Iron, diamonds lead Qikiqtani activity

Mineral exploration activity held its own in Nunavut in 2013, despite a tough funding environment and stiff competition from other attractive mining jurisdictions around the world.

Of the mineral projects edging closer to development in the territory, the Mary River iron project is likely the closest to startup. For the past two years, the venture, spearheaded by Baffinland Iron Mines Corp., has headlined mining news coming from the Qikiqtani, the territory's easternmost region.

The Qikiqtani Region is Nunavut's largest administrative unit, covering 1,040,418 square kilometers (401,601 square miles).

Its land mass is mainly islands of the Canadian Arctic archipelago, including Baffin, Devon, Cornwallis, Bathurst, Ellesmere, and many smaller islands.

The northern part of the Melville Peninsula is also included within the Qikiqtani region, as are the Belcher Islands in southeastern Hudson Bay.

Iqaluit, the capital of Nunavut, is located on Baffin Island and is a major center for exploration-related supplies and support services for the region.

Other communities that benefit from exploration projects by providing services, supplies or employees include Igloolik, Hall Beach, Pangnirtung, Pond Inlet, and Arctic Bay.

The hamlets of Clyde River, Cape Dorset, Grise Fiord, Kimmirut, Qikiqtarjuaq, Resolute, and Sanikiluaq are also located in the Qikiqtani region.

Geologically, rocks in the Qikiqtani region host a range of mineral deposits and occurrences, including iron, base metals, gold, platinum-group elements, diamonds, and sapphires. The region has two past-producing mines: Nanisivik on northern Baffin Island, which produced zinc, lead, and silver, and the Polaris lead-zinc mine on Little Cornwallis Island.

Getting it "right" at Mary River

In a 2013 exploration overview prepared by the Mineral Resources Division at Aboriginal Affairs and Northern Development Canada's Nunavut Regional Office, regional geologists summarized mineral exploration, deposit appraisal, and development and related activities throughout 2013 in the Qikiqtani region. Many projects that had been active in 2012 were inactive in 2013. Mineral exploration and deposit appraisal expenditures in the Qikiqtani region for 2013 are estimated at C$13 million, with an additional C$48 million spent on mine complex development by Baffinland Iron Mines at Mary River.

Baffinland was issued a project certificate for the Mary River iron project by the Nunavut Impact Review Board for the second time in late May, culminating an 18-month process of "right sizing" the venture to enable it to advance in the current tough economic climate, according to industry observers.

The Review Board issued the first project certificate for Mary River to Baffinland in December 2012.

However, in January 2013, the company indicated that it wished to pursue a phased development approach to the project.

This strategy postponed the originally-planned production of 18 million metric tons of ore per year and construction of a railway and port facility at Steensby Inlet, in favor of a much smaller initial operation that would produce iron ore at a rate of 3.5 million metric tons per year.

In the initial phase, ore will be transported via the existing Milne Inlet tote road to vessels for seasonal shipping, with the later phases ramping up ore production to 21.5 million metric tons per year and constructing the railroad and port. This plan is estimated to slash the project's initial start-up capital costs to C$740 million from C$4 billion.

The company asked that its original project certificate be amended to allow the changes. The Review Board, however, considered the changes significant enough to require a second public review process to evaluate them.

Baffinland submitted a revised project description to the board in June 2013; this description included additions to the company's final environmental impact statement.

The Nunavut Water Board issued Baffinland a Type A Water License in July 2013.

In early September, the Qikiqtani Inuit Association and Baffinland signed an Inuit Impact Benefit Agreement for the project.

The agreement, which covers items such as education and training, Inuit employment, community support, and a commercial production lease, was under negotiation during the environmental review and water-licensing processes.

A draft plain language guide to the Inuit Impact Benefit Agreement has been published by the Qikiqtani Inuit Association, and the formal agreement was released in December 2013.

Technical review meetings were held in November, with a final hearing for the project proposal in January 2014.

During the 2013 field season an extensive geology and geophysics exploration program was performed across Baffinland's mineral claims and the Inuit Owned Land Exploration Agreement parcel located northeast, east, and southeast of the Steensby Inlet camp site. Due to the proximity of the Steensby Inlet site to the majority of claim blocks that comprised the focus of this field season, exploration work was based out of the Steensby Inlet camp rather than the main Mary River site.

The field program included property and regional scale reconnaissance prospecting, surface sampling, portable XRF traverses, property-scale mapping, ground gravity and magnetic surveys, and a helicopter traverse program.

Undergraduate and graduate thesis projects continued during 2013 and included focused geophysical modeling at Deposit No. 4, research on the origin of the "ore zone schist" at Deposits 1 through 5, and interpretive work on newly defined prospects in the Eqe Bay fold belt. The work at Eqe Bay included evaluation of the claims for base and precious metal potential.

A significant amount of cargo was brought in via sealift during the 2013 season, including nine dry cargo vessels and three fuel vessels. In total, 32,600 metric tons of cargo, 33 million metric tons of diesel fuel, and 2.1 million liters of Jet A fuel was transported.

At Deposit No. 5, Baffinland planned to focus work in 2014 on geophysical surveying and additional surface sampling. Construction of mine-related infrastructure and work on the mine site is underway and is expected to continue through 2014.

Located in northern Baffin Island, the iron mine is expected to produce 3.5 million to 4.2 million metric tons of iron ore annually when it begins operation in 2015. The ore, which will require little or no processing will be shipped from Milne Inlet to markets in Europe.

The Qikiqtani Inuit Association, meanwhile, reported a budget surplus of $7 million for 2013-2014 largely from leases of Inuit-owned land, as well as its Inuit Impact and Benefits Agreement with Baffinland Iron Mines. The association broke even in 2012-2013, after several years of posting deficits.

Diamond district in the making?

On southern Baffin Island, Peregrine Diamonds Ltd. continued work in 2013 on its Chidliak diamond project, including the collection of a 508-tonne bulk sample. Under an option agreement negotiated in 2012, De Beers Canada Inc. funded the 2013 exploration program on the 798,940-hectare property, which is comprised of Crown land and IOL (surface) parcels. Six new kimberlites were discovered in 2013 at Chidliak, which is located 120 kilometers (74 miles) northeast of Iqaluit, on the Hall Peninsula of Baffin Island. Chidliak is the largest diamond exploration project in Nunavut, based on the project's total area and number of known kimberlites.

In October, DeBeers announced that due to market conditions it would not exercise its right to enter into the joint venture agreement on the Chidliak property. As a result, Peregrine said it will continue to advance the project as its 100 percent owner.

Peregrine completed a winter bulk sampling program on the CH-6 kimberlite between February and April 2013. A total of 508 wet metric tons of kimberlite material was collected through surface trenching. In November, Peregrine announced that processing of the bulk sample had been completed and the resulting heavy mineral concentrate would be evaluated for its diamond content.

The $2-million 2013 summer field program, operated by De Beers, included geologic mapping and prospecting and ground geophysics, specifically gravity, magnetic, EM, and ground-penetrating radar surveys.

The program ran from late June to mid-August, and resulted in the discovery of six new kimberlites, one of which was discovered by geologists with the Canada-Nunavut Geoscience Office working on the Hall Peninsula Integrated Geoscience Program.

These discoveries bring the number of known kimberlites at Chidliak to 67.

Kimberlite float which did not correspond to any known kimberlites on the property also was discovered at several locations.

One of these localities, Area B, consists of kimberlite boulders and cobbles with abundant KIMs found over an area of 0.6 square kilometers (0.23 square miles), making Area B a high priority for future exploration.

Initial results from the bulk sample released in December 2013 included a diamond grade of 2.70 carats per metric ton returned from a 222.1-metric-ton subsample that produced 601 carats of commercial-size diamonds (larger than 0.85 millimeters in size). Forty-eight of the diamonds were more than 1 carat in size, with the largest diamond recovered weighing 3.54 carats. A third of the diamonds are white or colorless, while yellow, grey, and brown stones make up another third, and the remaining third are off-white.

In late February, Peregrine reported the final results of an independent diamond valuation for 1,013.5 carats of commercial-size diamonds recovered from the CH-6 kimberlite pipe. At an average price of US$213 per carat, the parcel was valued at US$215,605. The grade of the 404.2-metric-ton bulk sample that yielded the 1,013.5-carat parcel was 2.58 carats per metric ton for diamonds larger than the 1.18 millimeters square mesh sieve size. Within the parcel, the four largest diamonds, weighing 8.87, 5.83, 4.62 and 4.11 carats, had per-carat market values of US$4,076, US$3,455, US$2,900 and US$2,633, respectively.

"The average price per carat and grade of this bulk sample clearly show that CH-6 could have rock value that is comparable with the richest kimberlites currently being mined," said Peregrine CEO Eric Friedland. "We are more confident than ever that planned bulk sampling beginning in 2015 of other known pipes at Chidliak with economic potential could lead to the development of Baffin Island's first diamond mine."

In May, Peregrine reported estimates for a maiden independent NI 43-101-compliant inferred mineral resource for the top 250 meters of the CH-6 kimberlite pipe and additional tonnage as a target for further exploration. Key elements of the CH-6 estimates included an inferred mineral resource of 7.47 million carats of diamonds in 2.89 million metric tons of kimberlite to a depth of 250 meters, an estimated 2.60 million to 3.47 million metric tons of kimberlite classified as a target for further exploration and the kimberlite is open at depth.

In addition, Peregrine reported estimates for the CH-7 and CH-44 kimberlites. The CH-7 kimberlite tonnage estimate is between 2.75 million and 3.97 million metric tons from surface to a depth of 280 meters. The CH-44 tonnage estimate is between 1.16 and 2.05 million metric tons from surface to a depth of 230 meters. Both CH-7 and CH-44 are open at depth. The tonnage estimates that have been identified at CH-6, CH-7 and CH-44 are classified as targets for further exploration and are conceptual in nature.

Peregrine also said insufficient exploration has occurred to define a mineral resource on those targets, and it is uncertain if further exploration will result in the tonnage estimates being delineated as a mineral resource.

In March, Peregrine reported the start of its 2014 exploration and diamond resource definition program at Chidliak. The primary objective of the 2014 program will be to advance three to five kimberlites showing economic potential to the bulk sample stage and to commence logistical preparations for the 2015 bulk sampling program. The objective of the 2015 bulk sampling program will be to confirm sufficient diamond resources to enable commencement of a pre-feasibility study for Baffin Island's first diamond mine. The approved budget for the 2014 program is C$7 million.

Peregrine plans to advance additional kimberlites to the bulk sample stage in 2014 by completing a program of core drilling on these pipes. In addition, thorough exploration will be focused on discovering new kimberlites with economic potential in a priority area that includes the CH-6, CH-7 and CH-44 kimberlites. The 2014 program is expected to be completed in September.

Search for base metals

At the Storm copper-zinc-silver project, located on the northwest coast of Somerset Island, Aston Bay Holdings reported in January 2013 that it had acquired a database containing unreleased technical data from Teck Resources Ltd .; this data was used to plan the 2013 work. The database includes results from 15,000 meters of drill core, more than 7,400 soil and sediment samples, and geophysical data, including results from a 3,970 line-kilometer electromagnetic survey.

Aston Bay, which optioned the Storm property from Commander Resources Ltd. in 2011, said exploration at Storm in 2013 consisted of soil sampling, re-sampling of historical drill core and modeling of the results, and identification of targets for future sampling and drilling. Highlights from the core re-sampling include 1.79 percent copper over 49 meters from surface in the 2200N Zone, and 110 meters grading 2.45 percent copper from surface and 56 meters grading 3.07 percent copper from 12.2 meters in the 2750N Zone.

On the Seal Zinc prospect, the company collected a 200 kilogram mini-bulk sample for metallurgical analysis. In November 2013, the company announced results from analyses of historic drill core from Seal Zinc, including significant results from hole AB95-02 of 10.58 percent zinc over 18.8 meters, and from AB95-03 of 6.62 percent zinc over 22.1 meters.

Under the terms of the joint venture with Commander Resources, Aston Bay must conduct C$6 million worth of exploration work on the properties by December 2015 to earn a 50.1 percent interest in the project. This includes C$1 million per year in 2012 and 2013, and C$2 million per year in 2014 and 2015.

Further work on the project will include integration and analysis of historical datasets with data collected in the 2013 season. Preparation of a NI 43-101 resource estimate and further drilling is planned for the Storm prospect, though timelines have not been set.

Aston Bay Holdings reported in late May that it has entered into an agreement for a period of exclusivity with a major mining company with a public market capitalization in excess of US$10 billion. The exclusivity period will last until the execution of an earn-in agreement and/or a memorandum of understanding or June 30, whichever is earlier. The exclusivity agreement is an initial step towards the proposed MOU to form a joint venture on the Storm Copper and Seal Zinc projects.

"Aston Bay has been actively seeking a partner to advance the Storm project, and we are excited to have attracted the interest of a major mining company with a track record of successfully developing and operating mines," said Aston Bay President and CEO Benjamin Cox. "Our discussions with the major have advanced to the stage that both parties felt it was appropriate to enter into an exclusivity agreement in order to negotiate and document the final terms of the MOU."

Aston Bay also reported June 11 that it has amended an MOU with Lyncorp International Ltd. a company wholly-owned by David Mullen, to purchase equipment including four Christensen CS10 Core Drills and accessories. The closing of the transaction will now occur after the end of the period of exclusivity between the company and the major mining company.

Another diamonds hunt

North Arrow Minerals Inc. acquired the Mel project in August 2013. The project consists of five prospecting permits covering about 73,865 hectares (182,520 acres), and is part of an option agreement with Anglo Celtic Exploration Ltd., along with the Luxx diamond project in the Kivalliq region. Previous exploration in the area was focused on base metals and nickel-copper-PGE occurrences, but North Arrow's current exploration focus is on diamonds.

The main exploration targets at Mel are two KIM trains whose sources are currently undefined. These KIM trains include eclogitic garnet and pyrope garnet, both of which can be indicative of diamond presence in a kimberlite. The company undertook an airborne magnetic survey in July and August 2013 of the two target areas and acquired the historical till sampling database. A review of the database has confirmed that both mineral trains consist of high interest pyrope and eclogitic garnets, as well as kimberlitic ilmenite. Exploration plans for 2014 include prospecting of targets identified from the 2013 magnetic surveys and additional till sampling.

At Luxx, North Arrow's 2013 exploration work consisted of an airborne magnetic survey and the collection of 64 till samples.

A number of high-priority targets have been identified from the magnetic survey, including several targets located immediately up ice of the KIM trains.

Results from the 2013 till samples have confirmed the historic till sample results, and include two highly anomalous samples (pyrope garnet plus ilmenite) located immediately down ice from the highest-priority magnetic anomaly.

Follow up evaluation work for 2014 will include additional till sampling and detailed prospecting of the highest priority target areas, as well as the acquisition of required permits for a spring 2015 drilling program.

Projects with future prospects

Canada Coal Inc. holds 68 coal licenses in the high Arctic, 59 of which are currently active and nine of which are pending. The licenses occupy a total area of 786,189 hectares on Ellesmere and Axel Heiberg Islands. Although the company had planned an exploration program in 2013, no work was done on the property. However, Canada Coal continues to plan for a future drilling program on the Fosheim Peninsula and Vesle Fiord prospects.

West Melville Metals Ltd.'s Fraser Bay project is located on the western coast of the Melville Peninsula. The project, whose tenure is held by Roche Bay plc, consists of a single mineral lease covering 1,306 hectares (3,227 acres) of Crown land. A drill program on the lease was under consideration for the 2013 season, but no work on or results from the project have been reported.

In February, West Melville Metals elected to exercise its right under an amendment to the Fraser Bay Option Agreement with Roche Bay plc by issuing 200,000 shares to Roche Bay. Under the terms of the amendment, the dates by which the first and second options must be exercised have been extended from Sept. 30, 2013 to Dec. 1, 2014 for the first option and from Dec.31, 2015 to April 15, 2017 for the second option.

"We very much appreciate the cooperation of Roche Bay in concluding this arrangement," said West Melville Metals President and CEO Rory Moore, Ph. D. "Both parties recognized that it would be challenging to finance a significant exploration program at Fraser Bay under current market conditions and concluded that delaying exploration work and preserving the capital structure of West Melville would be in the best interests of all stakeholders in the long term."

At the West Melville Project, meanwhile, Vale Canada Ltd. acquired mineral tenure in 2011 to explore for nickel, copper and PGE. The project, at Adamson River on the Melville Peninsula, currently consists of 28 mineral claims, which were acquired based on a nickel discovery reported by the Geological Survey of Canada as part of its Geo-mapping for Energy and Minerals project, which ran from 2009 to 2011 on the Melville Peninsula.

Vale also holds a Nunavut Tunngavik Inc. Exploration Agreement for subsurface Inuit Owned Land parcel HB-09.

From June to August 2013, Vale Canada carried out a field program. Activities included drilling and ground geophysical surveys. Five drill holes were completed on two ultramafic targets for a total of 1,308 meters of core. Down-hole EM surveys were completed on four of the drill holes. A 21 line-kilometer EM ground geophysical survey also was conducted. No results from the 2013 field program have been released to date.

Advanced Explorations Inc.'s Roche Bay and Tuktu properties are located on the east coast of the Melville Peninsula. The project consists of four mineral leases and 45 mineral claims at Roche Bay and 16 claims at Tuktu. The iron formations on both properties were discovered during regional exploration by the Geological Survey of Canada in

1968. In August 2012, the company released a positive feasibility study on the Roche Bay C-Zone, based on production of 5.5 million metric tons per year of a 66 percent iron concentrate, over an estimated mine life of 15 years.

A year later, Advanced Explorations reported results of a comprehensive review of the drilling programs, sample results, and other data from the Roche Bay and Tuktu projects. This review determined that there is significant potential for direct-ship ore at both locations and identified high-priority targets for future sampling and drilling work. No other results or work done were reported for 2013.

Other inactive projects in the region include Commander Resources Ltd.'s Baffin Island Gold Project; Advanced Explorations Inc.'s Anik copper-nickel project, on the Melville Peninsula; Peregrine Diamonds Ltd.'s Qilaq diamond project; the Aviat diamond project, a joint venture project 90 percent owned by Stornoway Diamond Corp. and 10 percent owned by Hunter Exploration Group.