An aerial view of a Diavik Diamond Mine pit, located about 300 kilometres northeast of Yellowknife
As in the rest of Canada, the past year has been difficult for the mining industry in the Northwest Territories and exploration companies have curbed spending. Yet, the Northwest Territories government remains optimistic about the future because the area is richly endowed with many important minerals, such as diamonds, lead, zinc, copper, tungsten, rare earths, gold, silver and platinum.
With a large unexplored land mass of 1.4 million square kilometres, the Northwest Territories offers many large mineral prizes. The government is eager to work collaboratively with industry partners to further the interests of both the mining industry and the people of the Northwest Territories.
The partnership between the territorial and federal governments to gather new geosciences data is an example of the government’s commitment to working collaboratively to stimulate investment. It is estimated that every one million of government investment in the geosciences knowledge base stimulates five million dollars in exploration spending. This investment could result in the discovery of an estimated $125 million worth of new resources — discoveries that could offer shareholders rich returns and create jobs and business opportunities for Northwest Territories residents.
Of the Northwest Territories four operating mines, three produce diamonds. The underground and open pit EKATI Diamond Mine, located at Lac de Gras, 300 kilometres northeast of Yellowknife, has been in production since 1998. To date, 156 kimberlite pipes have been found on EKATI’s claim block. At 3.2 million carats, 2009 production was down four per cent from 2008. Nevertheless, annual diamond sales from the 80 per cent BHP Billiton-owned EKATI mine represent about three per cent of current world rough diamond supply by weight and six percent by value.
The second jewel in the Northwest Territories’ diamond crown is the Diavik Diamond Mine, also located 300 kilometres northeast of Yellowknife. Operated by Diavik Diamond Mines Inc., a part of the Rio Tinto Group, the mine has been in operation since 2003 and has produced over 50 million carats since then. The diamond production forecast for 2009 is between five and six million carats.
The third, De Beers Canada’s Snap Lake Mine, located 220 kilometres northeast of Yellowknife, made its debut in 2008. Snap Lake, the company’s first mine outside Africa, is Canada’s first completely underground diamond mine. Annual production is forecasted to be 1.4 million carats.
Due to the global financial turmoil and a drop in diamond demand, the Diavik and Snap Lake mines ceased operations during the summer of 2009, while BHP Billiton curtailed expansion plans at EKATI. On a more positive note, an improved outlook has driven the operators of Diavik and Snap Lake to cancel planned winter shutdowns.
Despite their recent economic troubles, there is little doubt that these diamond mines have had an enormous positive impact on the Northwest Territories economy. Since construction started at EKATI in 1996, the mines have generated nearly 14,000 person-years of employment and have purchased goods and services worth over seven billion dollars from northern businesses. More than three billion dollars of those purchases were from Aboriginal companies. Impressively, each of the mines made 74 to 83 per cent of their total purchases from northern businesses in 2008.
Vancouver-based North American Tungsten Corporation’s Cantung Mine is the Northwest Territories’ only non-diamond mine. Tungsten is mined at this operation, located just on the Northwest Territories side of the border with Yukon. In October, the company placed the mine on care and maintenance due to increased inventory and declining tungsten prices. The company feels that this move will allow for a timely and cost-effective return to production when the tungsten market improves.
A land of promise
While there are four producing mines in the Northwest Territories, there is potential for many more. One project in the advanced development stage is Fortune Minerals’ NICO gold-cobalt-bismuth project, located 160 kilometres northwest of Yellowknife. The company is currently seeking permits for a combined open pit and underground mine. With proven and probable mineral reserves of 21.8 million tonnes containing 760,000 ounces of gold, 61 million pounds of cobalt and 77 million pounds of bismuth, NICO will likely have a minimum 15-year mine life with an annual production rate of 1.46 million tonnes of ore.
Another proposed project with great promise is Canadian Zinc Corporation’s Prairie Creek Mine project. This lead-zinc-silver proposed project is located in the south Mackenzie Mountains. Substantial infrastructure is already in place on the property, including a partially developed underground mine with an existing 1,000 tpd mill.
Canadian Zinc is proposing an underground mine at Prairie Creek that could process up to 1,200 tonnes of ore per day for 14 years. The company holds exploration and development permits but not the permits required to operate the mine. Awaiting permits and an improvement in the economic climate, the company scaled back operation in October 2008. When it is up and running, the Prairie Creek Mine could contribute significantly to the Northwest Territories and the Dehcho region where it is located. The mine will employ 150 people during the construction and exploration phase and 220 people during operations.
The Northwest Territories could soon have yet another diamond mine — the Gahcho Kué project, a joint venture between De Beers Canada and Mountain Province Diamonds. With indicated resources of approximately 23.6 million carats, this project, located 280 kilometres northeast of Yellowknife, is among the largest new diamond projects under development in the world. Gahcho Kué is currently undergoing an environmental impact review.
Tyhee Development Corporation’s Yellowknife Gold project, located 90 kilometres north of Yellowknife, consists of the Ormsby and Nicholas Lake gold deposits. The gold resource is 1.2 million ounces with an inferred resource estimate of another 353,000 ounces. By July 2009, Tyhee had raised $2.65 million. The company will complete a preliminary feasibility study in 2010.
Another bright and emergent mining prospect is Avalon Rare Metals’ Nechalacho rare earths project, located 100 kilometres southeast of Yellowknife. With rare earths being in great demand for use in a host of “green” products, such as hybrid cars and wind turbines, and China currently controlling global supplies, the Nechalacho project is extremely attractive to investors.
Nechalacho’s potential 64.2 million-tonne resource could sustain mining for at least 100 years. Avalon is working on a prefeasibility study and hopes to have the mine in production by 2013. The company has established good relations with affected Aboriginal people in the region and is working closely with the Northwest Territories government. The mine could eventually employ 200 people and create business opportunities for thousands of northerners, in addition to contributing billions of dollars to the Northwest Territories economy.