Mining Explorers 2013: Rich resources spur project investment

Northwest Territories continued to benefit in 2013 from a recent surge of exploration interest. A vast expanse of mountains, forests and tundra that is roughly two-thirds the size of Alaska, the territory covers 1.17 million square kilometers (431,162 square miles).

"We have, in the North, what the world wants - what emerging markets need," Northwest Territories Premier Robert "Bob" McLeod told an audience at a Prospects North gathering in Yellowknife Sept. 11.

"We are the third-largest diamond producer in the world. In fact, diamonds account for almost a quarter of our territory's GDP. We already export US$2 billion annually in diamonds alone. And we are a territory of 45,000 people," he continued. "We have gold. We have silver. We have bismuth, rare earth metals, cobalt, lead, (and) zinc. The vast majority of our mineral reserves are not even being mined. There is so much potential."

While the Northwest Territories has no shortage of mineral resources, McLeod said the sparsely populated northern jurisdiction needs capital investment and infrastructure to harness the full economic potential of its mineral wealth.

But change is in the wind.

"The world is taking notice of the Northwest Territories' mineral potential," said Tom Hoefer, executive director of the NWT & Nunavut Chamber of Mines.

With a ranking of 29 among the world's most attractive jurisdictions for mineral exploration and development and the best overall improvement in Canada, Hoefer observed that the Northwest Territories was a standout in the Fraser Institute's 2012-2013 annual survey of mining companies.

He said Northwest Territories, together with its neighbor Nunavut, is a land of tremendous mineral potential that is under‐mapped and under‐explored. Eight geological provinces spell diverse mineralogy - gold, silver, diamonds, lead, zinc, uranium, tungsten, rare earths, cobalt, bismuth, nickel, copper, iron, etc.

Though US$60 billion worth of mineral products have been mined in the region since 1932, Northwest Territories currently has only four operating mines - the Ekati, Diavik and Snap Lake diamond mines and Cantung, the largest producer of tungsten concentrate in the West.

Devolution, a key to prosperity

The Northwest Territories' economic growth was forecast to increase by a 0.2 percent in 2013, and be followed by stronger 2.6 percent growth in 2014, according to a March report by the Conference Board of Canada. Though relatively modest, this growth would be an improvement over declining real GDP experienced in territory in 2011 and 2012.

Concerted efforts by government, industry and Aboriginal communities in the territory throughout the year resulted in significant changes that bode well for the future. This includes aggressive initiatives to remove regulatory bottlenecks that previously clogged the territory's mine project review process; a formal mineral development strategy being advanced by the territorial government, ongoing work by regulatory boards to improve internal systems and efforts of the chamber of mines and the government to engage Aboriginal communities.

In addition, plans are being advanced for improvements in transportation infrastructure, land use, geoscience and training investments

In July, the Government of Canada signed a final devolution agreement with the Government of Northwest Territories and five of the territory's seven Aboriginal governments (Inuvialuit Regional Council, NWT Metis Nation, Gwich'in Tribal Council, Sahtu Secretariat Incorporated and Tlicho Government).

"You will have heard that it is an agreement about the administration of land and resources, but it is more than this. At its heart, devolution is about prosperity and partnerships. It is about the Government of the Northwest Territories and regional Aboriginal governments working together to turn the enormous resource potential of this territory into jobs and economic opportunities for the people of the North and the people of Canada," McLeod said in September.

Beginning on April 1, 2014, the people of the Northwest Territories will become responsible for all decisions related to public lands and resources, including how to protect the environment.

"It will mean access to new revenues and a new measure of fiscal independence that the Government of the Northwest Territories can use to invest in the people of this territory, the economy and the environment. Make no mistake: for the Northwest Territories, this is a game-changer. Devolution is the key to a new era of prosperity," McLeod predicted.

Progress in mine development

The prospect of new mines going into production in the near future in the Northwest Territories brightened considerably as a quartet of northern projects passed significant regulatory and approval milestones in 2013. They include:

Canadian Zinc Corp. secured approval in September from Minister Bernard Valcourt of Aboriginal Affairs and Northern Development (Canada), for a Type "A" water license for the company's Prairie Creek Mine project (The company also secured a land use permit and Type "B" water license for the construction and operation of part of an access road for the project from Parks Canada Sept. 5.);

Gahcho Kué diamond project, which received a recommendation July 19 from the Review Board to the Federal Minister of AANDC to advance the project to permitting and licensing (Gahcho Kué is owned by a 51/49 percent joint venture between De Beers Canada Inc. and Mountain Province Diamonds.);

Fortune Minerals Ltd.'s NICO base and precious metal project, which won approval July 19 by from the Federal Minister of AANDC and the Tlicho Government to proceed to the permitting and licensing stage; and,

Avalon Rare Metals Inc.'s Nechalacho rare earth elements project, which secured the Review Board's recommendation July 26 to the Federal Minister of AANDC to advance to permitting and licensing.

"We are very encouraged to see these projects moving closer to becoming mines, and we thank the regulatory agencies and the Minister of AANDC for their efforts," said Cathie Bolstad, president of the NWT & Nunavut Chamber of Mines. "While the minerals industry is currently facing significant financial and commodity price challenges globally, the continued advancement of these and other significant northern projects helps invite investment to the Northwest Territories and Nunavut. This will help sustain and grow our industry which is a significant provider of economic opportunities and benefits to northern residents and Canada."

Significant exploration dollars

A downward trend in mineral exploration activity seen throughout the mining sector in 2013, especially among juniors, also burdened many projects in Northwest Territories, despite earlier predictions that investor interest might spur investment in various prospects during the year.

Some projects, however, saw substantial exploration dollars. These include the Gahcho Kué, Nechalacho rare earth elements and Courageous Lake projects where winter exploration commenced in February.

At Gahcho Kué, geotechnical drilling related to planned surface infrastructure was followed in April by drill testing of 15 priority geophysical targets.

At the Nechalacho project, Avalon began a brief definition drilling program Feb. 5. The objective of the program was to complete additional in-fill drilling near the planned underground crusher location, within stopes designed to be mined in the first few years of mine life. Avalon sought to update a resource estimate for the project and to complete a feasibility study in the second quarter of 2013.

At Courageous Lake, Seabridge Gold Corp. began core drilling the high-grade Walsh Lake gold target in February. With C$3.1 million budget for the winter program, the junior aimed to complete 16 holes totaling 7,400 meters in hopes of generating an initial resource estimate for the newly discovered Walsh Lake deposit.

North Arrow Minerals Inc. Oct. 3 reported that its option partner, Dominion Diamond Corp., mounted a C$3 million exploration program at the Lac de Gras Diamond Project as part of an agreement to earn a 55 percent interest in the Lac de Gras property by incurring C$5 million in exploration expenditures prior to September 2016. North Arrow said results of the two-phase program of drilling and sampling will be used in planning a 2014 exploration program.

Kennady Diamonds Inc. conducted a 5,000-meter winter drill program and 3,000-meter summer drill program at its Kennady North Project that returned very encouraging results, including an exceptional sample grade of 8.44 carats per metric ton in a bulk sample from one of two diamondiferous kimberlites. Kennady is located immediately north and west of the Gahcho Kué diamond project.

Canadian Zinc focused in 2013 on developing its advanced-staged Prairie Creek zinc-lead-silver property, and commenced a five-hole, 2,500-meter diamond drill program in September to test a large multi-stacked gravity and electromagnetic geophysical anomaly believed to be 200-450 meters below surface and situated about one kilometer (0.62 mile) from the Prairie Creek mine site and outside, but adjacent to, the defined mineral resource.

Though Avalon budgeted C$21.2 million for spending in fiscal 2013 and another C$2.1 million for the remainder of the 2013 calendar year, most of the funds were directed to development at Nechalacho and only a fraction toward exploration. A 2013 winter drill campaign completed 12 HQ holes totaling 1,977 meters, while an additional four holes totaling 1,000 meters of definition drilling was completed by mid-August. Avalon planned to incorporate results from both drilling programs into a updated mineral resource estimate in late 2013.

Smaller exploration programs

Some juniors outlined extensive exploration campaigns for 2013, but had to scale the programs back when they encountered difficulty raising sufficient capital in the current tight financial markets to carry out the programs.

Darnley Bay Resources Ltd., for example, had to scuttle plans for a C$8 million drilling campaign for 2013 (seven targets). The junior, however, did conduct a much smaller program of geological and geophysical surveying and rock sampling.

One junior, TerraX Minerals Inc., bucked the general sector trend of scaling back to wait out the capital drought by boldly purchasing the 3,562-hectare (8,802 acres) Northbelt gold property located about 15 kilometers (nine miles) north of Yellowknife out of receivership in January and then picking up additional property in the Yellowknife gold camp by purchasing the adjacent 250.82-hectare (619.8 acres) Goodwin property from Sonde Resources Corp. in May to expand the Northbelt property.

Northbelt abuts the Giant Mine property (historical production of 7.6 million ounces gold), and is directly north of the historic mine along the known mineralized trend. It contains several known occurrences, including the Crestaurum deposit, which has an historic resource of 290,000 metric tons of 7.52 grams per metric ton gold (source: Treminco Annual Report, 1990), the Goodwin property has known gold showings, according to government records.

"TerraX has been looking for an opportunity to acquire a property with historical resources in a major mining camp," said TerraX President Joe Campbell.

"The Northbelt property meets this criteria, and has the added advantages of being easily accessible to Yellowknife infrastructure; has a clear 100 percent ownership of mine leases with low annual property fees; contains numerous showings with minimal historical exploration; has a maximum drilling depth of only 100 meters on the Crestaurum deposit; is over an established geological extension of the known mineralized trend from the multimillion-ounce producers; and has a geological context similar to the Con Mine, which was mined to almost 1,900 meters depth."

Following a positive due diligence study, I believe acquisition of this property will be a turning point for TerraX's future," Campbell added.

During the 2013 field season, TerraX completed an airborne geophysical survey and field exploration program as well as extensive resampling and re-logging historic drill core at Northbelt.