Major advances Arctic mining project

Near the top of the world a major mining company is quietly ramping up development of the first gold mine in what is sure to become a major gold mining district. After putting the brakes on development of its Hope Bay Gold Project during the last half of 2009 because of the global economic downturn, Newmont Mining Corp. has rallied in 2010 to advance the development by leaps and bounds in a US$200 million program that tackles challenges on several fronts.

Hope Bay is North America's largest undeveloped greenfield with a combined estimated resource (indicated and inferred resources) exceeding 10 million ounces of gold. Located 90 kilometers, or 56 miles, south of Cambridge Bay, Nunavut near the Arctic Ocean, the 80-kilometer, of 50-mile-long, property is situated 150 kilometers, or 93 miles, north of the Arctic Circle.

Denver-based Newmont grabbed international headlines in late 2007 when it agreed to acquire Miramar Mining Corp., the owner of the Hope Bay gold property, for C$1.5 billion.

In 2009, Newmont's operating subsidiary, Hope Bay Mining Ltd., embarked on the first phase of a three-phase development plan. The company conducted mine planning studies, installed a new domestic water treatment plant and added beds at Doris Camp. In addition, it began environmental baseline studies for the next phase of development, removed three barges carrying back-hauled scrap from the land and began rehabilitating Windy Camp and the Patch Maintenance Facility.

Newmont's exploration team also completed about 48,000 meters of drilling in 2009, including 7,000 meters on regional targets, 15,000 meters at Doris and 26,000 meters on the Madrid Trend and identified additional ounces of high-grade (10 to 14 grams per ton gold) material. In addition, the team completed an industry-leading district framework study that identified more than 45 new targets, with the first six tested showing positive results, the company said.

Small underground mine

This fall, Newmont moved forward with initial development of the Doris North underground mine, including building an underground decline providing access for test stoping and development and exploration drilling and obtaining underground bulk samples of ore. Exploration across the belt and development of other known deposits also continued, along with permitting activities for potential future stages.

Current plans call for Newmont to proceed with construction of an 800-metric-ton per day mill in 2011 and to gain regulatory approval to start gold production from the underground operation at Doris North in 2014.

The major said it intends to leverage existing permits by modification and amendment for the construction and start-up of the small-scale Doris North underground mine, mill and tailings storage facility. Planning is underway for permits that are needed for longer-term development of additional underground and surface mines in subsequent phases of the project.

"If results from initial underground development and drilling are positive, we will advance to operations and phase 2 development, which will potentially include multiple operations at deposits such as Patch 14 (Madrid) and Doris Central," the company reported on its website.

Chris Hanks, director of environment and social responsibility for Hope Bay Mining said phase 2 could involve completion of the backbone of the infrastructure required to development the entire mining district, from Roberts Bay to Boston and include port, camp, road and airstrip upgrades.

This phase also could result in potential new mines built at Madrid/Patch, and Boston, as Newmont develops additional resources and acquires operating permits as needed, Hanks told the Nunavut mining industry at a symposium in Iqaluit last spring.

In phase 3, Newmont envisions completing development of the entire mining district, including exploring more than 45 additional targets in the greenbelt and defining additional development phases to realize full district value.

Mounting a major sealift

One of the biggest achievements of Newmont's 2010 program at Hope Bay was completion of a sealift operation within a six-week window when the ice is melted in the Canadian Arctic providing access through the Northwest Passage.

The unique supply chain challenge involved the transport of 10,000 tons of cargo and 3.7 million gallons (14 million liters) of diesel fuel to Roberts Bay near the project site by mid-August via sealift, ice class ships and ocean going tugs and barges, along with critical cargo needed to build and supply the construction of the Doris North underground mine.

The annual restocking of supplies via sealift involved coordinating the arrival, unloading and departure of numerous barges and ships before the Arctic ice froze over.

The 2010 sealift was four times larger than a similar effort the previous year that saw delivery of US$18 million worth of cargo, fuel and freight to Hope Bay. This year, more than 550 sea containers, several fuel shipments and numerous camps delivered US$95 million in goods and fuel.

After being delivered to ports on the east and west coasts of Canada, the lower 48 states and Alaska by early May, the Hope Bay-bound supplies were loaded onto oceangoing barges and ships headed north. The effort requires 300-500 people to coordinate the overall marine logistics effort, including truck drivers, stevedores (cargo loaders) and the vessels' crews.

Preparation for the 2010 sealift started nearly 10 months earlier in October 2009. In addition to the ticking clock, weather was the biggest challenge for the sealift. While the ice opens up in both directions most years, sometimes it does not melt enough for all ships to pass through. To mitigate this risk, the 2010 sealift was split between the eastern and western routes, a first for Newmont and a first for the Arctic, the company said.

Some shipments originated from eastern Canada and travel through the Panama Canal; while others traveled up the West Coast or navigated to the Arctic from the eastern edge of the continent. The Panama Canal route was selected to accommodate pick-up and delivery of additional cargo and because of ice-free weather conditions enroute. The tug and barge selected for this route traveled nearly 11,000 nautical miles. Because the port of Robert's Bay and the Hope Bay team could only manage so many vessels arriving at one time, critical items were sent ahead early.

Intensified exploration

In 2009, Newmont undertook belt-scale studies that geological, geophysical and geochemical data compilation, re-interpretation and assessment of metamorphic anomalies, along with a belt-wide prospectivity analysis. The project's resource development team identified significant expansions to previously known mineralization at Doris and south of Madrid. Much of this was done via ice-based drilling to depths up to a half-mile, or 870 meters, to better explore and define Doris Lower.

"By comparison, there are mines in similar districts in greenstone belts in Canada more than 1.2 miles, or 2,000 meters, deep, so we may be literally scratching the surface of Hope Bay's potential," the company said.

Currently, there are two areas of exploration focus at Hope Bay: 1) resource development, which better defines the existing known resource, and 2) district development, which is designed to unlock the value of the larger district. In 2010, the company completed more than 42,000 meters of resource development drilling and 24,000 meters of exploration drilling.

The gold at Hope Bay is hosted in near-surface quartz veins along fault zones with deep continuity, but is also narrow-veined (usually 2 to 5 meters wide) and with little geologic signature to guide exploration.

Added to this, traditional challenges of remote Arctic exploration, such as sub-zero temperatures, drilling in ice and grizzly bears, have been exacerbated by the explorer's inability to drill from mid-October to mid-January because the fall and winter days are too dark to fly helicopters, and the lakes are not yet frozen deep enough to place drills on the ice. Once the Doris North underground decline is completed in 2011, the Newmont exploration team hopes to be able to drill year-round to further define the resource.

Training local residents

The Hope Bay team is working closely with a number of contractors with extensive Arctic experience, including about a dozen Inuit-owned companies.

Hope Bay Mining has entered into numerous agreements with the Kitikmeot Inuit Association, the Inuit organization that administers surface access to 103,000 square kilometers, 64,000 square miles, of Inuit-owned land, including much of the land associated with the Hope Bay project. The association has about 5,000 members in western Nunavut. In August, its board of directors, along with staff members, toured the Hope Bay project.

"Our tour was intended to see (the) sealift in process, as well as to view the work (current and/or upcoming) of KIA joint venture companies. We have seven majority Inuit-owned companies that are under contract to Newmont, as well as three sister companies (subsidiaries of Norterra), and are very proud of the degree of involvement that Newmont has afforded us. We look forward to an exciting future working with them," the association said in a statement.

Hope Bay Mining plans to negotiate a socio-economic agreement, called the Inuit Impact and Benefit Agreement, with the association prior to beginning production.

In addition to contractor positions such as underground miners, operators, site service personnel, and laborers, Newmont has committed to train and hire local Inuit residents as permanent employees. In 2009, the project employed about 260 workers, including 46 Inuit in various positions. It currently employs about 400 workers

With the initiation of the underground mine at Doris North, Newmont said there will be additional employment opportunities for local residents, with more hiring as the project pace accelerates. Jobs being advertised in the Kitikmeot region in 2010 include geotech assistant positions

Newmont, which employs some 35,000 people at mines around the globe, said its jobs outreach effort at Hope Bay will involve a talent pipeline approach, in which job applicants move from aptitude testing to ready-to-train training to construction skills training and work programs. After that, they will progress to apprenticeships and other trainee positions.