2010 Mining Explorers: Re-energized miners head north

Efforts to build an electricity transmission line critical to economic development of northwestern British Columbia moved closer to reality in 2010. Cheered by the prospect of access to cheap power, scores of miners flocked to the region to re-activate dormant projects and scour the mountainous terrain for new discoveries.

The Canadian government allocated C$130 million in funding for construction of the Northwest Transmission Line in September 2009, providing critical funding for the estimated C$404 million needed to build the power conduit.

The new 287-kilovolt line will cover 335 kilometers, or 208 miles, from Skeena Substation near Terrace to Meziadin Junction and north to a new substation to be built near Bob Quinn Lake.

It will provide access to the province's electricity grid, while supporting economic diversification in the area.

The line also could advance a potential connection between southeast Alaska and the North American transmission grid via British Columbia.

In April, British Columbia Transmission Corp.'s application for an environmental assessment certificate for the Northwest Transmission Line entered the formal 180-day review process with the BC Environmental Assessment Office.

The EA certificate is required before construction on the line can begin.

The BC Environmental Assessment Office Sept. 2 granted a 31-day temporary suspension of the review process at BC Hydro's request.

However, the power provider said its plans for the NTL are still on track and moving forward in a timely manner.

Construction was expected to begin this fall.

Industry benefits

The new line is expected to spur development of numerous mine projects, previously considered uneconomic because of high power costs, according the industry and BC government officials.

Imperial Metals Corp., for example, says development of the Red Chris copper-gold porphyry project located 80 kilometers, or 50 miles, south of Dease Lake and about 20 kilometers, or 12.5 miles, from the power line's proposed route near Highway 37, is contingent on the availability of electric power.

The Red Chris deposit contains at least 276 million metric tons of minable reserves at 0.349 percent copper and 0.266 g/t gold (based on a 2005 feasibility study) and considerably more tonnage in measured, indicated and inferred resources.

The project's anticipated mine life is 25 years with known reserves and a production rate of 30,000 metric tons per day.

Construction of a mine would take about two years and generate 600 jobs.

During the mine's life, operations would require 250-300 workers and another 750 indirect jobs.

New thinking

Hard Creek Nickel Corp.'s Turnagain Project, located 70 kilometers, or 44 miles east of Dease Lake, is set to benefit from access to the new power line. An updated preliminary assessment last spring recommended open-pit mining and milling at a rate of 87,000 metric tons per day, along with conventional flotation and chloride leach processing followed by on-site nickel solvent extraction - electrowinning metal refining for the project. The study estimated recovery of 1.88 billion pounds of payable nickel over 24.4 years at an average rate of 35,000 metric tons (77 million pounds) per year and total capital costs of C$2.92 billion.

In addition to access to the proposed power line, new ideas re-ignited interest in 2010 in at least a half-dozen large mine projects in northern British Columbia, including the Turnagain project and NovaGold Resources Inc. and Teck Resources Ltd.'s Galore Creek Project.

In a letter to shareholders Sept. 14, Hard Creek President Mark Jarvis said the company is eyeing ways to reduce the project's capital cost by as much as C$800 million through improvements in the concentrate grade of ore from the 33,220-hectare, or 82,085-acre, property. Turnagain is one of a handful of giant undeveloped primary nickel-in-sulphide projects in the world, while global shortages in the metal are forecast as early as 2014. Jarvis also said the deposit remains open to the north and at depth, offering potential for expansion of the resource.

Last spring, Galore Creek Mining Corp., a 50-50 partnership between NovaGold and Teck, identified a preferred design for mining the giant copper-gold-silver deposit located north of Stewart, B.C., and targeted completion of a pre-feasibility study in the first half of 2011.

Significant changes to the original mine design include increasing throughput to potentially 90,000 tpd, a 40 percent increase from the original design; realigning a tunnel and access road; relocating a tailings facility to allow for construction of a conventional tailings dam; and relocating processing facilities to allow for future expansion.

The pre-feasibility study will provide capital cost estimates, economic analysis using higher copper and gold prices than used in previous studies, as well as permitting, construction and production timelines.

The partners expected to spend C$8 million in 2010 for care and maintenance and optimization studies at the Galore Creek and another C$12 million for the pre-feasibility study.

Under the partnership agreement, Teck is funding these costs.

Development pipeline

Other northern British Columbia mine projects that inched ahead in the development process in 2010 include Canada Zinc Metals Corp.'s Akie zinc-lead project situated within the southern-most part (Kechika Trough) of the regionally extensive Paleozoic Selwyn Basin of Northeast British Columbia. Canada Zinc completed a sale of shares and warrants in July that brings equity held by Chinese state-owned Tongling Nonferrous Metals Group Holdings Co. Ltd. in the junior to 36 percent. Some C$18 million in proceeds will be used for working capital and to advance the Akie project.

Columbia Yukon Explorations Inc. is working to advance its "Storie" molybdenum deposit located 6 kilometers, or nearly 4 miles, southwest of Cassiar, B.C., to development. The junior reported progress in June toward the Storie Moly Project, as the project entered the B.C. environmental assessment review process.

New discoveries

New discoveries also played a role in 2010 in the revival of mining exploration and development activity in northern British Columbia.

In July, Seabridge Gold Corp. confirmed the discovery of "Iron Cap," a new large potentially bulk minable deposit at its giant KSM Project, which could substantially improve the project's economics.

The KSM project is one of the largest undeveloped gold projects in the world with proven and probable reserves totaling 30.2 million ounces of gold and 7 billion pounds of copper.

Seabridge's drill program objectives in 2010 were to add 2-3 million ounces of gold reserves and explore Iron Cap, which it said had the potential to be KSM's fourth largest deposit.

The company reported wide intercepts of gold, copper and silver grades above the KSM average from new and historic drilling and said it would proceed with infill drilling at Iron Cap to establish new proven and probable reserves to be included in mine plans for the project.

Seabridge said the new deposit, located immediately adjacent to the Mitchell zone, is at least 900 meters in strike length, 400 meters wide and up to 350 meters thick.

Gold fever

Dozens of smaller explorers also mounted drilling programs across the region in response to promising 2009 gold discoveries, primarily in and around the historic Stewart Gold Camp of northwestern BC. Among the juniors:

Nanika Resources Inc. is exploring several properties near the Silver Coin gold-silver-zinc property where Jayden Resources Inc., formerly Pinnacle Mines Ltd., made a discovery in 2009;

TAD Mineral Exploration is seeking gold and silver on the Hazelton Property located 7 kilometers, or about 4 miles, northeast of Hazleton, B.C., and about 325 kilometers, or 200 miles, due east of Ketchikan, Alaska;

REC Minerals Corp. is pursuing surface exploration on its MC Dalhousie gold-silver-copper-zinc-lead property located a few miles north of Stewart, B.C.;

Bolero Resources Corp. is hunting for signs of copper and gold on the Red Chris "South" prospect adjacent to Imperial's Red Chris Project; and

American Creek Resources Ltd. is exploring for gold and silver on the Electrum Property near Stewart.

In the far northwest corner of British Columbia, juniors such as Constantine Metal Resources Ltd. also are exploring for gold. Constantine mounted a promising early-stage soil sampling program that returned encouraging gold and silver values on the 9,280-acre Trapper Lake property in the Atlin Mining Division.

A smaller group of explorers also are tracking the more elusive rare earth elements across northern and central B.C. Paget Minerals Corp., for example, is exploring the Xeno rare earth element property and Bolero Resources is amassing REE-prospective claims in its Carbonatite Syndicate Rare Earth Claim Group located 80 kilometers, or 50 miles, northeast of Prince George, B.C.

Strategic mergers

A number of companies battled restraints imposed by tight financial markets with timely consolidations and acquisitions.

Leading this group is Thompson Creek Metals Co. Inc. and Terrane Metals Corp., which signed a definitive agreement in July under which Thompson Creek will acquire 100 percent of the issued and outstanding equity of Terrane in a cash and stock transaction valued at about C$650 million.

Terrane's Mt. Milligan Copper Gold Project, located 155 kilometers, or 96 miles, northwest of Prince George, contains proven and probable reserves of 482.4 million metric tons grading 2 percent copper and about 0.4 grams per metric ton gold for contained metal of 2.1 million pounds copper and 6 million ounces of gold.

The project also boasts a large measured, indicated and inferred copper and gold resource.

Forecast to average 262,100 ounces gold per year in production at a cash cost, net of a copper credit, of negative US$8 an ounce, Mt. Milligan is expected to provide about 400 direct permanent jobs and significant long-term economic benefits for the region

Environmental concerns

The British Columbia Provincial Government granted Taseko Mines Ltd. a long-term, renewable, 25-year mining lease for the Prosperity gold-copper project in June.

The mining lease gives Taseko the right to proceed with development of the proposed C$815-million Prosperity copper-gold mine near Williams Lake, B.C. But a federal review panel ruled July 2 that the mine would have "significant adverse environmental effects" on several factors, including fish, fish habitat, grizzly bears and First Nations' use of the land for traditional purposes.

The open-pit mine, which would use a lake to store waste tailings from copper- and gold-processing, has already been approved by the B.C. government.

While the B.C. assessment foresaw some harm to the environment, it concluded that it was outweighed by a predicted C$5-billion economic injection over the 20-year life of the mine and C$600 million of revenue for various governments.

Building the mine would create about 375 construction jobs, and operating it about the same number of high-paying positions.

Another estimated 600 indirect jobs would be spun off in the community, according to Taseko.

Additional federal review of the project was expected to begin in mid-September.