Alberta Benefits From Cross-Border Exploration

At the end of Dec. 31, 2008, companies had staked 11.9 million hectares for industrial and metallic minerals in Alberta. In 2008, about 3.1 million hectares of new staking occurred along the Alberta-Saskatchewan border in response to the accelerating global potash market. In addition, a resurgence of diamond activity in the Buffalo Head Hills field resulted in the discovery of new diamondiferous kimberlites and the emergence of new operators in the area. Uranium activity continued in northern and southern Alberta, there was renewed interest in polymetallic shale in northeastern Alberta and base metals in the northwestern parts of the province. Throughout 2008, there was an ongoing assessment of the Clear Hills iron, the Burmis magnetite and in situ coal gasification potential.

Uranium -Southern Alberta

Uranium occurrences have been reported in the Upper Cretaceous and Tertiary formations in southern Alberta since the early 1980s. The increased demand for uranium in the global market spurred the staking and exploration activity in southern Alberta for the last four years. Southern Alberta is an exploration ground for sandstone- hosted uranium deposits because of its similar geology to the uranium- producing clastic sedimentary basins in Wyoming and Colorado. In 2008, detailed information about the exploration activities became available through newly released mineral assessment reports. These reports are available from the Alberta Geological Survey.

North American Gem drilled 378 metres in five reverse-circulation holes on the Whiskey Gap property located along the Canada-U. S. border. Samples were collected from two of five reverse-circulation holes. The samples were submitted for analysis and results are pending.

Firestone Ventures announced that geophysical modelling of the initial dataset from the company’s airborne geophysical survey in southwestern Alberta, south of Ft. Macleod, was successful in identifying buried stream channels on four priority areas.

The airborne geophysical survey was flown to identify pre-glacial paleovalleys (buried stream channels) on four priority areas covering favourable stratigraphic, hydrological and structural settings. Fugro Airborne Surveys completed an electromagnetic and magnetic survey in 2007. TerraNotes carried out Radarsat Imaging Analysis and interpretation of preliminary data, followed by modelling using the airborne survey data. Conductive trends on two of the properties and indications of an oxidation-reduction-front may be indicative of a roll-front-style uranium deposit formation.

Fission Energy performed a reconnaissance scintillometer survey and sampling program on the Fort Macleod property. The company took 13 samples and 105 scintillometer readings from the outcrops. Geophysical log review of microfilms from 151 oil and gas wells was completed from holes north and south of Claresholm.

Soil, water and rock sampling was conducted over portions of the property. A total of 233 soil, 2 stream- sediment, 19 well-water and 28 rock samples were collected. In addition, a 1,027 radon cup (AlphaTrack) survey was completed over select portions of the property.

A total of 14,414 line-km of airborne radiometric and magnetic surveys were flown over portions of Fort Macleod. The intent of the survey was to map areas of anomalous radioactivity and to outline paleochannels.

Uranium -Northeastern Alberta

The Proterozoic Athabasca basin, which hosts the richest uranium deposits in the world on the Saskatchewan side of the border, is also being explored in the northeastern corner of Alberta. The mineralization occurs near the unconformity between the deformed crystalline basement of the Archean and Early Proterozoic and flat-lying fluvial deposits 1.6 billion years old. In Alberta, the Maybelle River Shear Zone hosts disseminated to high-grade uraninite, with one intersection of 21% U3O8 over 5 metres. In 2008, companies reported the following activity in the Alberta portion of the Athabasca basin.

Red Dragon Resources has planned a ground electromagnetic survey on some of the high-priority targets, discovered by drilling in 2007 on the Rea uranium project. Three of eight holes intersected significant alteration and anomalous concentrations of uranium in sedimentary rocks immediately above the unconformity with the underlying basement pegmatite. The objective of the 2008 program was to map more precisely the intersection of the basement fault structures and the unconformity with the overlying sedimentary rocks.

Fission Energy 2007-2008 exploration program began with a 696 line- km, airborne, high-resolution, magnetic and electromagnetic (VTEM) survey in the northeastern part of the North Shore project, and concluded with a 7-hole spring drilling program totalling 1,260 metres. The exploration program successfully identified a significant hydrothermal system associated with a major northeast-trending structure. Strong alteration and radioactivity were intersected along this structure at down-hole depths reaching 185 metres, with widths ranging from less than one metre to 8.5 metres. The basement-hosted altered zones contained highly anomalous concentrations of geochemical pathfinders and included uranium values ranging as high as 70.5 parts per million (ppm) uranium.

Four holes (DDH: NS08-002, 003, 004 and 007) encountered geochemically anomalous intervals ranging in width from 0.5 metre to 8.5 metres with uranium values as high as 70.5 ppm in (NS08-004) associated copper values (to 984 ppm copper in NS08- 007), and occasionally anomalous zinc (to 216 ppm zinc in NS08-003). Hole NS08-007 returned copper values of 305 ppm over 3.5 metres from 38 to 41.5 metres. Holes NS08-002, 003 and 004 intersected intervals of significant structural and hydrothermal alteration, and encountered mineralization over drill hole widths of 0.5 to several metres in basement rocks. Holes 003 and 004, spaced 1.2 km apart, intersected strong pervasive alteration and intermittent mineralization between depths of 72 to 99 metres. Hole NS08-007, located 850 metres northeast of NS08-004 along an inferred structure, contained significant intermittent copper anomalies between 70 and 79 metres (up to 984 ppm copper), which corresponds with other anomalous geochemistry and radioactivity observed in NS08- 002, 003 and 004.

The Alberta Project is on the west side of the Athabasca basin, covering the western arm of Lake Athabasca. It is a 20 x 90 km block of 13 permits that stretches from the Saskatchewan border to just north of Fort Chipewyan. CanAlaska Uranium has carried out airborne and marine geophysical surveys in previous years. Detailed follow up work was carried out over major prospective areas during winter 2008.

Fission Energy reported that they completed ground electromagnetic surveys over targets identified from airborne geophysical surveys. The Athabasca South Shore property is along the southwestern shore of Lake Athabasca, stretching from Wood Buffalo National Park on the west and to the Alberta-Saskatchewan border on the east.

Diamonds

The Buffalo Head Hills kimberlite field, located about 380 km north of Edmonton, is the third largest known district of significantly diamond-bearing kimberlites in Canada, after Lac De Gras in the Northwest Territories and Fort la Corne in Saskatchewan. New 2008 kimberlite discoveries bring the total number of known occurrences in the Buffalo Head Hills field to 41, and of those, 28 are diamondiferous.

During 2008, two separate Grizzly Diamonds drill programs completed 12 drill holes, totalling 2,270 metres in the northeastern part of the Buffalo Head Hills kimberlite field. The drilling discovered three unknown kimberlite bodies (BE-01, BE-02 and BE-03), which represented the first kimberlites discovered in Alberta since 2003. Positive, caustic-fusion diamond results from the 2008 winter drill program yielded 54 diamonds greater than 0.075 mm and 26 diamonds greater than 0.106 mm from a 56.6 kg sa
mple from BE-02. This finding prompted a larger campaign by Grizzly Diamonds with a fall 2008 drill program that collected an additional 563 kg of kimberlite material from BE- 02. Grizzly Diamonds currently holds about 1.2 million hectares of diamond properties throughout Alberta.

In 2007, Diamondex Resources and Shore Gold purchased the Buffalo Head Hills diamond project from Stornoway Diamond (formerly Ashton Mining of Canada), who had previously defined 38 kimberlite bodies between 1997 and 2007 by spending about $30 million. During January to March 2008, Diamondex drill tested the K14, K252 and K6 kimberlite bodies with 41 drill holes, totalling 6,818 metres, to identify different kimberlite phases and micro- diamond content.

The grid-based drill program represented a more thorough approach in comparison to the previous operators, and it will be interesting to view the results, particularly because of Shore Gold’s knowledge of “prairie- type” kimberlites, as it is the owner/ operator of the Star Diamond project and Fort la Corne joint venture in Saskatchewan.

Preliminary modelling identified six distinctive, eruptive phases in the K14 kimberlite from which the partners developed a preliminary, three- dimensional model. Internal studies anticipated that each eruptive phase would have its own characteristic diamond grade. The modelling has already indicated that an additional east-west row of drill holes is required along the southern edge of the K14 grid to further outline the kimberlite body.

In addition to this Diamondex/ Shore Gold drill program, an aggregate sample of 369 tonnes of kimberlite was recovered from surface trenches at K14 and K6. A total of 139 stones were recovered from three separate trench samples from K14, yielding estimated diamond grades of between 7.4 and 8.8 carats per hundred tonnes (cpht). A single trench at K6 returned 85 diamonds and an estimated diamond grade of 7 cpht. The largest stone recovered was a 1.07-carat stone from K6.

To the west of the Buffalo Head Hills kimberlite field, United Uranium and Star Uranium completed a 6-hole drill program. Although none of the drill holes penetrated kimberlite, till and shale samples yielded high numbers of kimberlitic-indicator minerals. In addition, caustic-fusion analyses of a basal till unit resulted in the recovery of one diamond in the 0.15-0.212 sieve. The companies are planning more extensive geophysical and drilling programs.

Potash

With the global potash market experiencing rapid growth in the last decade due to the demand for food, fibre and feed, a new mineral play is developing in southeastern Alberta. Several companies, including APEX Geoscience, Cloudbreak Resources, Dahrouge Geological Consulting, Grizzly Diamond, Landis Energy, Rich Resource Investments, Shear Minerals, Solitaire Minerals, Utah Uranium and several numbered Alberta companies have staked metallic and industrial mineral permits on the Alberta-Saskatchewan border.

The play is developing, in part, because of the results of a mid-1960s drilling program completed by Bayfield Oil and Gas and City Savings and Trust Co. that discovered potash- bearing beds in the uppermost portion of the Prairie Evaporite Formation at a depth of roughly 1,061 metres. The potash minerals carnallite and possibly sylvite are of the same composition, depositional sequence and depth as the potash at Unity, Sask., Canada’s first potash mine. The depth is likely sufficient for solution mining, which accounts for some of the potash produced in Saskatchewan.

Magnetite

In southwestern Alberta, Micrex Development continues to develop its Burmis Magnetite project, where it is estimated that a quarry could sustain a 20,000 to 40,0000-tonne-per-year operation of finished magnetite for 10 to 12 years. The magnetite would be developed for recoverable, dense- medium separation in the coal industry. Furthermore, it is possible that titanium-bearing minerals, such as ilmenite, leucoxene and rutile, could be liberated as co-products during the processing of raw magnetite ore.

Exploration for magnetite and other metals in the Burmis area dates back to the early 1900s, with three known magnetite deposits historically named the North Burmis (Marasek), Central Burmis (Milvain) and South Burmis (Boutry) deposits. In 1961, an historical study (non-National Instrument 43-101 compliant) estimated a resource of around 2.1 million short tons of “possible magnetite ore.” Recent work confirmed the potential for this historic resource.

Lead-Zinc

Ivany Mining completed a helicopter- borne electromagnetic and magnetic survey using Fugro’s HeliGEOTEM system over the lead-zinc target on its 1,145-sq.-km Zama Lake property, in northwestern Alberta. Of that property area, Ivany has optioned 922 sq. km from Star Uranium and staked another 224 sq. km.

Zama Lake is about 20 km north of Zama City, which is 700 km north of Edmonton. It covers an area of anomalous concentrations of sphalerite and galena grains in the coarse sand fraction of bulk till samples.

The HeliGEOTEM survey was flown at 200-metre flight-line intervals encompassing roughly 1,667 line-km in and around Zama Lake to detect potential targets based on favourable geological and geophysical signatures and/or known mineralization, and to facilitate follow-up geological ground-truthing, mapping and drilling intended during the second phase of exploration later in the fall season.

The lead-zinc mineralization was tentatively attributed to a sedimentary exhalative source (Sedex type) thought to be within the property area. Although the carbonate strata occur only at depth near Zama Lake, the potential for Mississippi-Valley Type lead-zinc mineralization also exists, similar to the world-class Pine Point deposit in the Northwest Territories, mined by Cominco (now Teck) between 1964 and 1998. Star Uranium retains its diamond rights on about 850 sq. km of Zama Lake.

Polymetallic Shales

In 2008, to advance exploration and development of near-surface, metal- enriched black shales, Dumont Nickel acquired the 2,536-sq.-km SBH property, located 120 km north of Fort McMurray.

SBH encompasses six historical subproperties (Buckton, Buckton South, Asphalt, Eaglenest, McIvor West and North Lily) previously studied for metals by Tintina Mines, NSR Resources, the Alberta Geological Survey and the Geological Survey of Canada.

No exploration work was completed on the SBH property in 2008; however, Dumont compiled previous work in an NI 43-101-compliant technical report.

The SBH property is underlain by the near-surface, flat-lying Late Cretaceous shales of the Second White Speckled and Shaftesbury formations. Dumont indicates two potential black shale- hosted polymetallic zones: Buckton and Asphalt. Both Buckton and Asphalt are open in more than one direction for an additional few kilometres. Based on the previous surface exploration, the Buckton south property may represent a southern extension of the Buckton zone for a distance of 6 km. Previous reconnaissance exploration on the McIvor west property identified surface nickel-gold-zinc anomalies, as well as circular geophysical features consistent with similarly identified polymetallic-enrichment zones elsewhere in the SBH property.

Titanium and Zirconium

Titanium Corp. continued research and development on the concentration and separation of titanium and zirconium minerals and the removal and recovery of bitumen from oil sands tailings in the Fort McMurray area. Titanium Corp. performed heavy-mineral concentration and separation programs at its Regina facility to increase the recovery of higher-grade zircon products using various oils and other chemicals. Prospective new technologies, tested with external firms, have shown improved results and testing continues.

Placer Gold

Gold is the only metal produced in Alberta solely as a by-product from gravel operations usin
g a sluice box at the end of the gravel-washing process. According to Alberta Energy, the total Alberta production of placer gold in 2008 was about 65 kg . Natural Resources Canada reported 53 kg (1,700 oz.) of total gold production in Alberta in 2007 and 60 kg (2,090 oz.) in 2006.

Clear Hills Iron

Ironstone Resources, through an exclusive agreement with TUL Resources, earned a 40% to 60% interest on 14 metallic and industrial permits and leases in the Clear Hills area of northwestern Alberta. It completed a drilling program on its Rambling Creek block in February and March 2008. The company drilled 51 holes and recovered 385.5 metres of ooidal ironstone-bearing core from 47 holes. As yet, Ironstone has not reported the results from the drilling program. An additional 23.4 sq. km of land was staked north of Smoky River by TUL Resources for iron exploration.