Mining Explorers 2013: Mining activity remains strong in 2013

There is a reason why Nunavut has one of the fastest-growing economies in Canada: mining.

With one operating gold mine at Meadowbank, two huge projects on the verge of startup at Hope Bay and Mary River, five projects advancing through the environmental assessment process at Meliadine, Back River, Hackett River, and the Izok corridor as well as exploration activities continuing across all three regions of the territory in 2013, there's little wonder that Nunavut's "time has come."

"Mining has the best potential to create jobs and long-term prosperity for Nunavumiut," said Matthew Spence, director general of the Northern Projects Management Office of the Canadian Northern Economic Development Agency.

In all, eight mining projects in various stages of development are currently wending their way through the regulatory assessment and permitting process in Nunavut. Representing a large number of different commodities, the ventures are expected to bring more than C$12 billion in capital investment and 5,000 full-time jobs to Nunavut, a sparsely populated territory with an available labor force of roughly 2,000 people.

"Mining (in Nunavut) offers a broad range of direct and indirect career opportunities," Spence said. He also noted that multi-generational opportunities are associated with many of the mine projects currently being developed.

Nunavut, Canada's northernmost territory, covers 1.994 million square kilometers (770,000 square miles), and roughly one-third larger than Alaska, is under-mapped and under-explored.

The territory is widely viewed as one of the country's largest treasure troves of untapped mineral wealth.

Nunavut's eight geological provinces have diverse mineralogy, including gold, silver, diamonds, lead, zinc, uranium, tungsten, rare earths, cobalt, bismuth, nickel and copper, according to Elizabeth Kingston, general manager of the Nunavut office of the NWT & Nunavut Chamber of Mines.

Nunavut, in fact, ranks seventh among 93 global jurisdictions with attractive geology in the 2012-2013 annual Fraser Institute survey of mining executives, Kingston said.

In addition to eight to 10 advanced mine projects in its development pipeline, Nunavut also boasts at least 10 promising exploration projects - North Country Gold Corp.'s Three Bluffs, Committee Bay (gold); Stornoway Diamonds Corp.'s Hammer (diamonds); North Arrow Minerals Inc.'s Oro (gold); Prosperity Goldfields Corp.'s Kiyuk (gold); Starfield Resources Inc.' Ferguson Lake (nickel/copper/platinum); Cameco's Aberdeen (uranium); Canada Coal Inc.'s Nunavut Coal (coal); Commander Resources Ltd.'s Baffin Island Gold (gold); Peregrine Diamonds Ltd.'s Chidliak (diamonds); and Advanced Explorations Inc.'s Roche Bay (iron) along with numerous earlier-stage ventures.

Kingston said benefits of this mining activity will add up over time and generate numerous training and job opportunities as well as business expenditures, government royalties, tax revenues and social assistance savings; Inuit revenues in direct royalties and shared resource revenues.

Potential benefits of mining in Nunavut between 2013 and 2030 include those will come from one currently operating mine and seven potential new mines; the territory's gross domestic product climbing to C$36 billion, total federal and territorial tax (direct + royalties) exceeding C$10 billion, nearly 100,000 person-years of employment and total income earned in Nunavut of more than C$9 billion.

Exploration forecast

Mineral exploration activity continues to be a bright spot in Nunavut's economy as miners shoveled a total of C$443 million into projects across the territory in 2012, though comparable mineral exploration spending in 2013 is expected to decrease at least 25 percent to C$312.7 million according to Natural Resources Canada.

Still, Nunavut ranks fourth-highest among Canada's provinces and territories in attracting mineral exploration dollars, much of it from major and mid-tier mining companies.

Matthew Senkow, district geologist in the Nunavut Regional Office of Aboriginal Affairs and Northern Development Canada, said that about 31 projects - 10 gold, eight base metals, five iron; four uranium; two diamonds; one nickel-copper-platinum group elements, and one coal - were active in 2012 in Nunavut. Several projects include multiple properties and/or are multi-commodities. This year, however, about half of those projects were inactive and very few new projects commenced exploration in Nunavut in 2013.

At C$228.7 million, the largest portion of exploration spending in 2012 was focused on projects seeking precious metal, primarily gold, while base metals drew C$81.2 million; iron, C$80.5 million; uranium, C$40.2 million; diamonds, C$8.9 million and other minerals, C$3.6 million.

NRCan predicted that iron and uranium will take the biggest hits in 2013, dropping to C$8.2 million and C$29.0 million, respectively. Precious metals will attract C$192.2 million, while base metals will draw C$69.9 million, and diamonds, C$3.5 million. Spending on the hunt for other minerals (nickel, copper, PGE and coal), however, was expected to nearly triple to C$10.0 million, according to NRCan.

In March, NRCan forecast 2013 exploration and deposit appraisal expenditures in Nunavut by region would diverge substantially from comparable spending in 2012.

In the western Kitikmeot Region, the outlay was projected to decrease more than 35 percent to C$127.6 million in 2013 from C$197.6 million a year earlier, while comparable spending in 2013 was expected to increase 8.7 percent in the central Kivalliq Region to C$162.9 million from C$149.0 million the previous year.

For the northeastern Qikiqtaaluk Region, NRCan estimated that exploration and deposit appraisal expenditures in 2013 would plummet nearly 76 percent to C$23.2 million from C$96.4 million aspects of a pre-feasibility study expected to be announced in mid-October 2013.

Developments in the Kitikmeot

Gold exploration continued to be the key focus of work in the Kitikmeot in 2013. Most of the activity in the region was focused on exploration for gold, base metals and diamond exploration with Back River and Hackett River attracting the most exploration dollars.

Sabina Gold & Silver Corp. planned to spend more than C$70 million in 2013 on its Back River gold project located in the Kitikmeot region. The work included at least 42,000 meters of drilling to support a 2014 feasibility study and significant work on the engineering, geotechnical and environmental aspects of the pre-feasibility study expected to be announced in mid-October.

The company had C$94 million in working capital at June 30, but said it planned to end 2013 with $60 million in cash.

To the north, the Hope Bay project covers most of the 80 kilometer- (50 miles) long and seven to 20 kilometers- (4.34 to 12.4 miles) wide Hope Bay greenstone belt, and comprises a collection of Crown mineral leases and claims, as well as Nunavut Tunngavik Incorporated exploration agreements.

The Hope Bay belt sits within the Bathurst structural block of the northeast Slave Province, and is isoclinally folded with belt parallel shear zones.

Multiple Archean lode gold deposits are known within the belt, including the Doris and Boston deposits, and a collection of deposits and mineralized zones within the Madrid Trend.

Gold deposits within the Hope Bay belt are generally associated with large-scale regional structures.

After conducting extensive exploration and development work at Hope Bay in recent years, former owner Newmont Mining Corp. put the project on "care and maintenance" in early 2012.

Nearly a year later, Toronto junior TMAC Resources Inc. agreed to purchase the project in hopes of undertaking gold production at Hope Bay. TMAC completed the acquisition from Newmont in March.

By October, the junior had hammered out a five-year renewal of the commercial lease agreement for the project's Doris North Mine and related facilities at Robert's Bay and the Doris North site. In addition, the renewal of the Type 'A' water license for the Doris North Project for a 10-year period won final approval from both the Nunavut Water Board and the Minister of Aboriginal Affairs and Northern Development Canada. The renewal of the commercial lease and the Type 'A' water license allows for the commencement of production from the Doris North mine and mill.

As part of the commercial lease agreement, TMAC and the KIA also entered into a general securities agreement as security for TMAC's closure and reclamation obligations under the commercial lease.

In May, Glencore Xstrata plc (formerly Xstrata plc) announced an updated resource at the Hackett River silver-rich volcanogenic massive sulphide project. Hackett River and the surrounding Wishbone property are located within the Hackett River greenstone belt (also known as the Wishbone greenstone belt) in the Slave Structural Province of Nunavut. Xstrata acquired both properties from Sabina in 2011.

Hackett River is considered one of the largest undeveloped VMS projects in Canada, and possibly the world, with estimated resources of 61.3 million metric tons (indicated and inferred) grading 4.2 percent zinc, 138 grams per metric ton silver, 0.9 percent lead, 0.5 percent copper, and 0.2 g/t gold. Xstrata conducted an ambitious drill program on the property in 2012, which included 203 diamond drill holes totaling 51,548 meters. The company also planned to carry out another 50,000 meters of drilling on the project in 2013. The company also initiated a preliminary feasibility study in 2012, and Xstrata reported plans to submit a draft environmental impact statement in 2013.

Glencore Xstrata also embarked on another advanced exploration program in 2013 with C$40 million in planned expenditures targeting 57,000 meters of diamond drilling. Of the 50,000 meters allocated for 2013 exploration, 21,000 meters was drilled near known deposits, while 29,000 meters sought new deposits in unexplored areas of the property. The remaining 7,000 meters was geotechnical drilling to support a pre-feasibility study, pit slope, and underground mining and foundation.

In the updated mineral resource estimate for Hackett River, the company reported measured-and-indicated resources at the project totaling 25 million metric tons grading 4.2 percent zinc and 130 g/t silver containing 105 million ounces silver, and inferred resources totaling to 57 million metric tons grading 3 percent zinc and 100 g/t silver containing 183 million ounces silver.

Glencore Xstrata's tentative timeline for the project calls for development and construction of a mine between 2015 and 2018. A major hurdle to forward momentum, however, is the project's remote location.

Sabina, Glencore-Xstrata and MMG Resources, which has conducted drilling and surface exploration programs at its polymetallic High Lake, Izok Lake and Hood projects in recent years, have focused recently on developing overland corridors to facilitate inland mine development in the region by transporting potential base metals products to port facilities from which they can be shipped to market.

The companies are currently evaluating the potential for year-round shipping from Bathurst Inlet.

Glencore Xstrata and neighbor Sabina recently submitted a new "Baffin Inlet Port and Road" project proposal to the Nunavut Impact Review Board with additional details on environmental issues, wildlife protection, marine and road traffic than an earlier version that they asked the regulator to consider in December.

The Hackett River project site is located about 80 kilometers (50 miles) west of a potential deep-water port on the shore of Bathurst Inlet. Sabina's Back River gold project is located about 70 kilometers (43 miles) to the south.

The proposal, submitted to regulators by the BIPR Company, a 50-50 joint venture formed by Glencore Xstrata and Sabina, calls for construction of a deep-water port at Bathurst Inlet with connecting roads to the Hackett River project site and to the Back River project site, as well as a future connection to the existing ice road which services the Ekati and Diavik mines from Yellowknife, Northwest Territories.

MMG is also studying a proposed road and port facility to support development of the Izok and High Lake deposits.

Companies focused on diamond exploration in the region in recent years did not carry out significant programs in 2013.

Kivalliq exploration

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

Agnico-Eagle Mines Ltd. continued work in 2013 at two of the largest gold exploration projects in the region, the Meadowbank gold mine and Meliadine project.

At Meadowbank, gold production continued for a fourth consecutive year in 2013 at the Portage and Goose Island pits. Additional exploration work for resource conversion began in April 2012, with the aim of extending the Goose deposit southward into the deeper Goose South deposit and extending the Vault deposit towards the east and southwest. The current mine-life for Meadowbank is estimated to extend through 2017.

The Meliadine property was one of the company's primary exploration focuses in 2013. Meliadine had reserves of 3.0 million ounces gold (13.3 million metric tons grading 7.0 grams per metric ton gold), as well as indicated resources of 2.2 million oz gold (17 million metric tons grading 3.9 g/t gold) and inferred resources of 2.9 million oz gold (15 million metric tons grading 6.2 g/t gold) as at Dec. 31, 2012. Although an internal review undertaken by the company in July is expected to reduce 2013 spending at Meliadine, Agnico said the project would continue to advance with about US$45 million allocated to driving an exploration ramp and exploration drilling.

At least three other juniors mounted robust exploration programs for gold in 2013 in the Kivalliq. They are Northquest Ltd. at the Pistol Bay Gold Project; Prosperity Goldfields at its Kiyuk Lake project and Anconia Resources Corp. at its Atlas Group project.

Uranium exploration in Nunavut in 2013 was centered in the Kivalliq Region, mostly in and around the Thelon Basin. Kivalliq Energy Corp. completed a C$4 million exploration program that included drilling and geochemical sampling at the Angilak Project, which hosts the Lac Cinquante Deposit, Canada's highest grade uranium deposit outside of the Athabasca Basin.

Explorers Cameco Corp. and AREVA, meanwhile, worked to advance their projects at Aberdeen and Turqavik and Kiggavik, respectively.

Kiggavik, owned by AREVA, is the most advanced uranium project in the territory. A final environmental impact statement for that project was submitted to the Nunavut Impact Review Board in 2012.

Cameco planned a C$9 million for regional exploration near Aberdeen and Turqavik in 2012, and results indicate significant grades of up to 3.5 percent U3O8 over 10 meters along the Andrew Lake fault. Drilling results testing for additional mineralization at Qavvik returned grades of 0.5 percent U3O8 over a length of up to 20 meters. The mineralization extends from surface to a depth of 390 meters.

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

Several majors have explored prospects in the Kivalliq in recent years and may have returned to conduct additional work in 2013.

Diamonds and iron

In the Qikiqtaaluk region, Peregrine Diamonds Ltd. was the exploration standout, carrying out a planned bulk sampling in 2013 that is expected to continue into 2014 and discovering additional kimberlites in exploration. In April, Peregrine completed a C$3.5 million bulk sampling program at the CH-6 kimberlite and its partner De Beers Canada commenced a C$2 million exploration program in July that resulted in the discovery of two new kimberlites and indications that kimberlites at Chidliak may have a strong gravity response.

In past years, most exploration spending in the Qikiqtaaluk was devoted to iron, but tight capital markets and the Mary River project advancing toward construction and production, combined to curtail exploration activity significantly during the year.