Dec '09/Jan '10

New Brunswick

Well-positioned for a commodities rebound

By S. McClenaghan, K. Thorne and L. Fyffe

The first of two headframes under construction at PotashCorp’s Picadilly project near Sussex, New Brunswick

In 2008, lower commodity prices, in conjunction with the credit crisis, led to an overall decrease in exploration expenditures from the 2007 figure of $32 million to $31 million and in mineral production values from $1.57 to $1.4 billion. However, in 2009, New Brunswick recorded its highest number of claims in good standing since 1956 — 38,000, up from 37,700 in 2008. Sustained work on advanced projects continued to outline resources and expand reserves, positioning some for development with the expected rally in commodity prices.

Issues concerning landowners’ and prospectors’ rights were brought to the forefront during a claim-staking peak driven by higher uranium prices. After a brief suspension of ground claim staking, regulatory amendments were passed to limit uranium exploration and mining in designated watersheds and municipalities. To address landowners’ issues, the Mining Act was further amended in 2009, moving the province towards an online electronic map-staking system. The NB e-CLAIMS system, scheduled to come online in early 2010, will allow electronic access to mineral claims from anywhere in the world.

Mineral exploration

Base metals: Blue Note Mining intersected significant base metal mineralization while testing a 2.3-kilometre geophysical anomaly at the Armstrong property in northern New Brunswick’s Bathurst Mining Camp. Drill hole AB-08-09 intersected 8.3 metres of massive sulphides grading 2.83% Zn, 1.01% Pb, 0.32% Cu and 27.1g/t Ag, including 3.62% Zn, 1.46% Pb, 0.29% Cu and 32.3g/t Ag over 3.0 metres.

SLAM Exploration acquired 607 claims in the Bathurst Camp following the discovery of angular boulders of semi-massive and stringer sulphides in the Mullin Stream area. Three drill holes have intersected broad stringer sulphide mineralization zones. Drill hole TS-09-01 intersected a 43.3-metre interval of stringer mineralization comprising 10% pyrite-pyrrhotite with visible base metals and containing 406 ppm Cu, 323 ppm Pb, 557 ppm Zn, 121 ppm Co, 1.8 ppm Ag and 56 ppb Au.

A 2008 New Brunswick Junior Mining Assistance grant helped fund an 11-hole, 2,767-metre drilling program through the Costigan base-metal sulphide deposit in west-central New Brunswick. All holes intersected sulphide mineralization with intervals up to 27.0 metres and grades ranging from 1.85% to 9.96% Zn+Pb. SLAM updated its resource estimates for the Nash Creek zinc-lead-silver massive sulphide deposit, 25 kilometres west of the Port of Belledune. Wardrop Engineering reported NI 43-101-compliant indicated resources of 7.81 million tonnes grading 2.72% Zn, 0.55% Pb and 18.3 g/t Ag, with an inferred resource of 1.21 million tonnes grading 2.66% Zn, 0.52% Pb and 18.0 g/t Ag.

Stratabound Minerals commissioned RPC Science and Engineering to conduct preliminary metallurgical test work on the semi-massive  copper-cobalt zones within the Captain volcanogenic massive sulphide (VMS) deposit at the Bathurst Camp. The 30 per cent sulphide mineral contents consist of pyrite, chalcopyrite, sphalerite, galena and bismuth/bismuthinite, with cobalt occurring as a solid solution in pyrite. Flotation tests on the copper-cobalt and the cobalt zones also returned encouraging results.

Kria Resources completed a preliminary economic assessment for its Halfmile Lake VMS deposit in the Bathurst Camp. It estimates that a 2,000 tpd underground mining operation would have a life of at least 20 years with payback on investment (NPV of $587 million and 16.24 per cent rate of return) being achieved in the eighth year. The deposit’s NI 43-101-compliant indicated resources are 6,260,000 tonnes grading 8.13% Zn, 2.58% Pb, 0.22% Cu and 30.78 g/t Ag. Inferred resources are 6,080,000 tonnes grading 6.69% Zn, 1.83% Pb, 0.14% Cu and 20.51 g/t Ag. Kria also reported NI 43-101-compliant inferred resources of 5,520,000 tonnes grading 6.11% Zn, 2.59% Pb, 0.40% Cu and 54.21 g/t Ag (5% Zn-equivalent cut-off) at the nearby Stratmat property.

Puma Exploration delineated a NI 43-101-compliant resource of 364,000 tonnes containing more than a million ounces of silver, 11 million pounds of zinc (1% Zn-equivalent cut-off), five million pounds of lead and 6,200 ounces of gold in the Haché massive sulphide lens on its Nicholas-Denys property in northern New Brunswick. Recent drilling on the property, which hosts more than 50 mineralized showings, focuses on upgrading inferred resources to indicated resources. Puma is currently conducting fill-in drilling on the nearby Shaft lens (300 metres along strike), with one drill hole intersecting 4.4 metres of sulphides grading 6.0% Zn, 3.3% Pb, and 108 g/t Ag. A 2009 New Brunswick Deposit Evaluation grant allowed Puma to drill on the Turgeon VMS deposit, five kilometres south of Belledune. Two drill holes intersected copper mineralization with 2.4% Cu over 31 metres and 40 metres grading 1.0% Cu and 2.9% Zn. In light of recent drilling results and historical data, Puma staked 30 claims on the southern extension of the Turgeon property.

Gold: Freewest Resources Canada and Rockport Mining drilled 11 holes on the East Zone of their Clarence Stream property in southwestern New Brunswick, testing a 600-metre segment below the 100-metre level. Intersections included 8.24 g/t Au over five metres in drill hole CS08-308 and 13.69 g/t Au over two metres in hole CS08-310.

Blue Note Mining discovered a significant gold occurrence following soil sampling and trenching on its Williams Brook property, 90 kilometres west of Bathurst. The company drilled 24 shallow holes to test mineralization associated with quartz veins and potassic-altered rhyolite. Drill hole WB-08-11 returned 2.8 metres assaying 11.2 g/t Au including a 50-centimetre section assaying 24.1 g/t Au. The gold mineralization was intersected 15 metres below the surface.

Stratabound Minerals, partnering with Castle Resources, reported results from 10 drill holes on the Elmtree gold property in northern New Brunswick. Intersections in the lower grade South Gold Zone included 0.63 g/t Au over 35.0 metres in drill hole ELM-42 and 0.36 g/t Au over 63.5 metres in drill hole ELM-48. Intersections in the higher-grade West Gabbro Zone assayed 1.95 g/t Au over 18.5 metres and 4.65 g/t Au over 17.5 metres in holes ELM-51 and ELM-52, respectively. The Elmtree property hosts NI 43-101-compliant resources of 525,000 indicated tonnes grading 2.45 g/t Au, 4,624,000 inferred tonnes averaging 1.25 g/t Au and 41,000 inferred tonnes containing 201,000 ounces of silver, seven million pounds of zinc and 2.4 million pounds of lead.

Polymetallic minerals: Based on 48 additional holes drilled in the summer of 2008, Geodex Minerals reported an updated NI 43-101-compliant resource model for its Sisson Brook tungsten-molybdenum deposit. The mineral resource estimate (0.125% WO3-equivalent cut-off) for Zone III is measured at 11 million tonnes of 0.109% WO3 and 0.037% Mo; indicated at 69.1 million tonnes of 0.107% WO3 and 0.03% Mo; and inferred at 47.8 million tonnes of 0.097% WO3 and 0.036% Mo. For the Ellipse Zone, the resource estimate is measured at 500,000 tonnes of 0.112% WO3 and 0.034% Mo; indicated at 10.4 million tonnes of 0.105% WO3 and 0.038% Mo; and inferred at 8.6 million tonnes of 0.091% WO3 and 0.041% Mo.

To upgrade the resource and test new target areas, Geodex completed a 28 hole, 4,900-metre drilling program. The company is also focussing on its Flume Ridge property in southwestern New Brunswick to investigate the source of significant tungsten anomalies in soil and stream sediment samples.

Adex Mining released updated NI 43-101-compliant resource estimates for its Mount Pleasant property comprising two main mineralized zones. The Fire Tower Zone contains indicated reserves of 13,489,000 tonnes of 0.33% WO3 and 0.21% MoS2, inferred resources of 841,700 tonnes grading 0.26% WO3 and 0.20% MoS2 (0.3% WO3-equivalent cut-off). The North Zone contains indicated resources of 10,882,000 tonnes grading 0.43% Sn, 67.8 g/t In, 0.67% Zn, 0.09% WO3, 0.06% MoS2, 0.11% Cu and 0.08% Bi; and inferred resources of 7,603,000 tonnes grading 0.22% Sn, 74.6 g/t In, 0.99% Zn, 0.08% WO3, 0.05% MoS2, 0.09% Cu, and 0.05% Bi (0.25% Sn-equivalent cut-off). Adex has also conducted comprehensive metallurgical testing to evaluate the viability of extracting tungsten from low-grade concentrates. This test work will be instrumental in developing a pilot-plant program that may lead to commercial-level tungsten, molybdenum, tin and indium production.

For its Burnthill Mine property, Cadillac Ventures reported NI 43-101-compliant initial estimates of 461,000 tonnes grading 0.489% WO3, 0.012% MoS2 and 0.01% SnO2, and 590,000 tonnes grading 0.535% WO3, 0.009% MoS2 and 0.013% SnO2 in the indicated and inferred categories, respectively.

Non-metallic minerals: With a 36 line-kilometre ground magnetic and VLF-EM geophysical survey on its Benjamin River property in northern New Brunswick, Great Western Minerals Group delineated a 700 by 100-metre geophysical anomaly coinciding with exposures of pegmatitic apatite-diopside-magnetite that contain significant rare-earth-element (REE) mineralization in addition to phosphate and iron. Historical assays range from 0.6% to 1.0% REE2O3 hosted by coarse apatite, which is preferentially enriched in heavy-REE (Eu through Lu). Phosphate and iron oxide grades are also significant with samples assaying up to 18% P2O5 and 39% Fe2O3.

Cornerstone Capital Resources completed the first phase of an exploration program targeting volcanic-associated uranium deposits on its Chaleur property 60 kilometres west of Bathurst. A 1,511 line-kilometre fixed-wing airborne magnetic and radiometric survey identified 15 uranium targets. Followup prospecting and geochemical stream sediment sampling discovered two new areas of uranium mineralization coincident with airborne uranium anomalies with float samples assaying up to 427 ppm U.

Mining activity and development

PotashCorp continued construction on its new $1.7 billion Picadilly Potash mining operation near Sussex. Development plans involve two headframes and an on-site concentrator. Construction is to be coordinated with upgrades to the adjacent Penobsquis Mine’s infrastructure. Ground was broken on the first headframe in 2008, with production anticipated to commence in 2011.

Blue Note Mining evaluated the known inferred resource at the Caribou Mine. Underground drilling discovered a significant width of mineralization directly below current mine reserves, with drill hole UGX-08-27, intersecting 34.8 metres grading 7.22% Zn and 2.69% Pb. Despite the excellent operating performance and recovery rates, the mine, being unprofitable due to lower commodity prices, is currently closed. However, it has recently been purchased and plans are being drafted to reopen it.

Xstrata Zinc Canada completed an extensive technical and economic evaluation of potential mineral resources and other mining remnants in its Brunswick No.12 base metal mine. With improving commodity prices, Xstrata has converted a significant tonnage to mineral reserves status and extended the mine’s life to early 2012.

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