Dec '07/Jan '08


Canada’s emerging exploration frontier starts delivering

Exploration and mining heat up in Nunavut

By Karen D. Costello and Linda J. Ham, district geologists, Iqaluit, Nunavut, Indian and Northern Affairs Canada 

During 2006, an estimated $200 million was spent by the exploration and mining sector in Nunavut. Based on Natural Resources Canada’s (NRCan) biannual survey, $225 million is forecast for 2007. The overall number of hectares covered by some form of mineral tenure declined from 48.6 million hectares in 2005 to 27 million hectares in 2007, as explorers turned to more focused and higher cost field programs.

The number of exploration properties under evaluation in the territory’s three districts — Kitikmeot, Kivalliq and Qikiqtani — has increased over last year. The largest increase is with grassroots projects targeting uranium; most companies are exploring for unconformity-associated mineralization associated with Proterozoic basins. There are over 135 properties undergoing varying levels of exploration: nine base metals, 41 diamonds, 25 gold and precious metals, two iron, six nickel-copper-platinum group elements (PGE’s), 49 uranium, one coal and one sapphire.

As major mining companies strive to replenish reserves, Nunavut projects operated by juniors are attracting attention. This year, three juniors with advancing exploration projects were courted by international major mining companies. Majors continue to forge technical alliances with and make strategic investments in juniors with significant exploration portfolios in Nunavut.

Kitikmeot Region

There are several advanced-stage exploration properties in addition to Nunavut’s first mine, the Jericho Diamond Mine. At the Jericho Mine, which opened in 2006, Tahera Diamond Corporation has increased production grade to 0.90 carats per tonne and the value of production for the second quarter of 2007 was $6.9 million. However, financial losses were incurred, leading the company to adopt a comprehensive financing and improvement plan on which progress is being made. Tahera, De Beers Canada Inc. and Nordic Diamonds Inc. sampled 500 tonnes of the JD-3 kimberlite on the Jericho claims and conducted drilling and ground geophysics on the Anuri kimberlite property.

Stornoway Diamond Corporation added to their land holdings with their takeover of Ashton Mining of Canada Inc.and Contact Diamond Corporation.The Artemisia diamond property optioned to Vaaldiam Resources Ltd. and Ashton was returned to Stornoway.

Diamondex Resources Ltd. acquired Trigon Exploration Canada Limited and continued work on numerous diamond properties in the Coronation Gulf region and in eastern Kitikmeot.

The Kugaaruk area on the Boothia Peninsula, a potentially significant diamond district discovered in 2006, continues to return encouraging results. Indicator Minerals Inc., Hunter Exploration Group and Teck Cominco Limited discovered four more kimberlites on the Darby project, bringing the total to nine. Indicator and Hunter are also evaluating their Barrow project. Diamonds North Resources Ltd. explored independently and in joint ventures with several companies (Shear Minerals Ltd., International Samuel Exploration Corp. and Arctic Star Diamond Corp.). On their wholly-owned Amaruk project, Diamonds North discovered 17 new kimberlites,for an updated total of 22.Diamonds North and sister company Uranium North Resources Corporation, continued exploring for diamonds and uranium on trans-border properties between the NWT and Nunavut on both Victoria Island and in the western Kitikmeot.

Newmont Mining Corporation made an all-cash offer for Miramar Mining Corporation, whose prime assets are extensive land holdings in the Hope Bay greenstone belt. Miramar is in the process of acquiring all of the necessary authorizations for the Doris North open pit gold mine, scheduled to start in 2008. Active exploration is underway throughout the belt, with at least two more gold-bearing systems identified for future development. As of April 2007, the updated gold resource estimates, for the entire belt, point to an indicated total of 5.2 million ounces at 4.54% grams per tonne and inferred resources of 5.4 million ounces of gold at 3.6 grams per tonne. Drilling in 2007 suggests further increases in these resource estimates.

The Back River Project (George Lake/Goose Lake; Dundee Precious Metals) is a banded iron formation, advanced gold property. Updated resource estimates (based on over 1,000 drill holes) point to indicated resources of 3.41 million tonnes at 10.9 grams per tonne Au and inferred resources of 3.55 million tonnes at 10.2 grams per tonne Au. Plans for 2007 included delineation drilling, soil and rock sampling, geochemistry and bulk density determinations for resource modelling.

Committee Bay Resources continued their gold exploration efforts along the Committee Bay greenstone belt in eastern Kitikmeot and northern Kivalliq. The best prospects include Three Bluffs, Raven, Antler, Anuri, West Plains and Inuk. Drilling in 2007 was designed to increase the Three Bluffs’ inferred resource of 1.897 million tonnes at 8.0 grams per tonne Au.

Zinifex Limited, an Australian zinc-lead miner, completed a take-over of Wolfden Resources and their advancing projects within the High Lake greenstone belt (western Kitikmeot). These projects include the volcanogenichosted massive sulphide deposits of Izok, High Lake and Hood, as well as the Ulu gold deposit and Gondor base metals project (60 per cent owned with Xstrata plc). Izok has indicated resources of 14.8 million tonnes grading 2.5% Cu, 12.8% Zn, 1.28% Pb and 71 grams per tonne Ag, plus inferred resources of 0.37 million tonnes grading 3.79% Cu, 6.40% Zn, 0.27% Pb and 54.2 grams per tonne Ag.

Wolfden submitted a draft Environmental Impact Statement in November 2006 for the High Lake copper-zinc open pit and underground operation. Regulatory review is ongoing and a final development decision is expected in 2008. Indicated reserves are 17.3 million tonnes of 2.25% Cu, 0.32% Pb, 3.35% Zn, 0.95% grams per tonne Au and 69.75 grams per tonne Ag; inferred reserves are 1.3 million tonnes of 1.17% Cu, 0.28% Pb, 3.36% Zn, 0.78 grams per tonne Au and 64.6 grams per tonne Ag.Zinifex also acquired Lupin, a folded, banded iron formation former gold mine east of Izok.

Sabina Silver Corporation’s 2007 highlights at its Hackett River silver-zinc-gold-copper-lead project included a Preliminary Economic Assessment by Wardrop Engineering Inc.This study suggests a 13.6 year mine life, with an average annual production of 324.7 million pounds Zn, 12.4 million ounces Ag, 20.7 million pounds Cu, 37 million pounds Pb and 17,200 ounces Au.

North Arrow Minerals, a new company to Nunavut, optioned Strongbow Exploration Inc.’s properties (gold, base metals and the precious metals Silvertip project) in western Kitikmeot and undertook grassroots exploration activities. Kaminak Gold Corporation has optioned its Kitikmeot properties to various partners.

The Muskox Intrusion, a layered maficultramafic complex with nickel-copperplatinum group elements (PGEs) mineralization, is being explored by Adriana Resources Inc. and 50/50 Nunavut Ltd. A new zone of mineralization was identified near the Keel portion of the intrusion. Silvermet Inc. and Prize Mining Corporation conducted work on their claims in the south-central portion of the complex.

The Hornby Bay Basin of western Kitikmeot has attracted several companies searching for uranium. Exploration efforts by UNOR Inc. (owned 19.5 per cent by Cameco Corporation) have identified uranium targets within their extensive land holdings, some of which are governed by agreements with Cameco and Adriana. Triex Minerals Corporation and Pitchstone Exploration Ltd. continued delineation drilling and evaluation of the Mountain Lake deposit and nearby targets.

Kivalliq Region

The gold,diamond and nickel exploration projects in the Kivalliq were joined in 2007 by a new generation of uranium explorers. Of the 51 properties in the region, 27 are under evaluation for their uranium potential, with two more having uranium-base metal associations. The majority of the uranium exploration interest is directed towards the Thelon Basin and its underlying basement rocks.

Shear Minerals Ltd. and partner Stornoway Diamond Corporation had another successful year in evaluating the diamond potential of the Churchill Property. The 2007 work focused on continued exploration of promising indicator mineral trains and geophysical anomalies. As well, evaluation continued on four diamond-bearing, vertically-emplaced kimberlite dykes (Jigsaw, Notch, Kahuna and Meeka) that returned sample grades up to 2.18 carats per tonne. Initial results from the bulk sampling program at Kahuna yielded an average diamond content of 0.90 carats per tonne. Drill-testing along the Kahuna trend suggests a kimberlite body along a 4.5 kilometre strikelength. Thirty-one new kimberlite occurrences were discovered in 2007, 15 in drill core and 16 from surface occurrences. Three of the kimberlites are interpreted to be similar to diamond-bearing ones found elsewhere on the property in 2006.

Peregrine Diamonds Ltd.was active on its Nanuq Diamond Project,northeast of Baker Lake, conducting ground-based geophysical surveys and follow-up drilling. Peregrine has entered into a letter of agreement with Indicator and Hunter for exploration on the Nanuq North property,where there are 67 claims covering 46,955 hectares.

Agnico-Eagle Mines Ltd. started off 2007 by putting in an offer to acquire all shares of Cumberland Resources Ltd., the 100 per cent owner of the Meadowbank gold project.The transaction was completed in July 2007.The Meadowbank project has gold reserves of 21.3 million tonnes grading 4.2 grams per tonne.Agnico-Eagle committed $8 million to the 2007 field program,exploring for potential extensions and new zones of mineral resources at the Goose South (discovered 2007) and Cannu zones (discovered 2005). Drilling was used to test the mineral resource envelopes in, or near, the open pit reserves at the Portage and Goose Island zones. Results suggest continuous gold mineralization over 3.5 kilometres and these results could potentially lead to increases in the resources and reserves.

Comaplex Minerals Corporation has received regulatory approval for an underground exploration decline into the Tiriganiaq gold deposit on its Meliadine West Project (78 per cent Comaplex; 22 per cent Resource Capital Fund). The proposed 11-month underground program has been designed so that, if evaluation work (bulk sample and a feasibility study) is positive, the decline could be used for production purposes. An infill-drill program, designed to upgrade the resource status, increase the understanding of the deeper parts of the deposit and test portions of the potential open pit on the Tiriganiaq deposit,was completed.

In southern Kivalliq, Newmont Canada Exploration has a gold exploration project west of Nueltin Lake, to look for Proterozoic sediment-hosted gold. Maze Lake is another early-stage gold exploration project, targeting Archean greenstonestyle gold mineralization,operated by Terrane Metals Corporation and optioned from Placer Dome.

The Ferguson Lake Project, operated by Starfield Resources Inc., is the most advanced nickel-cobalt-copper-PGE project in Nunavut. In 2007, a revised mineral resource estimate for the Main West Zone was released and indicated 15.2 million tonnes grading 0.71% Ni, 1.04% Cu, 0.08% Co,1.64 grams per tonne Pt and 0.28 grams per tonne Pd. This represents a 76 per cent increase over a previous estimate. Delineation drilling of the low sulphide-PGE zone, 50 metres below the massive sulphide lenses of the Main West Zone,was the focus of the 2007 drill program. A scoping study is underway to meet the requirements of a Preliminary Economic Assessment, under NI 43-101 guidelines.

Intrepid Mines Ltd. and Aura Silver Resources Inc. are exploring the Greyhound property within the Archean Woodburn Lake greenstone belt, 50 kilometres north of Baker Lake. The property hosts sulphide-enriched boulders containing base and precious metals, suggestive of volcanogenic massive sulphide mineralization.

Drill-testing of zinc, copper, gold and uranium targets was conducted by Tri Origin Exploration Ltd. on the Keewatin Project.

There are 14 companies actively involved in uranium exploration in the Kivalliq.

The most advanced properties are Kiggavik and Sissons, collectively referred to as the Kiggavik Project. Past work identified three deposits with significant uranium resources: Kiggavik, Andrew and End. In late 2006, Areva Resources Canada Inc. commenced a viability study that included geotechnical drilling, environmental studies and near-deposit exploration work. Extensive work is planned for 2008.

Cameco Corporation is exploring for uranium on four properties, three in the Thelon Basin area and one west of Nueltin Lake in southern Kivalliq.

In 2007, Titan Uranium Inc. completed its second season of drilling on its Thelon North properties and acquired 61 new claims, covering areas with favourable geology and several radiometric anomalies. During 2007, Titan entered into an arrangement with Mega Uranium Ltd. whereby Mega can acquire a 51 per cent interest in all of Titan’s interests in the Thelon Basin.

Western Uranium Corporation’s Ruby Hill Project occurs along the north and north-east perimeter of the Thelon Basin. Ground geophysics, surface sampling and prospecting and drill testing of conductors identified from the 2006 airborne surveys were conducted in 2007. Cameco will acquire a ten per cent equity interest in WUC through a non-brokered private placement to form a strategic alliance.

A neighbouring project along the Thelon Basin’s north margin is the Garry Lake property, owned and operated by Uravan Minerals Inc. Results of two new geophysical surveys will be integrated with an area-wide geochemical compilation to identify coincident anomalies and potential drill targets for 2008.

Bayswater Uranium Corporation began field work on its five wholly-owned claim blocks and ten prospecting permits (50 per cent-owned through the Canadian Uranium Joint Venture with Strongbow). Results from their 2006 airborne magnetic survey suggest kimberlite potential exists on the Itza Lake claim block, now under option to Stornoway.

The North Thelon Joint Venture (NTJV), operated 50/50 by Forum Uranium Corporation and Superior Diamonds Inc., covers a portion of the eastern margin of the Thelon Basin and an option on a property northeast of the Kiggavik area from Tanqueray Resources Ltd.

Uranium North is actively exploring for uranium on two project areas: Amer Lake and South Baker. Airborne geophysics and extensive sampling on numerous prospects was completed, with additional work planned for 2008.

The Baker Uranium Project is Pacific Ridge Exploration Ltd.’s flagship property, optioned from Kaminak Gold Corporation. Pacific Ridge has identified a number of priority drill targets, including Lucky-7, KZ Zone and 7-One. New drilling intersected uranium mineralization at Lucky-7 Zone, associated with fracturing and clay alteration of the Kazan sandstone within a northerlytrending sub-vertical structural corridor emplaced with a mafic dyke. Drilltesting below the 2006 holes encountered thicker and higher grade uranium intersections at depth.

Outside of the Thelon Basin, Ur Energy Inc. (Bugs Property) and Kaminak (Yathkyed Iron Oxide Copper Gold +/- Uranium Property) have early-stage uranium exploration projects underway.

Qikiqtani Region

The Mary River Iron project of Baffinland Iron Mines Corporation dominates the Qikiqtani development scene. For 2007, a $90 million program was announced, with exploration, bulk sampling and other activities in support of a Definitive Feasibility Study and a Scoping Study underway. Detailed engineering and economic investigations continue. Exploration drilling between Deposit 3 and 3A shows continuity, with varying widths. Exploration and geomechanical drilling were completed on Deposit No. 1 and Deposit No. 3. Geotechnical drilling focused on proposed port sites, overburden testing at the Mary River project site and drilling on the Mary River to Steensby Inlet rail corridor. Baffinland is planning a bulk sample of 250,000 tonnes of high-grade hematite and magnetite ore to be delivered to several steel mills for late 2008.

Advanced Explorations Inc. and Roche Bay plc entered into a joint venture agreement to undertake work required to complete a feasibility study on the Roche Bay banded iron formation (magnetite) deposits.

The Aviat project on the Melville Peninsula was Stornoway’s largest project, in partnership with BHP Billiton and Hunter. The 2007 summer exploration program helped to delineate and extend a series of stacked, flat-lying kimberlite sheets, up to approximately 7 metres thick, and resulted in the discovery of a new pipe (AV 9). Increased understanding of the sheet complex has enhanced Aviat’s tonnage potential. All kimberlites have proven to be diamondiferous, with the new AV 9 pipe currently undergoing analysis for diamond content. The 1.04 million acre Qilalugaq Project is covered by an option agreement between Stornoway and BHP Billiton.Stornoway discovered four new kimberlite dykes (Naujaat 3 to 6) and extended the strike-length of the Naujaat 1 and 2 dykes discovered in 2006. Samples for macro-diamond analysis were collected and 600 kilograms from the Naujaat 1-6 bodies was submitted for caustic fusion analysis. Sixteen kimberlites are now known within a 26 kilometre trend, interpreted to be a structural corridor exploited by kimberlite magmas rising from the mantle.

Peregrine Diamonds Ltd. operates three diamond exploration project areas, Chidliak, Mirage Bay and Foxe Basin, covered by two agreements between Peregrine and BHP Billiton. Follow-up heavy mineral sampling was conducted on the Mirage Bay and Chidliak projects to better define the indicator mineral trains and constrain an up-ice indicator cut-off. On the Foxe Basin project, 14 aeromagnetic anomalies, identified on Prince Charles Island,were followed-up with detailed ground-based magnetic surveys. Heavy mineral samples were collected from Prince Charles and other islands within the project area.

Diamond exploration is underway in the High Arctic by De Beers, in partnership with Pure Diamonds Exploration Inc. Processing of the 2006 till samples was completed, resulting in the identification of two kimberlite indicator mineral areas on Cornwallis Island and in the western portion of Devon Island (Cape Osborne). A detailed program of airborne magnetic surveying and follow-up till sampling was undertaken on the Cornwallis Island permit block.

De Beers continued work on the Baffin Island Diamond Project by drilltesting several geophysical targets and evaluating the Aliguja and Amon kimberlite trend. The next phase of exploration will focus on evaluating existing discoveries and related targets along kimberlite boulder trains within the project area.

Diamondex conducted ground geophysics, till and stream sediment sampling, and diamond drilling on the Brodeur Property. Focused drill-testing of the Tuwawi kimberlite was undertaken and 9 of 14 holes drilled over the Nanuk and Kuuriaq target area intersected kimberlite.

Work on the Baffin Island Gold Project, operated by Commander Resources Inc., continues to reveal the gold endowment of the Lower Proterozoic iron formations and shear zones along the 140 kilometre greenstone belt. With the discovery of the Hebert mineralized trend (a 14 square kilometre area with swarms of quartz veins carrying arsenopyrite, pyrrhotite and minor galena), 17 gold prospects have now been identified.

On Baffin Island, Cameco acquired 27 prospecting permits around the Proterozoic Borden and Fury-Helca basins. These basins are similar in age to the other uranium-bearing sedimentary basins in Nunavut and also similar in characteristics to the uranium-bearing Athabasca basin and basins in Australia. They have received limited attention for their uranium potential and are currently being explored by Cameco and UNOR.

Looking Forward

Recent initiatives undertaken by various stakeholders and by government in Nunavut, such as exploring options of online map selection, the release of Nunavut Tunngavik Incorporated’s (NTI) uranium exploration policy and the further development of (a web-based portal linking users to publicly available Nunavut geoscience information), will allow Nunavut to remain competitive with other jurisdictions in Canada.

All exploration companies operating in Nunavut are encouraged to ensure they gain a good understanding of the operating and regulatory requirements, and acquire all applicable authorizations and permits prior to proceeding. A good resource is INAC’s Exploration and Mining on Crown Lands in Nunavut Guidebook available online at Historic exploration efforts and government geoscience mapping projects have identified prospective geological terrains within Nunavut.Armed with new ideas, modern technologies, improved understandings of the geological environment and revised exploration models, companies are venturing into under-explored areas and making gains. New discoveries are occurring in the territory, confirming the high mineral potential and likely emergence of core mining districts within Nunavut.

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