Remote territory offers mineral bonanza

No discussion of opening Canada's Far North to mineral resource development could get far without the focus turning to Nunavut, the nation's newest and least-explored territory.

At one-fifth the size of Canada, Nunavut contains 1,994,000 million square kilometers, or 770,000 square miles, (nearly three times the size of Texas).

Much of the territory is underlain by Archean-aged rocks similar to those found in the most productive geology in Ontario, Quebec, South Africa, Australia, and Brazil.

But much of this geology is poorly understood.

The geology of Nunavut records almost 3 billion years of Earth history and contains a wide spectrum of economic commodity types, according to David Scott, a geologist with the Canada-Nunavut Geoscience Office. While Nunavut currently trails other parts of Canada in the development of these resources, ongoing and new exploration is rapidly advancing understanding of the territory.

Mostly settled land claims

Nunavut became a territory in April 1999 as a result of the Nunavut Land Claims Agreement, the largest aboriginal land settlement in Canadian history. NLCA is a final settlement whereby all land claims in Nunavut have been settled with the Inuit of Nunavut, thus providing an unmatched level of land tenure certainty. However, land claims overlapping Hudson Bay and the southernmost Kivalliq region are being negotiated with residents of northern Quebec and northern Manitoba, respectively.

In addition to creation of the territory, the NLCA gave Inuit fee simple title to 356,000 square kilometers, or 137,500 square miles, of land. There are 944 parcels of Inuit Owned Lands (IOL) where Inuit hold surface title only (surface IOL). The Government of Canada or "the Crown" retains the mineral rights to these lands.

Inuit also hold fee simple title - including mineral rights - to 150 parcels of IOL (subsurface IOL), which total 38,000 square kilometers and represent about 2 percent of the territory.

Surface title to all IOL is held in each region by one of the three Regional Inuit Associations (RIAs) - Kitikmeot, Kivalliq, and Qikiqtaaluk - while Inuit subsurface title to subsurface IOL is held and administered by Nunavut Tunngavik Inc. NTI issues rights to explore and mine through its own mineral tenure regime.

Mineral rights (mineral claims or leases) that existed at the time of the NLCA signing - known as grandfathered rights - continue to be administered by Indian and Northern Affairs Canada until they terminate or the holder transfers its interests to the NTI regime.

In total, the Crown owns mineral rights to 98 percent of Nunavut's land mass, and INAC administers these rights.

Geological studies are ongoing

The Government of Nunavut, in partnership with the federal government through the Canada-Nunavut Geoscience Office, is working to create an understanding of Nunavut's geology that is comparable to other jurisdictions in Canada.

Nunavut Minister of Economic Development and Transportation Peter Taptuna told miners in Vancouver, B.C., in January that recent mapping on Southwest Baffin Island, for example, identified previously unmapped and very prospective Archean-age volcanic rocks, and mapping on South Hampton Island discovered that minor previously identified oil shales are now understood to be a single continuous unit that has great potential as a major regional source rock for oil and gas.

"The mapping also uncovered and improved understanding of some of Nunavut's large Archean greenstone belts, and as CBR Gold Corp., Commander Resources, and before them Cumberland Resources and Miramar Mining found out, there is a lot of gold in these rocks," he said. "Our increasing understanding of their base metal potential and the broad area where companies have made diamond discoveries underscore that Nunavut has a greater potential for upside discovery success than any other jurisdiction in Canada or perhaps around the world."

Taptuna said the Government of Nunavut is partnering with the federal government in its Geomapping for Energy and Minerals initiative that is putting $75 million into new geoscience mapping north of 60th parallel. The GEMs initiative will include a number of major mapping projects across Nunavut.

"One example is the Thelon project where we are hoping to further our understanding of the Thelon basin, a sister basin to the Athabasca basin in Saskatchewan that produces much of the world's uranium," Taptuna said. "This area is best known for the Kiggavik project, which AREVA is moving toward development, but the tremendous exploration success by Uranium North, Bayswater Uranium, Kivalliq Energy Corp, and Forum Uranium further demonstrate that even at this early stage, the Thelon basin holds the potential to match the Athabasca basin."

Industry drives resource development

Junior mining companies have historically been the driving force behind much of the exploration activity in the territory, but the majors are progressively increasing their presence.

Taptuna said he believes Nunavut is not only a good place to invest in the minerals industry, but the best place to invest.

"In 2007 and 2008, over C$600 million was invested by you and others exploring for minerals in Nunavut," he told the mining executives. "More than 130 projects across the territory were looking for gold, silver, base metals, uranium, diamonds and iron ore deposits. 2009 was a difficult year for companies and investors alike; however even in this historic downturn almost C$200 million was invested."

Mergers, acquisitions in Kitikmeot

The Kitikmeot region spans the western and northern mainland of Nunavut, parts of Victoria Island and all of Prince of Wales, King William and Somerset islands. Cambridge Bay and Kugluktuk are the largest communities and provide support and services to exploration projects in the region. Yellowknife, Nwt., also is an important logistical center for this area of Nunavut.

In 2009, exploration in the Kitikmeot region was not as robust as in previous years; however there were more than 40 active mineral exploration projects. The region has diverse geology commodities being sought including base metals, diamonds, gold, lithium, the platinum group metals and uranium.

Several companies working in the region were the focus of mergers and takeovers. China Minmetals, through its Canadian subsidiary MMG Resources Inc., acquired the majority of OZ Minerals Ltd.'s assets in 2009. OZ Minerals, itself, was formed in 2008 through a merger of Zinifex Ltd. and Oxiana Ltd. Minmetals, through MMG Resources Inc., now owns numerous zinc and copper exploration projects in the western Kitikmeot region. Early in 2009, Dundee Precious Metals, owner of the Back River gold project and the Wishbone gold and base metal properties of the western Kitikmeot region, was taken over by Sabina Gold & Silver Corp. (formerly Sabina Silver Corp.).

Newmont Mining Corp., one of the world's largest gold producers, continued revising an exploration and development strategy for its Hope Bay greenstone belt. This shift in focus by Newmont followed the acquisition of Hope Bay's former owner, Miramar Mining Ltd., in 2008.

Sabina Gold & Silver Corp., owner of the silver-rich volcanogenic massive sulphide (VMS) deposits at Hackett River (western Kitikmeot), now owns most of the Hackett River volcanic belt. The George and Goose lakes gold deposits (Back River Project), east of the Hackett River property, also are owned by Sabina Gold & Silver, and were the focus of advanced exploration programs in 2009. The Hackett River belt also hosts the Yava and Musk base-metal deposits.

Advanced exploration in the Kitikmeot region includes the Gondor, High Lake, Hood, Izok Lake deposits and the Ulu gold deposit. All of these deposits, formerly owned by OZ Minerals, are now under the control of MMG Resources. Work was undertaken on Izok Lake and High Lake in 2009.

Active diamond exploration continued across the Boothia Peninsula and over areas south of Kugaaruk in the eastern Kitikmeot. Land also was held for diamond exploration over parts of the western mainland and Victoria Island.

Several nickel-copper-PGM and uranium exploration camps in the western Kitikmeot were put on care and maintenance by operators in 2009. No work was conducted on these properties but many companies are anticipating work in 2010.

New gold mine in Kivalliq

The Kivalliq region includes Nunavut's eastern mainland, Southampton Island and several small islands in Hudson Bay. The communities of Rankin Inlet and Baker Lake provide logistical support for many exploration projects in the region as well as for Agnico-Eagle Ltd.'s newly opened Meadowbank gold mine.

The level of exploration activity in 2009 in the Kivalliq region dropped when compared to the previous three years. However, extensive field programs in 2007 and 2008 led most companies to maintain their prospective ground without a field presence in 2009.

Rocks of the Archean-Proterozoic Western Churchill geological province underlie much of the Kivalliq region. Islands within Hudson Bay, including the southern portion of Southampton Island, are underlain by sedimentary rocks of the Paleozoic Hudson Platform.

The Western Churchill Province spans a 1.5-billion-year interval, and with its diverse geology the region is host to a variety of mineral deposit types. Known mineral deposits, prospects and occurrences identified in the Kivalliq include: mafic to ultramafic-related magmatic nickel-copper-cobalt-PGM; orogenic (mesothermal) lode gold; volcanic massive sulphides; syngenetic and epigenetic uranium, quartz-carbonate veins containing precious metals, and diamonds associated with Phanerozoic kimberlite intrusions. Past-producing mines in the Kivalliq region are the North Rankin Nickel Mine at Rankin Inlet and the Cullaton-Shear Lake Gold Mine, north of Nueltin Lake.

Meadowbank poured its first gold Feb. 27, a solid 8,134-gram, or 287-ounce, bar that heralded the startup of production at the 350,000-ounce-per-year operation.

Meadowbank is Nunavut's largest mineral development project.

Mine development expenditures at Meadowbank hit C$600 million in 2009, bringing total investment in the mine project to about C$1.5 billion, as the company completed construction of service buildings and the processing and power plants, and acquired additional operational equipment.

Commissioning of the processing plant was scheduled for January with half a million metric tons of ore from the Portage Deposit ready for processing.

Agnico-Eagle continued with additional exploration off the mine site, on additional ground acquired near the Meadowbank mine trend.

Seventeen companies conducted field programs in the Kivalliq region in 2009, resulting in 26 active properties with land tenure maintained or consolidated on another 15 properties.

Following the release of airborne magnetic survey and preliminary mapping data from the Southampton Island Integrated Geoscience Project, Anglo American Exploration (Canada) Ltd. and Vale Inco Ltd. secured prospecting permits for large blocks of ground in the area.

Comaplex Minerals continued to advance the Meliadine gold property, 25 kilometers or 16 miles, east of Rankin Inlet. With detailed knowledge from its underground program on the Tiriganiaq Deposit and a NI 43-101 resource estimate for the adjacent Discovery Deposit, an independent preliminary assessment was completed. The results indicate gold production from the Meliadine property is feasible under current and projected economic conditions.

In December, Comaplex bought out its joint venture partner, Meliadine Resources Ltd., gaining 100 percent interest in both the Meliadine West and Meliadine East gold projects in a bid to simplify ownership and ongoing management of the two properties.

Uranium exploration within the territory in 2009 was limited to the Kivalliq region. The main area of interest remains the Proterozoic Thelon basin and underlying Archean basement.

The most advanced uranium project, Kiggavik, is operated by AREVA Resources Canada Ltd. In late 2008, AREVA filed a project description with the Nunavut Impact Review Board for a combined open-pit and underground uranium mine operation and related infrastructure development. The company is awaiting a decision from Canada's Minister of Indian Affairs and Northern Development on the next step in the regulatory process.

NTI signed a second exploration agreement with Forum Uranium Corp. This agreement covers uranium exploration on Inuit Owned Land west of Baker Lake.

Diamond exploration efforts in Kivalliq in 2009 were limited to prospecting and infill till sampling by two operators.

Diamonds, REEs, lithium in Qikiqtaaluk

The Qikiqtaaluk region is the largest in Nunavut, covering Baffin Island, islands of the High Arctic (e.g. Ellesmere, Devon, Axel Heiberg, Prince of Wales, Bathurst, Cornwallis), and northern Melville Peninsula.

The largest diamond project in Nunavut is located on southern Baffin Island northeast of Iqaluit. The Chidliak Property was the object of regional till geochemical surveys in 2005 and 2006, leading to the 2008 discovery of kimberlite outcrop by Peregrine Diamonds Ltd. Three diamond-bearing kimberlites were discovered in 2008 and 13 more in 2009 when Peregrine spent $9.2 million at Chidliak, funded by partner BHP Billiton.

Diamond exploration programs on Baffin Island also have identified areas with significant anomalies indicative of uranium and other metals deposits. These results contributed, in part, to the Qikiqtaaluk region having the most new prospecting permit acquisitions in 2008 and again in 2009.

The Qikiqtaaluk region is host to Nunavut's largest mineral deposits, the Mary River hematite and magnetite deposits, owned by Baffinland Iron Mines Corporation. The main deposit, Deposit No.1, has proven reserves of 160 million metric tons (at 64.4 percent iron) and probable reserves of 205 million metric tons (at 64.9 percent iron).

An intensive program in 2008 saw Baffinland complete its two-year bulk sample shipment, road construction from the site to the coast, expansion of the camp facilities and continued geotechnical and geomechanical studies. In 2009, the program was generally reduced in scope, but activities included continued environmental baseline studies, metallurgical test work and delineation drilling of Deposit No.1.

For the central Baffin area, junior explorer Commander Resources Ltd. signed a farm-in and joint venture agreement with AngloGold Ashanti Holdings Plc, who will acquire a 51 percent interest in Commander's Baffin Island gold project. An expanded multi-target drill campaign operated by Commander is planned for 2010.

About 900 grab samples were collected from Forum Uranium Corp.'s North Thelon Project during the uranium exploration programs in 2007 and 2008. Of the 255 samples collected in the Nutaaq area of the Judge Sissons claim block, 155 samples grade from 0.1-3.8 percent total rare earth oxides. These rare earth elements are accompanied by elevated levels of zirconium, niobium and tantalum.

During the 2009 field season, Forum conducted further geological mapping and sampling.

An area of alkaline intrusive rocks occurring over a 10-kilometer-by-10-kilometer area was identified.

Fifty-five samples of representative rock types from the alkalic complex were collected for geochemical and whole rock analysis.

Twenty-nine samples graded over 0.1 percent total rare earth oxide, with a peak of 2.7 percent.

Representative hand specimens also were collected during the 2009 sampling program and sent for petrographic analysis.

The Nutaaq host rock is an alkali-feldspar syenite and the rare earth element ore mineral monazite was identified.

Also identified was a type of alteration that may be fenitization - a metasomatic alteration characteristic of alkaline systems associated with rare earth element deposits.

Additional studies are ongoing at the University of Saskatchewan's microprobe laboratory to better determine the rare earth element ore mineralogy as well as chemistry of those minerals.

Further work on the property will be contingent upon completion of a full review of this new data.

The Torp Lake lithium project covers two mineral claims (2,006.6 hectares) and was staked to cover a known lithium-rich pegmatite. Spodumene-bearing pegmatite was investigated by the Geological Survey of Canada in the early 1990s. The main dyke, the McAvoy, is described in historical work as being traceable for at least 200 meters, potentially up to 400 meters along strike, and attaining widths of 10 meters to 15 meters.

Spodumene, a lithium-bearing silicate mineral, occurs in the McAvoy pegmatite as columnar crystals up to 1.5 meters in length.

The mineral occurs over a 110-meter interval.

In the summer of 2009, the dyke was mapped and sampled and the property was prospected for additional lithium-rich pegmatite.

From the sampling program, values up to 3.5 percent Li2O were returned.

Spodumene characteristically contains a maximum lithium content of approximately 8 percent Li2O and lithium-bearing pegmatite typically returns grades of 1 percent to 1.5 percent Li2O. The 3.5 percent Li2O reported for the McAvoy pegmatite, therefore, indicates the sampled area of the pegmatite contains approximately 40 percent to 50 percent spodumene.

North Arrow is planning a ground geophysical and drilling program for 2010.