Exploration booms in BC’s Quesnel Trough

Vancouver — Perception matters in mining, and for much of the 1990s, British Columbia was not perceived as a favourable exploration destination. Onerous government policies, land-use battles, and low metal prices all took their toll, and by 2001, exploration spending was a paltry $29 million as companies flocked to far-flung destinations perceived to be more “mining-friendly.”

The leftist government, which focused more on creating parks than wealth for most of the 1990s, is long gone, and commodity prices have rebounded nicely. And yet the province still ranks near the bottom of a list of the world’s most favourable mining regions. The Fraser Institute’s annual survey of mining companies puts British Columbia in 44th place out of 64 jurisdictions, up from seventh from the bottom last year.

The improved standing is small consolation for industry officials who maintain 2004 was “a watershed year” for the industry. Exploration spending jumped to more than $130 million and staking activity was up 75% over 2001 levels.

“An opinion survey is just a snapshot in time,” says David Caulfield, president of the British Columbia & Yukon Chamber of Mines, adding that, in this case, the snapshot is more than six months behind time. “The survey results do not reflect the many positive changes that have taken place over the last half of the year — changes that have bolstered investor confidence in B.C.’s mineral exploration and mining sector.”

Caulfield says strong commodity prices gave the industry a much-needed boost, as did the present government’s pro-mining policies, such as a streamlined permitting process, an online staking system, a $25-million geoscience program, and a supportive long-term mining plan.

Another catalyst in the industry’s turnaround was an unexpected flurry of discoveries and developments. Drills are once again turning in the Quesnel Trough, a 1,000-km-long belt of favourable geology in the north-central interior, best known for its alkalic porphyry copper-gold deposits and mines. During the 1960s, ’70s and ’80s, numerous mining companies scoured the belt, seeking deposits similar to those found farther south, in the famous Highland Valley. Copper was king then, and even the low grades of some deposits did not prevent their development, at least until metal prices softened in the 1990s. The subsequent rash of mine closures and stalled projects led to the perception that the region’s copper-gold deposits were not robust enough to compete with the huge, higher-grade deposits of copper and gold deposits offered in Chile, Africa’s copper belt, and elsewhere.

Exploration in the belt took another hit in the mid-1990s when Placer Dome (PDG-T) mothballed its expensively acquired Mount Milligan copper-gold project near Williams Lake. Weak metal prices contributed to the decision, but so did the deposit’s complex geology and low grades, which in turn reinforced the perception that British Columbia’s copper-gold deposits were not competitive globally.

But after a decade of costly adventures (in some cases, misadventures) in far-flung locales, some companies came to realize that there is no place like home. The hope was that the new exploration and metallurgical techniques that were transforming the broader industry might breathe new life into British Columbia’s mining camps. And for the few companies that persevered, that’s precisely what happened, albeit with some help from Mother Nature and Lady Luck. Several new discoveries near producing and past-producing mines were made in the Quesnel Trough, including ones significant enough to make the industry sit up and take notice.

“What’s exciting is that the grades of some of the new discoveries are much higher than those of the mines originally developed,” says mining veteran Donald Mustard.

Northeast zone

The casebook example is the 2003 discovery by Imperial Metals (III-T) of the Northeast zone, a high-grade, copper-gold alkalic porphyry deposit 1.5 km from the company’s Mount Polley mine, near Williams Lake.

The discovery came at an opportune time, when Imperial was aiming to revive Mount Polley, which had operated from 1997 until its closure (forced by low metal prices) in 2001. Prospecting along a new logging road in a previously under-explored area revealed grades far above those of the remaining reserves.

The discovery was a surprise in that previous exploration at Mount Polley had focused on magnetic anomalies. But unlike the known Cariboo, Bell and Springer deposits, the Northeast zone is not magnetic. This finding led to an extensive and ongoing re-evaluation of the entire property with the aid of induced-polarization (IP) survey technology.

Imperial notes that IP coverage over the Northeast zone and along the eastern flank of the property correlates well with the mineralization in the Northeast zone. Since then, other IP anomalies have been identified, and these will be explored in future programs.

Buoyed by the discovery, Imperial resumed mining at Mount Polley in March 2005, using ore from the Bell pit and low-grade stockpiles. Existing reserves in the Wight, Bell and Springer open pits now stand at 44 million tonnes grading 0.45% copper and 0.3 gram gold per tonne. These pits also host resources in the measured, indicated and inferred categories.

At last report, the Northeast zone had a reserve of 9.1 million tonnes grading 0.88% copper, 0.29 gram gold and 6.4 grams silver, plus a resource of 15.7 million tonnes grading 0.61% copper, 0.19 gram gold and 4.4 grams silver. The zone remains open for expansion.

Sweetening the pot is the recent discovery of the Green zone, an even higher-grade portion of the Northeast zone, which could be amenable to underground mining. Previous drill results include 25.1 metres grading 4.43% copper, 1.28 grams gold and 26.9 grams silver, and 15 metres grading 5.86% copper, 3.13 grams gold and 39 grams silver.

The Northeast zone discovery spurred exploration for alkalic porphyries not just along the Quesnel Trough but in other regions as well. It also helped changed the perception that the province’s copper-gold deposits were “yesterday’s news.”

Imperial’s efforts were recognized earlier this year when the Chamber of Mines presented its prized H.H. “Spud” Huestis Award for excellence in prospecting to Patrick McAndless, vice-president of exploration.

Kemess

Another turnaround story in the Quesnel Trough is the Kemess gold-copper mine, 250 km north of Smithers. The mine broke records last year for production (303,475 oz.), cash costs (US$137 per oz.) and throughput (52,136 tonnes).

In the late 1990s, however, the problem-plagued mine pushed its original operator, Royal Oak Mines, into bankruptcy. Northgate Exploration (ngx-t) took over the operation in 2000 and not only made it a financial success (helped by improved metal prices) but outlined a nearby deposit capable of extending the mine life until at least 2019. Previous operators had identified the exploration target, but initial drilling was too shallow to reveal what later proved to be an economic deposit.

The Kemess North deposit is now in the permitting phase. If all goes as planned, the US$190-million mine will produce an average of 250,000 oz. gold and 113 billion lbs. copper annually over a lifespan of 13 years.

Another major development in the Quesnel Trough is the possible revival of the long-stalled Mount Milligan project. Placer Dome’s newly appointed president, Peter Tomsett, says the project’s economics are being assessed “in light of today’s fiscal environment.”

The key to Mt. Milligan may be in the metallurgy, and this year Placer intends to extract new samples to determine which processing technologies would be the most economic. Advances in understanding the deposit’s geology are also expected to improve the prospects for development.

“Our goal is to make a decision by mid-year on whether a full feasibility study is warranted,” Tomsett told d
elegates at a mining conference earlier this year.

Since 2001, Placer Dome and copper giant Phelps Dodge (PD-N) have been working together to “develop and commercialize” new metal-extraction technologies. The companies have since developed a suite of proprietary processes, including high-temperature ones that are well-suited for locations where dilute acid can be used. The medium-temperature process, on the other hand, minimizes acid production, and is best-suited for sites where dilute acid cannot be used. This process incurs lower oxygen costs and converts a significant portion of sulphide sulphur to elemental sulphur.

Major copper producers such as Phelps Dodge were motivated to develop such processes as they offer low-cost alternatives to smelting and refining, are environmentally safe, and reduce transportation and handling costs. The subsequent technology transformation of the industry was such that by 2003, 70% of Phelps Dodge’s copper production was from solvent extraction-electrowinning (SX-EW), whereas in 1983, production was solely from conventional milling and refining methods.

Gibraltar

The use of SX-EW processing is relatively new in British Columbia but is expected to grown in importance. The technology has already helped to revive and improve the economics of the Gibraltar copper-molybdenum mine, near Williams Lake. Taseko Mines (TKO-V) and contract-miner Ledcor Mining brought the former producer back into production late last year. They aim to produce roughly 2,300 tonnes of cathode copper annually from low-grade stockpiles and waste dumps.

Gibraltar’s conventional mill is expected to produce an average of 70 million lbs. copper and 980,000 lbs. molybdenum in concentrates annually. The molybdenum circuit was recently upgraded in order to benefit from high moly prices.

Imperial Metals is also testing new methods to treat oxide resources at its Mount Polley mine. Near-surface mineralization at the Springer deposit is highly oxidized, and in the past, only about 11% of the copper was recoverable in the existing flotation mill (which handles mostly sulphide ores). The company says initial column-tests were successful, with about 78% of the acid-soluble copper recovered by the leaching process. Tests are ongoing.

Successes at Mount Polley and Kemess have stimulated exploration for similar deposits in the region, and experts believe there is potential for many more discoveries. Also, additional logging roads are opening up areas that were previously inaccessible or difficult to explore. However, because of the dearth of funding in the past decade, little systematic exploration has taken place in the region since 1991. As a result, knowledge of the region’s geology and overall potential is far from comprehensive.

Some portions of the Trough were under-explored because of widespread glacial-till overburden and local overprinting by Quaternary volcanics. Mining companies are now seeking to identify the most prospective areas for higher-resolution magnetic and IP surveys to identify exploration and drill targets.

“The best investment the government can make [in mining] is to fly the entire Trough,” Mustard says, adding that such an investment would help companies identify a new generation of mines, including new deposit types.

Lysander

Mustard is president of Lysander Minerals (LYM-V), which holds two large projects in the Trough, mid-way between the Kemess and Mt. Milligan deposits.

The company acquired its Lorraine-Jayjay project based on the concept of a major buried alkalic intrusion. The most advanced target is the Lorraine deposit, which, at last report, had a resource of about 32 million tonnes averaging 0.66% copper and 0.17 gram gold. This deposit and other targets are being explored by Eastfield Resources (ETF-V), which can earn a 75% interest in the 250-sq.-km project.

Lysander also owns the Osilinka project, which includes a discovery at Cat Mountain, recently identified as a classic, high-level, alkalic gold-copper porphyry related to a strata volcano.

Last year, Mustard presented a technical paper broaching the theory that the Jayjay and nearby Osilinka projects form part of an iron-oxide copper-gold system. It is a theory he has been keen to explore further, as iron-oxide deposits include some of the largest copper deposits in the world, notably Olympic Dam in Australia, Phalabora in South Africa, and Candeleria in Chile.

Serengeti

Another player in the Trough is Serengeti Resources (SIR-V), which recently added five properties to its already sizable holdings. The company says the properties demonstrate “excellent potential to host significant porphyry copper, gold or copper-gold deposits.” The selection criteria included the potential size of the mineralized systems, strong evidence of the desired minerals, and previous exploration by others that defined, but did not adequately test, these targets.

Among the newly acquired properties is Kwanika, 85 km northwest of Mt. Milligan. Previous operators outlined a resource of 36 million tonnes grading 0.2% copper (gold was not analyzed), which has yet to be upgraded to meet current resource-reporting standards.

Serengeti also believes its Choo property, 25 km west of Mt. Milligan, is prospective for new discoveries, particularly at depth. Previous work at Choo focused only on shallow testing of large IP, magnetic and soil-geochemical anomalies with “intriguing copper-gold values.”

Serengeti also holds options to acquire four properties in the northern part of the Quesnel Trough. The Darby, Bloom, Fleet and Shadow properties are all within 10 km of the Omineca access road, and all have previously identified geophysical and/or geochemical targets that are believed to be prospective for copper-gold deposits.

Chapleau and Fjordland

Other juniors active in the Trough include Chapleau Resources (CHI-V) and Fjordland Exploration (FEX-V). Chapleau recently staked 88 sq. km near the Mount Polley mine and adjacent to Fjordland’s Woodjam copper-gold project.

Fjordland reported encouraging drill results from Woodjam last fall, the highlight being 361.2 metres grading 0.84 gram gold per tonne and 1.12% copper, which includes 274.9 metres of 1.03 grams gold and 0.14% copper. The company can earn up to a 60% interest in the project from Wild Rose Resources (WRS-V) by spending $1.5 million on exploration by the fall of 2006.

Chapleau says its claims are similar, geologically and geophysically, to the Woodjam project. These similarities include “the presence of a separated, ring-shaped cluster of well-defined positive magnetic anomalies, suggesting the presence of buried intrusives at depth.” The company aims to define and refine drill targets by higher-resolution magnetic and IP surveys.

The improved outlook for copper prompted Wave Exploration (WA-V) to ride the wave to the Quesnel Trough as well. A year ago, the junior staked two blocks of claims deemed prospective for porphyry copper-gold deposits. The Antoine claims are in the Horsefly area, 24 km south of Mount Polley, while the Lip 1 and 2 claims are 15 km southeast of Mt. Milligan.

Several companies are also exploring for gold, and several small-to-medium-sized mines have operated in the belt in recent decades. Government geologists note that, since 1859, parts of the Trough have been the site of “significant placer gold production, including some large-scale mining operations.” Recent field studies were aimed at identifying the bedrock sources of the placer gold, and several source areas have been identified.

Still, copper-gold porphyries remain the most sought-after type of deposit, and the list of juniors exploring for them continues to grow. That’s no small tribute to the pioneering Hunter-Dickinson Group, which, almost single-handedly, kept the camp alive through some tough times, long after others had
fled to more exotic locales.

Mine financiers Robert Hunter and Robert Dickinson recently helped revive the dormant Gibraltar copper-gold mine. Back in the late 1980s and early ’90s, however, the partners spearheaded exploration and initial development of the Mt. Milligan and Kemess deposits. They also generated numerous exploration targets in the Trough, which, after almost a decade-long hiatus, are back in play.

— The author is a former editor of The Northern Miner and currently works as a freelance writer in Vancouver.