Territory sees spurt in mining activity

A challenging economic climate in 2012 failed to impede growth in mining activity in Northwest Territories. As miners struggled to fund their work programs, numerous companies managed to plow ahead in the wake of regulatory improvements, advancing projects that could bring even more robust times to the territory's mineral resources sector.

The Northwest Territories, one of Canada's three northern territories, is sandwiched between Yukon Territory to the west and Nunavut to the east. With a land mass of nearly 1,347,150 square kilometers (520,000 square miles), the NWT is roughly twice the size of Texas and a bit smaller than Alaska, though it has a particularly sparse population of only 43,000 residents.

"What the NWT does have - in huge amounts - is resource potential," said NWT Industry, Tourism and Investment Minister David Ramsay.

"Lying beneath our lands are diamonds, gold, uranium, tungsten, lead, silver, zinc and other rare earth minerals. We are fortunate to have seven potential mining projects coming on-stream within the next decade - ranging from the opening of our fourth diamond mine - Gahcho Kué - to Avalon's Nechalacho Rare Earths mine project," Ramsay told an audience at the Arctic Technology Conference held in Houston Dec. 6.

What the NWT also has, according to Natural Resources Canada, is a mineral resource industry that is on the move. Unlike its neighbors, the NWT is expected to see growth in mineral exploration investment in 2012.

NRCan's survey of mineral exploration companies, released in November, forecast 2012 northern exploration expenditures decreasing from year-earlier levels in Nunavut and Yukon but increasing in the NWT.

NRCan's latest semi‐annual report, "Exploration and Deposit Appraisal Expenditures, by Province and Territory," predicted a 44 percent increase in 2012 mining investment to C$135.5 million in the NWT compared with C$93.8 million a year earlier. By contrast, such spending is forecast to decrease in Nunavut and Yukon from record highs in 2011. In Nunavut, 2012 expenditures are forecast to drop 20 percent to C$426.5 million from C$535.7 million a year ago, while comparable outlays in Yukon are expected to dip 12 percent to C$291.7 million from C$331.7 million in 2011.

"While NRCan provided no details to explain its survey results, we can say that the good news is that mining projects in both the NWT and Nunavut continue to advance through the approvals processes," said Cathie Bolstad, president of the NWT & Nunavut Chamber of Mines in announcing the survey results.

"We are pleasantly surprised to see that the NWT is bucking the northern trend with a projected increase of 44 percent over last year.

We are cautiously optimistic that this reflects the good work being done by so many parties to improve the NWT's investment climate: The Federal government with regulatory improvement and its Northern Projects Management Office; the territorial government to create a NWT Mineral Strategy; and our own Chamber's work with the Akaitcho to strengthen that Aboriginal community's support for mineral development."

NRCan's data includes on‐mine‐site and off‐mine‐site activities, field work, overhead costs, engineering, economic and pre‐ or production feasibility studies, environment, and land access costs.

Claim-staking slows

In its annual mineral exploration overview, the NWT Geoscience Office summarized the gains made by the NWT mining sector in 2012.

The 34-page report, authored by H. Falck and K. Gochnauer, said that much of this year's activity resulted from a surge of mining activity begun in 2011, and the NWT mining sector also suffered from the same setbacks felt throughout the industry.

By the end of October, for example, only 88 claims covering 58,000 hectares had been staked in NWT, many covering older claims that had lapsed. By comparison, 710 claims covering 550,000 hectares were staked in 2011 when explorers ventured into new regions and returned to areas where mining activity had been absent for 20 years, the report said.

The territory has only four operating mines - three diamond producers: Ekati, Diavik and Snap Lake and one tungsten mine, Cantung.

With the exception of Snap Lake, these are mature operations that are set to close within the next decade unless significant new deposits are found to prolong their mine life.

De Beers Canada Ltd.'s Snap Lake Diamond Mine located 220 kilometers (136 miles) northeast of Yellowknife continued to ramp up production in 2012, targeting 1.4 million carats of annual production by 2014. The mine, which is designed to process ore at a rate of 3,150 metric tons per day, is forecast to produce diamonds until 2030. In 2011, Snap Lake recovered 881,000 carats from 814,000 metric tons of material, down slightly from 925,000 carats in 2010.

Ekati's majority owner BHP Billiton reported plans to sell its stake in Canada's first diamond mine, and Diavik's 40 percent co-owner Harry Winston is working to acquire the operation in a deal reportedly valued at about US$500 million.

Diavik's 60 percent co-owner Rio Tinto plc also announced a review of its Canadian diamond assets that could lead to their sale and curtailed its diamond exploration activities in the NWT indefinitely.

Advanced projects progress

Meanwhile, thanks to considerable work on a slew of advanced exploration and development projects, the overall outlook for mining activity in the NWT is on the upswing.

Exploration and environmental work continued on of these ventures, including Avalon Rare Metals Inc.'s Nechalacho Project, Canadian Zinc Corp.'s Prairie Creek Minesite Project, Fortune Minerals Nico Project, Tamerlane Ventures Inc.'s Pine Point Mine Project, Tyhee Gold Corp.'s Ormsby/Nicholas Lake Project and Seabridge Gold Co.'s Courageous Lake Project.

De Beers Canada and Mountain Province Diamonds Inc. are currently working to advance their huge diamond project, Gahcho Kué, through the environmental review process with five days of public hearings in several NWT communities concluding recently. Reports from the companies indicate a positive feasibility study for the project, and their proposed mine plan calls for recovery of 4.5 million carats annually from open pits on the 5034, Hearne and Tuzo kimberlite pipes for an 11-year mine life.

The companies expressed optimism Dec. 11 about the project's chances of winning regulatory approval. "We are confident that the project is not only technically sound, but also reflects our commitment to sustainable development by listening to our community partners and incorporating key input that makes this project viable and respects local priorities," said De Beers Canada Chief Operating Officer Glen Koropchuk in opening remarks.

"Last week's public hearings mark an important milestone towards the development of Canada's next great diamond mine. The successful permitting of Gahcho Kué will secure the Northwest Territories' position as one of the world's leading diamond producing regions," said Mountain Province Diamonds President and CEO Patrick Evans in the Dec. 11 statement.

Canadian Zinc received approval in December 2011 from the Mackenzie Valley Environmental Impact Review Board for the Prairie Creek project to proceed to the regulatory phase for approval by the Mackenzie Valley Land and Water Board. The Geoscience Office said that pending another step of approval, construction of the lead-zinc-silver mine could begin in 2013.

Avalon recently reported an increase in the mineral resource estimate for its flagship Nechalacho rare earth elements project and that it received positive news from metallurgical and refinement testing. The company also announced plans to build a separation plant and refinery in Louisiana. The Nechalacho deposit located at Thor Lake, NWT, is emerging as one of the largest undeveloped rare earth elements resources in the world.

Diamond exploration surges

Despite the slow pace of claim-staking, mineral exploration activity in the Northwest Territories in 2012 was relatively robust.

Diamond explorers included Kennady Diamonds Inc., a company formed by Mountain Province Diamonds in 2011 to manage its Kennady North diamond project, which lies north of Gahcho Kué.

Kennady engaged Northtech Drilling Ltd. to drill a minimum 2,500 meters to test up to 12 new targets and intersected kimberlite in four holes along the Kelvin Faraday Corridor.

Initial results of testing include 1,889 diamonds (0.92 carats total weight) extracted from 394.4 kilograms of core with an average grade of two carats per metric ton for the combined Kennady North kimberlites.

More targets remain to be tested, and the company is planning a winter drill program.

An affiliate of Diavik's 40 percent owner, Harry Winston Diamond Mines Ltd. continued work in 2012 on the 124,238-hectare joint venture property that it agreed to explore with North Arrow Minerals Inc. and Springbok Holdings Ltd. in an option agreement in 2011 but ran into a delay in July because of the lack of availability of a track-mounted reverse circulation drill. Harry Winston had agreed to spend at least C$5 million over a five-year period on the project in order for the option to vest.

Olivut Resources Ltd. discovered new kimberlite in an 11-hole lightweight drill program testing eight targets on the HOAM property that covers 57,465 hectares in the Interior Platform region south of Fort Simpson, NWT. Caustic fusion analysis results are pending. Olivut's exploration of HOAM has resulted in the discovery of 29 kimberlites to date and the identification of numerous additional priority drill targets.

After several years of no field work in the Lac de Gras region, Peregrine Diamonds Ltd. returned in the summer of 2011 and completed a 295-kilometer (183 miles) ground geophysics program over a number of claims in an effort to generate new kimberlite targets. Last winter, the explorer drilled 799 meters on four separate kimberlite targets. Kimberlite pipes were discovered at three of those sites and microdiamond analysis confirmed that all three are diamondiferous.

"The discovery of three new diamondiferous kimberlites at Lac de Gras, a diamond district with two operating mines that has seen intense exploration activity in the last 20 years, is a testament to the experience and dedication of Peregrine's exploration team," Peregrine President Brooke Clements told Mining News recently.

"It also illustrates the potential to make additional new discoveries.

We continue to analyze the results from this year's work and previous programs.

… Future work programs are being planned and could include new target evaluation on the company's 75,000 hectares of mineral claims, additional drilling on one or more of the kimberlites discovered this year and an updating of the economic and resource studies of the DO-27 kimberlite."

Talmora Diamonds Inc. also carried out staking and a limited exploration program of collecting samples and drilling in August on its 27,835-hectare Horton River Project in hopes of substantiating early analysis of kimberlite mineralization on the property.

Metals exploration heats up

Metal explorers also carried out numerous work programs in 2012 in the Northwest Territories. They include BFR Copper & Gold Inc., Boxxer Gold Corp., Bullmoose Mines Ltd., Scavo Resource Corp. (formerly Pure Living Media Inc.), Copper North Mining Corp. (copper-silver) Devonian Metals Inc. (zinc-lead-silver), Manson Creek Resources Ltd. (gold), Minerals and Metals Group (copper-lead-zinc), Nighthawk Gold Corp. (gold), Platinum Group Metals Ltd. (copper-nickel-cobalt-PGM), Selwyn Chihong Mining Ltd. (zinc-lead), Tamerlane Ventures Inc.(zinc-lead-copper-silver-gold), Viking Gold Exploration Inc. (gold), Williams Creek Gold Ltd. (gold) and WPC Resources Inc. (gold).

Nighthawk reported an initial NI 43-101 mineral resource estimate in February for its Colomac gold project, which encompasses the historic Colomac Gold Mine, of 1.446 million ounces of gold, or 42.65 million metric tons of ore averaging 1.05 grams per metric ton gold, using a cut-off grade of 0.6 g/t gold. The junior drilled 11,235 meters in 30 holes in its 2012 exploration program, and assay results confirmed higher grade gold ore shoots plunging beneath several zones on the 94,701-hectare property. The results included intersections as high as 25.78 meters averaging 7.78 g/t gold and 13.25 meters averaging 11.4 g/t gold.

Platinum Group Metals explored Providence (Credit Lake) copper-nickel-cobalt property with a gravity survey and six-hole, 1,208-meter drill program and confirmed that mineralization continues at depth with intercepts 90 meters vertically below historic intercepts. Assay results are pending.