Yellow Metal Has Big Companies Flocking To Nunavut

Nunavut celebrates its 10th anniversary in 2009. In recent years, the territory has seen a steady investment in its exploration and mining sector. Exploration and deposit appraisal spending in 2007 reached $338 million, a 60% increase over 2006. Estimates suggest 2008 spending will come in around the $300 million level.

There were 132 active exploration properties in Nunavut during 2008. These properties represent a wide range of commodities: iron, uranium, diamonds, base and precious metals. The properties are spread over the territory’s three regions: the Kitikmeot, Kivalliq and Qikiqtani.

Gold

Early in 2008, Newmont Mining completed a $1.5-billion acquisition of the Hope Bay gold properties, in the eastern Kitikmeot along the Coronation Gulf. Newmont’s land position covers the full 80-km length of the Hope Bay greenstone belt. Three deposits contain indicated and inferred resources of more than 10 million oz. gold — two small high-grade (using 4 to 8 grams gold per tonne cutoffs) lode deposits, Doris and Boston, and the low-grade (averaging 4 grams gold per tonne), bulk-tonnage Madrid deposit. Newmont is working on a comprehensive plan for the Hope Bay belt. A $34-million field program was conducted in 2008, including exploration and geotechnical drilling of 70,000 to 80,000 metres. The Doris deposits were drilled to increase the reserves. The company also did resource drilling at the Boston and Madrid deposits and regional drilling elsewhere along the belt.

Agnico-Eagle Mines continued its development work and further advanced its Meadowbank gold project, north of Baker Lake in the Kivalliq region. Probable gold reserves currently are 3.5 million oz. — 29.3 million tonnes at 3.7 grams gold per tonne, with more potential along strike and at depth. The project received its Type A Water Licence in July 2008. Exploration in 2008 identified ore-grade intercepts over minable widths outside of the currently known reserve and resource envelope. Evaluation of the underground potential is ongoing. Construction continues at the site, and initial production is anticipated for 2010.

Agnico-Eagle purchased a 14.5% interest in Comaplex Minerals, whose main assets include a 78% interest in the Meliadine West gold project and a 50% interest in the Meliadine East gold project. Both projects are near Rankin Inlet in the Kivalliq region. In 2008, Comaplex completed an underground bulk sampling program and infill drilling on the Tiriganiaq deposit, part of the Meliadine West property.

Dundee Precious Metals’ Back River project comprises the George and Goose Lakes gold deposits. Indicated resources are 3.415 million tonnes grading 10.9 grams gold per tonne or 1.19 million oz. gold. The inferred resource is 3.555 million tonnes at 10.2 grams gold or 1.16 million oz. gold. Other properties, such as Wishbone, located 50 km west of the main project, cover favourable geological settings for gold, copper, silver, zinc and lead mineralization. Dundee budgeted $12.8 million for gold and massive sulphide exploration. This work included infill and exploratory drilling, bulk sampling of both George and Goose Lakes deposits and geological mapping, sampling and geophysical surveying on the Wishbone property.

Base Metals

In 2008, Australian zinc-gold company OZ Minerals acquired several properties in western Nunavut, including two massive sulphide projects: the copper-zinc-gold-silver High Lake and copper-zinc-lead-silver Izok Lake deposits.

High Lake, located 50 km inland along the Coronation Gulf, contains a known resource of 17.3 million tonnes averaging 3.3% zinc and 2.2% copper. Izok Lake, located south of High Lake along the Nunavut-N. W. T. border, is the largest of OZ Minerals’ deposits in Nunavut and hosts a resource of 14.8 million tonnes. The average copper grade is 2.6%, whereas the average zinc grade is 12.8%. OZ recently reviewed its capital and operating expenditures and announced that it will defer several capital projects and cut operating costs.

The Hackett River silver-zinc project, in western Kitikmeot, owned by Sabina Silver hosts at least eight known massive sulphide occurrences — including East Cleaver Lake, Boot Lake and Main Zone (or “A” Zone). Recent results from the Jo Zone, another significant occurrence, indicate excellent potential for additional resources, reporting values of 284.3 grams silver per tonne, 5.4% zinc and 2.6% copper over 30 metres, including 756.8 grams silver and 13.88% copper over 4.55 metres.

Sabina suggests that Hackett River will have a 13.6 year mine-life at milling rate of 10,000 tonnes per day, with annual production of 12.4 million oz. silver, 147,300 tonnes zinc, 9,400 tonnes copper, 16,800 tonnes lead, and 17,200 oz. gold. Indicated resources are 40.1 million tonnes and inferred resources stand at 7 million tonnes. The project recently entered Nunavut’s regulatory process and will be subject to a review by the Nunavut Impact Review Board.

Uranium

Uranium exploration activities (a total of 44 properties) occurred across the territory, with work concentrated in the Thelon basin of the Kivalliq region, and the Hornby Bay basin of western Kitikmeot region. Based on positive results from a viability study, Areva Resources Canada, together with partners JCU Exploration and Daewoo Corp. , announced in December 2007 that they will be advancing the Kiggavik uranium project (Kivalliq region) to the environmental impact assessment and feasibility phases. The Kiggavik project entered the regulatory process with the submission of a project description to territorial regulators and boards by Areva in November 2008.

Kaminak Gold and Nunavut Tunngavik formalized an exploration agreement on the Angilak uranium property, 335 km west of Rankin Inlet. Evaluation of the Angilak property’s many uranium-copper-gold occurrences, including the Lac Cinquante uranium deposit, began in 2008. Late in 2008, Forum Uranium signed a memorandum of understanding with NTI to earn a 100% interest in all minerals on one half of IOL parcel BL-21, located 20 km west of the Kiggavik project.

The Ferguson Lake project is the largest nickel-platinum group elements (PGEs) project in Nunavut. In 2008, Starfield Resources continued its drill program to define the low- sulphide high-grade PGEs potential, and to upgrade inferred copper- nickel-cobalt-PGEs resources in the West Zone to indicated resources. Additional geophysical targets were identified as prospects outside of the main zone. Starfield is planning a test plant for metallurgical studies on a bulk sample from Ferguson Lake beginning mid-2009.

Diamonds

Diamond exploration across the territory produced encouraging results. Diamonds North discovered seven new kimberlite bodies during its 2008 drilling program at its Amaruk project, in the Kitikmeot region. This brings the total number of kimberlites on the property to 29, and the majority of these are diamondiferous.

Indicator Minerals, and its partner Teck, are encouraged by recent drilling results on the Darby project in central Nunavut. These findings resulted in Teck increasing the 2008 exploration budget by 18%. Additional kimberlite boulders were discovered in two areas 18 and 28 km from known occurrences. These areas may represent new kimberlite clusters. Nine kimberlites have been discovered at Darby, five of which are diamondiferous.

At the Aviat project, Stornoway Diamond concentrated on outlining the size and grade potential of known kimberlite sheets within its Eastern Sheet Complex. The lateral extent of the diamondiferous AV267 body was expanded from 125 hectares to 250 hectares. The company collected a 203- tonne sample, and discovered a new kimberlite sheet. Stornoway also completed delineation drilling on the AV9 kimberlite pipe discovered in 2007.

Partners Shear Minerals and Stornoway discovered nine kimberlites on the Churchill diamon
d project. They identified two of the new kimberlites (Killiq and the Kahuna breccia) as being similar to other highly diamondiferous kimberlites on the property.

Peregrine Diamonds completed a field program on its Chidliak prospecting permits, 150 km northeast of Iqaluit on Baffin Island (Qikiqtani region). Work in 2008 included a large airborne magnetic/electromagnetic survey and an indicator mineral sampling program. Three diamondiferous kimberlites — CH-1, 2 and 3, all exposed at surface — were discovered. A 2.28-tonne sample collected from CH-1 returned a diamond content of 1.56 carats per tonne and included a 2.01-carat, gem-quality, octahedral diamond.

In November 2008, BHP Billiton chose to exercise its earn-in rights for the Chidliak property. The agreement calls for BHP Billiton to incur a total of $22.3 million in future exploration expenditures on Chidliak in order to earn a 51% interest. An expanded 2009 exploration program will focus on evaluating the three known kimberlites, conducting exploration activities with the hope of discovering additional kimberlites, and evaluating the more than 170 known kimberlite- type geophysical anomalies. In addition to its diamond potential, Chidliak also hosts platinum and base metal anomalies.

In the northern Kivalliq region, north of Peregrine’s Nanuq diamond property, Peregrine’s joint-venture partner Indicator Minerals announced the discovery of a new kimberlite at Nanuq North. Three kimberlites (Kayuu, Natuarlik and Tudlik) discovered in 2007 returned encouraging diamond results. Additional claims were staked in 2008, increasing the Nanuq land holdings from 201,000 to 314,000 hectares.

Iron

On northern Baffin Island, Baffinland Iron Mines completed its year-long, $70 million bulk-sample program at the Mary River iron ore project. The Mary River site, located 150 km south of Pond Inlet, contains high-grade magnetite and hematite deposits. Based on definition drilling done since 2004, Baffinland announced revised ore reserve figures in 2008 of 365 million tonnes at Deposit No. 1, and 500 million tonnes at neighbouring Deposits Nos. 2 and 3. The mining plan would develop Deposit No. 1 at a rate of 18 million tonnes annually for the first 20 years of production. In 2008, Baffinland submitted a project development proposal for Mary River, which includes a full-season deep water port at Steensby Inlet, and a 140 km rail route connecting the mine to the port.

Gold Exploration

Commander Resources prospecting program on the Hebert Prospect, located in its Baffin Island gold property, returned encouraging results. Numerous quartz-arsenopyrite veins and minor stratabound semi-massive gold-bearing arsenopyrite gossans were discovered in a 1.5-km corridor. Channel sampling over a 200-metre portion of this corridor returned several high gold values, the best being 91.06 grams gold per tonne over 1.6 metres (including 446.6 grams gold over 0.3 metre). Rock chip and grab sampling returned high gold values including 1,388 grams gold per tonne, 861 grams gold, 720 grams gold, 213.5 grams gold and 660.3 grams gold.

Outlook

Based on values from Natural Resources Canada’s expenditure surveys, including 2008 projections, private industry has invested an estimated $1.56 billion in Nunavut since 1999. Estimates from this survey indicate 2008 spending levels will be reduced from 2007, and many mining and exploration companies have publicly indicated that overall development and exploration plans and spending will be scaled back this year. In 2009, as Nunavut reflects on its first 10 years, it is also keeping a close eye on the next decade — readying itself to harness the opportunities and see through the challenges that lie ahead.

For more information, visit www.ainc-inac.gc.ca/nunavut