Mining Explorers 2011: Explorers swarm Canada's Far North

Throughout the 2011 field season, explorers pushed the envelope in Yukon Territory, scrambling to target and assess rapidly increasing numbers of deposits of gold, silver and base metals mineralization being identified as the exploration rush that overtook the region in 2009 stretched into its third consecutive year.

With gold prices climbing to new highs and a stable investment climate, the lure of the Yukon attracted miners and investors in numbers not seen in a century.

"Both Yukon and Nunavut are entering a period of sustained growth in their mining industries. New mines opened in both territories last year and more are scheduled to start up over the next decade," said Marie-Christine Bernard, associate director of The Conference Board of Canada. "In the Northwest Territories, however, the diamond extraction industry has reached maturity and production is expected to wane over the next four years, limiting economic growth."

"The economies of Canada's territories are prone to sharp rise-and-falls as mining projects move through the assessment, construction, production, and closure phases," Bernard said in a mid-2011 report. "All three territories face the cyclical nature of growth based on resources."

Mining boom

After nearly a decade of mine development, Yukon's mining industry is entering a new boom cycle. Two new gold districts have recently emerged in Yukon: The Dawson Range gold district of West Yukon (includes Kinross Gold Corp.'s White Gold property and other related discoveries, such as Kaminak Gold Corp.'s Coffee property) and the Selwyn basin gold district, north and east of Keno Hill, (mainly comprising Atac Resource Ltd.'s massive Rau Gold property, which encompasses several new discoveries).

The Dawson Range gold district was the scene of a staking rush that began in 2009 and has resulted in more than 25 companies grabbing claims from the Carmacks area in the south, through the White Gold area, and northwest to the Yukon-Alaska border.

At the Rackla Gold property, the newly discovered Osiris Zone is being described as a Carlin-style gold occurrence, a deposit style that geologists say has long been sought after in the Yukon.

This discovery, within a structural trend and hosted in Selwyn basin stratigraphy, increases the gold potential of a vast area of the eastern Yukon.

Staking in this area continued to be robust in 2011 and several companies acquired significant land positions targeting similar structural, stratigraphic and geochemical trends within the district.

Numerous other areas of the Yukon with known gold potential are being re-evaluated; staking of these areas, as well as areas with previously unrecognized gold potential, continued throughout the territory.

Base metal exploration in the Yukon has been overshadowed by the search for gold, but several base metal properties are being advanced and new discoveries are being made. In 2010, Capstone Mining's exploration program at the Minto Mine uncovered three new copper-gold-silver zones - Wildfire, Copper Keel NE and Inferno. ATAC Resources Ltd. discovered the Ocelot silver-lead-zinc-indium showing on its Rau property while searching for gold. Strategic Metals met with drilling success on its Keg (Silver

Range Resources Ltd.) silver-zinc-lead-copper-tin-indium property north of Faro. The Casino copper-gold-molybdenum-silver porphyry deposit of Western Copper Corp. is at the pre-feasibility stage with a significantly increased resource reported in 2010. Overland Resources' Yukon Base Metal Project (Andrew/Darcy, zinc-lead-indium) is advancing through feasibility. Selwyn Resources successfully closed a C$100 million joint venture transaction with Chihong Canada Mining Ltd. to form Selwyn Chihong Mining Ltd. in order to advance the huge Selwyn zinc-lead project in southeast Yukon.

Total exploration costs for 2010 hit a record C$160 million in 2010 with gold capturing more than 58 percent of expenditures, silver 10 percent, copper and copper-molybdenum projects 12 percent, zinc-lead 15 percent, and other commodities (tungsten, molybdenum, uranium, nickel, rare earth elements, and iron) 5 percent.

Of the minerals being sought in 2011, explorers showed a decided preference for gold, 69 percent of all exploration targets in the Yukon, up from 58 percent a year earlier. Percentages last year of silver (10 percent), copper (10 percent), and nickel-PGE-molybdenum (5 percent) targets decreased this year to 8 percent, 7 percent and 1 percent, respectively. The number of lead-zinc projects remained unchanged at 15 percent.

The Yukon Geological Survey, meanwhile, undertook mapping and related field-based studies in eight areas in 2010, thereby sparking interest among explorers in new focal points for future investigation. Four of the projects constitute part of YGS' ongoing collaboration with the

Geological Survey of Canada under its Geomapping for Energy and Minerals, or "GEM," program. These include bedrock mapping and thematic studies under the Edges project in southwestern Yukon (Coast Belt and North Stevenson Ridge areas), targeted stratigraphic and sedimentological work in Eagle Plain/Peel Plateau, and final wrap-up of bedrock mapping in the Coal River area. Non-GEM activities included bedrock mapping in the southern Wernecke Mountains, surficial mapping in the north Dawson Range area, community-scale surficial mapping around Mayo and Pelly Crossing, and initiation of a new energy study in the Whitehorse trough.

The Yukon component of the Edges project concentrated on bedrock mapping in the Coast Belt this year. The mapping extended 2007-2009 mapping in the Windy-McKinley area southeastward to Aishihik Lake in the Ruby Range. Highlights of the mapping include the delineation of a metamorphic gradient in the Kluane Schist that may have a relationship to gold mineralization, and the identification of porphyry and epithermal-style mineralization associated with the Ruby Range batholith and age-equivalent overlying volcanic rocks.

Bigger, busier in 2011

With the busy summer field season getting under way, Yukon officials projected record numbers of mining companies spending record sums on mineral exploration programs scattered across the southern two-thirds of the territory.

Based on the industry's spending intentions in February, Natural Resources Canada projected C$39.3 million would be spent in 2011 by the majors on exploration and deposit appraisal activities in the Yukon, while junior mining companies were expected to invest a total of C$217 million on comparable activities.

Since then exploration spending projections have increased dramatically, according to the latest government figures. Expenditures by mineral explorers in Yukon is expected to nearly double in 2011, climbing to about C$300 million by year's end.

Capstone Mining's Minto copper-gold-silver mine was Yukon's only fully operating hardrock mine in 2010; however, Alexco completed pre-production development of its underground silver-lead-zinc mine at Bellekeno, shipped the first concentrates to the Port of Skagway in early December and finishing commissioning a 400-metric-ton-per-day conventional flotation concentrator mill in early 2011.

Yukon Zinc Corp. also completed development of its Wolverine zinc-silver-lead-copper-gold deposit in the Finlayson Lake volcanogenic massive sulphide district.

The Wolverine deposit contains an estimated reserve of 5.15 million metric tons of ore averaging 9.66 percent zinc, 0.91 percent copper, 1.26 percent lead, 281.8 g/t silver and 1.36 g/t gold, or enough for a 10-year mine life.

Though it began partial production in late 2010, the Wolverine Mine is still ramping up toward its full 1,700-metric-ton-per-day production capacity, now anticipated in 2012.

After an April 2010 mine collapse that resulted in the death of one mine worker, Yukon Zinc halted production while it conducted underground geotechnical engineering.

This work slowed the timeline for full production.

Expenditures for a water treatment plant and other capital expenses continue at the Minto Mine as the company continues to make new discoveries, expands the resources at Minto and prepares for underground mining, and thereby extending Minto's current mine life. Mine development expenditures in 2010 for all three properties exceeded C$150 million.

Among mineral explorers, some 80 companies submitted plans to explore mineral properties in 2011, up about 14 percent from the 70 companies that chased Yukon prospects in 2010, according to the Yukon Geological Survey. Of this number, 96 percent are juniors, according to YGS economic geologist Lara Lewis. In 2010, the industry mounted 150 exploration projects, and that number was expected to increase significantly this season.

"The number of companies working in Yukon isn't really final because some companies from last year dropped their options and are no longer working in Yukon, and others haven't announced work programs," Lewis told Mining News in June.

Some 32 of the companies exploring active hardrock projects in the Yukon in 2011 will record expenditures ranging from C$500,000 to C$1 million, while 44 explorers were expected to shell out anywhere from C$1 million to C$5 million on exploration programs. At least another 16 companies budgeted more than C$5 million, with a handful planning to spend more than C$12 million.

The government also continued to encourage exploration by providing funding of C$570,000 with its successful Yukon Mining Incentives Program in fiscal 2011-12. The funds assist individual prospectors, territory newcomers and successful juniors with a variety of grassroots, regional exploration and target evaluation projects. Based on investment commitments made by successful applicants in 2010-11, YMIP funds leveraged more than C$5 million in exploration expenditures in 2010, representing a leveraging ratio of ~3:1 and enough promising results to trigger further exploration investments.

Claim staking, another measure of mineral exploration activity, soared off-the-charts, with 83,863 quartz claims staked in 2010 and nearly 85,000 more claims staked through July. By comparison, the previous annual record, set in 2009, totaled 15,041 claims staked. Quartz claims in good standing in the Yukon rose to 158,419 by year-end 2010 and had exceeded 240,000 by mid-2011.

Despite the largest staking rush in history in the past two years, Yukon geologists say only a fraction of the total land available for mineral exploration in the territory has been staked.

For mining in the Yukon, 2011 is also a banner year with two new mines - Bellekeno, and Wolverine- joining the Minto Mine in extracting and processing minerals. Further, the White Gold, Whitehorse and Mayo mining districts continued to experience massive buildups in exploration investment. The resource boom also drove growth in the territory's service industry at rates not seen since the Klondike Gold Rush of the late 1800s. The retail and wholesale trade, and financial industries all experienced rapid expansion. Overall, real gross domestic product in Yukon was expected to jump 5.9 percent in 2011.

Mining in Yukon Territory took center stage in January at the annual Mineral Exploration Roundup Conference in Vancouver, B.C. Recognized as one of the top jurisdictions in the world for mining and exploration, Yukon has attracted unprecedented interest from industry stakeholders across the spectrum.

The majority of the projects planned for 2011 lie within close proximity to the recent White Gold, Coffee and Rackla Belt discoveries. However, a significant number of the programs underway or planned for this year are occurring elsewhere in the Dawson Range, in the Finlayson and Whitehorse mining districts and near MacMillan Pass and in Southeast Yukon.