Although it has been more than 1,000 years since the Vikings discovered Greenland, its mineral resources remain relatively unexplored. However, that may all change now that
The Nalunaq project is a high-grade, narrow-vein underground gold deposit 40 km from the village of Nanortalik on the southern tip of Greenland. It lies just 6 km from tidewater and is therefore accessible to boat and barge service.
Crew acquired a half-interest in the project late last year by merging with Mindex, a Norwegian exploration company listed on the Oslo Stock Exchange. Crew issued 27.1 million shares for a total consideration of $36.2 million. In addition to Nalunaq, Crew acquired three other assets: the second-generation Mindoro nickel laterite project, in the Philippines, which is being advanced to feasibility; the Roros zinc project, in Norway, which is being carried forward by
The acquisition of Nalunaq has given Vancouver-based Crew an early entry into an emerging gold district. More recently, the company tripled its land holdings in the area to 1,081 sq. km. “Our theory is that there are more deposits like Nalunaq,” said Anders Hvide, vice-president of finance (and former managing director of Mindex).
When the The Northern Miner visited the project, a $7.2-million program of underground development and bulk-sampling was well under way, the objective of which is to provide enough data to complete a final feasibility study and secure project financing. By funding all but $1 million of this year’s work program, Crew is increasing its stake in the project to 67%. The remaining interest is held by NunaMinerals (formerly Nunaoil), a government-owned company that had been funding the project on a 50-50 basis up until this year. “The government of Greenland is very supportive,” said Hvide. “It’s just that they have to spend money on schools and health systems [more so than on] mining projects.” He added that there has been talk of NunaMinerals’ reducing its interest in exchange for a royalty.
The focus of this year’s work program is to define 300,000-400,000 oz. of measured and indicated gold resources, enough to support an initial three years of mine life and thereby guarantee the payback of capital costs. This is a condition set by the banks with which Crew has been negotiating for project debt financing.
The Nalunaq prospect is a gold-bearing quartz vein and calc-silicate altered shear system that outcrops on the eastern and northern faces of Nalunaq Mountain. It was first discovered in 1992 by Nunaoil as a follow-up to a regional stream-sediment and scree-sampling program undertaken in the late 1980s.
The southernmost part of Greenland is underlain by gneisses, granites, and metasedimentary and metavolcanic rocks of the Proterozoic-age Ketilidian mobile belt. This belt is overprinted by the post-orogenic Gardar Rift, which is characterized by alkaline plutonic rocks.
The mineralized vein structure at Nalunaq is hosted in a package of mafic metavolcanic amphibolites derived from pillow lavas and concordant dolerites. The vein structure strikes northeast and dips from 25 to 45 southeast at an average of 34. The vein system is exposed semi-continuously along a 1,750-metre slope length of the mountain side, between a vertical elevation of 400 and 1,250 metres. Thin pegmatite and aplite dykes locally cut the main vein and metavolcanic sequence.
Since its discovery, drilling programs have been carried out in 1993, 1995, 1998 and 1999. In total, 78 core holes representing 10,930 metres of diamond drilling and 70 intercepts have been completed. Drilling has tested 400 metres of strike length and 477 metres of dip length in an area of the structure that lies between 200 and 677 metres of elevation. The holes were spaced at 50-metre centres and cut the structure at 25-to-50-metre intervals downdip.
In 1998, Mindex drove a 288-metre-long adit on the vein at the 405-level (405 metres above sea level) in order to get a better handle on the structure and control. The adit started in the footwall and proceeded about 65 metres before it was turned to intercept the vein, which was followed on strike for about 205 metres before the vein was lost. Subsequent drilling determined that the vein had been faulted off to the right by 6-7 metres and that it continues for at least an additional 70 metres beyond the end of the adit. Two raises were driven 15 and 24 metres up the vein from two locations in the adit. The main vein in the adit was channel-sampled at 1-metre intervals using a rock-saw. Face-chip samples, obtained with a hammer, were considered unrepresentative and therefore not used in the resource estimates.
The main vein zone consists of multiple (two to three) quartz veins within a strongly sheared zone of calc-silicate (chlorite, epidote and carbonate) altered amphibolite. The quartz thickness within the zone ranges from 0.01 to 0.75 metre. The zone itself has a true thickness ranging from 0.15 to 1.5 metres, for an average of just 0.4 metre. The individual veins pinch and swell, and are locally folded or stretched out.
Quartz veining locally disappears for short intervals (2-5 metres) along strike, though micro-veinlets and strong calc-silicate alteration are present. Studies supported by drilling show that the mineralization occurs in a planar structure and that bonanza oreshoots may form irregular, elongated bodies within the structural plane.
A separate, smaller vein, termed the Hangingwall vein, occurs about 25 metres stratigraphically above the main vein.
Gold occurs in a free state and almost exclusively in association with quartz in veins and veinlets. Minor gold mineralization is present in calc-silicate rocks immediately adjacent to the veins and in calc-silicate rocks between vein splits. This is most likely attributed to the presence of micro quartz veinlets.
Based on a liberation factor of 850 microns, the individual gold grains range up to 3 mm in size and average 1.7 mm.
Preliminary metallurgical tests were conducted by Lakefield Research in 1997 on a composite 400-kg bulk sample taken from surface outcrops representing six specified zones. The sample contained 40% quartz vein material and 60% wall rock dilution for an average head grade of 97.1 grams gold and 10.7 grams silver.
“Gold recovery is pretty simple,” said Hvide. “There is a lot of free gold.”
Gravity recovery ranged from 72.9% to 78%. Overall gold extraction for combined gravity and rougher flotation ranged from 94.1% to 96%, while both gravity and cyanide leaching produced a recovery range of 97.2% to 98.4%.
Hvide says further metallurgical tests will be carried out this fall on a much larger, representative sample that will more closely resemble the expected head grade of the mine.
Prefeasibility
As part of a prefeasibility study completed in March 1999, MRDI Canada estimated that indicated and inferred resources totalled 374,000 tonnes grading 26.4 grams gold per tonne, equivalent to 317,000 contained ounces. The calculations were based on a cutoff grade of 100 grams. MRDI used the assay data from 58 diamond drill holes completed up to that time, plus sampling results of the vein at surface and in the adit, to conclude that the vein averaged a thickness of 0.6 metre and a grade of 53.7 grams.
Additional holes
In the latter part of 1999, Mindex completed an additional 19 drill holes and conducted an extensive surface program of mechanized sampling along a 550-metre length of the outcrop exposure between the 400- and 890-metre level of elevation. About 80% of the length was exposed, and 378 channel samples were taken at 1-metre intervals with a rock saw. Sampling results included 117 metres averaging 7 grams (at a 200-gram cutoff), or 7.7 grams (using a 300-gram cutoff) across an average thickness of 1.09 metres, including a 9-metre interval of 632 grams over a width of 0.56 metre at the 480-metre level of elevation. The next 138 metres averaged 18 grams (200-gram cutoff), or 21.1 grams (300-gram cutoff), across 0.8 metre true width. The final section, of 123 metres, averaged 43 grams (200-gram cutoff), or 48 grams (300-gram cutoff), across a width of 0.91 metre, including a 23-metre section of 230 grams across a width averaging 1.2 metres at the 760-metre level.
Based on the results from the 1999 program, Mindex re-calculated the indicated and inferred resources at 455,000 tonnes grading 32 grams, for a total of 425,000 contained ounces.
In the March 1999 prefeasibility study, MRDI evaluated several potential mining plans by assuming a mining area of 300 metres of strike length, 1,060 metres of dip length and a vein thickness of 0.6 metre. Based on these dimensions, MRDI extrapolated a potential resource of 835,000 oz. contained in 949,000 tonnes grading of 27.4 grams, after applying dilution for a 1.5-metre mining width. The study assumed mining would be done by a contractor using modified longhole stoping methods from a footwall access ramp. The mill process chosen for the study was a combination of gravity concentration followed by whole ore leaching in a carbon-in-pulp circuit, with a potential gold recovery of 96%.
The infrastructure on-site would consist of an 80-person camp, the mill plant and offices, a road to the fjord, a tailings line and mixing station for submarine tailings disposal, and barge supply and service from Nanortalik. Electrical power would be supplied by diesel generators.
A base-case scenario of 250 tonnes per day would see an annual production of 74,260 oz. over a mine life of 10.8 years at a cash cost averaging US$214 per oz. Capital costs are estimated at US$19.2 million. Using a gold price of US$300 per oz., the study projects an after-tax discounted internal rate of return of 15.4% and a payback period of five years.
Improving economics
The prefeasibility study notes that there are opportunities for significantly improving the economics of the base-case scenario by extending the strike length of the ore zone and increasing the mine production rate. Assuming the strike length can be extended to 400 metres, MRDI estimates that the mining area could potentially contain 1.3 million tonnes grading 27.4 grams. A 500-tonne-per-day scenario envisions a yearly production of 148,500 oz. over a mine life of 7.2 years at an average cash cost of US$160 per oz. The capital costs are slightly higher, at US$19.8 million, which equates to a total cash cost of US$185 per oz. The internal rate of return is 51%, with a payback of 1.8 years.
MRDI recommended that the Nalunaq joint venture emphasize exploration and development of resources in the main vein below an elevation of 550 metres. “This area has the greatest potential for yielding [our] objective of identifying 300,000 to 400,000 oz. of gold in an area where infrastructure will be the least expensive to locate,” states MRDI’s report.
Extending adit
This year’s underground program entails extending the existing 405-level adit by at least 150 metres, driving two additional adits on the 350- and 450-levels for a total distance of 850 metres, and completing a network of nine raises between the three adits at roughly 80-metre centres. The mining contractor is Procon Mining & Tunnelling.
Hvide told The Northern Miner that the 405-level adit has been extended by 150 metres to date. “We are still in mineralization, so it’s going really well. It looks as if the 500-tonne-per-day scenario is realistic.”
Brian Ballou, vice-president of operations, is no less enthusiastic: “It’s a unique deposit in that you see visible gold quite extensively throughout all the workings.”
The Nalunaq deposit exhibits a “high nugget effect,” causing erratic grades and creating concerns about the continuity of ore zones. The old adage “drill for structure and drift for grade” rings true in this case. “Drilling doesn’t tell us grade, it tells us structure,” said Ballou.
Last year, several rich high-grade channel samples of more than 800 grams gold over a 1-metre width were recorded during surface-sampling of the main vein. Underground channel samples in excess of 5,000 grams were obtained in the 405-level adit.
The erratic nature of the gold mineralization is evident along sections of the main vein. For example, 300-metre downdip section returned the following values:
– a surface sample at the 468-metre level of elevation assayed 218 grams;
– hole 28 cut 1,020 grams across 0.3 metre at 25 metres downdip;
– hole 27 hit 0.7 gram across 2.09 metres at 50 metres downdip;
– hole 17 intersected 0.3 metre of 18.4 grams at 112 metres downdip;
– a 405-level adit sample yielded 5,240 grams across 0.8 metre at 120 metres downdip;
– hole 18 hit 1.25 metres of 3.9 grams at 140 metres downdip;
– hole 19 cut 1.12 metres of 113 grams at 165 metres downdip;
– hole 2 intersected 40 grams across 0.3 metre at 242 metres downdip; and
– hole 3 hit 2.4 grams across 0.1 metre at about 300 metres downdip.
Grade verification
In conjunction with the underground development, Strathcona Mineral Services is supervising a “grade verification” bulk-sampling program so that a reliable resource estimate can be tabled. The mined material of some 20,000 tonnes from the adits and raises is being processed on-site in a 3-stage, 250-tonne-per-day sample tower.
Each round in the adits represents about 60 tonnes, which is first put through a cone crusher and then through the sampling tower, where a representative 28-kg field sample of minus-6-mm crush is collected. “It’s a true sample of the mining width,” said Ballou.
The samples will be shipped to Lakefield Research for gold analysis. In total, an estimated 415 rounds will be taken during this year’s program.
Strathcona is overseeing the whole sampling operation to ensure quality control. Crew’s geologists map each face, round by round, and take face and wall channel samples using a rock saw based on a program set up by Strathcona. The channel samples are also sent to Lakefield Research for analysis.
Crew won’t have the sampling results available until the first quarter of next year. “We hope that the 80-by-80-metre underground workings give us enough resources and enough confidence to satisfy the banks,” said Ballou. The work this season will go a long way toward establishing a definitive grade of the vein structure and determining optimum mining methods.
In addition to this year’s underground bulk-sampling program, Crew has built a 6-km access road to the project site from the shore of the deep water fjord. Also, the company is considering building a twin-otter landing strip near the project site.
In terms of environmental permitting, the project is in its third year of baseline studies, and Hvide says there has been no negative press. “So far, we have had good support from the environmental departments and the government itself,” he said.
Inland ice
Nearly 80% of Greenland’s surface area of 2.2 million sq. km is covered by a huge ice cap known as the Inland Ice. The surrounding coastal strip, which is up to 200 km wide, is ice-free and comprises a total area of 410,000 sq. km. The most southerly point of Greenland has the same latitude as Anchorage, Oslo and Helsinki.
A good portion of Greenland’s population of 56,000 lives on the west coast, with some 20% of Greenlanders residing in the capital city of Nuuk. The country relies primarily on the fisheries industry. Farming and fishing remain the main occupations in smaller towns and settlements, but tourism is a growing industry.
Air and sea transportation links connect these communities internally. A regional carrier, Greenlandair, provides flights both domestically and internationally, with fixed-wing aircraft and helicopters. Scheduled flights are made to Denmark, Iceland and Canada.
Since 1953, Greenland has been an integral part of the Danish realm. A home rule system was adopted in 1979, and authority in most fields has been transferred to the government of Greenland. Denmark remains responsible for matters such as foreign affairs, defense and judicial affairs. The local currency is the Danish kroner.
With respect to mineral resources, all land is held by the Crown, with no land being privately owned. Licensing and regulations are administered by the Mineral Resources Administration for Greenland, which is part of the Danish Ministry for Environment and Energy.
Temperatures in the south of Greenland typically range between minus 20 C and plus 20 C, with an annual average temperature of plus 1.5 C. Half the south’s annual precipitation of 900 mm falls as rain between May and October. “Year-round mining is no problem at all,” said Hvide.
Metorex interest
Crew is a diversified international mining and exploration company, based in Vancouver, with a 41% controlling interest in Metorex, a junior South African mining house that owns and operates seven mines. Metorex is listed on both the Johannesburg and London Stock Exchanges, and holds a diversified portfolio in the base metal and industrial minerals market.
For the fiscal year ended June 30, Metorex reported a net income of $15 million on revenue of $145 million. By comparison, the previous fiscal year saw the company earn $29 million (including exceptional items of $22 million on the sale of a mineral deposit) on revenue of $119 million.
A final dividend of $2.2 million was declared, payable Sept. 1, 2000. Crew’s share of this dividend amounts to about $900,000.
Crew recently closed a $15.6-million private placement consisting of 13.8 million shares at $1.13 each, with institutional and private investors. The financing was arranged through Christiana Markets and DnB Markets, both of which are based in Norway, and David Williamson Associates.
The company now sits with more than $23 million in its treasury and has 101.4 million shares outstanding, or 110.8 million fully diluted. Since February, Crew has raised about $33 million, a considerable portion of it in Norway.
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