Nunavut could see two gold mines by '08

Two Vancouver-based mining companies are forging ahead with gold projects in Nunavut, and if all goes according to plan they could both be in production by 2008. Cumberland Resources and Miramar Mining have seen their stock prices leap from under $2 a year ago to around $5 today thanks to endorsement from the Nunavut Impact Review Board. The mainly indigenous residents of Canada's far northern territory have expressed enthusiasm for new mining projects, as long as stringent environmental conditions are adhered to.

After receiving a positive recommendation from the NIRB at the end of August, the board of Cumberland Resources approved a production decision for the Meadowbank gold project. Meadowbank, an open pit project, is located 70 kilometers north of the hamlet of Baker Lake and is forecast to produce an average of 330,000 ounces of gold per year over an eight-year mine life, creating over 300 full-time jobs. The NIRB's recommendation is conditional on the project abiding by a list of 86 terms and conditions stipulated to protect the local wildlife and ecosystem.

Meadowbank has seasonal ocean access

Infrastructure is always a major issue in Nunavut, but the Meadowbank project is in a favorable position. There is seasonal ocean access to the site via a 250-kilometer corridor from Baker Lake through Chesterfield Inlet. Ships and barges can use this route for two-and-a-half to three months of the year, and there is also air access, with several scheduled flights into Baker Lake daily. The mine will have its own 4,800-foot airstrip, long enough to accommodate a C-130 Hercules cargo aircraft.

In addition, Cumberland will build a 112-kilometer conventional all-weather access road, rather than an ice road, which many northern projects rely on.

Baker Lake has a population of about 1,600 and 90 percent of them are Inuit. Unemployment in the community ranges from 50 to 60 percent, Cumberland's President and CEO Kerry Curtis told the Denver Gold Forum Sept. 25. "We get a lot of support from the community, we know a lot of people here, we've had 10 years to get to know them, and them us, so the support from the community has been tremendous," Curtis said.

Three open pit designs within five-kilometer radius

"One of Meadowbank's big advantages is the amount of reserves that are hosted closely together," Curtis continued. "We have three open pit designs, namely the Goose Island open pit, the Portage open pit and Vault, all of which are within a five-kilometer radius. We have lots of other exploration targets that we haven't fully explored yet, we have other deposits up to the north which aren't in the feasibility study, so there's lots of resource and reserve growth remaining here."

The Meadowbank property encompasses an entire greenstone belt covering 35,000 hectares. Greenstone is named for the green hue imparted by the chlorite minerals within the rocks. The belts often contain ore deposits of gold, silver, copper, zinc and lead. Much of Meadowbank is surrounded by shallow water, and Cumberland plans to build dikes using open pit material, as has been done at Diavik diamond mine in the Northwest Territories.

Cumberland has been drilling in an area known as the Cannu Zone this year, and the company has also discovered a promising target called Goose South, south of the Goose Island deposit. "What I can tell you is everything we see at Goose South is exactly the same as what we see at Goose Island itself," Curtis said. Cumberland will continue its exploration drilling in that area next year.

Work began in 1995

Since Cumberland began work at Meadowbank in 1995, the company has taken its estimated gold resources from 200,000 ounces to 3.8 million ounces, at a cost of C$50 million, which includes the feasibility study and due diligence.

The project has been "very, very cost-effective," according to Curtis.

This summer Cumberland commenced construction of a fuel pad for a fuel storage tank and started procuring equipment and supplies for the construction of the road.

After federal approval of the NIRB's recommendation, Meadowbank should be issued a project certificate and the final permits can be obtained.

The construction cost of the mine is expected to be around C$313 million, and production is planned for late 2008 or early 2009.

Hope Bay farther north

Miramar Mining's Hope Bay project is another greenbelt property, located farther north than Meadowbank - 700 kilometers northeast of Yellowknife. There is access to the site from the Arctic Ocean and the MacKenzie River for 12 weeks of the year, July through September, making it relatively cheap for Miramar to ship in bulk supplies. Hope Bay currently comprises three deposits called Doris, Boston and Madrid. Miramar received the project certificate for Doris North from the NIRB Sept. 15, and the company is now applying for permits.

In early September Miramar signed an Inuit Impact and Benefit Agreement with the Kitikmeot Inuit Association, which provides for local employment, training and business opportunities arising from construction and operation of the Doris North project to be made available to the Inuit of the Kitikmeot region. The agreement also outlines the special considerations and compensation that Miramar will provide for Inuit regarding traditional, social and cultural matters, and effects on Inuit water rights. The signing ceremony in Cambridge Bay was attended by 250 guests, including federal MPs and the premier of Nunavut, Paul Okalik.

Miramar will build one infrastructure center with one mill and processing center for all the ore that comes from the existing deposits and any new deposits that the company discovers, the company's president and CEO, Tony Walsh, told the Denver Gold Forum Sept. 25. The project will start with a two-year, high-grade, high cash-generating operation at Doris North. Miramar hopes to commence production at Doris North in mid-2008. The capital cost for Doris North is estimated to be under C$40 million.

Phase one tailings facility big enough for phase two

"High grade means low cash costs, but what really drives this particular phase is that it generates over C$100 million of free cash after payback of capital, so it gives us significant cash for the much larger phase two and pays for capital such as the jetty, the road, the airstrip and the camp, which will go into phase two," Walsh said. "And most importantly, the tailings facility that we're permitting for phase one is big enough for phase two and in Canada permitting of tailings is the most difficult part of the regulatory process, so it should make phase two a lot easier."

In phase two, Miramar is considering two options: a 6,000 ton-per-day underground operation producing 300,000 to 400,000 ounces a year at Boston, Doris Central and Madrid, or a 15,000 ton-per-day large open pit operation producing 600,000 to 800,000 ounces a year at Madrid, with underground operations at Boston and Doris Central. The company is aiming to complete engineering work by the end of this year, to analyze the returns for the two options and determine which would be most profitable. Feasibility work on the chosen option will begin next year.

"This year we have a huge program under way, we're going to spend more than C$30 million, we're doing more than 75,000 meters of drilling," Walsh said. "We have six drill rigs going right now with major drilling, just hired another drill crew, we go up to seven (and) we'll be drilling to the end of October. We're also 21 days behind at the assay lab, they're kind of overwhelmed, so we'll have results coming out all the way through mid-December." Miramar is working closely with its second-largest shareholder, mining giant Newmont, which owns 9.9 percent of the company.