Deposits augur new era for Nunavut

A trio of deposits in the newly created Canadian territory of Nunavut is inching closer to becoming the cornerstone for a new era of mining in the region, where most of the existing mines are close to the end of their lives.

Meliadine (West and East) and Meadowbank are gold deposits in eastern Nunavut. They have taken several years to delineate because of the short exploration window in the Far North, financing challenges, and the amount of resources required to prove up an economic deposit in remote locales such as Nunavut.

But junior Cumberland Resources (CBD-T), which has a stake in all three projects, is finally seeing the light at the end of the tunnel as it tallies up net ounces in situ, including the results of intensive drilling in both areas last year. Mining analyst Don Poirer of Goepel McDermid calls the Meliadine properties “some of the largest undeveloped gold deposits in Canada.”

The projects have an advantage over other undeveloped deposits in Canada’s newest territory (for example, the Izok Lake polymetallic deposit) in that they occur close to northern communities, seasonal ports and airports, making exploration and development less expensive. They also represent fresh hope in a region where most of the mines, including Nanasivik and Polaris, are reaching the end of their lives.

Meliadine West, a joint venture among Australia’s WMC (56%), Comaplex Minerals (CMF-T) and Cumberland, covers the western half of a 70-km-long gold belt just north of Rankin Inlet, N.W.T. The deposit contains an inferred resource of 23.7 million tonnes grading 8.5 grams gold per tonne (uncut), the equivalent of 6.5 million oz. in four closely spaced zones.

The current plan calls for the deposit to be mined from an open pit followed by underground development. The mine is expected to produce 300,000-400,000 oz. gold over a life of 12-15 years, starting in late 2003. The partners have proposed an exploration budget of about $10 million for 2000.

Of the two Meliadine projects, Meliadine West is by far the most advanced, owing to the 5-year involvement of project operator WMC, a major Australian mining company. But more than $6.5 million has been spent on Meliadine East to outline a resource of about 2 million tonnes grading 6.7 grams gold, and, last year, partners Cumberland and Comaplex intersected a new zone there. The J2 zone returned gold mineralization from several sub-parallel quartz veins along a 300-metre strike length.

Meadowbank

At the wholly owned Meadowbank project, about 250 km northwest of the Meliadine belt, Cumberland is awaiting the results of a prefeasibility study. The sheer volume of information being processed, including results of 6,000 metres of drilling in 1999, has delayed the study somewhat, says Cumberland President Glen Dickson.

The last estimate of resources at Meadowbank was 8.8 million tonnes grading 6.15 grams per tonne, or 1.7 million oz. gold. Most of the resource is minable by open-pit methods at a waste-to-ore stripping ratio of 7-to-1.

“What we do next will be dictated by the prefeasibility study,” says Dickson. “We hope to launch right into a feasibility study.”

Meanwhile, Cumberland plans to spend $1.5 million to explore a new package of ground that covers the northwestern extension of the Meadowbank gold trend. The company considers the extension an opportunity to add significantly to the known inventory at the promising project.

Cumberland recognized the potential of the extension after compiling results of work spearheaded by the Geological Survey of Canada (GSC). Last year, the junior collected 480 samples in the 30,000-ha area. More than 25% assayed greater than 1 gram gold per tonne gold, whereas 60 yielded greater than 5 grams.

Cumberland is investigating the land package under one of a handful of agreements with Nunavut Tunngavik Inc. (NTI), the non-profit organization responsible for administering Inuit-owned lands since Nunavut was created almost a year ago. NTI controls the subsurface rights to 35,000 sq. km, or about 2% of Nunavut’s total land mass.

The agreement calls for minimum annual exploration expenditures and fees, and incorporates a production lease that can be activated following a prefeasibility study. Production is subject to a 12% net profits interest royalty.

Land tenure

Dickson says that although the agreement took a long time to complete, the new government is becoming more skilled at working out the details of land tenure.

“It took a few months to get the concession,” he says. “They don’t really have a template finalized yet — it’s a work in progress.”

Speedier processing of these types of agreements, coupled with other incentives, should stimulate exploration in the brand-new territory.

“We’ve made some excellent progress, most notably on the geoscience front,” says Gordon McKay, director of minerals for the government of Nunavut.

One of the new initiatives is the Canada-Nunavut geoscience office, a partnership between the GSC, the Department of Indian and Northern Development and the Nunavut government. The office will provide information to mining companies seeking to launch exploration programs in the territory.

“The database in Nunavut is quite a ways behind the rest of Canada,” says McKay. “There will be a lot of brand-new geoscience coming out because of the new office.”

The government has also provided $160,000 to develop a network of prospectors in Nunavut, where there has been no tradition of prospecting despite the fact that most of the inhabitants have an intimate association with the land through hunting and trapping.

The government is considering a proposal for the development of a deep-water port at Bathurst Inlet and a road that would link the port to the existing winter road system, which runs south from the Lupin gold and Ekati diamond mines. A final decision has yet to be made, though the northern section of the road, from Bathurst Inlet to Izok Lake, is said to be economically viable.

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