Dec '08/Jan '09

British Columbia

Forging ahead in 2008

By J. deGrace, J. Fredericks, D. Grieve, B. Madu, B. Northcote and P. Wojdak

Releasing coal at Peace River Coal’s Trend mine

Mineral production and exploration spending in BC have grown dramatically over the past five years. Exploration spending, reaching record levels in 2007, tapered off in 2008 as companies moved towards conserving cash over the year.

The government and the mining industry have several initiatives to foster investment and economic development. Among these is one that recognizes the importance of the public geoscience information delivered by various agencies, especially Geoscience BC. They, along with the BC Geological Survey, provide new geoscience data and ideas that serve to attract the mineral industry. In 2008, the provincial government allocated a further $6 million for mineral exploration-related geoscience in the area between Vanderhoof and Terrace.

In September 2008, the BC government announced that it will proceed with environmental assessment and First Nations consultation on the proposed Northwest Transmission line, which would make the power grid accessible to several mine development and exploration projects.

Mining and exploration tax incentives remain in place and numerous initiatives are aimed at promoting the industry among First Nations peoples. The province is also actively promoting its mining industry in Asia, which has shown increasing interest in investing in BC mining.

Operating metal and coal mines

Of the 10 metal mines and nine coal mines in BC, several are expanding operations or extending their mine lives. Notable ones include Brule, Endako, Highland Valley Copper, Gibraltar, Trend and Wolverine.

Beginning a north to south review, Northgate Minerals’ Kemess South gold-copper-porphyry deposit in the Toodoggone region, a 52,000 tonne-per-day operation, is expected to close in 2010.

In the northeast coal fields, Western Canadian Coal Corp. plans to expand the capacity of the Wolverine/Perry Creek operation from 2.2 to three million tonnes annually and the Brule mine from one to two million tonnes a year. The company completed drilling in advance of reopening the Willow Creek mine. Peace River Coal Inc. plans on doubling production at the Trend mine, to two million tonnes per year.

Thompson Creek Metals Inc. announced a $374 million upgrade and expansion at the Endako molybdenum mine to increase mill throughput to 50,000 tonnes per day by 2010. Reserves at the new rate would be sufficient to 2024.

At the Huckleberry copper-molybdenum mine, co-owned by Imperial Metals Corporation and a Japanese consortium, exploration continued to increase reserves, currently expected to last to 2010.

Cross Lake Minerals’ recently opened QR gold mine, with an orebody of about 900,000 tonnes of 6 g/t Au grade, transitioned to underground operation in 2008.

Imperial Metals is actively exploring on-lease at its Mount Polley copper-gold-silver-porphyry deposit, which has reserves to 2015. Imperial focused on finding high-grade ore to replace that from the Wight pit, and is concentrating on developing the new Springer pit.

Taseko Mines Ltd. announced a $350 million project to increase daily throughput from 55,000 to 85,000 tonnes per day at its Gibraltar copper-molybdenum mine. The company also completed a major drilling program aimed at extending reserves.

Roca Mines’ new underground molybdenum mine, MAX, is permitted to produce 72,000 tonnes annually. The initial focus is a 280,000 tonne, 1.95% MoS2 resource within a larger resource.

The five southeastern metallurgical coal mines are operated by Teck Coal Limited (formerly Elk Valley Coal Corporation), which planned to expand production to 25 million tonnes in 2008 and undertake further expansions over the next few years. The company continued to drill adjacent and outlying holdings to evaluate future expansion opportunities. These included Castle Mountain, Marten-Wheeler and Mount Michael, all potential open pit sites.

Teck’s Highland Valley Copper, Canada’s largest base metal mine, is undergoing a $300 million extension that will permit mining until 2019.

On Vancouver Island, the Myra Falls Operations of Breakwater Resources Ltd., an underground zinc-copper-gold-silver mine in operation for more than 40 years, has reserves for several more years. Exploration, for which there is further potential, continued into 2008.

In southern BC, Merit Mining Corp. followed a bulk sample from its Lexington-Grenoble copper-gold deposit with commercial production in June 2008. The mine has measured and indicated resources of 297,000 tonnes at 8.36 g/t Au and 1.35% Cu. The 200 tonne-per-day Greenwood mill could eventually process ore from other nearby deposits.

Development stage projects

Redcorp Ventures Ltd. is constructing roads, an airstrip and barge landing facilities at Tulsequah Chief, a once-producing zinc-copper-lead-gold-silver mine in the Northwest. Reserves are estimated to suffice for eight years at 2,000 tonnes per day.

Adanac Molybdenum Corporation has a provincial permit for a 20,000 tonnes-per-day open pit operation at Ruby Creek near Atlin. Exploration drilling adjacent to the proposed pit continued in 2008. Mine construction is on hold in light of difficult financial market conditions.

Sherwood Copper Corp. undertook infill drilling to update their recent preliminary economic assessment of the Kutcho Creek massive sulphide project. An environmental assessment project report is anticipated in 2009. Current indicated resources are 17.3 million tonnes grading at 1.56% Cu, 2.12% Zn, 26.1 g/t Ag and 0.29 g/t Au.

At Imperial Metals’ Red Chris copper-gold porphyry deposit in the Northwest, an East Zone hole intersected 1,024 metres grading 1.01% Cu, 1.26 g/t Au and 3.92 g/t Ag.

At Copper Fox Metals Inc.’s Schaft Creek project, a drilling program focused on collecting geotechnical information for mine design and an environmental assessment project plan. Measured and indicated resources are 1.393 billion tonnes and a positive preliminary feasibility was released in September 2008.

To lower costs at the Galore Creek project, located in a topographically challenging area in northwestern BC, Teck and NovaGold continued engineering re-evaluation, including modifying the access route and the mine plan design. Access road construction continued in 2008. An announcement regarding the new plan is currently anticipated.

Fortune Minerals Limited released an updated feasibility study on the Lost Fox deposit at its Mount Klappan anthracite coal project and is seeking partners to pursue development.

Western Canadian Coal Corp. restarted environmental assessment at its Hermann project in August 2008. Peace River Coal delineated its Roman Mountain and Horizon deposits, and First Coal Corp. drilled its Goodrich Central South property and was considering a 100,000-tonne bulk sample.

Terrane Metals Corp.’s environmental assessment application for the Mt. Milligan porphyry copper-gold project was accepted for review. The company received a positive feasibility study and plans to begin production by 2012.

Last year, Taseko Mines started an environmental assessment review at its Prosperity gold-copper porphyry deposit, which has 487 million tonnes of proven and probable reserves.

New Gold Inc.’s New Afton copper-gold underground mine commenced mine construction and is expected to begin production in late 2009. Probable reserves stand at 44.4 million tonnes of 0.98% Cu, 0.72 g/t Au and 2.27 g/t Ag.

Copper Mountain Mining Corp. is conducting a 50,000-metre drill program at Copper Mountain, a copper-gold porphyry deposit near Princeton. Production is planned to resume in 2011. Measured plus indicated resources stood at 163.1 million tonnes of 0.43% Cu in late 2007. In October, Mitsubishi Materials Corporation announced the purchase of a 25 per cent stake in a Copper Mountain subsidiary and a contract to purchase the first 10 years’ entire output.

Selected exploration projects

In the northwest region, at the Cassiar Gold Camp, Hawthorne Gold Corp. began drilling aimed at resource re-evaluation, exploration and ultimately reopening the permitted Table Mountain mine. Near Atlin, Prize Mining poured 100-ounce and 220-ounce gold bars from its pilot mill at Yellowjacket and, based on test project results, will apply for additional mining in 2009.

At Seabridge Gold Inc.’s Kerr-Sulphurets-Mitchell porphyry-related gold deposit, last year’s 15,000-metre drill program sought to define the Mitchell zone for a feasibility study. At 0.5 g/t Au cutoff, the indicated mineral resource across three mineralized zones exceeds one billion tonnes. At the neighbouring Snowfield project, Silver Standard Resources Inc. also conducted a major drill program on the eastern continuation of the Mitchell zone.

At Kitsault, Avanti Mining Inc. calculated a NI 43-101-compliant indicated resource of 158 million tonnes grading 0.1% Mo from historical data and began an infill drilling program. Terrane Metal’s Berg Project, with a significant resource of 372.5 million tonnes grading 0.3% Cu and 0.039% Mo, saw approximately 12,000 metres of drilling. Bard Resources has reported impressive molybdenum intercepts at its Lone Pine project near Houston, including 753 metres at 0.1% Mo.

In the central region, the Akie stratiform zinc-lead-silver deposit of Mantle Resources Inc. was expected to reach 10,000 metres of drilling. At Kwanika, Serengeti Resources Inc. continued to define a copper-gold porphyry deposit. To the south, at the Chu, TTM Resources Inc. mounted a large drill program. Barker Minerals Ltd. defined the Frank Creek deposit as Kuroko- type polymetallic volcanogenic massive sulphide. At Woodjam, Fjordland Exploration Inc. reported continuing positive results at the new Southeast Zone and discovered a mineralized zone, the Deerhorn. Skygold Ventures Ltd. conducted a major drill program at its Spanish Mountain sediment-hosted gold deposit.

In the south-central region, Newmac Resources Inc. drilled the Crazy Fox property north of Kamloops, encountering long intersections of molybdenum mineralization. At the Ruddock Creek zinc-lead project north of Revelstoke, Selkirk Metals Corp. reached the E-Zone with a decline and began underground drilling in mid-2008. The Harper Creek deposit, north of Barriere, is an extensive volcanogenic sulphide system with a bulk tonnage target. Yellowhead Mining Inc. has completed a preliminary economic assessment and the project has entered the pre-application phase of the BC environmental assessment process.

In the Afton area, Abacus Mining and Exploration Corp. drilled the Ajax copper-gold porphyry deposit in a joint venture with New Gold Inc. to determine a preliminary economic assessment and global mineral resource. West of Merrit, in the Spences Bridge Gold Belt, Consolidated Spire Ventures Ltd. undertook a large drill program at the Prospect Valley project. To the southeast, Goldcliff Resource Corporation continued to drill and trench the Panorama Ridge property and characterize its large-tonnage, low-grade gold potential.

In the southeast region, at the Thor silver, lead, zinc, gold and copper property of Taranis Resources Inc., extensive diamond drilling and geophysics helped correlate the True Fissure and Great Northern past producers with other mineralized zones. Joint venture partners Astral Mining Corporation and Kootenay Gold Inc. continued to drill the Jumping Josephine property west of Castlegar. Stockwork-hosted gold related to Jurassic intrusions in the JJ Main zone was the major focus of their activities. Eagle Plains Resources Ltd. was active on its sedex lead-zinc targets in the Purcell Supergroup at the Iron Range and Bohan properties, east of Creston.

For further details, see the British Columbia Geological Survey.

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