Mining in northern territory to rebound

Nunavut is one jurisdiction in Canada with a favorable economic outlook in the face of the COVID-19 pandemic, according to a recent economic analysis completed by the Conference Board of Canada.

The reason: Nunavut's mining sector, which remained mostly intact in 2020, accounted for more than one-third of its economy, a higher share than in every other Canadian province or territory.

Projected to have expanded 6.1% last year, Nunavut's economy is forecast to grow 13.2% in 2021, marking the territory's fifth and sixth consecutive years of economic growth greater than 5%, the Conference Board reported.

Though the pandemic stunted the territory's economic growth in 2020, especially in the mining sector, the economists say the effect will likely be temporary.

Though projected to increase by nearly one-third in early 2020, mineral production in Nunavut fell short of that target, climbing only 18.6% during the year due to scaled-back output at the territory's gold mines. Output totaled about 600,000 ounces of gold in 2020, down from 890,000 oz forecast earlier in the year.

Baffinland Iron's Mary River mine remains a bright spot in the territory's mining outlook, according to the Conference Board.

In 2018, Canada approved the company's application to increase its annual shipments of iron ore from 4.2 million metric tons to 6 million metric tons through 2019. In March 2020, the higher limit was extended until the end of 2021.

While Baffinland Iron has sent Nunavut-based workers home temporarily due to the pandemic, the reduced work force is not expected to affect its iron ore production.

According to the Board economists, mining operations in Nunavut in 2021 are expected to be fully recovered from the COVID-19 crisis. As a result, many of the gains projected for 2020 will be realized this year, and output in the sector is expected to increase by 34.4% in 2021.

Beyond next year, Sabina Gold & Silver Corp.'s developing gold project at Back River is expected to give mining a boost in Nunavut.

However, the company has deferred drilling at the site due to the COVID-19 pandemic, and production startup for the project is expected to be delayed by one year to late 2023, according to the Conference Board.

Hope Bay sale advances

Agnico Eagle Mines Ltd., owner of Nunavut's two operating gold mines – Meliadine and Meadowbank – moved one step closer Jan. 20 to acquiring TMAC Resources Inc., co-owner and operator of the Hope Bay gold mine property in western Nunavut when an Ontario Superior Court judge agreed to sign off on amendments to an original contract that had China-based Shandong Gold Mining Co. as the buyer.

The amendments also increased the sale price by a 26% premium to C$2.20 per share on Shandong's original offer of C$1.75 per share.

TMAC and Shandong, a Chinese-state owned company, agreed in May to the sale of the Hope Bay property, but the Canadian government rejected the deal in late December because of national security concerns.

Hope Bay is an 80-kilometer-by 20-kilometer Archean greenstone belt that has been explored by BHP, Miramar, Newmont and TMAC for more than 30 years. In that time, more than C$1.5 billion has been spent on exploration and evaluation, surface infrastructure, and mine and process plant development.

TMAC began producing gold in early 2017 from Doris, its first mine at Hope Bay, and processed gold at the Doris processing plant, which originally had nameplate capacity of 1,000 metric tons per day and expanded to 2,000 tpd midway through 2018. There is potential to grow TMAC's established deposits considerably at depth, and then increase resources further through prioritized exploration of the more than 90 other identified regional targets. TMAC also is permitted to produce gold from both the Madrid and Boston deposits at Hope Bay.

During the Jan. 20 court hearing, held over Zoom, TMAC's legal counsel said Agnico Eagle is best positioned to develop and operate the Hope Bay mine property and is likely the only company that could complete the transaction in a timely fashion.

The gold miner stepped forward with a non-binding bid immediately after Canada rejected Shandong's proposal. By using the same offer, Agnico Eagle and TMAC were able to bypass another round of shareholders' meetings to approve the new transaction, thus expediting the sale. Some 97% of TMAC's shareholders agreed to the original deal.

TMAC's advisers concluded that Agnico Eagle's offer was positive, and it would address the company's balance sheet challenges. The company has outstanding debt exceeding $117 million, plus millions more in related fees and interest.

The companies finalized the sale Jan. 4, and it has been approved under Canada's Competition Act.

With the final court order, Agnico Eagle expects the deal to remain on track for completion by Feb. 8.

Observers, meanwhile, hailed the sale as good news for Nunavut and for the Kitikmeot Region where Hope Bay is located, citing Agnico Eagle's positive impact on Nunavut communities in the Kivillaq Region where the Canada-based gold mining company's existing Nunavut operations mines are located.

Sabina updates resource

Sabina Gold & Silver Corp., operator of the brightest gold prospect on Nunavut's horizon, recently reported an updated mineral resource estimate at its Back River gold project.

Resources for the project now total 6.32 million oz (33.45 million metric tons at 5.88 grams per metric ton) in the measured and indicated categories and an additional 2.86 million oz (13.794 million metric tons at 6.44 g/t) in the inferred category.

The junior said the 2020 mineral resource estimate will be incorporated into an updated feasibility study for Back River due later this quarter.

Since the last mineral resource estimate in 2014, drilling has focused on discovery and delineation of several new high-grade mineralized zones within the Goose Site. The company said it succeeded in increasing the resource estimate in all categories at an all-in cost of less than C$25/oz gold, further demonstrating the tenor and strength of gold mineralization at Back River.

Major milestones for the Goose Site reported in the Jan. 20 update include initial mineral resource estimates for the Nuvuyak and the Llama Extension deposits, adding about 1 million oz of gold to inferred resources at an average grade of 7.52 g/t gold. In addition, an updated mineral resource estimate at the Umwelt deposit added roughly 885,000 oz gold in the measured and indicated categories.

The Back River mineral resource estimate, which includes both the Goose and George sites, has seen significant increases since it was last published in 2014. Overall, 988,000 oz have been added to the measured and indicated estimate, an increase of 18.5%; and more than 1 million oz added to the inferred estimate, a 54.3% increase.

"Since our acquisition of the Back River project in 2009, Sabina has delivered tremendous growth in the global resource for the project, along with an improved understanding of the geologic model," said Sabina Gold President and CEO Bruce McLeod. "With over 565,000 meters of drilling completed, these deposits are well understood with the majority of the resources in the M & I categories. While the 2020 drilling season was limited due to COVID-19 restrictions, I am pleased that we were able to complete inferred resource estimates on the new discoveries at Nuvuyak and Llama Extension.

"Historically, we have seen a conversion rate of approximately 73% when upgrading mineral resources to mineral reserves, and we expect a similar rate when converting these new discoveries into mineral reserves in the future," McLeod added.

Other explorers make advances

Blue Star Gold Corp. Jan. 14 reported final assay results from 7,621 meters drilled in 38 diamond drill holes during 2020 exploration at its Ulu and Hood River properties in western Nunavut. Ten holes were drilled at the Ulu and Gnu Zone deposits to expand known resources and provide data for resource modeling, and 28 holes were drilled to test exploration targets on both the Ulu and Hood River properties, including 14 in the North Fold Nose (NFN) Zone.

Drilling highlights include 14.95 g/t gold over 13.8 meters in the upper zone and 9.65 g/t gold over six meters in lower zone at Flood.

Blue Star said a comprehensive compilation of all technical data for the projects is ongoing in pursuit of an updated geologic model for the Flood and Gnu deposits to be followed by an updated resource estimate for the projects, plus an initial resource estimate for NFN Zone.

Fury Gold Mines Ltd. reported plans Jan. 13 to resume exploration in 2021 of its Committee Bay Project with a minimum of 10,000 meters of drilling aimed at expanding the Three Bluffs deposit and drill testing several new targets during the summer season. The project is located about 180 kilometers (112 miles) northeast of Meadowbank mine.

In 2020, Fury's technical team refined targeting for Committee Bay, outlining potential areas to expand the Three Bluffs resource in addition to several mature regional targets, each with the potential to be a new major discovery, the company said.

"We will continue to apply our systematic exploration approach as we advance our entire project portfolio in 2021 and position our shareholders to also benefit from the large-scale exploration programs planned later in the year," Fury explained.

The company said it will pursue a discovery-focused drill program within the 300-kilometer-long (186 miles) Committee Bay Gold Belt to advance toward the goal of developing a five-million-oz resource base at Committee Bay.