Dec '08/Jan '09

Manitoba

Boosting economies, generating knowledge

By D. Prouse and M. Lavergne

Drill operating at VMS Ventures Reed Lake property

The dip in metal prices in 2008 had no significant impact on exploration spending in Manitoba. Exploration and deposit appraisal spending intentions are estimated at $135.8 million, significantly higher than last year’s figure of $102.6 million.

By boosting local economies, generating geoscience knowledge and identifying new deposits with mineable potential, exploration drives forward an industry that makes significant contributions to Manitoba’s economy. In 2007, mineral production was valued at $2.5 billion for metals and industrials, nearly tripling since 2003.

Manitoba’s eight operating mines directly employ 3,500 people, mostly northerners. Another 14,000 people are employed indirectly in spinoff businesses. Last year, metal miners invested $543 million in capital expenditures.

It is expected that mining could generate over 1,500 new jobs within the next five years in Manitoba. Numerous education and on-the-job training initiatives are currently being developed and delivered by colleges and mining companies.

Base metals

Crowflight Minerals continued surface and underground development at the Bucko Lake nickel mine near Wabowden. Having received its Environmental Act Licence, the company can commence production. Awaiting federal approval to use Bucko Lake for tailings disposal, Crowflight is installing interim land-based tailings storage facilities. Full production will be achieved in early 2009.The base-case scenario calls for production of 1,000 tonnes per day to produce 11.1 million pounds of nickel per year.

Crowflight announced that drilling at the past-producing Manibridge mine located south of Wabowden resulted in the discovery of two nickel zones located within 400 metres of past production. One of the zones returned an intersection of 16.75 metres of 1.38% Ni. The project is a joint venture with Pure Nickel Inc.

Vale Inco plans to invest about $120 million in automation at its nickel refinery in Thompson. Robotic technology incorporating automated cranes and electric transfer cars will replace the manual handling of heavy nickel cathode. The project is expected to be completed by 2011.

Exploration at the Thompson mines has demonstrated significant open pit mining potential for two new deposits, the Thompson 1-C and 1-D Surface zones. Drilling projects are also returning encouraging results at depth at both the Thompson and Birchtree mines.

HudBay Minerals continues to advance the Lalor Lake zinc discovery near Snow Lake. As of August, NI 43-101-compliant indicated resources were 3.4 million tonnes of 8.82% Zn, 0.71% Cu plus significant silver and gold values. Inferred resources stand at 13.2 million tonnes of 8.19% Zn and 0.70% Cu. Drilling continues and a feasibility study is expected to commence by the end of 2008.

Independent Nickel Corp. continues drilling to upgrade the reserve base of the past-producing Lynn Lake nickel mine. A November 2007 prefeasibility study demonstrated positive economics with a cash cost nickel at $4.90 per pound of refined at a rate of 3,000 tonnes per day. The company has been drilling a new zone near a shared boundary line with Western Areas NL. In mid-August, Victory Nickel made an unsolicited takeover bid for Independent Nickel. Independent’s board recommended shareholders accept the offer.

Western Areas NL is conducting nickel exploration on the EL property in Lynn Lake. Drilling at the Melville prospect (near a shared boundary with Independent Nickel) encountered a significant new nickel-copper zone that appears to lie within Independent’s claim boundary. Western Areas intends to further test the zone to see if it extends onto their ground.

In October 2007, VMS Ventures discovered a significant copper-zinc mineralization zone at their Reed Lake property. The company has since drilled over 60 holes, with many returning wide intervals of significant copper and zinc grades. Assays from drillhole RD-08-51 returned 97.21 metres of 2.08% Cu and 0.07% Zn, including a 10.7-metre intersection of 6.86% Cu and 0.23% Zn. Some intersections also contain significant gold and silver credits. Drilling is ongoing.

A winter drill program by Victory Nickel at the Minago deposit north of Grand Rapids found continuity of nickel mineralization at depth beneath the open pit resource. Significant results included 47.8 metres of 1.30% Ni within a 623.5-metre intercept of 0.36% Ni. A feasibility study for the open pit portion is due for completion in the fourth quarter of 2008. Measured and indicated resources are 49.1 million tonnes of 0.516% Ni.

Pure Nickel Inc. completed a versatile time-domain electromagnetic (VTEM) airborne survey and a 15-hole drill program at their William Lake property north of Grand Rapids. Drilling was completed on five zones and a significant mineralized zone was discovered. The most significant hole on the new zone intersected a sulphidic iron formation containing massive sulphide intervals, which averaged 0.91% Ni over 12.15 metres.

Murgor Resources drilled at their Hudvam and Wim copper-zinc projects, which are under option from HudBay Minerals. At the Wim deposit near Snow Lake, drilling upgraded the resource estimate by 1.0 to 2.5 million tonnes. In 2007, NI 43-101-compliant inferred resources at Wim were 2.06 million tonnes of 1.92% Cu and 1.65 g/t Au. At the Hudvam property near Flin Flon, a new NI 43-101 estimate increased gold resource by 40 per cent and boosted indicated resources to 854,076 tonnes (2.0% Cu equivalent cutoff). Halo Resources has actively explored the Sherridon area property northeast of Flin Flon. The project contains a combination of mature and grassroots base-metal and gold prospects including four historic copper-zinc deposits — Cold Lake, Bob Lake, Lost Lake and Jungle Lake. Total NI 43-101-compliant indicated resources at all four deposits are 3.1 million tonnes of 1.00% Cu, 0.91% Zn plus precious-metal credits. This does not include results of recent drilling at Bob Lake.

Rockcliff Resources completed geophysics and drill programs on several Snow Lake area properties. The portfolio contains some previously discovered deposits under option from Hudbay Minerals. Initial drilling at the Kof and Sylvia zones intersected multiple sulphide zones containing significant copper and zinc values. An initial 27-hole drill program at the Rail property identified the source of several untested geophysical targets and extended the strike and depth of copper-rich mineralization at the historic Rail Lake deposit. Phase two drilling commenced in July.

At the McClarty Lake project southwest of Snow Lake, Troymet Exploration identified two laterally continuous zones of massive sulphides. A lower zone hole intersected 15.3 metres of 3.46% Zn and is locally enriched in silver and gold. Geophysical surveys suggest the presence of additional sulphide lenses associated with the alteration system that hosts known mineralized zones.

Southeast of Flin Flon, Copper Reef Mining completed an airborne VTEM survey and drilling at their Mink Narrows property. Drilling was highlighted by a 10.21-metre intersection of 3.66% Cu. Known mineralization has been extended and it has been confirmed that the upper east portion of the deposit is actually a separate lens that remains open at depth and to the east.

Wildcat Exploration completed airborne geophysical and ground induced polarization (IP) surveys at Reed Lake. The property could host volcanogenic massive sulphide deposits and contains a layered mafic-ultramafic intrusive complex, which is prospective for platinum group metals. Geological mapping and ground truthing of geophysical targets were completed in the summer.

Mustang Minerals Corp. released results of a positive prefeasibility study on the Maskwa nickel deposit east of Lac du Bonnet. The study incorporated proven and probable open pit reserves totalling 7.11 million tonnes grading 0.64% Ni and 0.13% Cu. The initial capital cost is estimated at $123 million. A full feasibility study is planned. Mustang has another nickel-copper open pit resource 35 kilometres away, at the M2 zone on the Mayville property.

At the Ore Fault and Bird River properties east of Lac du Bonnet, Marathon PGM Corporation intersected multiple lenses of massive sulphide, including 15 metres grading 1.71% Ni at Ore Fault and 6.55 metres grading 1.65% Ni at Page. The Ore Fault North zone consists of an upper zone of nickel-copper mineralization and lower zinc-copper-silver zone.

Precious metals

Carlisle Goldfields began second phase drilling of 20 to 25 holes at the past-producing MacLellan mine in Lynn Lake in February. In May, NI 43-101-compliant resource measured and indicated resources stood at 932,000 tonnes grading 6.81 g/t Au and 11.4 g/t Ag. If sufficient resources can be defined, Carlisle plans to de-water the mine and conduct a feasibility study.

Garson Gold continued drilling to define additional resources at the New Britannia mine in Snow Lake. Efforts focused on the main mine and the No. 3 zone to its west. Garson is examining the feasibility of reopening the mine using additional ore from the No.3 zone. Updated NI 43-101-compliant indicated resources are 394,000 tonnes of 6.72 g/t Au. A further 575,000 tonnes are inferred. Scoping is underway to determine capital costs of reopening the mine and mill.

At the Reed Lake project southwest of Snow Lake, Tribune Uranium Corp.’s 13-hole drill program identified multiple gold-bearing mineralization sections, with the best assay returning 5.79 metres of 12.84 g/t Au.

In January 2008, Rolling Rock Resources’ Monument Bay project reported inferred resource of 4.9 million tonnes of 6.01 g/t Au, an increase of 35 per cent in contained ounces. Ongoing scoping will help define mining economics and evaluate the potential of commencing production. Rolling Rock also reported encouraging drilling results at the Domain gold project near Oxford House.

San Gold Corp. discovered multiple gold-bearing zones about 1.5 kilometres northeast of the Rice Lake mine. Here, in the Hinge zone, drilling has to date discovered at least four sub-parallel veins and numerous uncorrelated breccia zones within 100 to 300 metres of surface. A drillhole from Hinge #4 zone returned 6.3 metres of 85.1 g/t Au. Deep underground drilling below the working levels at Rice Lake also discovered a high-grade zone and extended the downdip extension of the high-grade “96” vein. An early hole returned 2.7 metres of 31.8 g/t Au.

In the Rice Lake Belt, Wildcat Exploration drilled at the Poundmaker and Jeep properties and conducted airborne geophysical and ground IP surveys at Jeep to investigate potential mineralized shear zones. Summer sampling and geological mapping programs were also conducted at the Jeep, Mable and Garner Lake properties.

Harvest Gold conducted a nine-hole drill program at the Lesavage North project east of Bissett. The company tested mineralized zones encountered in previous drill programs as well as new geochemical and geophysical anomalies. Assay results are awaited.

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