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Wildfires upset NWT mineral exploration

Explorers push past delays, evacuations to finish 2023 work Mining Explorers 2023 - January 18, 2024

With a summer marred by unprecedented wildfires behind them, companies exploring the mineral-rich Northwest Territories are reporting impressive results from their 2023 programs.

Seeking new deposits of valuable minerals, ranging from ever-popular diamonds and precious metals to recently designated "critical minerals," such as lithium, rare earth elements and zinc, a score of explorers took to the field across the territory.

"An exciting new chapter is emerging for mining in the NWT," said Northwest Territories Minister of Industry, Tourism and Investment Caroline Wawzonek. "While global competition for investors is fierce, we are well positioned to not only become a supplier of critical minerals, but to be a leader in how they are resourced in both an environmental and socially responsible way."

Several advanced projects also reported noteworthy progress toward starting production, including three operations that attracted new owners or partners.

Promising start to 2023

The explorers resumed the hunt for precious, base, and critical minerals in 2023, many with programs buoyed by financial assistance from the Government of Northwest Territories Mining Incentive Program.

In 2022, the territorial government, with C$500,000 from the Canadian Northern Economic Development Agency, awarded C$1.5 million in grants to mineral explorers and prospectors chasing early‐ and advanced-stage projects. Much of that work carried over into 2023.

Last spring, NWT officials again sought applications for mining incentive grants the government will award to help fund 2024 mineral exploration programs.

Active mining and drilling took place during the year by more than a score of companies, including a half-dozen or so newcomers seeking lithium deposits.

Natural Resources Canada projected total spending for mineral exploration and deposit appraisals in 2023 to increase in Northwest Territories to C$112 million, up more than 40% from C$79.8 million a year earlier. NRCAN's estimates are based on explorers' spending intentions.

Devastation and delay

An unprecedented season of wildfires swept through much of Canada this summer, with more than two million hectares – an area more than three times the size of Delaware – burned in Northwest Territories and at least eight communities in the northern territory evacuated, including Yellowknife, the capital.

NWT government officials and residents said the number and ferocity of the conflagrations far exceeded the territory's 10-year annual average of 185 wildfires. They also cited 2014 as the last year the Northwest Territories had a wildfire season that approached being as devastating.

"We're all tired of the word 'unprecedented,' yet there is no other way to describe this situation in the Northwest Territories," Northwest Territories Premier Caroline Cochrane said Aug. 16.

In addition to being home to Northwest Territories' government, Yellowknife serves as the hub for mining across much of Canada's Far North.

A mining town that grew around the historic Con and Giant gold operations, the city continues to be an important business center for the Diavik, Ekati, and Gahcho Kué diamond mines to the north and explorers working across the territory and in Nunavut.

Over the past couple of years, the Northwest Territories capital has emerged as a potential northern link in North America's electric vehicle supply chain, due to the presence of large cobalt and bismuth deposits west of the city, a huge zinc, lead, and silver mine project to the southeast, rich stores of lithium and Canada's first rare earths mine.

Mineral exploration was interrupted at least temporarily by the threat of wildfires. One wildfire burned through the camp and mine at Sixty North Gold Mining Ltd.'s Mon property about 40 kilometers (25 miles) north of Yellowknife, curtailing that explorer's entire 2023 program.

The towns of Hay River and Enterprise on the south side of Great Slave Lake had already been evacuated when the government ordered Yellowknife's 22,000 residents to vacate their homes and head south.

Diamond output dips

The territory's three operating diamond mines, meanwhile, continued production despite disruption from the wildfires.

The value of Canadian diamond production, according to Kimberley Process, totaled US$1.88 billion in 2022 from sale of 16.2 million carats. This compares with a value of US$1.51 billion in 2021 from sales of 17.6 million carats.

Canada ranked third globally in terms of global production, and fourth in value. Kimberly Process statistics show global diamond production in 2022 was 120 million carats, up 1% from 119 million carats in 2021. The value of this output totaled $16.02 billion, up 24% from comparable value of $12.9 billion in 2021.

"The NWT has been among the top global producers of diamonds since the early 2000s. NWT diamond potential remains high, and rejuvenated exploration could help find new deposits to sustain production and the important role diamond mining plays in the health of the territory's economy," said NWT & Nunavut Chamber of Mines President Kenny Ruptash.

Though the Diavik mine is closing in three years, cost reductions related to the adoption of new diamond mining and recovery technologies, construction of the planned Slave Geological Province all-season road, and new, cleaner hydropower, could contribute to extending the life of the mine, he added.

The COVID-19 pandemic depressed diamond markets worldwide in 2020, but prices began rising again in 2021. One NWT diamond mine closed for part of 2020, before resuming operations in early 2021.

"Diamond production has bounced back in the NWT in 2022, reaching a new high," Ruptash reported.

The value of 2022 diamond production in Northwest Territories increased significantly to US$2.17 billion, up US$477 million (28%) from US$1.69 billion in 2021.

Mountain Province Diamonds Inc., which owns a 49% stake in Gahcho Kué reported output of 1.33 million carats during the third quarter of 2023, compared with 1.45 million carats for the same period a year ago.

Despite the effect of a five-day plant shutdown in mid-June, the impact of the wildfires this summer and lower market demand for diamonds, Mountain Province expects the mine's production in 2023 to still fall within the lower range of the company's previous estimates, President and CEO Mark Wall said Sept. 21 in the company's third quarter statement.

DeBeers Canada Ltd. owns the remaining 51% interest in Gahcho Kué.

New lithium rush

Potentially rich lithium deposits extending east from the Northwest Territories capital of Yellowknife has spurred a small stampede of mining companies to Canada's North this summer as worldwide demand for the critical mineral accelerates.

At least seven companies reported exploration programs seeking commercial quantities of lithium in spodumene pegmatites in the territory this year.

Lithium is an important mineral for green energy technologies, and net-zero emissions technologies. Lithium-ion batteries, for example, are expected to become the dominant technology in this market, given their high energy density, long life cycle, and decreasing costs.

By 2050, the cumulative worldwide demand for the white mineral could reach more than 60 million metric tons, which is more than 10 times current annual production.

Canada does not currently produce lithium but has large mineral-rich deposits called spodumene pegmatites and brine-based lithium resources.

The recent rush to explore for lithium in northern Canada is also spurred by increased prices. Though volatile due to intermittent supply, lithium carbonate spot prices have soared in recent years.

The Canadian government recently designated lithium as one of about three dozen minerals critical to the country's security.

Seeking lithium opportunities

Longtime NWT diamond explorer, North Arrow Minerals Ltd., reported progress in mid-July in evaluating lithium enriched pegmatites at its LDG, Mackay and DeStaffany projects in the prospective terrain north and east of the territory's capital city.

"These discoveries are ... in a similar geological setting to the better-known Yellowknife Pegmatite Province, and North Arrow's work to date demonstrates they have potential for similar size and scale to the pegmatites of the Yellowknife area," Ken Armstrong, the explorer's president and CEO, said Oct. 12.

He also noted that the LDG and MacKay spodumene pegmatites lie within several kilometers of the Tibbitt-Contwoyto winter road connecting Yellowknife with the territory's diamond mines to the north.

Exploration drilling in 2024 will benefit from use of this winter road, as well as North Arrow's ... exploration camp, Armstrong added.

At its DeStaffany Lithium Property near Great Slave Lake about 115 kilometers (70 miles) east of Yellowknife, North Arrow also searched for lithium this summer, using core drilling and surface sampling. By mid-July, the explorer had confirmed significant spodumene mineralization in four pegmatites – Moose 1, Moose 2, Moose 3, and Moose 4.

North Arrow is also pursuing lithium deposits in Nunavut at the Bathurst Inlet pegmatite field and on Baffin Island.

The Yellowknife Pegmatite Province east of NWT's capital has a history of lithium exploration dating back to the 1950s. However, the district has been overlooked in recent times, until Li-FT Power Ltd. secured its potentially world-class Yellowknife Lithium Project in late 2022, according to Adam Ritchie, managing director of another newcomer, Australia-based Loyal Lithium Ltd.

Formerly a gold exploration company, Loyal switched its focus to lithium recently and in April, acquired controlling interest in the Hidden Lake lithium project 45 kilometers (28 miles) east of Yellowknife. Patriot Battery Metals Ltd., Loyal's partner, retained 40% interest in the 2,500-hectare land position across six contiguous claims containing 14 mapped lithium spodumene-bearing pegmatite outcrops, with four drill-tested, spanning a cumulative strike length of 2,250 meters.

Ritchie said encouraging exploration results and metallurgical tests at Hidden Lake indicate potential for significant lithium in spodumene-rich dykes along strike and at depth.

Another explorer, ION Energy Ltd., also completed the acquisition of two NWT lithium projects, the 900-hectare (2,224 acres) Little Nahanni claims, located in an area with known pegmatites dating back to 1961, and the Bliss Lake lithium pegmatite project, which encompasses 5,798 hectares (14,327 acres) located 13-15 kilometers (8-9 miles) from lithium properties held by Li-FT Power Ltd.

Australia-based Midas Minerals Ltd. inked a deal with Gold Terra Resource Corp., to earn up to 80% interest of the critical mineral rights (including lithium and associated pegmatite minerals and rare earth deposits) on 718 square-kilometers (277 square miles) of property outside Yellowknife.

This summer Midas began mapping the project and sampling pegmatite swarms.

Impetus for other critical minerals

The three companies seeking to develop advanced exploration projects in Northwest Territories to mines want to tap into C$3.8 billion the Canadian government earmarked in its 2022 budget to spur the development of the country's critical minerals industry.

In December 2022, the government released a strategy with broad goals for how that money will be spent.

One of the trio, Fortune Minerals Ltd., is also collaborating with senior miner Rio Tinto to develop technology that will improve recovery of critical minerals, cobalt, and bismuth, at its Nico cobalt, gold, bismuth, and copper mine project located in the Tlicho First Nation region west of Yellowknife.

Under a memorandum of understanding, testing of this technology for Fortune's planned refinery in Alberta will be done at Rio Tinto Kennecott's integrated copper mining and smelting operations in Utah.

The partnership aims to maximize the value of critical mineral supply chain investments and increase Fortune's planned cobalt and bismuth refining operations to process co-product streams of the minerals recovered from the Kennecott smelter.

Startup costs for the mining and processing operations are estimated at C$750 million.

Osisko Metals Ltd., meanwhile, finalized a four-year agreement recently valued at C$100 million in which U.K.-based Appian Capital Advisory acquired 60% ownership in the Pine Point zinc mine project. The money will finance exploration, feasibility, and regulatory work at Pine Point.

In September Osisko Metals reported initial assay results from its 2023 drilling program at X25, a prismatic-style deposit with a tabular-style apron in the West Zone.

Conducted as part of the Pine Point Joint Venture's larger 2023 exploration program, the definition drilling was designed to achieve an average drill spacing of about 30 meters within modeled mineral resources reported in a 2022 preliminary economic assessment. This spacing would upgrade inferred resources to the indicated category.

Among 2023 drilling highlights:

Hole X25-23-PP-004 intersected 33 meters grading 11.26% zinc and 2.71% lead.

Hole X25-23-PP-034 intersected 6.98 meters, grading 21.09% zinc and 3.24% lead.

The explorer said all mineralization at X25 occurs between 68 meters and 195 meters vertical depth from surface and occurs as sphalerite and galena associated with intensely altered hydrothermal dolomite and limestone.

Osisko Metals CEO and Chairman Robert Wares said the 2023 drill program results would be used in a feasibility study set to begin in the second half of 2023.

At the Prairie Creek zinc, silver and lead deposit in Nahanni National Park Reserve, NorZinc Ltd. is also seeking federal assistance from the National Trade Corridor Fund to help complete a 170-kilometer (106 miles) road to the mine site.

RCF, a Delaware-based private equity group and major shareholder in NorZinc, bought out the company's other investors in October 2022 in a deal that also provided the explorer with working capital for exploration at Prairie Creek in 2023.

Considered one of the highest-grade undeveloped zinc-lead-silver mine projects in Canada, Prairie Creek is expected to produce average annual payable volumes of 2.55 million oz silver, 122 million lb zinc, and 101 million lbs. lead over an estimated life of mine of 20.3 years.

A 2021 mineral resource estimate for the project includes 9.8 million metric tons of measured and indicated resources at 22.7% zinc-equivalent, which accounts for the value of all the metals in the deposit, and 6.4 million metric tons of inferred resources at 24.1% ZnEq.

The mine outlined in a 2022 preliminary economic assessment is fully permitted to begin production.

All three mining companies hope to tap into the C$3.8 billion the Canadian government earmarked in its 2022 budget to spur the development of the country's critical minerals industry.

In December 2022, the government released a strategy with broad goals for how the money will be spent.


Regrouping with REEs

Vital Metals Ltd., previously Canada's sole rare earth elements producer, provided an update in September on a strategic review it initiated in April 2023 to investigate the long-term viability of its rare earth processing facility in Saskatoon, Sask., where construction was suspended in late 2022.

Though REE ore is in high demand, the costs, and related processes for marketing the minerals are challenging.

After a failed attempt to market REE ore produced at its North T demonstration mine at the Nechalacho project in NWT, Vital is pursuing other avenues to bring Nechalacho's ore to market.

Located about 100 kilometers (62 miles) southeast of Yellowknife, Nechalacho is comprised of eight contiguous mining leases totaling 5,786 hectares (14,229 acres).

With a November investment from China-based Shenghe Resources Holding Co., Vital's Canadian subsidiary Cheetah Resources Corp. is currently exploring development of an integrated North American supply chain for future rare earth production at Nechalacho.

Hunt for gold

Several juniors continued their hunt for gold in 2023, including Gold Terra – one of the most active precious metals hunters in Northwest Territories.

Gold Terra Chairman and CEO Gerald Panneton said the Yellowknife wildfire evacuation order interrupted the company's program of deep drilling on the Con Mine Option Property. Targeted to intersect the down plunge extension of the prolific Campbell Shear zone at depth below the Con Mine deposit (1938-2003), hole GTCM23-055 was stopped at 1,900 meters because of the evacuation of Yellowknife in August.

But the hole eventually proved to be "a major technical success," Panneton said in October. The explorer hit a 30-meter intersection of prominent quartz veining and visible gold in the high-grade gold-bearing Campbell Shear Zone, which extends some 200 meters beneath existing Con Mine underground workings.

"On comparing our intersection with historic intersections in the closest underground drilling, such as in historical hole 7940, we see major similarities to the current intersection some 250 meters above," Panneton said. "This is indicative of the continuation of gold mineralization within the shear below the former Con Mine," which produced 5.1 million ounces of gold at an average grade of 16 g/t."

Panneton said Gold Terra will step up from the parent hole to add more intersections within a radius of 50-100 meters laterally, and eventually up-dip, from the first intersection.

The Con Mine Option Property is under option from subsidiaries of Newmont Corp. and can be acquired by Gold Terra under certain conditions.

Gold Terra's 2023 drilling program was intended to add resources to a 2022 initial mineral resource estimate of 109,000 indicated ounces of gold and 432,000 inferred ounces of contained gold between surface and to a depth of 400 meters below surface, along a 2,000-meter corridor of the Campbell Shear.

Nighthawk Gold Corp., reported impressive drilling results in September, including a half-meter of mineralization averaging 502 g/t (16.14 oz/t) gold; and 318 g/t (10.22 oz/t) gold over 0.4 meters at the 24/27 deposits located in the Colomac Center Area, about 2,000 meters east of the Colomac Main deposit.

"We believe we are just scratching the surface on this zone's potential, with more high-grade, near-surface gold to be discovered with additional drilling," Nighthawk President and CEO Keyvan Salehi said in September.

Discovery of a feeder zone for the high-grade intercepts could be a "game-changer" for Nighthawk, Salehi added.

Progress to the west

Fireweed Metals Corp., which is exploring the Gayna zinc-lead-silver-gallium-germanium project in western Northwest Territories, completed a three-week-long, low-impact ground gravity survey over the property lying about 180 kilometers (112 miles) north of the MacMillan Pass zinc project in neighboring Yukon.

With 28,000 meters of historical drilling and significant upside potential, a 2022 geophysical program identified two broad areas with gravity anomalies at Gayna.

Fireweed's 2023 gravity survey aimed to expand coverage to identify new anomalies, and to refine existing anomalies for future drill-testing.

At Fireweed's Mactung tungsten project to the south, the explorer recently reported mineral resources of 41.5 million metric tons of indicated resource at 0.73% tungsten oxide and 12.2 million metric tons of inferred resource at 0.59% WO3, making it the world's largest known high-grade resource of the critical mineral and one of the rare, large tungsten resources outside of China.

"This not only reaffirms Mactung's unmatched combination of grade and scale but establishes it as a truly strategic critical minerals project for the West with the underground resource alone able to supply much of North America's demand for decades," said Fireweed Metals CEO Brandon Macdonald. "Fireweed is looking forward to collaborating with federal, territorial, and Indigenous governments to advance Mactung through the permitting and detailed engineering stages of this unique project."


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