Industrial Minerals Lead The Way In Nova Scotia

Nova Scotia continues to offer investment opportunities to the mineral industry with proven industrial mineral, metallic mineral and coal deposits. The province’s Atlantic coast location provides strategic access to North American and European markets with an extensive transportation network, including numerous deep-water ice- free ports. There are also opportunities for value-added manufacturing of mineral-based products.

The mineral industry contributes to Nova Scotia’s economy through exploration, mine development, mineral production, secondary processing, provision of goods and services to the industry, and mine site rehabilitation. Gypsum, anhydrite, salt, coal, aggregate, lead, zinc, limestone, silica sand, quartz, stone (marble, slate, sandstone, granite) and peat are produced in Nova Scotia. Secondary processing of mineral products continues to be an important part of the mining industry, and those manufactured products include brick and clay products, cement and concrete products, refined salt products and dimension stone.

Production in 2009

Industrial minerals, led by gypsum, salt, limestone and construction aggregate, continue to make up the bulk of mineral production in the province in terms of value and quantity. Many producing sites are long-term operations, often operating for several decades before resources are depleted.

The Nova Scotia gypsum industry, after a long period of record annual production (more than 8 million tonnes), has recently reduced production due to both a lower demand in the marketplace for construction wallboard and the replacement of natural gypsum stone with “synthetic” gypsum. This resulted in temporary shutdowns at several of the six producing mines last year. The industry has experienced similar patterns of lower demand in the past when new home construction slowed in the United States and production is expected to increase as the housing industry recovers.

Demand for salt products remained strong as a result of the continuing requirement for road de-icing products for winter use in the Maritime provinces and neighbouring regions. Annual production for 2009 was 1.4 million tonnes of salt.

Nearly 1 million tonnes of coal were mined in 2009 from two surface coal mines. Coal production has increased significantly over the past few years, with several reclamation mining projects operating at past-producing underground mines. Reclamation continues to be an important component in the mining cycle with six such projects active in Nova Scotia in 2009.

Base metal mining returned to Nova Scotia in 2007 with the resumption of zinc and lead production at Gays River, operated by Acadian Mining. The province’s only operating metal mine was placed on care and maintenance in 2009, however, following the steep drop in commodity prices for these metals in late 2008.

The demand for construction aggregate, both for domestic and export markets, continues to grow annually. A few large operations are complemented by a number of strategically located quarries and pits throughout the province to supply smaller markets. Martin Marietta’s crushed granite aggregate quarry at Auld’s Cove continues to rank in the top five Canadian crushed stone quarries. Construction aggregates are not considered minerals under the Mineral Resources Act and are owned by the land owner.

Exploration and development

As a result of the relatively low mineral commodity prices that persisted from 2008, the overall level of exploration activity for 2009 was down from the previous year. Mineral exploration mainly focused on gold and base metals, with several financings and exploration plans nearing completion in the latter part of 2009. With the price of gold surpassing US$1,100 per oz., demand has increased and exploration for gold is expected to remain prominent in Nova Scotia.

Acadian Mining closed a $10-million private placement with Golden River Resources and continues to develop its gold projects with the recent completion of more than 2,600 metres of infill drilling on the Beaver Dam property. Acadian holds five advanced gold properties in Nova Scotia with total resources in the order of 626,000 oz. gold in the measured and indicated categories and 1.11 million oz. in the inferred category. Silvore Fox Minerals recently closed a private placement with Sino Minerals Corp. for $1.35 million and is drilling on its Coxheath copper-molybdenum project in Cape Breton. Ressources Appalaches acquired Dufferin Resources and is working towards a National Instrument (NI) 43-101 resource estimate for its Dufferin gold mine. Scorpio Mining recently resumed preliminary work to investigate re- entry into the Caribou gold mine. Recent emphasis has also been placed on the potential for development of large-tonnage, bulk-mineable deposits associated with historical gold districts in metasedimentary rocks in the southeastern area of mainland Nova Scotia. Orex Exploration signed an option and joint-venture agreement with Quebec-based Osisko Mining. Osisko is funding $2.8 million in drilling and reconnaissance work at the Goldboro gold property in 2010. Measured and indicated resources at Goldboro currently stand at 397,200 oz. gold at a cutoff grade of 1.5 grams gold per tonne, plus another 405,926 oz. in the inferred category.

There has been continued interest in rare metals associated with the granites of southern Nova Scotia. Avalon Rare Metals continues to explore the potential for tin and rare metals near East Kemptville. Drilling is under way and the company plans to issue a NI 43-101-compliant resource estimate this year. Cornerstone Capital Resources of Newfoundland recently staked ground in the New Ross area.

Merrex Gold has announced the sale of 50% of the Jubilee zinc project to Chrysos Capital Corp. and the start of a 1,500-metre drilling campaign on its Cape Breton property.

In 2009, exploration work continued on evaluation of the iron oxide- copper-gold (IOCG) potential of volcanic rocks along the north boundary of the Cobequid-Chedabucto Fault zone. Newly discovered rare earth element potential sparked a staking rush in this area in late 2009.

Larger mineral development projects under investigation include Atlantic Gold’s proposal for an open- pit gold mine at Moose River and an undersea, long-wall coal mine project at Donkin held by Xstrata Coal (75%) and Erdene Resource Development (25%).

Atlantic Gold has an environmental approval for the Touquoy deposit in Moose River, which holds measured and indicated resources totalling 534,000 oz. gold, plus 122,000 inferred oz. The company is planning an onsite gold treatment plant, to produce roughly 90,000 oz. gold per year for a minimum of six years. Atlantic Gold also holds the Cochrane Hill gold property, which holds 251,000 oz. gold in measured and indicated resources and 298,000 oz. gold in the inferred category. The company is continuing to evaluate the deposit, with additional drilling under way.

Nova Scotia produces about 400,000 tonnes of coal per year. Coal prices have increased in the past number of years and it is widely accepted that coal will play an integral role in power generation for many years to come. Generation of thermal power in Nova Scotia consumes more than 2 million tonnes of coal per year, which is now mostly imported. The Donkin Coal Resource Block, off the coast of Cape Breton Island, has an annual underground production potential of 3 to 4 million tonnes of high-quality coal for domestic and international markets. A feasibility study is under way at Xstrata and Erdene’s Donkin coal project, which has the potential to employ more than 250 people.

Global demand for potash fertilizer is projected to be strong in the future and prices are expected to remain high. Nova Scotia is known for its economic evaporite deposits of gypsum/anhyrite and halite from Windsor Group rocks. There are num
erous occurrences of potash, which is formed in a similar geological setting, throughout northern Nova Scotia and Cape Breton Island. These factors have renewed interest in potash exploration opportunities in the province.

Nova Scotia has a lot to offer the industry, with abundant deposits, a strategic location for reaching North American and European markets, excellent transportation infrastructure, offshore natural gas production and comprehensive geoscience databases. In addition, new deposits are ready to come into production and several exciting prospects may provide new deposits for future production, placing the province in a strong position.