Former Underworld directors take on Greenland

VANCOUVER — Roughly 2.7 billion years ago, Greenland broke away from Eastern Canada and moved north, taking a chunk of the Archean greenstone belt that has produced 60% of Canada’s gold with it. Now a pair of Canadian geologists, fresh off a Yukon gold success story, are following the greenstone gold potential of those rocks to Greenland through a new company called Nuukfjord Gold (NUU-T).

In June 2009, many months before Kinross Gold (K-T, KGC-N) offered $132 million for Underworld Resources (UW-V) to get the White Gold project in the Yukon, Underworld’s chairman Michael Williams and director Rob McLeod were already spending some of their time thinking about Greenland.

Williams and McLeod had come across a Copenhagen-listed company called Nuna Minerals that was looking for a joint-venture partner for its huge gold project in the country. The project was called Nuukfjord, after the gold province it inhabits.

They looked at the reports, saw the project, investigated the realities of exploring and mining in Greenland, and decided the opportunity was too good to pass up. Establishing Nuukfjord Gold as a private company, they inked an earn-in deal with Nuna for the Nuukfjord properties.

Then they convinced Aaron Keay, an established investment banker and peer on several mining company boards, to join Nuukfjord Gold as president and CEO.

Nuukfjord was created for one reason — to define and hopefully mine gold resources within the 1,200-sq.-km land package that Nuna assembled in Greenland. Nuna has already been exploring the property for several years, during which time it has completed 15,000 metres of diamond drilling and spent over $11 million. The work identified eight target blocks along the project’s 150 km of strike and drill-tested one of those blocks, the Storo target, in some detail.

Storo is not yet home to a defined gold resource but Nuukfjord plans to change that before the year end.

The target has already produced some golden intercepts from its two areas, known as the Main and BD zones. The Main zone outcrops on the northwest side of Qingaaq Mountain and hosts gold in the lenses of an anticlinal fold. Nuna’s best intercepts from the Main zone include 10 metres grading 10.1 grams gold per tonne, 12 metres of 4.24 grams gold, 11.9 metres of 12.7 grams gold, 14 metres carrying 4.89 grams gold and 12.1 metres of 5.59 grams gold. All hits came within 60 metres of surface.

The BD zone sits below the Main zone as a mineralized plane striking for 800 metres and extending for at least 1 km down dip, where it remains open. The mineralized zone averages 9 metres in thickness and has produced such intercepts as 17.7 metres of 1.38 grams gold, 4 metres of 9.58 grams gold, 14 metres of 2.43 grams gold and 2 metres of 29.9 grams gold.

Nuna has also identified a third zone at Storo called the New Main zone, where the best surface channel sample returned 50 grams gold over 2 metres, within a 60-metre channel averaging 2.9 grams gold.

Gold was discovered in the Nuukfjord district as recently as the 1990s. Since then, several companies have explored the area intermittently; two companies recently completed regional and local-scale exploration databases that Keay says will provide a strong foundation for his team’s initial efforts. The lack of much vegetation or overburden in the area will also help.

The rocks of southern Greenland provide one of the largest areas of exposed Archean crustal rocks in the world. The terranes are part of the North Atlantic craton, which is correlated with the Archean gneisses of Labrador and, in turn, with the Superior geological province of Canada.

The individual terranes at Nuukfjord evolved independently until they were pushed together during a crustal shortening event roughly 2.6 billion years ago. The event resulted in regional northeast-trending shear zones and thrust ramps; along these structures several generations of metavolcanic rocks and metasediments define a 150-kmlong trend of gold mineralization.

Gold has been found in nearly all of the supracrustal belts within the Nuukfjuord corridor, hosted in quartz-carbonate veins distributed along fault zones in deformed greenstones of all ages. Gold is most abundant, however, in Archean terranes.

The other prospects at the Nuukfjord property range from the drill-tested Storo North target to areas like Bjorneo and Sermitsiaq, which have only seen sampling. Storo North, which is 4 km north of the Storo zone, is described as a structural mirror of its southern partner, showing the same stratigraphy and mineralization as Storo. To date, six drill holes have probed Storo North, revealing sheeted quartz veins 5 to 10 metres thick and traced for 1.3 km strike. Storo North is also on a mountain, called Aappalaartoq, and anomalous gold mineralization has been mapped continuously along the 4-km stretch between Aappalaartoq and Qingaaq Mountain, home to Storo.

The Qussak area sits at the head of Nuuk fjord, about 40 km northeast of the Storo zone, and is home to five areas of interest. Across the property Nuna Minerals collected more than 2,000 surface samples and drilled 42 holes. The work has started to outline laterally extensive areas of gold mineralization found in metavolcanic rocks hosting wide intervals of hydrothermal alteration as well as narrow quartz veins. The best results from Qussak include 23 metres of 1.24 grams gold, including 2 metres of 8.46 grams gold and 0.6 metre of 19.1 grams gold.

The Bjorneo target is 10 km west of Storo and has produced sampling results including 4 grams gold over 1.8 metres and 14.5% zinc, 5.6% lead, 60 grams silver per tonne and 0.5 gram gold over 0.5 metre.

“It’s a neat story,” says Keay. “I mean, we have a long, long road ahead of us and not every one of the holes we drill is going to pull the result we want but let’s hope we find the right resource at the right size. If we work within our (Archean belt) theory and it works, we will be pioneers in an underexplored country with a land package that offers significant potential.”

Nuukfjord plans to spend $3.5 million to $4 million at the Nuukfjord project this year, with most of the funding focused on Storo. A $3.5- million investment this year will earn it a 15% interest in the land package, pursuant to the joint-venture deal. Another $3.5 million spent on the ground before the end of September 2011 would increase Nuukfjord’s stake to 30%. In the two years after that, the company can solidify a 65% interest in the large property by spending another $16 million on exploration.

“It’s purely a working interest, which means every dollar we invest goes into the ground,” says Keay. “What we need to do first, based on the Kinross-Underworld model, is develop one asset, that is, prove up the resources in one area. Sure, we’ll do some trenching and some shallow drilling on some of the other blocks, but our focus is Storo.”

The Nuukfjord Gold property comprises seven non-contiguous exploration blocks that mostly lie along 150 km of strike extending northeast from the island’s capital, Nuuk, through southwest Greenland. The area experiences long, dry summers and mild winters tempered by the ocean, which keep the fjord waters free of ice year-round.

Greenland was a Danish colony until 1953 when it became an equal part of the Kingdom of Denmark. In 1979, the Denmark parliament granted Greenland home rule. In 2008, Greenlanders approved a referendum on greater autonomy and, on June 21, 2009, the largest island in the world assumed self-determination with responsibility for self-government of judicial affairs, policing and natural resources.

Denmark still maintains control of Greenland’s foreign affairs and defence matters. In addition, Denmark still transfers 3.2 billion kroner, which is roughly $630 million or $11,300 for each Greenlander, to the island’s government every year. However, in a slow progression towards full independence, as Greenland begins to colle
ct revenues from its natural resources, the grant will slowly diminish. Keay says the entire situation bodes well for mineral exploration and development.

“Greenland is probably one of the most mining-friendly countries in the world right now,” he says. “There are zero corporate taxes, no royalties, no land claims, zero aboriginal issues, and we have the support of the government and the locals. It’s a unique opportunity.”

Keay also highlighted the fact that Angel Mining (ANGM-L) has just put an old gold mine back into production in Greenland, an indication of the country’s appetite for mining. For Nuukfjord, mining remains a dream of the future and the company must instead concentrate on proving up the presence of gold on its properties.

“This spring and summer are going to be really exciting because we’re doing a ton of infill drilling and then we’re going to start pushing the boundaries and test just how big this Storo gold deposit can really be,” says Keay. “The drills are already ready to go.”