Advanced exploration and development

As most Canadians look forward to the arrival of spring, not so the intrepid explorers who love the land North of 60. It is a land of ice, snow and darkness. It is also host to some extremely promising mineral exploration projects. High commodity prices are fuelling the hunt for gold, diamonds, base metals and uranium. An estimate of half-a-billion dollars spent on mineral exploration in the Arctic during 2006 would not be far out of line.

Let’s look at some of the more advanced exploration and development projects North of 60, starting in the east.

Quebec’s Far North

Little of Quebec lies North of 60, but a second Ni-Cu-PGM producer is in the works. The Raglan South nickel project located in Nunavik (not to be confused with Nunavut, the territory) on Quebec’s Ungava Peninsula belongs to Canadian Royalties. The company has outlined an indicated resource of 16.2 million t at 0.91% Ni, 1.10% Cu and 3.73 g/t PGM; the inferred resource is 723,000 t at 0.87% Ni, 0.94% Cu and 2.31 g/t PGM. Work is underway on a bankable feasibility study for a 3,500-t/d operation.

Nunavut

Gold, base metals and uranium are all important exploration targets in Nunavut.

Areva Resources Canada plans to drill its Kiggavik and Sissons uranium prospects in 2007. Located 80 km west of Baker Lake, the holdings include three deposits that were explored from 1974 to 1997 and then mothballed due to low uranium prices. Areva opened a public information office in Baker Lake in 2006 and began a project viability study.

Uranium is also the target of Cameco at Aberdeen Lake, Pacific Ridge’s Baker project, and Titan Uranium in the Thelon basin.

Wolfden Resources has plans for two new copper-zinc mines: High Lake located 45 km south of Coronation Gulf and Izok located 80 km west of the former Lupin mine. The $333-million High Lake project includes both underground and open pit mining plus a 4,000-t/d concentrator. Wolfden has bought the Nanisivik concentrator and plans to move it to High Lake. Construction could begin in 2008, and mining in 2010. At Izok, an open pit and 4,000-t/d mill will be built. The cost of development there would be about $539 million.

Wolfden has entered the underground exploration stage at the Ulu gold deposit, 155 km north of the Lupin site. The cost to put the deposit into production with ore treated at the Lupin mill is estimated to be $61 million.

Committee Bay Resources is investigating the Committee Bay Greenstone Belt, northeast of Baker Lake. The Three Bluffs project is the most advanced. The company estimates the deposit might contain between 410,000 and 650,000 oz of gold. And if Three Bluffs cannot be mined profitably, Committee Bay knows of at least another two dozen occurrences that can be tested.

About 24 km north of Rankin Inlet, Comaplex Minerals is encouraged by the Meliadine gold project. An inferred resource number of 2.0 million t grading 6.7 g/t Au has been made for the Meliadine East property. Comaplex confirmed the continuity of the mineralization in the 1000 and 1100 lodes within the Tiriganiaq deposit at Meliadine West during 2006 and expected to complete a scoping study in Q1 2007.

The next gold mine in Nunavut is likely to be the Meadowbank project 70 km north of Baker Lake. It is owned by Cumberland Resources, which has become the friendly takeover target of Agnico-Eagle Mines. Production should begin in late 2008 or early 2009 at a rate of 300,000 oz/y. Three shallow open pits and a gravity/leaching recovery plant are planned. The capital cost was estimated in 2005 at $302.1 million.

Miramar Mining may rejoin the ranks of producers with the Hope Bay gold mine. The three deposits of interest (Doris, Madrid and Boston, spread along a 775-km-long greenstone belt) contain as much as 8.9 million oz of gold. The Doris North deposit will be developed first as a high-grade open pit, with production as early as mid-2008.

Nunavut is also home to an iron ore project, Mary River owned by Baffinland Iron Mines. Not surprisingly, it is located on Baffin Island. The company wants to develop a direct-shipping iron ore producer beginning in 2011. The Mary River deposit is estimated to contain 309 million t of indicated resources averaging 66.1% Fe, plus inferred resources of 28 million t averaging 65.9% Fe.

Northwest Territories

The Northwest Territories is the hotbed of the diamond hunt, perhaps because it is home to two producing diamond mines. The search goes on in the other territories, Alberta, Saskatchewan, Quebec and Ontario, but the NWT is bristling with drills.

Operator De Beers Canada (51%) has been making some serious cost cuts for the Gaucho Ku diamond project, a joint venture with Mountain Province Diamonds and Camphor Ventures. Early in the process, it appears that $200 million can be cut, making the target figure $720 million. Production at a rate of 3.0 million ct/y is tentatively scheduled to begin in 2011.

The Nico gold-cobalt-bismuth deposit lies 160 km northwest of Yellowknife. Fortune Minerals banked a positive feasibility study that recommended spending $215.2 million to develop both underground and open pit mines with a 4,000-t/d concentrator. The company has purchased the Golden Giant mill and is making plans to move it from Hemlo, Ont. Production is targeted for 2010.

Canadian Zinc’s Prairie Creek zinc-silver project lies about 500 km west of Yellowknife. This project was 90-95% completed before it stalled in 1982, and Canadian Zinc acquired it in 1994. The site was reopened in 2005, and advanced underground exploration is taking place.

Seabridge Gold plans to develop the Courageous Lake gold project 240 km northwest of Yellowknife. The latest estimate of measured resources stands at 6.3 million t grading 2.92 g/t Au and indicated resources at 53.0 million t grading 2.14 g/t Au. Drilling continues.

Yukon Territory

The Yukon’s next base metal producer is likely to be the Minto copper mine of Sherwood Copper. Located 240 km north of Whitehorse, production is to begin in mid-2007. The mill capacity has already been expanded to 2,400 t/d from 1,560-t/d. The Minto deposit contains an estimated 9.1 million t at 1.78% Cu, 0.62 g/t Au and 7.3 g/t Ag in the measured and indicated categories.

Tagish Lake Gold is aiming for a late 2008 startup of its Skukum Creek gold-silver project. Several mineralized zones have been identified, but the measured and indicated resources for the Rainbow, Kuhn and Ridge zones total 1.1 million t at 5.68 g/t Au and 184 g/t Ag using a gold cutoff grade of 3.0 g/t. Underground drilling continues.

The first mine in the Finlayson District is going to be the Wolverine zinc-silver underground mine of Yukon Zinc. A 1,400-t/d mill incorporating a DMS circuit and conventional flotation is planned. The total initial capital cost will be $207.5 million. The company received its mining licence in December 2006 and expects to receive a water licence by the middle of 2007. Full production is planned for Q1 2009.

Western Copper has two projects on the go. The Carmacks copper project lies 200 km north of Whitehorse and 50 km southeast of the Minto deposit. Using a 0.5% total copper cutoff grade, the deposit contains measured resources of 12.3 million t grading 1.1% total Cu and 0.480 g/t Au. The company is shooting for initial production in Q3 2008.

Western Copper has a scoping study for its Casino copper-gold-molybdenum project 300 km northwest of Whitehorse. It envisages an open pit and conventional flotation mill. The next step will be a pre-feasibility study that is to be ready by the end of 2007.

Over $25 million was spent during the 1970s and ’80s investigating the MacTung deposit on the Yukon/NWT border. Owner North American Tungsten is updating the 25-year-old resource estimate in light of today’s strong tungsten price.

Looking forward

There are a wealth of metals and diamonds for the mining industry north of 60N, but
new mines are not created without effort in one of the world’s most hostile climates. Thankfully, Canadians have the technical and financial know-how to prosper there.

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