Mining and Exploration Activity in Ontario – Update 2000

Ontario has been one of the world’s leading mineral producers for more than a century. Today, more than $5 billion worth of minerals a year, from amethyst to zinc, is produced in the province. Commodity price declines faced by Ontario and world mineral producers in the latter part of the decade are now showing strong recovery, and the improvements should reflect positively on producer revenues into the new millennium.

Indicators show that Ontario’s share of Canadian exploration expenditures continues to increase. The forecast for 1999 indicates that Ontario, along with Quebec, will lead the country in general and mine site exploration expenditures at $106 million each. In 1999, spending by Ontario’s senior mining companies increased by 8% from 1998, and accounts for over three-quarters of all Ontario exploration expenditures.

At the end of 1998, active claim units in Ontario exceeded 174,000. The Ministry of Northern Development and Mines (MNDM) recorded more than $55 million worth of assessment work on those units, with much of the exploration activity taking place in traditional mining camps such as Red Lake, Timmins, Kirkland Lake, and Sudbury.

The Ontario Geological Survey (OGS) continues to play a vital role in stimulating Ontario’s exploration sector. In keeping with this philosophy, a two-year, $19-million program, labeled “Operation Treasure Hunt”, was established to apply state-of-the-art geophysical and geochemical procedures to pinpoint new “buried or blind” mineral deposits in Ontario. The studies will uncover specific locations for prospectors and exploration companies to focus their activities in their search for new mines.

The areas to be surveyed and the best techniques to use are being determined by the OGS in co-operation with the OGS Advisory Board (OGSAB). The board, made up of industry-related experts, helps ensure that the OGS’s mapping priorities reflect changing industry and scientific requirements.

Northeast Ontario

Agrium Inc. has developed a new $100-million open pit mine and mill at its Kapuskasing phosphate deposit located 30 kilometres southwest of Kapuskasing (see page 13 of this issue).

In 1999, St. Andrew Goldfields Ltd. carried out two phases of diamond drilling on the West Area of the Hislop mine property, east of Matheson. At least three gold mineralized zones have been defined, both of which are amenable to open pit mining. Ore reserves presently stand at 325,000 tonnes grading 3.4 g/t (357,500 tons grading 0.10 opt) Au, using a 1.7 g/t (0.05 opt) Au cut-off.

The Kidd mine, owned by Falconbridge Ltd., is being evaluated for a major deepening project below the 6,800-foot level to the 9,800-foot level to access deep copper, zinc and silver mineralization. A feasibility study is underway, and if it is successful, the project will extend mine life to the year 2015.

Capital expenditures on the Battle Mountain Gold Co. (84.65% interest) and Teddy Bear Valley Mines Ltd. (15.35%) Holloway gold mine property for 1999 amounted to $6.2 million. The companies plan to spend more than $1.8 million on underground exploration and $400,000 on surface exploration near the mine property.

Barrick Gold Corp. announced that the Holt-McDermott gold mine shaft will be deepened from 941 metres to 1,196 metres, with production levels established at the 925-metre and 1,075-metre levels. The project will take three years to complete at a capital cost of $18 million.

Falconbridge continued development of its Thayer Lindsley mine, shifting from a high-grade, low-tonnage nickel-copper operation to a low-grade, high-tonnage operation. This has increased minable reserves to 5.0 million tonnes. Falconbridge continues to outline newly discovered orebodies at the Onaping Deep, Craig Deep, and Southeast zones, all of which are in the north range of the Sudbury Igneous Complex. Work also continued on the Norman West Zone on the east range of the Sudbury structure.

Inco Ltd. continued a US$125-million development project at its Creighton mine. Six million tonnes of high-grade nickel-copper ore between the 7,400-foot and 7,699-foot levels will be brought into production starting in 2001. Mining should continue until 2013. Inco continued to expand new discoveries immediately north and south of the Copper Cliff South nickel-copper mine. The company also commenced an aggressive exploration project at the former Totten mine on the Worthington orebody.

Mustang Minerals Ltd., Pacific North West Capital Corp. and Aquiline Resources Inc. have worked extensively on the River Valley mafic intrusion, east of Sudbury. Programs of line-cutting, ground geophysical surveys, geological mapping, soil and lithogeochemical sampling, as well as diamond drilling were undertaken. The second area of exploration for platinum group elements was in the East Bull Lake and Agnew Lake area west of Sudbury. Mustang and New Millennium Metals Corp. completed similar work to that undertaken at River Valley.

Canmine Resources Corp. has reached an agreement to acquire a hydrometallurgical cobalt extraction plant and refinery, formerly owned by Cobatec Inc., for $6.1 million. This facility, located in Cobalt, will enable Canmine to upgrade cobalt concentrate from the company’s Werner Lake cobalt project into cobalt carbonate.

Pele Mountain Resources Inc. has tested a 10,000-ton bulk sample of gold-bearing ore from its Jacobson Township property near Wawa. The average grade of the bulk sample was approximately 5 g/t Au.

River Gold Mines Ltd. extracted a bulk sample of approximately 86,000 tonnes from the Vega property in Riggs Township in December 1999. Should the reserves at both the Vega deposit and Pele Mountain’s Markes deposit prove to be economic, both pits will be mined and the ore will be processed at River Gold’s Magnacon mill.

Kinross Gold Corp. and United Tex-Sol Mines Inc. are exploring the Clavos gold deposit east of Timmins. A 20,000-metre diamond drill program is underway and has encountered encouraging gold mineralization.

Canabrava Diamond Corp., Paramount Ventures and Finance Inc. and Kennecott Canada Exploration Inc. have a major exploration program underway that extends from Wawa to Kapuskasing. The companies are searching for diamonds with a $25-million exploration budget.

Monopros Ltd. took a small bulk sample from a kimberlite pipe near Attawapiskat and will return to the area to do more exploration for diamonds. To date, Monopros has discovered 16 kimberlite pipes in the area, 15 of which are diamond-bearing.

Early in 1999, Millstream Mines Ltd. began another deep drill program at the Potter mine property in Munro Township, 80 kilometres east of Timmins. New drilling returned up to 7.82 metres of sulphide mineralization grading 1.96% Cu, 3.18% Zn, 0.085% Co and 0.53 opt Ag. The mineralization is approximately 914 metres (3,000 feet) vertically below surface and 579 metres (1,900 feet) below the former mine bottom working level. An induced polarization anomaly east of the mine shaft is currently being tested with deep diamond drilling.

Cross Lake Minerals Ltd. began a 700-metre drill program on its Sheraton Township property in the Timmins area. The company is targeting a 500-metre-long electromagnetic target northeast of the Cross Lake zone.

Northwest Ontario

Placer Dome North America continued gold production at its Campbell mine in Balmertown. The Reid shaft, collared in 1995 and designed to reach a depth of 1,820 metres to access deeper ore zones, was commissioned in 1999.

Goldcorp Inc. continued underground exploration at its Red Lake gold mine. Underground diamond drilling delineated new gold-bearing zones. The High Grade zone reserves are calculated at 1.89 million ounces gold contained in 1.39 million tons of ore with an average diluted cut grade of 1.36 ounces Au per ton. Goldcorp’s exploration budget for 1999 was $8 million.

North American Palladium Ltd. has substantially increased its reserves at the Lac des Iles mine to 94.1 million tonnes grading 1.66 g/t Pd, 0.18 g/t Pt, 0.14 g/t Au, 0.062% Cu and 0.053% Ni. At present a feasibility study is being conducted to evaluate a 15,000-tonne-per-day operation.

Exploration at Placer Dome’s Musselwhite gold mine has continued via surface and underground drilling, which is expected to outline an additional 500,000 ounces of gold in reserves. Over the past year some 60,000 metres have been drilled. The program was completed in mid-December 1999.

Wolfden Resources Inc. plans to perform bulk sampling soon on the crown pillar of the past-producing Pickle Crow mine. The company is presently completing a surface diamond drilling program on the property and has reportedly discovered a new mineralized zone.

In April 1998, Madsen Gold Corp. was taken over by Claude Resources Inc. Preproduction work continued until November 1999 in the original Madsen mine and advanced exploration on the adjacent McVeigh zone. In September 1999, the company announced a $10-million diamond drilling program at the mine on the McVeigh zone and the upper levels of the original mine plus a program to identify high-grade reserves at depth from the mafic/ultramafic No.8 zone.

Avalon Ventures Ltd. has updated the prefeasibility study of its Big Whopper petalite (lithium silicate) deposit, north of Kenora. The company expects that market demand for its petalite can be met by processing less ore, and that all of the petalite produced can be marketed as a high-grade product averaging 4.41% Li2O with a low iron content. Avalon proposes annual petalite production beginning at 17,000 tonnes and increasing to more than 32,000 tonnes in the fifth year.

Franco-Nevada Mining Corporation Ltd. reported that previous surface diamond drilling on its Hemlo property adjacent to the Williams mine defined inferred resources of 1.75 million ounces of gold. New drilling by the company in 1999 was intended to test the upper portion of the Hemlo horizon across 765 metres of strike length on its property.

Ontex Resources Ltd. initiated a major drill program and airborne geophysical program on the Brookbank and Cherbourg gold properties, Irwin Township (Beardmore area). The Brookbank deposit contains an inferred mineral resource of 1.38 million tons of ore grading 0.263 ounces Au per ton, as identified in previous drilling. The objective of the 1999 program was to expand the gold resource. Drill hole C-99-03 intersected 44.62 feet grading 0.121 ounces Au per ton. Drilling continues on the property.

Cameco Gold Corp. continued with the fourth year of an exploration program on the Knucklethumb Lake (Onaman Lake) gold project. The Big Bear gold occurrence, one of a number of structurally-controlled gold occurrences on the property, was the focus of a 1999 integrated exploration program.

Planet Exploration Inc. undertook a 1,195-metre drill program at its Red Lake East gold property. Anomalous gold was intersected in an intensely sheared, bleached and altered zone in high-grade metamorphosed ultramafic to mafic rocks.

Houston Lake Mining Inc. has a rare element pegmatite property at Pakeagama Lake 160 km north of Red Lake. Average grab sample values of 280 g/t (0.028%) tantalum oxide, 4,642 g/t rubidium oxide, 817 g/t cesium oxide, 366.4 g/t beryllium oxide, and 124 g/t tin were returned.

Triex Resources Ltd. completed an evaluation of its Minnitaki Lake property. The work has confirmed the presence of significant gold mineralization in the area, and provided data for resolution of follow-up drilling targets.

Cameco Gold will begin a 3,000-metre diamond drilling program of its Black Lake property in February, having completed a 2,000-metre drilling program last spring and follow-up geological mapping last summer.

Band-Ore Resources Ltd. started a drill program on its Nym Lake platinum group element property near Atikokan. Four holes totaling 2,000 feet are planned. Magnetic and induced polarization anomalies associated with a pyroxenite intrusion have returned grab samples up to 3.3 g/t Pd and Pt, 0.45% Cu, 0.8% Ni and 2.9 g/t Ag.

Southern Ontario

Belican Holdings Ltd. developed a new silica deposit in the Rear Leeds & Lansdowne Township, west of Brockville. The company mines sandstone of the Potsdam Formation as a source of raw material for the glass industry.

In late 1999, Brampton Brick Ltd. began a $30- to $33-million expansion of its Brampton plant that will increase capacity by 50% to about 200 million brick units per year. The increased brick production will result in accelerated mining of shale from the company’s Cheltenham quarry in 2000.

OMYA Canada Inc. has completed the fourth year of a five-year plant expansion program near Perth. The company produces a variety of calcium carbonate products from a calcitic marble extracted from the nearby Tatlock quarry in Darling Township. Annual production is 250,000 tons with reserves of more than 5.0 million tons.

Highwood Resources Ltd. acquired the Canada Talc property near Madoc in December 1998. During 1999, the company completed substantial upgrading to the plant and milling facilities. Development of recently identified talc reserves at the mine site is scheduled. The company also has expressed a strong interest in investigating other industrial mineral deposits in southeastern Ontario.

Regis Resources acquired the Goshawk property in 1997 and has outlined a new zone of vermiculite to the west of Highway 507 in Cavendish Township, about 50 kilometres north of Peterborough. In 1999, the company staked additional claims over adjacent areas thought to have high potential. Diamond drilling to confirm the depth and extent of the weathered material was completed.

Diamond Lake Minerals Inc. has defined a significant new graphite deposit in Bedford Township, about 40 kilometres north of Kingston. Work done to date has included stripping, trenching, sampling, air-track drilling, bulk sampling, bench testing, reserve calculations and market research. Additional definition drilling is planned to confirm the reserves and acquisition of the necessary permitting.

Canada Brick began construction of a $51-million, 150-million-brick-units-per-year plant at its new Aldershot West quarry. The plant will be in operation by late 2000.

In 1999, Global Stone Ingersoll Ltd. continued development of the new Millennium quarry. The high-purity limestone deposit will feed the company’s Ingersoll Lime plant. The plant processed the limestone removed during quarry development in 1999.

For further information concerning mining and exploration activity in Ontario, please visit the web site www.gov.on/MNDM

Mining Communities in Ontario

1 Caledonia

2 Clarendon Station

3 Cobalt/Haileybury

4 Dryden

5 Elliot Lake

6 Geraldton

7 Goderich

8 Hagersville

9 Havelock

10 Kapuskasing

11 Kingston

12 Kirkland Lake

13 Larder Lake/ Virginiatown

14 Latchford

15 Madoc

16 Manitouwadge

17 Marathon

18 Matachewan

19 Matheson

20 Midland

21 North Bay

22 Palmerston Twp.

23 Perth

24 Pickle Lake

25 Port Colborne

26 Port Hope

27 Red Lake/ Balmertown

28 Sault Ste. Marie

29 Schreiber

30 Shebandowan

31 Sturgeon Falls

32 Sudbury

33 Temagami

34 Thunder Bay

35 Timmins/ South Porcupine

36 Windsor

37 Wawa

Exploration Expenditures (Cdn$ millions)

(Figures include field and related overhead costs)

Source: Natural Resources Canada

p Preliminary; f Forecast