Mining year lives up to pre-season hype

As cold weather wraps up the 2011 field season, mining in Yukon Territory appears to be getting hotter, with exploration and development activities throughout the year living up to all of the pre-season hype and then some.

Early in the year, explorers laid the groundwork for grassroots exploration seemingly in every corner of the territory. No sooner than the meeting rooms emptied at Roundup in Vancouver in late January, than a frenzy of claim staking erupted in the Yukon. Golden Predator Corp. snatched up all of the available staking tags, gambling that the move would give it a head start over competitors in the staking rush that unfolded.

With about 100 companies undertaking active exploration projects in the territory, expectations for continued growth in the sector in 2011 proved prophetic. 
In 2010, interest in the White Gold and Rackla districts were the primary drivers of a record level of staking. There were 83,161 new quartz claims staked in 2010, more than five times the 15,041 claims staked in all of 2009.

But 2011 brought a host of newcomers and new avenues of exploration to the territory.

"We saw new ideas and new areas being looked at, with a lot of reconnaissance and early stage work on these big claim blocks," said Robert Holmes, director of the Mineral Resources Branch of the Government of Yukon's Department of Energy, Mines and Resources. "It will be a couple of years before we know what will come out of it."

New areas of interest in 2011 included the historic Livingstone mining area, huge tracks in Southwest Alaska near Burwash Landing, and several areas of eastern Yukon, including claims around Northern Tiger Resources Inc.'s 3Ace gold discovery northeast of Watson Lake. By Sept. 30, a record 103,755 new claims had been staked, bringing to 280,000 the number of claims and leases in good standing.

The government estimates the business of hardrock claim staking, alone, spawned C$40 million in spending in Yukon, up 25 percent from about C$30 million in 2010, Holmes said.

Big area plays dominated this early-stage work with 30-40 active companies sometimes jostling each other for claims.

"The barrier to entry is pretty low," Holmes told Mining News Nov. 8. "It's still free entry, and it only costs C$100 a year to keep a mining claim in Yukon."

Overall, mining exploration activity in the Yukon far exceeded official expectations in 2011, with spending setting a new record by topping C$325 million. That is up dramatically from a Natural Resources Canada forecast for Yukon spending of C$256 million early in the year and nearly double the C$160 million spent on Yukon exploration programs in 2010.

Holmes said he has high hopes for the future of Yukon mining. "No other jurisdiction in Canada has the variety of mining projects that we have. There are unique things going on in mining in Yukon, including a copper heap leach project and a gold heap leach project," he said.

Exciting developments ahead

In mining development and production, the territory also moved into a new era in 2011 with two more mines coming on line to join the Minto copper-gold-silver mine, which marked its fifth year in production. Capstone Mining Corp. subsidiary Minto Explorations Ltd. finished mining the Area 1 pit, but still has ore stockpiled to carry the mill through to next year. It is currently developing a pit in Area 2 of the Minto property, but has yet to collar a planned portal to go underground.

Holmes said the mine operator is entering phase 5 of the project and planning to bring several new deposits into production. "It's a very dynamic and interesting project for us, from a regulatory point of view. We have to be responsive to new ideas and at the same time, be responsible for the environment," he said. "Our biggest challenge at Minto is water management. They are trying all kinds of ideas. Currently, they are storing quite a bit of water, and we are working with them on a water discharge plan (for use) before spring."

Alexco Resource Corp.'s Bellekeno silver-lead-zinc mine, the Yukon's second mine in the new era, ramped up to 250 metric tons per day in production by mid-year and is forecast to produce a total of 2.5 metric tons of silver this year.

The Wolverine Mine, operated by Yukon Zinc Corp., is also up and running, but several setbacks, including mine fatalities, have slowed the high grade zinc-silver-copper-lead-gold mine's progress toward full production of about 1,700 tpd until the spring of 2012.

One of the most exciting aspects of mining activities in the Yukon in 2011 is the progress made by a growing number of advanced exploration projects moving toward possible production. Victoria Gold Corp., North American Tungsten Corp. Ltd., Selwyn-Chihong Mining Ltd., Yukon-Nevada Gold Corp., newly created Copper North Mining Corp., and Golden Predator Corp. are all pushing toward potential development of mines at their respective projects.

Victoria anticipates completing the regulatory assessment process for its multimillion-ounce Eagle Gold deposit at its Dublin Gulch property near the town of Mayo in central Yukon by spring and later in 2012 to begin construction of an open-pit heap leach gold mine with average annual production of 170,000 ounces.

In 2011, the company focused on completing a feasibility study on Eagle Gold and conducting a C$9 million exploration program on the broader Dublin Gulch property.

Victoria recently signed a comprehensive cooperation benefits agreement with the Na-Cho Nyak Dun First Nation for the Eagle Gold project and ongoing exploration within the First Nation's traditional territory in Yukon Territory.

N.A. Tungsten is moving its MacTung Project in eastern Yukon near the Northwest Territories border through the regulatory assessment process. The Yukon Environment and Socio-economic Assessment Board deemed adequate the company's proposal to mine MacTung's 33 million metric tons averaging 0.88 percent tungsten trioxide in October 2009, but had additional questions.

N.A. Tungsten just filed a big report with YESAB and so did Yukon-Nevada for its Ketza River gold project near Ross River, Yukon, Holmes said.

If MacTung is approved for production, it is forecast to run at 2,000 tpd from an underground operation using conventional long hole plus cut and fill mining methods.

Yukon-Nevada filed its initial Yukon Environmental and Socio-economic Assessment Application for Ketza River in late September, anticipating a minimum one-year review.

Progress toward development of the huge Selwyn zinc-lead project in eastern territory slowed a bit in 2011, in part because of an unsuccessful court challenge to the government's approval of the Selwyn-Chihong joint venture's underground exploration plans. The other holdup stems from Selwyn-Chihong continuing to modify its feasibility studies because the explorer "keeps finding more resources," Holmes said.

Other projects in the development pipeline include the Carmacks Copper Project, a heap leach copper project near Carmacks that stumbled in 2010 on regulatory opposition. Western Copper Corp. recently spun out the project into a new company, Copper North Mining. The copper project is currently permitted for construction and poised to produce 32 million pounds per year of cathode copper for six-plus years.

"The Carmacks Copper Project is part of a new company with new management now, and it's fair to say, they will be taking a fresh look at it with new eyes to see what they can do," Holmes said.

Golden Predator's Brewery Creek Project in central Yukon, where the aggressive explorer has made headlines all year with discoveries of new zones of substantial gold mineralization on the once-mined property, is another venture likely headed to development in the near future.

"We expect they will be proposing to develop that project, but they haven't approached us about development yet," Holmes said.

New leaders, same vision

Sworn into office Nov. 5, the Yukon's new government leaders are members of the same party that held power during the past term.

"I expect it will be steady as she goes (for mining policy)," Holmes predicted. "But there will be a new focus on managing success."

One issue that Yukon's leaders must soon tackle is the territory's rapidly growing demand for new sources of power.

Holmes said liquefied natural gas is a resource that industry and government have been investigating recently with new vigor because of the presence of substantial natural gas deposits in nearby northern British Columbia and in the Eagle Plain Basin near Dawson City.

China-based CNOOC Ltd.'s international subsidiary has made an undisclosed investment in Northern Cross (Yukon) Ltd. that will enable the private Calgary operator to fulfill work commitments under its existing exploration permits at Eagle Plain basin, according to a July 2011 report in the Oil and Gas Journal. Northern Cross said the work commitments are intended to further assess the oil and gas resource potential in the Eagle Plain area, where it owns and operates three significant discovery licenses and a total of 1.3 million acres in the basin.

"LNG is half the price of diesel. So some of the big projects are also looking at it," Holmes said.

Western Copper, which is pursuing development of the 1-billion-metric-ton Casino porphyry gold-copper-molybdenum project in central Yukon, is one mining company that studied LNG as a fuel source in 2011. The company also worked to improve the access road to the central Yukon property.

Little impact on placer mining

A mining sector that hasn't been affected significantly by the recent boom is placer mining.

Placer mining activity has experienced a steady decline in Yukon Territory since the 1980s. "We don't know why, but we suspect it has a lot to do with the price of fuel," Holmes said. "We are looking to see if there is anything we can do to help our placer mining industry.

Given all of the mining activity in 2011, Holmes said it might appear that the Yukon is getting crowded. But nothing could be further from the truth.

"The Yukon has so much mining potential still," he said.

"Just last week, we had a client come into the Mining Recorder's office with a 12-ounce and an 8-ounce nugget from the Livingstone Creek area, a region of the territory which has been mine for more than 100 years," Holmes added.