Diamonds, plans for N.W.T. port spur exploration

Exploration activity is booming in the Northwest Territories at both the grassroots and advanced project levels, and expenditures this year are expected to easily surpass $35 million, over 27% more dollars than spent last year.

Much of this renewed interest in the North’s geological potential is the direct result of a recent diamond discovery made in the Lac de Gras region by Dia Met Minerals (VSE), which is involved in a joint venture with BHP Minerals Canada. The discovery of gem-quality diamonds, the result of years of hard work and remarkable persistence by geologist Charles Fipke, sparked a staking stampede that easily ranks among the most feverish in Canadian mining history.

“Over 12.1 million acres have already been staked, and the number is growing daily,” Tom Hoefer, president of the Northwest Territories Chamber of Mines, told The Northern Miner. “Our local lumber companies are hard pressed to keep up with the demand for claim posts.”

If Hoefer has any complaint at all about all this diamond fever, it is that “too many companies” are bringing in southerners as technical and support staff for their programs, although he concedes this development probably reflects the highly secretive nature of the diamond business. But Hoefer makes it clear diamonds aren’t the only reason mining companies are taking a keen interest in the Northwest Territories. The increase in activity is also related to a proposal to build a new shipping port on the Coronation Gulf, an infrastructure initiative Hoefer says should open up a region that already hosts some of the best undeveloped base metal deposits in North America.

“This port is going to have to be a reality for Izok Lake,” Hoefer says, referring to the zinc-copper project being advanced by Minnova (TSE) and its parent company, Metall Mining (TSE), some 165 miles south of the community of Coppermine on Coronation Gulf. “The decision of these companies to re-activate Izok Lake is a multi-million-dollar show of confidence in the North.”

Discovered by Texasgulf in the 1970s, preliminary reserves at Izok Lake are currently estimated at 14.7 million tons grading 3.2% copper, 14.4% zinc, 1.3% lead and about 2.0 oz. silver per ton.

Minnova’s 1992 program was aimed at increasing confidence in Izok reserves, exploring for additional underground reserves, and testing new targets. Encouraging results were reported on all three fronts, but the most exciting development was the discovery of a new zone which added a further 2.2 million tons grading 2% copper and 8% zinc, and is still open down plunge. Minnova has two smaller undeveloped volcanogenic massive sulphide deposits nearby, Hood River and Gondor, and a land package considered prospective for new discoveries.

But Hoefer doesn’t think Minnova and Metall will have to “go it alone” to provide the winter road and coastal port that will be necessary to develop Izok Lake.

“A number of other companies with projects in the area have contributed to the port study,” Hoefer said. “Once Izok Lake hits its threshold it will make everything else look more economic, and then we can look at common roads and port facilities.”

Besides being subtly beautiful, the Arctic mainland south of Coronation Gulf, known to geologists as the North Slave Province, is indeed a storehouse of mineral wealth. The region has only one producer, the Lupin mine which became an economic gold producer in 1982, as well as a number of potentially economic deposits.

The list of previously discovered base metal deposits in the Barrenlands includes High River, now being explored by Aber Resources (TSE) and Kennecott. Located just 25 miles from the coast, this polymetallic deposit is regarded as the most accessible of the undeveloped base metal deposits of the area.

“I’m very optimistic about this project,” Hoefer said. “It was last drilled in the late 1950s when massive sulphide concepts weren’t well understood, and a lot of holes were drilled in the feeder zone, or in the wrong direction.” This limited program of several decades ago outlined 5 million tons grading 3.5% copper, 2.5% zinc and 0.023 oz. gold per ton. The A zone — which is the stringer type copper-gold mineralization — hosts the bulk of this tonnage. One hole within this zone returned 6.2% copper and 1.7% zinc over a true width of 141 ft. The D zone, which is the overlying zinc-rich massive sulphides — remains essentially unexplored although it returned high zinc grades from limited shallow drilling.

Aber can earn a 20% interest directly from the Hudson’s Bay Co., and an additional 30% to 40% interest from Kennecott by spending $8 million to $10 million over the next five years.

Exploration is already off to a good start. Results from summer drilling on the D zone include a 405-ft. intersection grading 1.2% copper, 1.5% zinc, plus minor silver and gold values, and more drilling is planned for after freeze-up when equipment and supplies can be moved to the property more economically.

Other undeveloped deposits south of Coronation Gulf include Hackett River owned by Cominco (TSE), which has indicated and inferred reserves in three zones totalling 19.6 million tons at 3.6% copper, 1.05% lead, 6.7% zinc, 0.01 oz. gold and 5.7 oz. silver per ton. Bill Wolfe, Cominco’s exploration manager for Western Canada, said the project was last drilled in the early 1980s when silver prices were high.

“The lack of infrastructure was a problem we simply couldn’t overcome,” Wolfe said. “If it had a better location down south it would probably be an orebody.”

Hackett River is located some distance east of Izok Lake, as are the undeveloped Yava (Westmin Resources and Conwest) and Musk (Noranda) base metal deposits, each with about one million tons.

The region also hosts gold deposits, including Homestake’s George Lake where $25 million has already been spent, as well as Homestake’s Back River area gold discoveries. Other gold deposits further to the north and closer to the proposed port, are BHP’s Ulu gold deposit (formerly known as Crown), and the Arcadia or Canuc deposit which hasn’t been worked since 1989. Diamond exploration is also spreading into the region, which could add a new list of players to share in the costs of providing infrastructure if important discoveries are made.

Hoefer also expects that both the territorial and federal governments, as well as native groups interested in new economic development, will ultimately play a role in helping a coalition of mining companies bring transportation infrastructure to this region. Important new discoveries would also provide more incentive.

“We have a number of greenstone belts that are largely unexplored and 25 years behind the south,” Hoefer said. “The potential to find quality near-surface deposits is so good the next Kidd Creek may be found up here.” Hoefer also points out that the N.W.T.’s pro-development stance from both government and native groups is also attracting mining investment away from other jurisdictions, such as British Columbia, where high tax burdens and ever-changing policies are having a negative impact on mining and exploration. To make his point, Hoefer cited Falconbridge’s statement when it recently closed its exploration office in Vancouver: “We simply cannot afford to look for mineral deposits in a province where we have no confidence that we would ever be able to develop a deposit into a mine.”