Augyva eyes iron in Quebec’s James Bay region

Iron ore mining and exploration in Quebec is focused in the northeast, but Georges-Yvan Gagnon, CEO of Augyva Mining Resources (AUV-V), is convinced there is great potential farther west in the province, specifically at the Duncan Lake project near James Bay.

“I think we have a very good opportunity to develop a new area for iron,” Gagnon says in a telephone interview from his office in La Macaza, Que.

Duncan Lake is 120 km east of James Bay’s eastern shore and 45 km south of the town of Radisson. 

Gagnon says the James Bay region’s infrastructure is ideal for mining because it’s directly accessible by road and served by Hydro Quebec. Gagnon says he has been involved with local Hydro Quebec projects in the region and spent 30 years working there. “I know this deposit really well.”

The project consists of 99 mining claims, covering about 45 sq. km with six Algoma-type iron ore deposits, hosted by a volcano-sedimentary sequence. 

The property’s geology is similar to the world-class iron ore deposits in Mauritania. “They are the same type of rocks,” Gagnon says. 

Like those in Mauritania, Duncan Lake’s deposits are characterized by granite intrusions, he says, which aids in processing the rock. “Granite is one of the most important things to help to liberate the iron easily.” 

In 2010 Met-Chem prepared a National Instrument 43-101 compliant resource estimate with a 16% iron cutoff grade, based on 10,000 metres of drilling. The estimate put 5.7 million and 26.6 million tonnes of iron ore in the measured and indicated categories, respectively, and 820 million tonnes in the inferred, all grading above 23% iron.

Duncan Lake is a joint venture between Century Iron Ore Holdings (51%) and Augyva (49%). Early this year, Century entered a binding framework agreement with Wuhan Iron and Steel (WISCO), China’s third largest steel maker, which will see capital injected into Duncan Lake towards achieving production. 

The agreement also includes an offtake agreement which gives WISCO the first right to buy Century’s share of any iron ore mined from the property. Century can earn an additional 14% interest in the project by spending $14 million developing the project or completing a feasibility study.

Gagnon says WISCO’s investment in Duncan Lake will accelerate the timeline in which Century and Augyva can complete an advanced drilling program to bulk up the resources in the measured and indicated categories, and then pursue a feasibility study. 

A 40,000- to 50,000-metre drilling campaign and scoping study should be done by year-end, Gagnon says, with the feasibility study planned for completion by mid-2012. Augyva has also contracted an environmental scoping study to identify any environmental and socio-economic issues at Duncan Lake.

An internal “opportunity study” has investigated a scenario that would see annual production of 21 million tonnes of ore, which would be transported 120 km via pipeline to an envisioned deep-water port in James Bay, Gagnon says. The company has determined the best location for such port facilities is just north of the Cree community of Chisasibi

Historically, the James Bay area has been overlooked as an iron-producing area because it was inaccessible and not connected to the power grid, Gagnon says. But with the area now well-connected and iron ore prices approaching US$200 per tonne, he says the time is right for development in the region.

“We will be a major producer in the area and we’re expecting to get more iron ore deposits.” Augyva recently announced its intent to take over Niocan (NIO-T) which has iron and niobium projects in the region and elsewhere in Quebec.

At presstime Augyva shares were trading at 59¢ apiece. The company has a 52-week trading range between 11.5¢ and a high of 70¢, which was reached on Jan. 26 following the announcement of WISCO’s investment. The company has 38.2 million shares fully diluted.