Quebec gov’t stakes nickel as private sector looks on

Traditionally, in Canada, provincial and federal geologists assist the mining industry by mapping virgin areas and releasing information about prospects and showings that often point the private sector in the right direction. The key to the process, of course, is that the surveyed lands are then made available for companies to stake and drill.

Recently, however, the Quebec government added a twist to the regular routine when, much to the dismay of the resource companies exploring that part of the province, it staked a set of claims itself and temporarily froze out the private sector from the area surrounding a new base metal find.

In August, a team of government geologists led by Andre Gobeil of Quebec’s natural resources ministry stumbled upon a gossan while completing a program of 1:50,000-scale mapping in the vicinity of Lac Manitou, northeast of Sept-Iles. Geologist Serge Perreault landed at the site and took hand samples from the gossan, returning later to take additional channel samples and sample a second gossan nearby.

On the first gossan, which is 16 metres wide and 30 metres long, assays returned 2% nickel, 2.3% copper and 0.12% cobalt.

The second gossan, of which a 6-by-10-metre portion is exposed, yielded one channel sample grading 2.2 % nickel and 1.5% copper and a second grading 1.4% nickel and 5.9% copper.

Between the two showings is a 40-metre-wide mineralized gabbro containing up to 20-30% sulphides. Samples from the gabbro contain up to 1.5% copper but no nickel concentrations over 1%.

Perreault says his department does not yet know how the two showings relate to each other geologically, nor can it estimate the size and depth of the base-metal mineralization at this time. A grid is to be cut in preparation for geophysical surveying of the area, and a lake-sediment geochemical survey is also planned. Perreault expects all planned work to be completed by the end of October.

“I don’t know any other place on the North Shore with 2% nickel. It’s promising, and we hope there’s something bigger beneath it, but we don’t know.”

Perreault is quick to point out that it would be premature to speculate whether the discovery is comparable to Voisey’s Bay, the huge nickel-copper-cobalt deposit some 600 km to the northeast in Labrador.

“It’s not a troctolite, and it’s not associated with anorthosite, so there’s nothing very similar to Voisey’s Bay,” he says.

At the North Shore showings, the mineralized gabbro cuts gabbronoritic country rock. And while it is wholly within the Grenville province, Voisey’s Bay straddles the Nain-Churchill provincial boundary.

As soon as news of the base metal find reached government officials in Quebec City, an 800-sq.-km parcel of land centred on the showings was withdrawn from staking.

“We wanted to control the information that comes out of there . . . and make sure there was no information leaked to any company,” explains Jean-Louis Coty, director of Quebec’s geological survey. “The way to protect our own interests was to withdraw the area from staking.”

Withdrawing the land from staking, he conceded, “is unusual, and we don’t intend to do it every day. But the politicians decided to play it safe.” Coty says claimstaking eventually will be permitted in the entire 800-sq.-km area, but no timetable has been set. “We want to be able to do our survey work in peace, we want to be able to fly the area, and we’ll make that information public as fast as we can.”

While no company is permitted to stake claims in the area, the government of Quebec has staked more than 80 claims centred on the showings.

Coty says that, in accordance with Quebec mining law, if a government geologist finds a major showing, “the first thing he does is stake it for the Crown.”

As for the fate of the claims staked by the government, he says, “We’re going to option it off one way or another. We’re looking at different scenarios . . . but we’re buying time now to figure out how we’re going to do it.” He adds that giving the claims to the province’s own exploration company, Soquem, is one possibility.

As for the significance of the find, Coty says, “I’ve seen a lot of showings in my life, and you can count this with the good ones. It’s the right type of ore, the right context, it’s very large and the grades are there.” Nevertheless, he cautions, “Right now there are zero tonnes there. It’s one helluva nice showing, that’s all it is.”

While no claims have ever been staked in the area withdrawn from staking, Virginia Gold Mines (VIR-M) and St. Genevieve Resources (SGV-T) have separately been working in the vicinity for several years. Both companies staked claims around the perimeter of the withdrawn lands after the Quebec government released its findings, but Virginia and St. Genevieve officials are not happy with the government’s actions.

While he does not object to the Quebec government’s staking of the claims covering the showings, Virginia’s vice-president of exploration, Paul Archer, says withdrawing the much wider area from staking was not necessary to ensure fairness, as government officials claim.

`Unfair’

“It would have been as fair if they had just made the announcement and left all the area open for staking on the day of the announcement. It’s the normal rules of the game . . . where it becomes a matter of who reacts most quickly.” St. Genevieve President Pierre Gauthier sarcastically compared the Quebec government’s withdrawal of the 800 sq. km on the North Shore to the use of the War Measures Act by the federal government during the October Crisis of 1970. He says the government’s actions will serve as a disincentive for capital investment.

“It’s ridiculous. What does this do for the whole notion of capital markets when you go and spend a million dollars in an area, then the government comes and sees what you’ve got and takes the area around it once it sees something? I don’t get treated this way in Africa. Governments don’t pass decrees to jump areas when they get hot.”

He says he cannot understand what would have been unfair about simply announcing the location of the showings and letting mining companies take it from there. Now, he says, the clear edge that St. Genevieve and Virginia had over other potential claimstakers in the area has been taken away.

“I expect to be having very constructive conversations with the government.

If they find a way to let us be one of the key participants, I don’t have a problem with this. But if ever we weren’t involved in how this thing gets settled, I’d be protesting very seriously.

“If the thing plays out fairly, then they did the right thing. But if it goes to an auction process and they sell this to Barrick [Gold], then they didn’t do the fair thing.”