines

None of the other three producing mines in Nunavut reported significant exploration activity in 2020. They posted strong output, however, for the first nine months of the year.

Agnico Eagle Mines Ltd. posted strong quarterly gold production at its Meadowbank Complex and Meliadine mines, noting that the Nunavut mines were primary contributors to the company's near-record third-quarter gold output.

Implementing new hygiene and safety protocols in response to the COVID-19 threat at its mines depressed Agnico-Eagle's production in 2020. For the first nine months of the year, the miner said payable gold production totaled 1.235 million ounces (including 1,982 oz of pre-commercial gold production at the Tiriganiaq open pit at Meliadine). That compares with some 1.288 million oz of output (including an aggregate of 82,562 oz of pre-commercial production at Meliadine and Amaruq) during the same¬¬ period in 2019.

At the Mary River Iron Mine on Nunavut's Baffin Island, Baffinland Iron Mines Ltd. continued to produce and ship to international markets up to 6 million metric tons of iron ore in 2020 from its port site in Milne Inlet. One of the world's northernmost operating mines, Mary River is also one of the world's richest iron mines. Baffinland is currently mining Deposit No. 1, which has an average grade of 67% and reserves of 400 million metric tons. It remains open at depth.

To effectively compete in international iron ore markets, Baffinland says it needs to boost production at the mine. The company is currently seeking regulatory approval to double the mine's current output, potentially producing up to 12 million metric tons of iron ore annually. A proposed phase 2 expansion project also would involve constructing a railway from the Mary River mine site to the port and adding a second ore dock at the port.

Baffinland said it followed government guidelines for managing risks associated with the coronavirus pandemic, including, sending home with pay all Inuit and vulnerable employees in March and requiring its remaining workers to rotate in and out of camp on a 28-day-on/28-day-off schedule to minimize the risk of infection.

In September, Baffinland confirmed its first positive COVID-19 case at the mine. No additional infections were identified in connection to that worker; however, the company reported a second confirmed coronavirus infection in a different employee on Oct. 21.

Baffinland said the second affected worker and any individuals identified through contact tracing as potential close contacts were placed in isolation under medical observation. All individuals in isolation remained asymptomatic, and there was no evidence of disease transmission at the mine, the company added.

Few juniors step up

Among the handful of juniors that did more than just consider exploration programs in Nunavut in 2020 are Blue Star Gold Corp., Silver Range Resources Ltd. and Sabina Gold and Silver Corp.

Blue Star is exploring the Ulu Property, an advanced gold and silver project, and the highly prospective Hood River gold concessions adjacent to the Ulu mining lease. The junior completed its purchase of the combined properties from Mandalay Resources Corp. in February.

Together, Ulu and Hood River comprise roughly 9,000 hectares (22,239 acres) of mineral claims, located about 525 kilometers (326 miles) north-northeast of Yellowknife, NT in the Kitikmeot region of western Nunavut. The sale also included a substantial inventory of capital equipment, a Weatherhaven camp with shop and a 1,200-meter-long airstrip.

Securing a 10-year license for water and reclamation in May and roughly C$5 million in investment capital – including about C$1 million from major shareholder Georg Pollert, Ph.D., by June, Blue Star launched its 2020 exploration and reclamation programs in July. Pollert, a German industrialist, boosted his ownership interest in Blue Star in October to nearly 40 percent.

The company reported assay results from 15 drill holes in September, three holes in the Flood Zone and 12 holes in the North Fold Nose Zone. All holes returned high-grade intersections of gold, including seven meters averaging 13.42 g/t gold from nine meters depth in hole BS2020ULU-002 and three meters averaging 13.87 g/t gold from 164 meters depth in hole HR20-017.

Blue Star Oct. 28 said it completed 38 holes in the 2020 drill program covering 7,624 meters, including 10 holes at the Ulu and Gnu deposits to expand known resources and confirm their geologic models, and 28 holes on the Ulu and Hood River properties, including 14 holes in the NFN zone, to test exploration targets.

Blue Star said it drilled holes in the Flood zone to provide additional geologic information and confirm certain aspects of the geologic model of the deposit, improve drill hole density, allow for possible upgrading of the resource category, and to expand the resource base.

One hole drilled in the Gnu zone was designed to help the company further understand the host structure, while three holes drilled on the Hood River property tested two early stage targets in the INT and Bizen zones.

The junior also reported that metallurgical testing of North Fold Nose mineralization showed greater than 93% recovery using simple and conventional processing methodology.

Juniors eye the Kitikmeot

In early October, Silver Range Resources Ltd. provided an update on its exploration of the Tree River Property in the western Kitikmeot region of Nunavut, along with surprising results from research of the Tree River Conglomerate recently released at the American Geophysical Union's annual general meeting.

The Tree River Conglomerate is an Archean metasedimentary rock unit in the Anialik Greenstone Belt. Known exposures of the geological formation are on permits staked as Silver Range's Tree River property and the on adjacent Inuit-owned lands' Parcel CO-69.

In 1997, noted northern geologist Valerie Jackson collected samples from the TRC about 3,100 meters northwest of Cracker Lake, while conducting regional mapping of the Anialik Lake Greenstone Belt. The samples were processed to recover zircons for dating purposes and unexpectedly yielded two suspected diamonds. The discovery was never verified.

In 2018, Graham Pearson and Jesse Reimink from the University of Alberta and Pennsylvania State University, respectively, conducted follow-up work in the area. They collected two 10-kilogram samples from the general area of the 1997 sampling about 300 meters from the boundary of the Tree River property.

In April 2020, Silver Range collected two panel samples on TRC, one each from the Main zone and the West zone. Extracted with an electric rock breaker and weighing 49.5 kilograms and 55.5 kilograms, respectively, the samples were sent to the Saskatchewan Research Council for analysis. The metallic screen assays from the panel samples returned 36.3 g/t gold from the Main zone and 0.29 g/t gold from the West zone, suggesting that gold in the TRC basal zone is syngenetic in origin. No diamonds were recovered from either of the panel samples.

Silver Range said conclusive zircon-age dating places the Tree River Conglomerate in the "Great Gold Deposition Event," which indicates that the TRC was deposited in the inferred Mesoarchean gold deposition event associated with the first organic production of oxygen and consequent fixing of soluble gold.

Conglomerate-hosted gold deposits in the Witwatersrand in South Africa and the Pilbara region in Australia occur within the same age bracket.

"In light of these remarkable results, Silver Range is designing a program to systematically test the gold and newly discovered diamond potential of the Tree River Conglomerate," the junior said in October. As a precursor, Silver Range has submitted an expression of interest to Nunavut Tunngavik to obtain the mineral rights to explore IOL Parcel CO-69.

The Tree River Conglomerate is very resistive and well exposed; as a result, it might be rapidly explored with surface sampling, the junior added.

Exploration light still shines

Sabina Gold and Silver Corp., the brightest light in Nunavut's dim exploration picture, continued to shine in 2020.

The junior successfully navigated COVID-19-related restrictions last spring to mount a major exploration program during the arctic summer and fall field season at its advanced Back River Gold Project in the Kitikmeot region of Nunavut.

Sabina has aggressively sought gold at Back River since acquiring the property in 2009. During the ensuing 11 years, the junior has grown the property's mineral resource dramatically to nearly 10.27 million metric tons of measured resource averaging 5.27 g/t (1.740 million oz) gold; 17.97 million metric tons of indicated resource grading 6.22 g/t (3.59 million oz) gold; and 7.75 million metric tons of inferred resource grading 7.43 g/t (1.85 million oz) gold.

Included in this mineral estimate are nearly 7 million metric tons of proven mineral reserves averaging 5.97 g/t (1.34 million oz) gold and nearly 1.89 million metric tons of probable reserves averaging 5.52 g/t (335,000 oz) gold.


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