Windy Camp, Nunavut — North of the Arctic Circle,
With that in mind, the partners are engaged in a $12.9-million, expanded program of exploration drilling aimed at adding 1 million ounces to the measured, indicated and inferred resource of 3.2 million oz. “I think we will have a reasonable shot at getting that,” project manager Adrian Fleming told The Northern Miner during a recent site visit. The drilling program, which began in February and utilized up to nine rigs, will have wound down by mid-June. At the time of our site visit, three rigs remained.
The joint venture’s threshold is 10 grams gold per tonne; anything less is regarded as uninteresting. “We are a long way north,” said Fleming, “and notwithstanding that we are near the coast, this area requires fairly substantial grade material, certainly in the early years.”
The resource base includes 1.9 million oz. of near-surface, high-grade resources averaging 16.9 grams. “Our concentrated objective at this stage is to get 2.5-3 million oz. of half-ounce grade,” said Miramar’s executive vice-president, Stephen Quin. A new resource estimate will be completed by year-end.
The Hope Bay project lies in Canada’s far northern Nunavut territory, 685 km northeast of Yellowknife and 170 km southwest of the community of Cambridge Bay. There, Miramar and Hope Bay Gold control an entire 80-km-long greenstone belt along the Arctic coast of northern Canada. The belt comprises mafic meta-volcanic (mainly meta-basalts) and meta-sedimentary rocks that are bound by Archean granite intrusives and gneisses. The package has been deformed during multiple events and is transected by major north-south striking shear zones that appear to have a significant control over mineralization, particularly where major flexures are apparent and coincident with antiforms.
Mineralization appears to be localized along second-order structures that are coming off the major Hope Bay break.
As the joint venture’s understanding of the belt increases, it has become apparent that the Wolverine porphyry system in the middle of the belt is a critical component that may be the heat engine for pumping the gold-bearing fluids through this package of rocks.
This belt is comparable to the Yellowknife, Kirkland Lake and Hemlo camps. “It has all the characteristics you would want to find in an Archean greenstone belt,” said Fleming. The belt is 80 km long and between and 7 and 20 km wide.
While infrastructure is limited in this remote part of northern Canada, the Doris deposit sits just 6 km from tidewater. Ocean-going barges or ships can reach Hope Bay and Roberts Bay from mid-July to the end of September. “That is a huge bonus for the Hope Bay project,” said Fleming. “Everything can be brought in by barge, and from a development perspective, there is also the opportunity that we could go the Polaris route and bring in a pre-built mill on a barge and just moor it on the coast.” (The Polaris mine, a zinc-lead producer on Little Cornwallis Island, Nunavut, is operated by Cominco.)
Montreal-based Hope Bay Gold (formerly Cambiex Exploration) purchased the Hope Bay project from BHP Diamonds in late 1999 for US$18.5 million cash. In addition, BHP was granted 6 million share purchase warrants exercisable at prices varying between $1.70 and $7.20 per share over a period of 40 months following the closing.
BHP had spent $85 million on exploration and underground development at Hope Bay between 1991 and 1998. In the process, it outlined an inferred resource of 4.3 million oz. in three separate deposits: Boston, Doris and Madrid. The decision to sell the project was made when BHP deemed gold a non-core asset and withdrew from the gold business worldwide. During its involvement at Hope Bay, BHP completed extensive geologic, geochemical and geophysical surveys, 177,350 metres of surface and underground diamond drilling, 2,300 metres of underground development on the Boston deposit, and the collection of 27,000 tonnes of bulk samples.
A scoping study by BHP evaluated the economics of a 190,000-oz.-per-year underground mine at Boston, based on a potential minable reserve of 1.2 million oz. at an average grade of 13.8 grams and a projected cash cost of US$162 per oz. This proposal did not provide an adequate return on BHP’s capital estimate of US$219 million. The scoping work highlighted the need to discover additional ounces.
Metallurgical tests on each of Boston, Doris and Madrid has shown that gold recoveries in the range of 88-98% could be expected for a process involving gravity and whole-ore cyanidation. Up to 40-45% of the gold in the Boston and Doris deposits could be recovered by gravity methods alone. None of the three deposits exhibits mineralogy that might by problematic to a mining operation or for tailings disposal. Other than low levels of arsenopyrite present in the Boston B2 zone, no base metals or heavy metals occur in significant concentrations.
Miramar
Vancouver-based Miramar came on board in December 1999 and gained a half-interest in the project by paying US$13.3 million to Hope Bay Gold and agreeing to fund $2.9 million toward exploration. Hope Bay Gold was also required to contribute $8.7 million for exploration, before the sharing of all additional expenditures on a 50-50 basis.
Last year, the Hope Bay joint venture spent $17 million on a 46,000-metres program of core drilling, designed primarily to confirm and upgrade the higher-grade component of the Boston and Doris deposits. The joint venture defined, in all three deposits, a measured and indicated mineral resource of 1.4 million oz. contained in 2.8 million tonnes grading 15.7 grams gold per tonne, and an inferred resource totalling 4.6 million tonnes grading 12.5 grams, or 1.8 million oz. The resource figures (3.2 million contained ounces) were lower overall than those calculated by BHP (4.3 million oz.), reflecting more conservative measures, including: tighter geological constraints, the capping of higher-grade assays, a higher cutoff grade, and the elimination of certain deeper drill holes with poor survey control.
This year’s winter-spring drilling program was initially budgeted at $10 million and saw 21,500 metres of core drilling completed. The program focused on expanding the known resource areas of the Boston and Madrid deposits, with limited infill drilling at Doris Connector.
Based on the positive results from the core drilling, the joint venture increased the budget by $2.9 million to allow drilling to continue through to the end of June. It is anticipated another 5,000 metres will be completed.
The biggest of the three gold deposits defined so far is the Boston deposit, which is adjacent to Spyder Lake, near the southern end of the belt, about 65 km south of tidewater. Boston was extensively tested by BHP with 231 surface holes totalling 70,180 metres and 230 underground holes comprising 16,500 metres. BHP went underground at Boston in 1996 and 1997 to define the geometry and grade of the mineralization, and to get a better handle on mining conditions. A decline was driven to a depth of 185 metres below surface and 27,000 tonnes of bulk samples of the B2 and B3 vein zones were collected from three different levels. Mining conditions were described as generally good.
Gold mineralization at Boston is associated with three sub-parallel and steeply dipping quartz vein zones typically 10-40 metres wide and hosted principally by hydrothermally altered and foliated meta-basalt. These zones have been termed B2, B3 and B4. Gold is spatially associated with coarse pyrite. About 85% of the gold occurs as coarse discrete grains and is free-milling. The remainder is in the sub-micron fraction, occurring within pyrite grains.
The B2 zone shows the best continuity and contains most of the mineralization. B2 is a 25-to-50-metre-wide zone consisting of numerous steeply
dipping and parallel en echelon quartz-carbonate veins developed at lithological contacts between meta-basalt and graphitic meta-sediment. Individual quartz veins vary from 20 cm to 3 metres in thickness and extend up to 50 metres along strike. The zone has been drill-tested 1,000 metres along strike and to a vertical depth of up to 780 metres.
In the first half of last year, Miramar and Hope Bay Gold drilled 134 holes into the B2 zone on a tight 10-by-15-metre grid. This work outlined some 650,000 oz. within 250 metres of surface and along a strike length of 450 metres in a measured and indicated resource of 1.3 million tonnes grading 15.2 grams. A further 895,000 oz. in 2.6 million tonnes grading 10.9 grams are categorized as inferred.
During the latter part of 2000, the partners drilled several holes from surface to test for possible extensions to the B2 zone, south of the underground ramp at Boston. Drilling intersected several narrow, uncapped high-grade intercepts, including:
– 2.9 metres of 100 grams in hole S239;
– 0.55 metre of 313 grams in hole S242; and
– 0.73 metre of 172 grams in hole S243.
This year, the partners further tested the Boston South area with 30 holes for a total of 8,138 metres. The 2001 drilling extended the high-grade mineralization within the B2 zone over 225 metres south of the Boston decline and to depths of up to 250 metres below surface. The mineralization occurs within at least three sub-parallel en echelon lenses. The 200 lens is the most extensive and remains open along strike and to depth. Highlighting the better results are a capped 11 grams over 4.4 metres (true width) in hole S265, 37.8 grams over 3 metres in hole S268, 14.6 grams over 3.5 metres in hole S281, 13.2 grams over 8.9 metres (including 4.1 metres of 21.2 grams) in hole S285, and 29 grams over 3.3 metres in hole S288.
Doris
The Doris deposit sits at the northern end of the belt, just 6 km from tidewater. It consists of a 4-km-long, steeply dipping quartz vein system in folded and metamorphosed pillow basalts. Like Boston, it is situated on an inferred inflexion in the regional Hope Bay break. The deposit was tested by BHP with 57,800 metres of diamond drilling in 201 holes.
Several parallel vein systems have been identified to date, the most important being the Lakeshore and Central veins. These have been traced over a strike length approaching 3 km and to depths of up to 530 metres. Most of the mineralization lies above a sub-horizontal diabase intrusive, though some intercepts below the diabase have yielded significant grades.
Most of the gold occurs along quartz-vein and wall-rock contacts and is associated with dark-coloured tourmaline-pyrite septa or ribbons.
The joint venture drilled 91 holes totalling 12,000 metres in the northern end of the deposit in 2000. Drilling showed that the Lakeshore and Central veins come together to form the Hinge zone, a thickened, high-grade, near-surface anticlinal fold closure. The Hinge zone was traced along a strike length of 325 metres and forms a large component of Doris North’s overall indicated resource, estimated at 710,000 tonnes grading 21.2 grams, or 483,000 oz. This will likely be a starting point for an open pit.
A little more than 1 km to the south in the Doris Central area beneath Doris Lake, the joint venture discovered the Stringer zone of mineralization associated with the Lakeshore vein. The Stringer zone contains multiple quartz veining within a dolomite halo in the hangingwall of the Lakeshore vein. An indicated resource of 418,000 tonnes grading 14.9 grams containing 201,000 oz. spans 525 metres of strike at Doris Central. The Lakeshore vein hosts about half of this resource.
This year, Miramar and Hope Bay Gold tested a 500-metre gap between the Doris Central and Doris North resource areas with seven holes totalling 1,423 metres. Drilling confirmed the presence of a shallow, sub-horizontal mineralized shoot within the en echelon C2 vein in the Doris Connector area. The three best holes returned intercepts of 8.4 metres (true width) grading 15.4 grams, 9.4 metres grading 19 grams, and 4.2 metres grading 10.6 grams.
The significance of the Connector zone is that it would pay for the development to put down a ramp to the Central zone from the Hinge zone on the northern end.
According to Quin, the key is to find other localized high-grade areas, like the Hinge, Connector and Central zones, without having to drill 6 km along the Lakeshore vein, which “goes on forever.”
He added: “These are pretty small targets to find with drilling. It really takes good geology to try to see these things from geophysics or mapping, where you can try to find indications that something is happening that is going to localize the gold.”
The joint venture had made two significant finds in the Madrid area during the first half of 2001. The Madrid deposit, 9 km south of Doris, received little work in 2000. It is a lower-grade deposit containing indicated resources of 328,000 tonnes grading 7.3 grams and inferred resources of 744,000 tonnes grading 9.3 grams, for a total of 300,000 contained ounces. The resource calculation was based on the joint venture’s reinterpretation of some 95 holes totalling 18,100 metres done by BHP.
The mineralization is related to carbonate alteration of mafic volcanics interlayered with sulphidic sediments. The Madrid deposit contains three main zones: Perrin, Matrim and Rand. Each exhibits shearing and brecciation, iron carbonate alteration, quartz veining and variable-grade gold mineralization.
Naartok
One of the higher-priority targets of the 2001 program was an area 250 metres west of Madrid, where a hole drilled at the end of the 2000 field season hit 34.8 metres (true width) grading 6.9 grams from surface, including 7.6 metres of 21.4 grams.
This previously unrecognized area of mineralization, dubbed Naartok, has been tested by 40 holes that defined a broad east-west trend of mineralization grading better than 1 gram over a strike length of 300 metres. The mineralization occurs in the hangingwall of a zone of intense ductile deformation, which extends 8 km from the southwestern shore of Windy Lake in the north, to south of Patch Lake.
Mineralization at Naartok occurs in a zone of multi-phase brecciation, quartz stockworking and silicification. Naartok is unique in that it has a wide payload of mineralization outside of the high-grade areas. Recent modelling has defined three steeply dipping higher-grade lenses within the broad halo: a thick one in the immediate hangingwall of the Deformation zone, and two smaller ones farther into the hangingwall and to the west.
The thick A lens, with gold values of 15-25 grams, extends 75-150 metres along strike, plunges 200 metres, and ranges from 5 to 25 metres thick. The best results include:
– 12.4 grams across 12.9 metres in hole M94;
– 12.1 grams across 16.9 metres in hole M95;
– 20.6 grams across 10.5 metres in hole M99;
– 13.9 grams across 13.6 metres in hole M126; and
– 22.9 grams across 8.7 metres in hole M143.
“With the discovery of the Naartok zone, we began to look along the edge of the Deformation zone, because clearly there seems to be a spatial relationship between the two zones,” said Fleming.
A second area of high-grade mineralization was discovered this spring in the Suluk area, 450 metres southeast of Naartok, under Patch Lake. Drilling has traced three sub-parallel, steeply dipping lenses of gold mineralization along a strike length of 350 metres, adjacent to the Deformation zone, a setting similar to that at Naartok. The mineralization at Suluk is contained within an interbedded sequence of basalts and lesser amounts of sediments. It is associated with silicification, quartz stockworks and pyrite within a broader sericite-dolomite alteration halo.
Better gold grades seem to be associated with higher percentages (greater than 5%) of fine-grained disseminated pyrite in altered horizons, and with horizons of pervasive silicification. Preliminary metallurgical testing of one sample of strongly graphitic sediment has identified active carbon that could pote
ntially affect gold recovery in a conventional cyanidation circuit. This is the first occurrence of this type of material in the Madrid area or in any of the other gold deposits in the Hope Bay belt. Additional metallurgical tests are continuing.
To date, the West lens carries the best grades over the widest intervals. A high-grade zone about 100 metres long has been tested to a depth of 175 metres below surface. Highlights from the 15 holes drilled to date at Suluk include:
– 3.8 metres (true width) grading 10.8 grams in hole M106;
– 19.4 metres grading 15.6 grams in hole M148;
– 3.5 metres grading 36.2 grams in hole M154;
– 6.7 metres grading 11.8 grams in hole M155;
– 4.3 metres grading 12.1 grams in hole M158; and
– 2.6 metres grading 22.8 grams in hole M162.
Additional drilling along the northern, 1,500-metre strike of the Deformation zone has yielded equally encouraging intercepts from the P112 and Perrin Bulge areas.
As part of the 2001 winter-spring program, a separate campaign of some 6,000 metres of reverse-circulation (RC) drilling in almost 200 holes targeted (with limited success) several prospects along the 80-km long belt.
“One of the big degrees of difficulty with the Hope Bay belt, from an exploration point of view, is that most of the more interesting geology doesn’t outcrop,” said Fleming. “There is very little alteration, fracturing or mineralization developed in the outcropping rocks. The more interesting terrain is either under water or in valleys filled with recent sediments.”
A 3,500-by-600-metre area over the North Patch target was recently tested by 43 shallow vertical RC holes totalling 362 metres. Chip logging revealed several alteration trends ranging from 300 to 1,500 metres long. Assay results are pending.
“We have this plethora of targets,” added Fleming, “and trying to rank them is not an easy task, but it’s a great situation to have. There is a lot of exploration that still needs to be done in this belt.”
The Hope Bay joint venture will be sending in a summer field crew in mid-July to carry out further regional exploration over six weeks once spring break-up ends. The partners will then consider a supplemental drilling program for the fall.
In April, Miramar and Hope Bay announced that they had agreed to spin off a separate package of mineral claims covering 100 sq. km on the Elu belt of rocks, 30 km northeast of the Hope Bay belt.
Elu is a greenstone belt of rocks comprising mafic and felsic volcanics, with minor sediments. It is about half as big as the Hope Bay belt and of higher metamorphic grade. BHP spent only $600,000 superficially exploring this package, whereas the joint venture has spent a further $100,000 on limited reconnaissance.
Given the focus on the Hope Bay belt, and with no work planned for the Elu belt in 2001, the joint venture partners decided to spin off Elu into
Under terms of the sale, Sherwood must raise $800,000 to fund an exploration program this year on Elu. Sherwood has negotiated a brokered private placement with Canaccord Capital for the sale of at least 3.2 million units priced at 25 per unit. Upon closing of the financing, Miramar and Hope Bay will each own a 27% stake of Sherwood.
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