True North Gems hunts jewels in the Arctic

In the far north, one Canadian firm is trying to do for sapphires, emeralds and rubies what explorers did for diamonds in the 1990s.

True North Gems, a Vancouver, British Columbia-based mining company formed in 2001, is pursuing three advanced exploration projects for precious gemstones, two in Canada and a third in nearby Greenland.

"True North's efforts are a direct spinoff of Canada's success in the diamond trade," said President William Rohtert, who heads the company's exploration team. "Canada, in the last few years, has gone from nowhere to being the third-largest diamond producing country in the world. And it may soon become the second-largest producer of diamonds."

In a recent interview, Rohtert told Mining News how True North Gems got its start. He said geologists recently found northern latitudes were under-explored for precious gems, and no longer was it cost-prohibitive to explore the Arctic.

A geologist and a gemologist, Rohtert worked for RTZ at the huge Diavik diamond mine in Northwest Territories for most of the 1990s.

He and others realized that it is just as easy to explore for emeralds as diamonds. "Diamonds and colored stones have more in common than do diamonds with metals," Rohtert said. "Stones are stones."

Emeralds in the Yukon

An emerald discovery in the Yukon Territory in 1998 and subsequent work by Expatriate Resources demonstrated the potential for Canada's first emerald mine. The work attracted the interest of Bernard Gaboury and Andrew Smith in 2001. The two geologists formed True North Gems and entered into a 50 percent option agreement with Expatriate for the Tsa da Glisza property, 93 claims covering 18 square kilometers on a high alpine ridge in the Finlayson mining district of the Yukon. Since then, True North has acquired 100 percent ownership of Tsa da Glisza, the company's most advanced exploration project.

In 2003 and 2004, True North extracted nearly 200,000 carats of emerald from Tsa da Glisza, including 7,512 carats of gem; 71,671 carats of near-gem; and 115,132 carats of non-gem quality emerald. The stones range in value from a low of $1.37 a carat for non-gem quality stones to a high of $46.77 for gem quality emeralds in wholesale prices, according to a company valuation released in June.

Sapphires in Nunavut

True North is conducting a $1.6 million exploration program this summer aimed at confirming grade, continuity of grade and mineralization along the strike and to depth along with recovering enough emeralds to complete requirements for a pre-feasibility study in winter 2005-spring 2006.

As of June, True North had drilled 50 tightly spaced holes, and emerald had been observed in eight targets over a 900-meter strike and 200 meters in elevation.

True North is also exploring for sapphires along the south coast of Baffin Island, Nunavut, on two mining claims covering nearly 9.9 square kilometers near the village of Kimmirut. The company acquired the Beluga sapphire property in 2003 through a lease option agreement with Inuit prospectors who made the initial discovery in November 2002. True North must make cash payments totaling C$390,000 by Dec. 1, 2007, to earn 100 percent interest in Beluga, subject to a 2 percent gross overriding receipts royalty on the sale of all extracted gemstones.

The 2004 exploration season yielded one new discovery of blue, yellow and clear sapphires, and 213 sapphires extracted in sampling with a total weight of 41.74 carats and a value of $2,448.98.

This year, True North is spending $1.08 million in an exploration program to define and delineate the Beluga sapphire occurrence using diamond drilling and mini-bulk sampling. The company said it will test for gemstone grade and value by means of a 100 to 500 tonne mini-bulk sample of sapphire-bearing material collected at the surface.

Beluga sapphires are generating considerable excitement in northern Canada. The Government of Nunavut and the Hamlet of Kimmirut, for example, are investing in development of a gemstone prospecting course for training residents of the territory.

Rubies in Greenland

But Rohtert told Mining News that True North's more recent ruby exploration project 400 miles to the east in Greenland should be exciting interest in the world of gemstones.

The Fiskenaesset Ruby property covers 5,500 hectares in the Qeqertarsuatsiaat district, 160 kilometers south of Nuuk, Greenland's capital. To date, 50 tonnes of high-grade ruby ore in six occurrences has been produced from the property.

True North, which acquired the right to earn 100 percent interest in the property, confirmed a seventh occurrence in July of gem-quality, barrel-shaped ruby crystals, measuring 2-by-1 centimeters.

"In the gemstone business, you care how big gems are," Rohtert said.

Ruby, the red variety of the mineral corundum, is one of the rarest and most valuable gemstones on earth. Large, high-quality rubies can exceed diamonds in value and sell in the range of $1,450 to $25,000 per carat. Other types of corundum are known as sapphires.

This summer, True North is spending C$900,000 to aggressively explore 110 square kilometers in the Fiskenaesset district and further define ruby mineralization. The team also will sample five or six unexplored occurrences.

Rohtert, who spent the past two months working on the Fiskenaesset property, said True North is very encouraged by what geologists are finding in Greenland.

"There are thousands of occurrences of sapphires in the world; hundreds of occurrences of emeralds; but 80 percent of the rubies in the world are found in Burma," he said.

In July 2003, the United States banned all imports, including rubies, from Burma - also known as Myanmar - because of that country's alleged human rights violations.

Rohtert said 30 jewelry retailers, including Cartier, recently joined the embargo, "refusing to buy 'blood rubies' from Burma."

"That's why Greenland is important," he said. "If True North can supply the world with a major source of rubies, then that's major news."

No development decisions yet

Though decisions to develop the three gemstone properties are still a few years away, Rohtert said he is confident True North will succeed in its quest to mine gemstones.

"It took 12 years for explorers to begin producing Canadian diamonds, but I don't think it will take that long for the colored stones," he said.

Part of Rohtert's optimism stems from True North's marketing plan.

"The reason companies before True North failed is they did not capitalize on the market," he explained.

Unlike diamonds, which have had a ready market for 100 years thanks to DeBeers, Rohtert said there is no established market for colored stones. "It's like starving to death with a refrigerator full of food," he observed.

To overcome this hurdle, True North decided to vertically integrate its business from mine to market. As a result, the company not only finds gemstones, it also sells them and invests in programs that promote the use of colored gemstones in Canada.

"The use of color is arguably the fastest growing aspect of fine jewelry design," Nick Houghton, True North's managing director, jewelry manufacturing and marketing, said in announcing the company's support of a national jewelry design competition.

Meanwhile, True North has attracted investment, but the company is still undervalued, said Rohtert. "The average investor in Canada doesn't quite know what is happening yet. It requires a learning curve. The same thing happened with diamonds," he said. "Regardless, we're going to succeed because we can mine and sell our stones."