Nuinsco examines ’60s-era Minago find with new eyes

SITE VISIT

Grand Rapids, Man. — With a history dating back more than three decades, well-known Canadian junior Nuinsco Resources (NWI-T, NUIRF-O) has emerged as a rejuvenated explorer, targeting a range of projects including base metals, precious metals, and uranium.

At its Minago project, in central Manitoba’s Thompson nickel belt, the company recently began a 3,000-metre drill program focused on providing more infill-verification data, as well as testing potential extensions to the deposit and collecting further metallurgical test samples.

Since acquiring the sulphide nickel project in 1999 for the token amount of about $25,000 plus a 1% net smelter royalty, Nuinsco’s work at compiling previous data en route to an updated resource estimate has proven successful. Whereas past resource estimates and engineering studies modelled a possible underground operation eyeing the higher-grade portions of the deposit, the latest Minago scoping study projects economic viability for a larger, open-pit scenario encompassing a much larger resource.

Using a 0.4% nickel cutoff, the recent study reviews a measured and indicated resource of 29.8 million tonnes grading 0.64% nickel plus an additional 27.2 million tonnes of inferred resource averaging 0.67% nickel. The tabled resource is entirely hosted in the Nose deposit, however drill testing of the North Limb, which extends at least another 1.5 km northwards, has identified similar mineralization with an intercept of 338 metres grading 0.33% nickel, including a 52.5-metre section of 0.64% nickel. The stepout drilling results show the potential to expand Minago significantly.

During a recent visit by The Northern Miner, examination of some of the latest drill core revealed the disseminated nickel mineralization is quite subtle, or fine-grained in appearance, although pervasive over significant widths with occasional net-textured sections. The sulphide nickel is almost entirely contained in pentlandite (with some millerite and violarite plus minor chalcopyrite and pyrite), giving the deposit the potential to produce a high-grade concentrate of 25-30% nickel, which would be a highly desired product for smelters.

Host rocks at Minago, as in most of Thompson Nickel Belt, are the lower Pipe formation rocks of the Opswagen Group. Nickel sulphide mineralization is predominantly magmatic (in or adjacent to the serpentinized ultramafics) although some sedimentary-hosted mineralization occurs. Significant folding and shearing throughout the belt has formed dilated zones in fold noses where mobilized nickel sulphides are trapped, creating a thickening of the mineralized layer and potential orebody targets.

There is no outcrop on the project area, which is covered by an abundance of peat and muskeg overlying up to 10 metres of glacial-lake clays. Beneath the clay lies up to 70 metres of Ordovician dolomites and sandstones above the nickel-hosting Precambrian lithologies. The overburden and Paleozoic waste rock overlying the mineralization creates a boosted stripping ratio for a possible open-pit operation, but is not insurmountable.

As for infrastructure, Minago is about as good as it gets. The project is situated adjacent to Manitoba Highway 6, which continues north to Thompson, where a railway line continues to the port of Churchill. Power is also readily available.

Minago was first discovered in the late 1960s through a regional exploration program by Amax Potash, which included airborne and ground geophysics and 44 drill holes. Project resource estimates of just over 6 million tonnes at about 1.3% nickel, using a 1% cutoff, failed to meet the company’s size threshold (18 million tonnes of 1.75% nickel) for an underground operation and the major walked.

In the mid-1970s, Granges took a kick at the deposit adding eight core holes to confirm previous work plus some metallurgical and milling studies. An unclassified resource estimate of about 12.5 million tonnes grading 1% nickel using a 0.7% cutoff was tabled on an underground model, but the project died.

Black Hawk Mining was next on the scene, from 1989 to 1991, conducting a number of resource estimates based on its predecessors’ programs, plus its own extensive drilling. Engineering studies culminated in an unclassified reserve of over 20 million tonnes grading about 1% nickel. Further metallurgical and processing studies were also completed, but the project again was deemed uneconomic.

Nuinsco changed the model at Minago with its evaluation of an open-pit operation (and a possible later transition to underground mining). With capital spending of around $200 million needed, the company is aware it will likely need to partner, or even sell, to develop the deposit, and Nuinsco is working on a better economic model.

An internal economic study, based on US$5-per-lb. nickel, reviews a potential 20-year mine life targeting 28.3 million tonnes of ore averaging 0.56% nickel from an open pit, and another 14.7 million tonnes of 0.72% nickel exploited by underground methods. The operation would have a life-of-mine stripping ratio of 8.5:1 and produce a total of about 360 million lbs. nickel. The potential for additional ore in the North and North West limbs is also being evaluated.

The company is also earning an interest in the Mel nickel project, located north of Minago and near the city of Thompson, from Inco (N-T, N-N) where a 2.7-million tonne measured and indicated resource grading 0.77% nickel has been reviewed between 46 and 183 metres depth.

Diabase uranium

With the strong market focus on uranium, and the metal’s astronomic price rise, much of the company’s recent exploration effort has been directed towards its Diabase Peninsula uranium project at Cree Lake, on the southern rim of Saskatchewan’s Athabasca basin.

In late 2004, Nuinsco entered into an option to acquire a 50% interest in the project from Trend Mining (TRDM-O) based on the property’s strategic location and favourable geology.

The Diabase property covers the contact of the Mudjatik and Virgin River Domains, marked by the major graphite and sulphide-bearing Cable Bay shear zone. Such a structure could form a centre for significant uranium mineralization in the unconformity-deposit environment. The Manitou Falls Formation sandstone unit overlies the unconformity basement rocks on the project and is up to about 400 metres thick. The sandstone has also been intruded by a number of diabase dykes.

Nuinsco vice-president of exploration Paul Jones says that given the project’s history, Diabase is “a great opportunity” for the company to get involved in uranium.

“It’s got a number of things going for it: geophysical targets that were untested; graphite in the basement rocks; geochem anomalies that were never tested with diamond drilling; and for the Athabasca, comparatively thin sandstone cover, as we’re only about 5 km north of the southern contact of the basin,” Jones says.

From 1978 to 1982, the former Crown corporation Saskatchewan Mining and Development Corp. (SMDC) conducted over 3,100 metres of drilling in 11 holes on the current property area.

With a half-dozen initial holes completed on the project this past winter, Nuinsco has intersected small amounts of uranium mineralization coincident with specific geochemistry and alteration indicative of the passage of high-temperature fluids through the rocks. Surface-boulder sampling has also returned strong indicator alteration signatures (clays, lead, arsenic, yttrium and boron) at the southern end of the property. Coincident with geophysical anomalies, the altered float could indicate subsurface uranium mineralization.

A ground geophysics program is planned to fine-tune airborne results and to aid in the delineation of further drill targets. Nuinsco plans additional holes to test along trend on the Cable Bay shear zone.

Rest of the roster

In addition to its Manitoba and Saskatchewan projects, Nuinsco holds the Lac Rocher nickel property in northwestern Quebec, where drilling h
as cut significant intercepts of high-grade sulphide nickel.

The company has also been exploring its Berta copper-gold porphyry and Elmalaan copper-zinc VMS projects in northeastern Turkey. Acquired from Noranda, now part of Falconbridge (FAL.LV-T, FAL-N), both properties are situated in the highly prospective Pontide metallogenic belt.

Nuinsco recently acquired a dewatering permit for its Cameron Lake gold deposit in northwestern Ontario. With a previous $24-million development program by a senior joint-venture partner falling short, the company believes the project deserves to be dusted off in light of a booming precious metals market. The company will evaluate the expansion potential, at depth, of the 572,000-tonne measured and indicated resource grading 6.5 grams gold per tonne plus 1 million inferred tonnes at 5.2 grams gold.

Steered by a production-oriented management team, Nuinsco recently floated a plan to finance the bankrupt Campbell Resources (CCH-T, CBLRF-O) for up to $15.5 million. The deal will have Nuinsco assume management of Campbell’s Joe Mann gold mine, Copper Rand and the Corner Bay copper projects in Quebec’s Chibougamau camp.

In mid-2005, Nuinsco sold its Rainy River gold project to Rainy River Resources (RR-V, RRFFF-O) for $2.5 million in cash, a $1-per-tonne royalty and 2.2 million shares in the reorganized company. Rainy River will pay Nuinsco a further $2.5 million upon production.

With 105.7 million shares outstanding and a trading price around 35, Nuinsco posts a $37-million market capitalization. Shares have traded in a 52-week range of 15.5-45.