We’re Closer Than You Think
When you think of harsh and unforgiving, you may tend toward the shrill winds and frigid temperatures associated with Arctic climates. But it’s going on more than two years of harsh and unforgiving conditions for mining and mineral exploration companies seeking investment. As prices for most commodities remain low based partly on slower expected growth in emerging economies, and the mining industry tries to regain investor confidence from its less-than-stellar performance during a boom earlier this decade, project developers and junior exploration companies forge ahead with the unenviable task of building up mineral resources and reserves to ensure that a healthy number of viable projects are on tap once operating mines are tapped out.
It’s no secret that mining projects in the North are more difficult (read: expensive) to develop than their southern counterparts. Remote projects mean higher costs getting supplies and workers to site and getting the product out to market. A study by the Mining Association of Canada found that capital costs for Northern gold and base metal mines were roughly 2.1 times those of mines in more accessible regions. (And operating costs were 1.6 times higher.)
But not all Northern projects are created equally. Granted, labour will invariably be more expensive up here, but a good number of project developers have hit the jackpot: their deposits aren’t located out in the middle of the barrengrounds, hundreds of miles from the nearest town. Some projects in the North are found just outside of big centres and can piggyback on roads or power grids, while taking advantage of a local workforce. Others are in established mining regions, which means they can benefit from infrastructure already put in place by operating mines. Here’s how they’ll do it.
1. Yellowknife City Gold Property: TerraX Minerals
What is it? A 93.5 km2 collection of gold properties north of Yellowknife on the same shear system that sustained the Con and Giant mines, which produced roughly 6.1 million and 8.1 million ounces respectively. The company has been busy consolidating properties in the area for the last two years and analyzing more than 200 historical drill cores. In 2013, it conducted a 520 line-kilometre airborne survey and, in 2014, initiated a small drilling program. This has helped TerraX zero in on its “Core Gold Area,” which comprises the Crestaurum and Barney Zone deposits.
Where is it? The southwest corner of the property is just eight kilometres from the Yellowknife airport. The northeast border of the property is two kilometres from the newly-recommissioned 7.5 mW Bluefish hydroelectric station. A transmission line runs south from the power station to the city, along the east side of TerraX’s property.
Benefits: This really is about as good as it gets up here. The southern portion of the property is accessible by road year-round, as it’s located just north of the Ingraham Trail—the start of the famous diamond mine ice road. The company could potentially link up to the Bluefish system, and Yellowknife, an established mining hub with a large pool of skilled workers, is just a 10-minute drive away.
What’s next? The company is upgrading the seven-kilometre road to its Crestaurum deposit. In late 2014, it secured $2.7 million in financing and contracted out a winter drilling program to Forarco Canada Ltd. which began on the “Core Gold Area” in mid-January.
2. Wellgreen: Wellgreen Platinum
What is it? The most advanced project on this list. Wellgreen expanded its measured and indicated mineral resource estimates last year to almost 330 million tonnes at 0.52 g/t platinum-palladium-gold.
Where is it? Roughly 300 km northwest of Whitehorse, and 30 km from Burwash Landing, which has an airstrip.
Benefits: The property has all-season road access and is only 14 km from the Alaska Highway, which connects to deepwater ports in both Haines and Skagway, Alaska. A high-capacity transmission line ends at Haines Junction, 125 km away, but with its road in place, the company may go the LNG route, having signed MOUs with two suppliers (one in Alaska, another in Alberta) and General Electric for LNG generators.
What’s next? In November, the company raised $9.1 million in equity financing and is now completing a preliminary economic assessment of Wellgreen, with hopes of beginning pre-feasibility level studies later this year. Wellgreen wants to start the permitting process in 2016.
3. Klaza project: Rockhaven Resources
What is it? Rockhaven Resources has identified nine main mineralized zones at its flagship Klaza gold project, covering roughly 77 km2 in southwestern Yukon. The company has completed more than 50,000 metres of diamond drilling since it took over the project in 2010, including more than 19,000 metres in 2014, which produced many high-grade showings particularly in the Western BRX zone.
Where is it? About 50 km west of Carmacks and the Klonkide Highway.
Benefits: Another project that’s road accessible year-round. Rockhaven doesn’t have to move its drill rigs by helicopter; it can lug them around by bulldozer.
What’s next? With more than $3 million in the bank as of September, Rockhaven is planning “aggressive exploration at Klaza in 2015,” according to a November release.
4. Marlin project: Canterra Minerals
What is it? In October, Canterra
announced the discovery of a diamond in one of the 126 till samples it collected over the 2014 exploration season.
Where is it? 220 km northeast of Yellowknife, and just 20 km northwest of De Beers Gahcho Kué project.
Benefits: One of many exploration projects clustered around the NWT’s three operating diamond mines (and Gahcho Kué, under construction). Canterra can use the winter ice road to bring in fuel and supplies in advance of spring and summer exploration programs. Randy Turner, Canterra CEO, says it’s much easier to explore in the region than it was in the 1990s. “You’ve got the ability to truck fuel and supplies—lumber and stuff—up the winter road. That didn’t exist back then,” he says. “It’s a lot cheaper to truck it up there than to fly it in. … The more money that goes into exploration, the better chance of success.”
What’s next? Results from the 2014 programs were still being analyzed in early 2015 and would provide the company with potential targets for future drilling.
5. Kennady North: Kennady Diamonds
What is it? A 2012 spinoff from Mountain Province Diamonds, 49-per-cent owner of Gahcho Kué, Kennady Diamonds released results from a mini-bulk sample of roughly 19 tonnes at its Kelvin kimberlite in December that showed an average grade of 2.59 carats per tonne.
Where is it? To the west and north of Gahcho Kué. Like, literally, right beside it.
Benefits: The ice road to Gahcho Kué goes right through Kennady North. “We’ve also benefited from being able to use the airstrip at Gahcho Kué from time to time,” says Kennady CEO Patrick Evans, who also heads Mountain Province. But could there be more? As another diamond explorer, Margaret Lake CEO Paul Brockington, explained to The Northern Miner: “What we’re looking at up there is the potential, in theory, for additional feed to other producers.” Evans poured cold water on the idea though, noting that diamond processing isn’t as cut-and-dry as processing gold or copper due to the differing quality of diamonds from different deposits. “The probability is that, at an operational level, Kennedy will build its own plant to be able to process its own ore more quickly and receive its own diamonds for sale.”
What’s next? Kennady’s preparing a bulk sample of up to 700 tonnes right now.
6. HOAM Project: Olivut Resources
What is it? Olivut Resources is searching for diamonds where no one else is. So far, it’s discovered 29 kimberlites within its 522 km2 property east of the Mackenzie River. The company flew an extensive helimag survey over priority areas in 2013 and spent much of 2014 analyzing that data. (Olivut spent only $160,000 on exploration from January to October 2014).
Where is it? The southern part of property is roughly 15 km from Fort Simpson.
Benefits: The company can take advantage of Fort Simpson’s all-season highway and airport, as well as its proximity to the Mackenzie River, which is busy with barge traffic in the summer.
What’s next? Olivut continues to pore over its airborne magnetic database.
7. Pistol Bay: Northquest Ltd.
What is it? Norquest has spent more than $10 million to explore its 861 km2 gold property on the coast of Hudson Bay. Last summer, it focused most of its work focused on its Vickers Target.
Where is it? Just north of the community of Whale Cove, Nunavut.
Benefits: An all-season road, originally built by the hamlet for hunters, runs through the property, so fuel and goods can be trucked in from Whale Cove. The hamlet also has an airstrip and port. Northquest boasts on its website that its drilling costs are “half of that of our peers working elsewhere in the Arctic.”
What’s next? $3.5 million’s been budgeted for exploration in 2015, subject to Northquest’s ability to raise those funds.