Dec '09/Jan '10

Yukon

An independent streak

By the staff of the Government of Yukon

Examining drill core from the White Gold project

The Yukon government is actively working to support mineral exploration and the mining industry. With full authority over the territory’s resources, the government is the sole administrator of a stable and direct mining development permitting process. It recently increased the territory’s competitiveness by modernizing the legislative framework for hard rock mining. With the passing of amendments to the Quartz Mining and the Miners Lien acts, Yukon’s resources sector enjoys a higher degree of certainty. In particular, amendments to the claims administration sections of the Quartz Mining Act have helped lower exploration costs.

Forthcoming changes to royalty rates will further help the territory compete with other Canadian mining jurisdictions. Additionally, Yukon has a single streamlined environmental review process, which functions at arm’s length from government.

Of the Yukon’s 14 First Nations, 11 have settled a comprehensive land claim and are ready to capitalize on opportunities in the resources sector. The territorial government continues to establish government-to-government relationships with all 14 First Nations to ensure their participation in territorial resource development. In addition to helping create new economic partnerships and investment opportunities, this constructive approach has brought certainty of land tenure to mineral explorers. The government encourages and facilitates partnerships with First Nations, industry and investors, for the benefit of all.

A culture of cooperation

A perfect illustration of the productive industry-First Nation relationship is Capstone Mining Corporation’s Minto Mine. The Selkirk First Nation, on whose settlement land the mine is located, has a cooperation agreement with Capstone. In addition to numerous opportunities, this agreement gives the First Nation a 0.5 per cent net smelter royalty on the mine’s production.

All projects that have advanced to economic studies have engaged the First Nations whose traditional territory they affect. Several First Nations have signed memoranda of understanding or cooperation agreements. Examples include Alexco’s agreement with the Na-cho Nyak Dun; the agreements between the Kaska and Yukon Zinc, Selwyn Resources and Yukon-Nevada Gold; and the agreements between the Carcross Tagish and True North Gems and Tagish Lake Gold.

Discovering gold

In notable contrast to nationwide trends, vigorous exploration activity occurred throughout Yukon Territory in 2009. With the price of gold often nearing the US$1,000 per ounce over the last year, and steadily rising since April 2009, the search for new gold targets became increasingly attractive during the 2009 exploration season.

This trend was encouraged by the new bedrock discoveries, Underworld Resources’ White Gold property, south of Dawson City, and ATAC Resources’ Rau property, 50 kilometres northeast of Keno City. Additionally, Victoria Gold commissioned a prefeasibility study on the Eagle Zone (Dublin Gulch). The company has a comprehensive open pit project to exploit the zone’s 2,690,400-ounce indicated resource. Although exploration activities occurred throughout the Tintina Gold Belt, the most intense interest remained focused on the under-explored Dawson Ranges.

Development galore

Mine development work continues at Yukon Zinc’s Wolverine Mine (zinc-silver-copper-lead-gold), one of Canada’s few base-metal properties advancing to production. Yukon Zinc has made significant progress on construction, and the project is on track for production in the third quarter of 2010. Substantial work was completed on the lined tailings impoundment, the industrial complex, the road and the underground mine workings. At a production rate of 1,700 tonnes per day, the deposit is forecast to yield an average of 53,400 tonnes of zinc, 4,860 tonnes of copper, 6,010 tonnes of lead, 4,933,200 ounces of silver and 20,200 ounces of gold per year for the first three years.

In the Keno Hill district, Alexco Resource Corp. is conducting extensive work, including underground development and drilling at the past-producing Bellekeno deposit to upgrade resources and make a production decision. Inferred resources at the start of the season stood at 517,000 tonnes of 1,016 g/t Ag, 13.5% Pb and 10.7% Zn. The summer exploration drilling program continues to produce excellent results. With a positive screening report subject to specified mitigation measures from the Yukon Environmental and Socio-economic Assessment Board, Alexco has edged closer being able to commence production.

Several Yukon-based projects are conducting engineering, geotechnical and environmental study programs in support of feasibility or pre-feasibility studies. Victoria Gold is completing a program at its Dublin Gulch deposit, where the Eagle Zone hosts indicated resources of 2.7 million ounces of 0.849 g/t Au. Carmacks Copper Corporation is working to upgrade the prefeasibility study on the Casino copper-gold-molybdenum deposit, which hosts proven and probable reserves of 914 million tonnes at a grade of 0.21% Cu, 0.24 g/t Au and 0.02% Mo. North American Tungsten is conducting studies in support of permit applications for the MacTung deposit, which has a completed a positive feasibility study. The deposit contains an indicated resource of 33.03 million tonnes grading 0.88% WO3.

Placer remains an important part of Yukon’s mining sector. Royalty records show that over 16.6 million crude ounces (518 tonnes) of placer gold currently worth over $10 billion have been produced to date. In 2009, placer gold production is expected to be similar to or slightly more than the 2008 total of 49,968 crude ounces.

Capstone Mining continued producing from its high-grade copper-gold Minto Mine. By the end of the second quarter of 2009, Minto had processed 500,783 tonnes of ore averaging 2.86% Cu, 1.28 g/t Au, and 12.7 g/t Ag, producing 29,408,000 pounds of high-grade (41.6 per cent)  concentrate containing 16,091 ounces of gold and 166,918 ounces of silver. In early 2009, exploration at the property led to the discovery of the Minto North deposit, 600 metres from the main Minto pit and has produced the highest-grade drill intersections.

A new El Dorado?

In 2008, Underworld Resources discovered the Golden Saddle and Arc zones at its White Gold property. Early drill results in 2009 (3.39 g/t Au over 104 metres at hole WD09-31) ignited a staking rush of over 7,000 claims in the area. Over 20 junior mining companies have acquired land in the area, which has been dubbed “The White Gold District.” Companies focusing exclusively on this area may be missing opportunities elsewhere, especially given White Gold’s geological similarities to the Dawson Range Mineral Belt.

In the White Gold district, other companies are engaged in earlier stage programs of soil sampling, geophysics, mapping and trenching. Initial results from Kaminak Resources’ Coffee property include soil samples containing up to 3.16 g/t Au and trenching returning 2.3 g/t Au over 21 metres. Tarsis Resources reported porphyry-style mineralization with grab samples of altered intrusive assaying 3.1 g/t Au, 206 g/t Ag and 0.04% Cu, and a prospecting discovery of a 0.30 metre-wide quartz vein-type, assaying 4.06 g/t Au, 161 g/t Ag and 0.89% Pb on the Prospector Mountain property.

Other gold exploration programs in the Tintina Gold Belt include drill programs by Golden Predator Royalty and Development on three properties. The Brewery Creek Mine property is being explored for sulphide resources within the mine trend, which produced approximately 280,000 ounces of gold. The Gold Dome property is host to numerous styles of intrusion-related gold mineralization, which have produced impressive drill results that need to be followed.

The Antimony Mountain property is drill testing the AJ gold-bearing quartz vein, which has returned high-grade gold from historical sampling. Victoria Gold is drilling on additional zones outside the main resources in the Eagle zone at Dublin Gulch. Canarc Resource Corporation has started a 10-hole, 2,000-metre drill program on the Tay/LP property. Emerick Resources has begun drilling on the Grew Creek Eocene-aged epithermal gold deposit, located along the Campbell Highway.

ATAC Resources’ Rau property, a new 2008 gold discovery, is subject to a substantial three-drill program. The property exhibits sulphide mineralization replacing dolomitized limestone and oxide mineralization, which has produced substantially higher grades than the sulphide type. The season’s first drill hole returned an impressive 28.04 metres of 24.07 g/t Au in oxide mineralization. ATAC is focusing on the oxides for their higher grades and excellent recoveries. Initial cyanide leach tests on oxide core returned recoveries of around 90 per cent.

A Range of projects

Several advanced Dawson Range projects were actively explored in 2009. Northern Freegold Resources conducted a 12,000-metre drilling program at the Nucleus deposit (inferred resource of 1,082,000 oz. Au within 67.57 million tonnes of 0.50 g/t Au). Northern Tiger Resources undertook a 2,500-metre drilling program on the Night Music zone at the Sonora Gulch project, where a 2008 drill discovery intercepted 26.6 metres of 4.96 g/t Au, 11.9 g/t Ag and 0.23% Cu. Western Copper drilled 10,000 metres at its Casino copper-gold-molybdenum porphyry deposit (4.4 billion pounds of copper, eight million ounces of silver and 475 million pounds of molybdenum, contained in a billion-tonne resource). The drill program was designed to upgrade inferred resources and to test potential new mineralization identified in a Quantec Titan 24 deep-penetration geophysical survey. Cariboo Rose and Alder Resources drilled 2,000 metres at their Canadian Creek project and Underworld Resources drilled over 20,000 metres at the White Gold project.

Beyond gold

Despite capturing the lion’s share of attention, gold is not the only commodity of interest in Yukon. BC Gold is exploring a number of properties that are underlain by the same Jurassic-aged intrusion that hosts the Minto and Carmacks copper deposits. Western Copper, working on the Carmacks copper deposit, has received its Quartz Mining Licence. The company is reviewing its 2007 feasibility study and, upon receipt of the final Water Licence, will make a production decision.

In the Keno Hill district, Mega Precious Metals conducted a 5,000-metre drilling program on its Eagle and Fisher properties, which are adjacent to the Bellekeno property. Selwyn Resources has been focusing on prefeasibility level studies to develop its Selwyn zinc-lead property as a 5,000 tpd, high-grade underground mine, followed by later expansion with addition of open pit operations. Current high-grade resources are indicated to be 16 million tonnes at 10.25% Zn and 4.23% Pb. Inferred resources are 26.7 million tonnes of 8.81% Zn and 2.81% Pb.

With so much exploration and development underway, Yukon is poised to retain its position as a prime target for mineral exploration, mine development and production in future years.

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