Mining Explorers 2012: Explorers flock to Far North

Companies chasing mineral riches in Nunavut in 2012 are expected to meet and surpass the brisk pace of exploration set a year earlier. But the race to discover major deposits of precious and base metals, along with uranium, diamonds and other commodities, in one of Canada's most underexplored and prospective jurisdictions is only just beginning.

At one-fifth the size of Canada, Nunavut covers 1,994,000 square kilometers (770,000 square miles or nearly three times the size of Texas). The Far North territory is Canada's youngest jurisdiction, having been formed in 1999, but Nunavut geology records nearly 3 billion years of Earth history and contains a wide spectrum of economic commodity types, according to geologists at the Canada-Nunavut Geoscience Office.

More than C$2.6 billion is estimated to have been spent on mineral exploration in Nunavut since the territory's creation.

In 2011, the industry delivered a year of robust mineral exploration to Nunavut with investment nearly doubling to C$502.3 million from the C$256 million reported in 2010. Comparable expenditures in 2012 are expected to climb another 10 percent to C$568.6 million by year's end, according NRCan's industry-based survey in March. The department will release revised figures in November.

Mineral exploration spending in Nunavut in 2011 reflected significant increases in investment by both junior and senior companies, although the majors accounted for the bulk of the outlays. In 2012, spending in Nunavut by junior companies was predicted to increase significantly, while expenditures by the majors was expected to remain relatively flat.

"Nunavut is doing very well with projected record investment this year of about C$570 million," Tom Hoefer, executive director of the NWT & Nunavut Chamber of Mines, said in a recent interview. "The territory has a lot more advanced projects. Sabina Gold & Silver Corp., for example, is doing very well at its Back River gold project."

However, the territory appears to be "a bit weak on the grassroots end" of mineral investment, Hoefer added.

Most Nunavut projects focused in 2012 on exploration for precious metals, primarily gold, even though outlays on iron projects are expected to outstrip the level of gold spending. Base metal expenditures are expected to triple and diamond spending to double from 2011 levels. In all, explorers are projected to spend C$220.4 million on precious metals projects, C$174.4 million on iron projects, C$44.2 million on uranium, C$54.8 million on diamonds and C$74.4 million on base metals.

Early setbacks, key milestones

While 2011 saw more projects advance towards production in Nunavut, 2012 got off to a rocky start with Newmont Gold Mining Corp. putting its huge Hope Bay gold project on care and maintenance indefinitely; Agnico-Eagle Mining Ltd. shortening the projected mine life of the Meadowbank Gold Mine - Nunavut's only operating mine - by three years to 2017; BHP Billiton opting out of its multiyear joint venture with Peregrine Diamonds Ltd. at the Chidliak diamond project; and Anglo Ashanti withdrew from its joint venture agreement signed in 2009 with Commander Resources Ltd. to explore the Baffin Island gold project.

Yet the first quarter of 2012 saw a flurry of NI 43-101 resource estimates based on 2011 work published for several projects, some for the first time, according to Nunavut officials. In addition to Sabina's Back River gold project, the list includes Canadian Orebodies Inc.'s Haig Inlet iron project near Sanikiluaq, Kivalliq Energy Corp.'s Lac Cinquante uranium deposit and Advanced Explorations Inc.'s Roche Bay and Tuktu iron projects.

Sabina also released an encouraging preliminary economic assessment on Back River in May, and Advanced Explorations reported a positive feasibility study of Roche Bay in August. Agnico-Eagle undertook construction of a road from Rankin Inlet to its Meliadine gold project located about 190 kilometers northeast of Meadowbank after receiving approval from the Nunavut Impact Review Board for this pre-development work. North Country Gold also built a road from Hayes Camp to the Three Bluffs deposit to support its exploration program and reduce the company's reliance on helicopter support.

New owners of projects that changed hands in 2011 mounted vigorous exploration and development campaigns this year. These include Baffinland Iron Mines Corp.'s high-grade Mary River iron deposits, Xstrata Zinc Canada's Hackett River silver-rich volcanogenic massive sulphide deposit and Elgin Mining Inc.'s past-producing Lupin gold mine and the Ulu gold project.

Exploration in three regions

The breakdown of mineral exploration and deposit appraisal spending anticipated in 2012 indicates expenditures will reach C$216 million in the central Kivalliq Region, C$194 million in the eastern Qikiqtaaluk Region and C$158 million in the western Kitikmeot Region.

Gold exploration was a key focus of work in the Kitikmeot in 2011, and this trend continued in 2012. Most of the activity in the western Kitikmeot this year was focused on exploration for gold, base metals and diamond exploration with Back River, Hackett River, and the Lupin Mine and Ulu drawing a surge in spending. In the eastern Kitikmeot, exploration, led by North Country Gold at Committee Bay, was conducted for gold, diamonds and platinum group metals.

Several significant base metal projects were active in the Kitikmeot in 2011, and are expected to be again in 2012. MMG Resources conducted drilling and surface exploration programs at its High Lake, Izok Lake and Hood projects in 2011 and focused in 2012 on developing an overland corridor to transport potential base metals products from its inland projects to market. A number of properties in the Kitikmeot are being explored for diamonds, including Shear Diamonds Ltd.'s Jericho Mine property, Stornoway Diamond Corp.'s Hammer kimberlite.

In the Kivalliq region, companies are primarily seeking gold and uranium, though some exploration is underway for base metals, platinum group metals, rare earth elements and diamonds.

The two largest gold projects in the Kivalliq region are Agnico-Eagle's Meadowbank gold mine and Meliadine project. The company's plans for 2012 included 110,000 meters of drilling at Meliadine. Other companies explored for gold in the Kivalliq include Uranium North Resources, Prosperity Goldfields, Anconia Resources, Northquest Ltd. and Diamonds North Resources.

All uranium exploration in Nunavut in 2011 took place in the Kivalliq, most in and around the Thelon Basin, and that trend continued in 2012. Substantial drilling programs were completed at Lac Cinquante, Aberdeen, Turqavik and Kiggavik in 2011 and 2012, with programs also completed on the North Thelon project and at Amer Lake. Kiggavik, owned by AREVA, is the most advanced uranium project in the territory. The Final Environmental Impact Statement for that project was expected to be submitted to the NIRB in 2012.

Exploration in the Kivalliq is ongoing for a number of other commodities, including lead, zinc, copper, gold and silver.

Most iron projects in Nunavut are located in the Qikiqtaaluk region, on Baffin Island, the Melville Peninsula and the Belcher Islands. Diamond, gold and base metal projects also are active in the region.

Most exploration spending in the Qikiqtaaluk is devoted to iron. In addition to the Mary River, Roche Bay and Tuktu projects, other iron projects are attracting interest. Canadian Orebodies conducted its first exploration program at the Haig Inlet project near Sanikiluaq in 2011 and based on the work done, the company was able to publish a resource estimate for the project, and follow up the work in 2012. West Melville Iron Company completed ground geophysics and channel sampling on the Fraser Bay deposit in 2011 to prepare for a planned drill program in 2012.

Peregrine Diamonds acquired BHP Billiton's interest in the Chidliak project and conducted a 2012 exploration program to pave the way for bulk sampling in 2013 and 2014.

Several companies have begun exploring the Melville Peninsula and the High Arctic for base metals. Advanced Explorations discovered five new occurrences of nickel-copper mineralization in 2011 at its Western Permits project on western Melville Peninsula, and returned for further evaluation of the property in 2012. Canada Coal acquired 75 coal licenses on Ellesmere and Axel Heiberg Islands in 2011 and in June commenced mapping and sampling programs that focused on the West Fosheim license areas.