ATLANTIC REPORT Review of Nova Scotia’s potential

Dan Kontak of the Nova Scotia Department of Mines and Energy reviewed its staff’s geologic investigations that had been funded by the last federal-provincial Mineral Development Agreement. Key findings date the main period of gold introduction at 370 million years ago, coincident with the granitic intrusion and the D4 deformational event, which was characterized by progressively deformed and altered ductile shear zones.

Kontak noted that some Meguma ore shoots occur in zones of brittle deformation and that large-tonnage, low grade deposits of the Carlin- type are possible in such an environment. Meguma Group gold deposits are often incorrectly labelled as being composed solely of narrow, high grade saddle reef quartz veins.

Meguma deposits must yield at least 9,000 kg to form a sound economic basis for further exploration in the Meguma Group, said President Craig Miller of Scotia Prime Minerals (ASE), taking into account the geology and mining history of this environment over the past 125 years and the rash of rec ent exploration and development disappointments. As a model for a mine scenario, Miller used the Meguma’s largest gold producer, the Goldenville gold district (407,661 tonnes grading 16.11 g per tonne milled), and worked out a discounted cash flow analysis.

Key assumptions were a total investment of $25 million for exploration, development and infrastructure with operating costs of $300(C) per oz; a 250-ton-per-day (230-tonnes-per-day) mining/milling rate; and a recovered grade of 8.57 g per tonne. Tax deductions and Canadian Exploration Incentive Program grants were factored into the model, with production commencing in year six and the deposit being mined out in year 15.

A deposit the size of Goldenville (6,500 kg recovered) would be unprofitable, Miller concluded, and would result in a loss on investment if gold were under $350(US) per oz. With gold at $400(US) per oz, the project would be profitable, but the after-tax return on investment would be a mere 4%. Even at $500(US) per oz, a Goldenville-size deposit would yield an after-tax rate of return of only 12%.

He believes that although his analysis needs refinement, it is in the right ballpark and, accordingly, his company is looking for Meguma deposits yielding at least 9,000 kg at a mined and milled grade of no less than 8.57 g per tonne. The geologic potential for such a deposit, consisting of a series of 300-2,300-g ore shoots over mining widths of one to 10 m, certainly exists in the Meguma, Miller says.

Joe Campbell, a mine geologist with Westminer Canada’s Seabright Division, spoke of exploration and mining lessons learned by his company at the Forest Hill and Beaver Dam projects, with particular reference to the bedded type of vein deposits. The abundance of bedded leads, combined with frequent coarse-grained gold particles, created a real sampling problem in obtaining a representative estimate of the true gold content of a zone. Although expensive, bulk testing is the ideal way to determine grade, Campbell said.

Seabright has tried a statistical approach, but there are too many variables to permit meaningful conclusions. The gold-bearing zones at Forest Hill seldom exceed 10 cm in thickness, so mining dilution to a 1-metre stope width becomes a major problem with zones so narrow, in combination with a calculated error on grade due to the nugget effect, Campbell said. Random muck samples from the stopes give the best indication of grade at Forest Hill, he said. Every other technique used, including 100-kg samples from the face, resulted in a grade higher than that eventually milled.

If veins this thick were the target, they would have to grade 100 g per tonne for a company to break even, he said. An additional problem from an ore reserve perspective is that if good geologic control is lacking, intersections of separate shoots may be joined on interpretation, with resultant inflation of both tonnage and grade in actual reserves.

From his experiences at Beaver Dam and Forest Hill, Campbell found the 10 cm-wide mineralized shoots to be about 30 m high on section, 30 m long on plan view, and hundreds of metres down plunge. Costs of exploring and developing such shoots could exceed the value of recoverable gold, he said, but bonanza pockets exist where a round or two might have a gold content that could be expressed on a percentage basis.

The combination of cleavage planes, bedding, faults and joints could also result in unwanted dilution which would ruin the profitability of a 10-cm-wide ore shoot, Campbell said.

Seabright has mined and milled 100,000 tonnes at Forest Hill at an average grade of six grams per tonne on an exploration basis, with half the tonnage being either planned or unwanted dilution. At Beaver Dam, 40,000 tonnes were milled before that project was terminated. Despite the disappointments Campbell has encountered on the Meguma projects he has worked on, he has not written off the Meguma as an exploration bet.

All projects reaching advanced stages of exploration in Nova Scotia over the past few years were within former producing areas, according to Seabright Explorations’ Vice- president Don Pollock. This work has failed to dispel the widely held belief that a Meguma deposit consists of narrow, discontinuous shoots that are hard to find and expensive to mine. “What we need in the province is a good new discovery, and we don’t have that yet,” Pollock said.

He is still optimistic about the Meguma, although not about the previously mined ores but for discoveries of new types of gold mineralization in the formation. The gold mining future of the Meguma is gold price-dependent and may also require some innovative cost-effective mining and milling procedures. Finding new types of Meguma deposits will require a thorough understanding of Meguma Group stratigraphy, Pollock suggested.

Broad stratigraphic differences within the Meguma may have played some role in the location of mineral deposits, or perhaps the rocks controlled certain types of structures which in turn controlled the gold mineralization, he said, citing the example of the Touquoy zone at the Moose River.

The Touquoy zone, a so-called slate belt, was mined in the 1800s by Damas Touquoy. The zone’s mineralization consists of a fault- bounded wedge of auriferous argillite with drill intersections of 1.29 g per tonne over 40 m; 3.11 g over 54.59 m; and 5.3 g over 27.3 m. These grades reflect composites of metre-long samples of argillite barren of quartz, with gold occasionally visible in the argillite.

Reserves for the Touquoy zone are over one million tonnes with an average grade of 2.63 g, using 1.5 g per tonne over a 3-m width as a cutoff. With a cutoff of 2.5 g per tonne over the 3-m width, geologic reserves amount to about 400,000 tonnes grading 4.2 g. Pollock thinks the Touquoy zone is not unique, and he says there are others like it waiting to be found. Stratigraphy may be a key to their discovery.

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