Dec '07/Jan '08


Saskatchewan leads the way

Article from Saskatchewan Energy and Resources, first published in the Northern Prospector 2007-2008 by the Manitoba-Saskatchewan Prospectors and Developers Association 

In 2007, it is estimated that about $277 million will be spent on mineral exploration in Saskatchewan. This level of expenditures represents an all-time record in terms of current-year dollars and continues a substantial year-overyear increase marked by actual expenditures of $243.6 million in 2006, $150 million in 2005, $60.8 million in 2004 and $31.3 million in 2003. As of October 12, active mineral dispositions totalled about 13.21 million hectares pursuant to the Mineral Disposition Regulations of 1986. In addition there were 50 active potash dispositions, comprising permits and leases, totalling about 1.35 million hectares.

In 2006, Saskatchewan was the world’s leading producer of potash and uranium, accounting for about one-third of global production of potash and 25 per cent of primary world uranium production. Gold, coal, silica sand, copper, zinc, silver, sodium sulphate, bentonite and sodium chloride were also mined. The total value of mineral sales was about $3.2 billion.


Uranium exploration expenditures are forecasted to rise slightly in 2007, reflecting the spot price for uranium, which continued to rise from US$72 per pound U3O8 at the start of the year to a high of US$136 per pound U3O8 in July 2007 (source of uranium spot prices: the Ux Consulting Company, LLC). By October 22, the spot price had settled to US$80 per pound U3O8; this compares to US$31.25 per pound U3O8 at the end of 2005 and an all-time low of US$7.10 per pound U3O8 in late 2000. Most uranium exploration is focused within and adjacent to the Athabasca Basin of northern Saskatchewan, the world’s pre-eminent uranium district. The basin contains the largest, highest grade deposits in the world and currently accounts for about 25 per cent of primary global uranium production. It is still considered highly prospective as underlined by a steady stream of recent exploration successes. These discoveries, which include some in the deeper western parts of the basin and in basement rocks beneath the unconformably overlying sandstones of the Athabasca Supergroup, reflect advances in the understanding of the geological context of the uranium deposits as well as enhancements in geophysical technologies.

About 40 companies are currently exploring the Athabasca Basin or ground immediately adjacent to it. This activity ranges from grassroots exploration to prefeasibility-stage projects. Large exploration programs include those of producers Cameco Corporation, AREVA Resources Canada Inc. and Denison Mines Corp. as well as junior UEX Corporation. Of particular note are the exploration successes at the Kianna and Anne deposits of the Shea Creek uranium project (AREVA, 63.25 per cent; UEX Corporation, 36.75 per cent) south of Cluff Lake. At the Kianna deposit, multiple zones of high-grade uranium have been discovered at depths from 665 to 917 metres in sandstone above the unconformity, at the unconformity (713 to 758 metres) and in basement rocks. Recently, UEX reported that in the fall 2007 drilling program at the Anne deposit, hole SHE 122-1 intersected 4.73% U3O8 over 33.7 metres, between 713.8 and 747.5 metres, including 23.21% U3O8 over 3.6 metres from 715.9 to 719.5 metres. This basement intersection is the second best reported from the Anne deposit. Also at the Shea Creek uranium project, work has begun in preparation for sinking a 950-metre-deep exploration shaft, between the Anne and Kianna deposits, at an estimated capital cost of $100 million.

Adjacent to the Athabasca Basin, uranium exploration is underway in the Uranium City area, northeast of Fond du Lac, northeast and southwest of Wollaston Lake, south of Key Lake and south of Dufferin Lake. In southwestern Saskatchewan, Uranium Power Corporation has optioned the South Fork project from JNR Resources and is evaluating the potential of Eocene paleochannels to host uranium mineralization similar to deposits in the Powder River Basin uranium district of Wyoming.

In 2006, uranium production in the Athabasca Basin came from multiple operations: McArthur River, Key Lake, Rabbit Lake and McClean Lake. Ore from McArthur River Mine [Cameco, 69.805 per cent (operator); AREVA, 30.195 per cent] was mixed with low-grade waste stockpiled at Key Lake and processed at the Key Lake Mill [Cameco, 83.33 per cent (operator); AREVA, 16.67 per cent], yielding 18.7 million pounds U3O8, the same as in 2005. This same level of production has been forecasted for 2007.As of December 31, 2006, proven and probable reserves at McArthur River were 367 million pounds U3O8 from ore grading 20.55% U3O8. At Cameco’s wholly owned Rabbit Lake operation, production from the Eagle Point mine totalled 5.1 million pounds U3O8 compared to 6.0 million pounds U3O8 in 2005. Production for 2007 has been forecasted at 5.4 million pounds U3O8.Proven and probable reserves at Rabbit Lake, as of December 31, 2006,were 19.1 million pounds U3O8 from ore grading 1.18% U3O8. At the McClean Lake operation [AREVA, 70 per cent (operator); Denison, 22.5 per cent; OURD (Canada) Co. Ltd., 7.5 per cent], production in 2006, which was from the Sue A and Sue E deposits as well as stockpiled Sue C ore,was 1.8 million pounds U3O8. This compares to production of 5.49 million pounds U3O8 in 2005. Production in 2007, which will be from the Sue A and Sue E deposits, is forecasted to remain at about 1.8 million pounds U3O8. As of December 31, 2006, reserves at the McClean Lake operation comprised 10.68 million pounds U3O8 from ore at an average grade of 0.77% U3O8.

Four uranium deposits are currently in development: Cigar Lake, Midwest, McClean Lake North and Sue B of the McClean Lake operation. Cigar Lake, one of the world’s largest high-grade deposits, is owned by joint venture partners Cameco (50.025 per cent),AREVA (37.1 per cent), Idemitsu Uranium Exploration Canada Ltd. (7.875 per cent), and TEPCO Resources Inc. (5 per cent). Proven and probable reserves at Cigar are 226.3 million pounds U3O8 from ore at an average grade of 20.67% U3O8. Construction at Cigar Lake, which began January 2005 and was expected to take 27 months to complete, was set back by two water influx events in 2006. The second of these, in October 2006, resulted in flooding of the mine’s underground workings.Cameco, the operator, has developed and started to implement a remediation plan for Cigar Lake; production is now anticipated in 2011.After production commences, it will take about three years to ramp up to an expected full production of 18 million pounds U3O8 per year.

At the Midwest project (AREVA, 69.16 per cent; Denison, 25.17 per cent; OURD, 5.67 per cent), AREVA, the project operator, submitted a project description to the regulatory authorities in December 2005. Providing all of the necessary permits are received, work on the proposed open pit mine could commence in 2008 with production starting in 2009. The ore will be milled at the nearby McClean Lake mill. Proven plus probable reserves for the Midwest deposit are 26.7 million pounds U3O8 from ore at an average grade of 6.05% U3O8. The Midwest ore also contains 4.37% Ni and 0.34% Co.

Three other uranium deposits are currently the subject of feasibility studies: Millenium,West Bear and Raven-Horseshoe.


In 2007, spending for diamond exploration is forecasted to be about $90 million, down slightly from actual total expenditures of $99 million in 2006. Most of the 2007 expenditures are targeted at two advanced-stage exploration projects underway in the Fort à la Corne forest 60 kilometres east of Prince Albert.

Shore Gold Inc.’s Star kimberlite project is the focus of a $60 million prefeasibility study that is moving towards completion. Underground bulk sampling, which recovered almost 70,000 tonnes of kimberlite, yielding over 10,000 carats of diamonds, and an extensive large-diameter (1.2 metres) drilling program, are providing the information required to complete a NI 43- 101 compliant mineral resource calculation. The four largest stones recovered from the Star Kimberlite weighed 49.50, 22.56, 19.67 and 19.58 carats. Shore’s current geologic model, which is supported by nearly 19 kilometres of diamond drilling, suggests that the Star kimberlite consists of an estimated 276 Mt of kimberlite. Five kimberlite units are distinguished: Cantuar, Pense, Early Joli Fou, Mid Joli Fou and Late Joli Fou. The Early Joli Fou kimberlite, which has the highest grade of all the phases, consists of two main units, pyroclastic kimberlite and kimberlitic breccia, and composes about 60 per cent of the Star body. Shore has reported a modelled value of US$130 per carat for a 4,991.68 carat parcel of diamonds from a composite sample of the Early Joli Fou kimberlite that was assumed to be composed of 70 per cent pyroclastic kimberlite and 30 per cent kimberlitic breccia. Shore is also undertaking extensive engineering and environmental studies and hopes to progress the Star project to a mining stage by 2012.

The other significant diamond exploration program is that of the Fort à la Corne Joint Venture (FALCjv) in which Shore is the operator with a 60 per cent interest and Newmont Mining Corporation of Canada has a 40 per cent interest. The FALCjv’s mineral disposition holdings include 52 drill-confirmed kimberlite bodies in the main Fort à la Corne kimberlite cluster and 11 drill-confirmed kimberlites in a satellite cluster 25 kilometres to the northeast. Many of the kimberlites in the Fort à la Corne kimberlite field are volumetrically among the largest in the world. The FALCjv is undertaking a $66.5 million accelerated exploration and evaluation program of the Star West part of the Star kimberlite and a seven kilometre long cluster of eight kimberlites, referred to as the Orion Cluster, which lies immediately northwest of the Star kimberlite. The focus of this program is the southwest part of the Orion Cluster, where work is underway to sink a shaft in preparation for collecting an underground bulk sample. The purpose of this shaft project, which is budgeted at $12 million, is to collect enough kimberlite for a realistic grade and diamond evaluation.

In the Candle Lake area, Great Western Diamond Corporation is currently awaiting results from the mini-bulk sampling test conducted on its C29/30 kimberlites last winter. The results of this sampling program will help chart the future of the Candle Lake project for Vaaldiam Resources Ltd. who are anticipating closing their takeover of Great Western Diamonds in November.

Several other companies are actively engaged in diamond exploration at various places throughout both southern and northern Saskatchewan. These programs are mostly at the grassroots stage and include indicator mineral sampling and geophysical surveys; some drill programs are also underway. Although some companies who have dispositions in Saskatchewan have shifted their focus to more advanced-stage projects in Nunavut and the Northwest Territories, the interest in Saskatchewan has not declined. The amount of land under disposition for diamond exploration has continued to increase, not only in the Fort à la Corne region, but in several other areas in the province.


In 2007, gold exploration expenditures are estimated to total $19.5 million, compared to actual expenditures of $13.8 million in 2006. These expenditures reflect a continued upward trend in the price of this precious metal, which was at about US$765 per ounce of gold in mid-October. Although there is some work underway in the Goldfields area near Uranium City, most exploration is in the La Ronge and Glennie domains, which form a portion of the Reindeer Zone of the Trans Hudson Orogen. Both domains contain several gold showings, including the Seabee Mine, Saskatchewan’s only active primary gold producer, in the Glennie Domain, and some former producing mines in the La Ronge Domain.

In June 2007, GLR Resources Inc. released the results of the final feasibility study, completed by Bikerman Engineering and Technology Associates Inc. for its Goldfields project near Uranium City. For the Box deposit, proven and probable reserves were estimated at 10,997,000 tonnes containing 601,007 oz Au and 559,000 oz of recoverable Au. At an average mining rate of 1,800,000 Mt per year, with estimated average annual production of 90,000 oz Au, it is estimated that the mine life will be six years. Total cash costs have been estimated at US$373.55 per oz Au. Measured and indicated resources of 289,000 oz Au in the Athona deposit could extend the life of the Goldfields project by an additional three years. Further work is underway to convert this resource to a reserve and possibly define additional resources in the deeper parts of the Box and Athona deposits. GLR is anticipating receiving its environmental permitting by the end of 2007; as a part of this process, the company has applied to increase the mill throughput from 2,000 to 5,000 tonnes per day.

In the La Ronge Domain, Golden Band Resources Inc. (Golden Band) continued exploration on its 750 square kilometres of dispositions which include 11 gold deposits, four former producing gold mines and a permitted mill. In the Greater Waddy Lake area, Golden Band has a cumulative defined measured and indicated resource of more than 724,000 oz Au in four of the company’s properties. The Bingo deposit near the Churchill River is estimated to contain an indicated mineral resource of 22,900 tonnes grading 13.8 grams per tonne Au, at a cut-off of 5 grams per tonne Au, over a minimum width of 1.3 metres. An additional 136,500 tonnes averaging 12.74 grams per tonne Au is classified as an inferred resource. The company has received a positive scoping study for its La Ronge gold project operating plan, based on potentially recoverable resources from the Komis, EP and Bingo deposits, and using the Jolu mill operating at a rate of 700 tonnes per day. In 2007, in addition to preparing for underground exploration on the Bingo deposit, the company was undertaking a major drill program to update resource estimates and test other targets.

In the vicinity of the Seabee Mine,Claude Resources Inc.undertook a variety of exploration programs at its various projects. The main components of this work were underground bulk sampling at its Porky West and Santoy 7 deposits, as well as definition drilling at Santoy 7 and 8 deposits. The company has reported an inferred mineral resource of 1,110,000 tonnes of 6.53 grams per tonne (top cut of 30 grams per tonne) for the Santoy 7 and 8 zones.

In 2006, the Seabee Mine, which is located in the Glennie Domain and is Saskatchewan’s sole producing gold mine, yielded 47,400 oz Au compared to 44,600 oz Au in 2005 and 40,900 oz Au in 2004. Production during the last quarter of 2006 was negatively impacted by the milling of ore from the Pork West bulk sample program. The company has also embarked on a plan to undertake in excess of 50,000 metres of underground drilling to define new resources to replace those being mined. During the first half of 2006, the Seabee mill processed 86,500 tonnes of ore at an average grade of 5.63 grams per tonne Au, which yielded 14,900 oz Au. This excluded production from the milling of a bulk sample from the Santoy 7 deposit which was completed on April 10. For the third quarter of 2007, Claude reported production of 15,091 ounces of gold from the Seabee Mine and the Santoy 7 project. In July 2007, Claude Resources updated its proven and probable reserves at the Seabee Mine. The updated mineral reserves total 802,600 tonnes, grading 6.94 grams per tonne and containing an estimated 179,100 oz Au.

Base metals

In 2007, spending on exploration for base metals is expected to be $16 million, a significant rise over actual expenditures of $3.9 million in 2006. Although much of this activity is focused on the area west of Flin Flon, there is also base metal exploration underway in the Brabant Lake area, the Wollaston Domain and north of Stony Rapids in the Axis Lake area. There was no base metal production in Saskatchewan in 2007.

West of Flin Flon, Foran Mining Corporation (Foran) and Copper Reef Mines Ltd. are advancing their McIlvenna Bay project. In the fall of 2006, Foran, the operator, released a NI 43-101 compliant technical report for the project which defined an indicated resource of 6,671,000 tonnes at a grade of 0.87% Cu, 6.51% Zn and 26.0 grams per tonne Ag and an inferred resource of 6,000,000 tonnes at a grade of 0.83% Cu, 5.89% Zn and 24.8 grams per tonne Ag. In April, Foran announced that it was commencing a drilling program at the McIlvenna deposit as a prelude to updating the resource calculation and to undertaking a preliminary scoping study. Foran also announced that it had completed at VTEM survey of the nearby Bigstone, Balsam and Hanson Lake properties.

Also west of Flin Flon, Murgor Resources staked additional claims adjacent to the Fon and Tyr properties, which it is earning a 100 per cent interest in under the terms of an agreement signed with HudBay Minerals Inc. in 2006. The 2007 exploration program on these properties included line cutting, airborne and ground magnetic and electromagnetic surveys. At the Fon property, Murgor also completed a 12-hole drilling program to confirm historical data and verify the continuity of mineralization. Murgor has also reported a NI 43-101 compliant inferred resource estimate for the Fon deposit of 5,007,888 tonnes at 3.73% Zn, 0.25% Cu and 0.35 ounces per tonne Ag (with a 1% Zn cutoff ). Early in 2008 Murgor is planning additional drilling of the Fon deposit to upgrade the resource to the indicated and measured categories.

In June, at its polymetallic Brabant Lake Property, Manicouagan Minerals Inc. (Manicouagan) commenced a Phase 2 drilling program comprised of 30 to 40 holes totalling 12,000 to 15,000 metres. A NI 43-101 compliant technical report prepared by MPH Consulting Ltd. for Manicouagan, reported an inferred resource of 4,858,000 tonnes grading 5.19% zinc, 0.57% copper, 0.28% lead, 22.59 grams per tonne silver and 0.22 grams per tonne gold.

In the Wollaston Domain, Wildcat Exploration Ltd. continued its exploration in the Sito Lake area and identified several new Zn-Pb-Ag anomalies in a large Mobile Metal Ion soil geochemistry survey.

North of Stony Rapids, on its Fond du Lac property, Pure Nickel Inc. completed 19 diamond drill holes totalling 3,127 metres. This program tested an area of known mineralization on the Rea Lake mineralized horizon, an eastwest trending Ni-Cu sulphide horizon 600 metres to the south of, and a possible extension to, the Axis Lake East Zone horizon. The 2007 drill program established that this mineralized horizon has a strike length of at least 3 kilometres, a shallow 25 to 40 degree southerly dip and a variable thickness from east to west. The Fond du Lac property contains a number of Cu–Ni occurrences including the 2.5 kilometres long Axis Lake horizon. The Axis Lake “East Zone” contains a non-NI 43-101 compliant estimated resource of 3,400,000 tonnes of 0.66% Ni, 0.60% Cu and 0.15% Co.

Industrial minerals

It is estimated that about $21.1 million will be spent on exploring for industrial minerals in Saskatchewan in 2007. Although most of these expenditures will be focused on potash, there will also be some exploration for kaolin and rare earth elements. In 2006, the value of Saskatchewan potash sales from the province’s ten mines was $2.2 million, which accounted for about 70 per cent of the value of Saskatchewan mineral sales and one-third of global production. Other industrial minerals produced included coal, clay, sodium sulphate, silica sand, salt and aggregate.

Potash exploration

After 25 years of relative inactivity, Saskatchewan is now in the midst of a major potash exploration campaign. From 2005 to 2006 there were five permits for potash exploration issued totalling 149,190 hectares. By mid- October 2007, an additional 43 applications had been received for potash exploration permits totalling 1,469,501 hectares. Also as of mid-October there were 50 active potash dispositions (permits and leases) totalling 1,349,586 hectares. Aside from the three producing companies, there are now 11 different companies involved in potash exploration in Saskatchewan. Of these, the largest number of permits, totalling 667,000 hectares, is held by the BHP Billiton–Prairie Potash joint venture. The focus of its work is the Saturn project in the central part of the province. By mid- 2007, the company had completed two NI 43-101 technical reports and a 3D seismic survey on the area, to evaluate the potential for developing a new greenfield potash mine. With over 348,000 hectares under disposition and several more applications for permits filed, the private company, Athabasca Potash Inc., has the second largest potash exploration permit holdings. In 2007, Athabasca drilled five potash test wells in its Burr property to explore targets identified during a 2006 2D seismic survey.

Potash Production

Since the early 1970s, the potash industry in Saskatchewan has remained relatively unchanged, with eight conventional and two solution potash mines operated by three companies: Potash Corporation of Saskatchewan, the Mosaic Company and Agrium Inc. Production in 2006, at 13.33 Mt of KCl,was curtailed due to protracted negotiations with key Asia markets. Production and sales in 2007 are expected to meet or exceed previous records. In response to a forecasted significant rise in demand for potash, Saskatchewan’s three producers have plans to invest about $1.67 billion over the next three years to further expand production capacity by 4.75 Mt above the current combined capacity of 23.56 Mt KCl.

Other industrial minerals

At its Gollier Creek kaolin project in the Wood Mountain area, Whitemud Resources Inc. estimates that construction of its $47.8 million meta-kaolin processing plant is 85 per cent complete. The company has begun mining kaolin, and stockpiling the ore for the anticipated commissioning of the plant in early 2008.

North of Uranium City, Great Western Minerals Group Ltd. (GWMG) continued work of its Hoidas Lake rare earth element project with a winter program comprising 3,700 metres of drilling. The objectives of this program were to expand and upgrade the resource estimate in the down-dip extension of the JAK zone; obtain 15 tonnes of unweathered material for pilot plant testing; and to obtain reference material for geotechnical testing. In January 2007, GWMG released an update of the original Wardrop Engineering Inc. NI 43-101 compliant resource estimate for the JAK Zone. The new estimate, based on 84 core holes and a 1.5 per cent total REE plus yttrium (TREE + Y) cut-off grade, increased the measured and indicated resource by 108 per cent to 1,150,000 tonnes from 553,000 tonnes with a slight increase in grade to 2.362% TREE + Y from 2.341% TREE + Y.Wardrop has also continued to carry out a preliminary economic assessment of the property.

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