Nunavut’s rocks start to pay off

Nunavut’s richest natural resource industry is now moving from adolescence to adulthood, as mining companies slowly progress from exploration to production.

A coalition of government and quasi-government organizations organized a seven-day series of promotional events last week to tell the people of Nunavut about it, during the 2005 version of Nunavut Mining Week.

By this time next year, they’ll be able to show the people of Nunavut that more than 10 years of mineral exploration is finally leading to the creation of job-producing and highly profitable mines.

That’s because the Tahera Diamond Corp.’s Jericho mine will be producing diamonds by next spring, and Cumberland Resource’s Meadowbank gold mine near Baker Lake is likely to be under construction.

In addition, mineral exploration itself has become a backbone of Nunavut’s economy. Mineral explorers, mostly small junior companies based in either Vancouver or Toronto, spent $170 million in Nunavut last year. Some people speculate that figure could reach $200 million for 2005.

Until recently, exploration companies have concentrated mostly on diamonds, gold and base metals.

But because of rising demand for fuel to run nuclear power stations, especially in China where 40 new nuclear reactors are to be built by 2020, exploration firms are now searching for a another commodity: uranium.

“There is a lot of interest in uranium right now,” said Dave Smith, the GN’s manager of mineral resources.

The Cameco Corp. of Saskatchewan is searching for uranium on lands west of Baker Lake that De Beers Canada had originally staked out in 1998 for their diamond potential. But so far, no one appears ready to propose the development of a uranium mine in Nunavut soon.

Here’s a list of some of the better-known exploration and mining projects in Nunavut right now, and the companies that are driving them.

Diamonds and gem stones

Stornoway Diamond Corp.

In 2002, Stornoway’s founders, while exploring for base metals on the Baffin region’s Melville Peninsula, stumbled across a treasure trove of what are called “kimberlitic indicator minerals.”

These are special types of garnet, peridot and other minerals formed by the same geological forces that create diamonds within kimberlite pipes. After that, the aggressive, well-funded Stornoway Diamond Corp. staked claims to about seven million acres of land in the Melville Peninsula, and began spending millions of dollars a year on a hunt for diamonds.

Since then, they’ve found seven bodies of kimberlite — the mineral within which diamonds are often found. That includes more tantalizing kimberlite occurrences found this summer at Stornoway’s Aviat properties on the Melville Peninsula, about 30 km west of Igloolik. Stornoway’s first kimberlite body, called “AV-1,” has already yielded numerous micro-diamonds.

Kimberlite usually occurs in large funnel-shaped pipes created millions of years ago by volcanic activity beneath the earth’s surface. Only about one to two per cent of the world’s kimberlite pipes will contain commercial quantities of diamonds, so it often takes many years to find the right ones.

Stornoway executives say that by 2004, they had dug up “significant proportions” of indicator minerals known as G10 and G10D pyrope garnets — the same indicators that led prospectors to the famous Lac de Gras diamond fields in the Northwest Territories.

In a press release issued just last week, the company suggests that the source of these indicator minerals on Melville Peninsula has yet to be found.

“Stornoway remains highly optimistic that further diamond discoveries are likely at Aviat,” Stornoway’s president, Eira Thomas, said.

The company has also found a new kimberlite field on Wales Island, just west of the Melville Peninsula in Committee Bay, where they’ve found 10 kimberlite occurrences so far. They’re exploring the area in partnership with BHP Billiton and Strongbow Exploration Inc.

Stornoway is also a partner with Shear Minerals in exploring the Churchill diamond properties near Rankin Inlet in the Kivalliq region.

Tahera Diamond Corp.

After years of struggle and uncertainty that began in 1992-93, when its predecessor companies staked their first claims in the Kitikmeot, the Tahera Corp. aims to start commercial diamond production by next spring at its Jericho Mine near Contwoyto Lake in the Kitikmeot.

A 200-man construction crew has been hard at work since last spring, building a tank farm, a processing plant, and other structures.

Jericho is Canada’s third and Nunavut’s first diamond mine. Within the projected eight-year life of the mine, Tahera hopes to produce about three million carats of diamonds in an operation that will employ between 125 and 175 people at any given time.

The company’s Inuit impact and benefits agreement with the Kitikmeot Inuit Association says they will make their “best efforts” to reach an Inuit employment level of 50 per cent within five years. The Inuit-owned Nuna Logistics firm has been contracted to do much of the mine construction work, and will also maintain an ice road connecting Jericho with the former Lupin Mine site.

Tahera is also optimistic about its chances of finding commercial quantities of diamonds on nearby properties that it continues to explore, especially the Muskox and Anuri kimberlite bodies.

Shear Minerals Ltd.

Through its Churchill Diamond Project between Rankin Inlet and Chesterfield Inlet, Shear Minerals Ltd. — in partnership with Stornoway and BHP Billiton — has found 30 kimberlite occurrences on its properties, which extend over nine million acres of the Kivalliq region.

And at one site, the company found four “macro” diamonds, each measuring from slightly less than one millimetre to about half a millimetre in width.

The company’s president, Pamela Strand, said in a press release two weeks ago that her company is “honing in” on the source of their discoveries so far.

Meanwhile, the company will spend $300,000 on an aerial survey of its Churchill West property, which lies adjacent to the Churchill project.

True North Gems

Although they’re likely some time away from being able to announce a commercial sapphire mine at the Beluga site near Kimmirut, True North Gems has already found marketable quantities of gems within exploratory samples taken in 2004.

An independent evaluator has estimated that blue, yellow and colourless sapphires contained in a bulk sample taken last year are worth between $30 to $400 per carat.

The company plans to sell polished gem stones through a web site later this year. True North Gems is also developing a high-grade ruby deposit in Greenland, and an emerald deposit in the Yukon.

Others

Other diamond hunters in Nunavut include Twin Mining (Jackson Inlet on North Baffin), De Beers (North Baffin and the Kitikmeot), Ashton Mining (Kitikmeot), and Allyn Resources (Kitikmeot).

Gold and precious metals

Commander Resources

Commander Resources has made significant gold discoveries in the western part of central Baffin Island, much of it on land controlled by Nunavut Tunngavik Inc. where Inuit own rights to the sub-surface.

This means that if Commander Resources develops a commercial mine, they must pay royalties to NTI.

Under NTI’s policies, the terms of its exploration agreements with companies like Commander Resources are kept secret.

Since 2003, the company has discovered a long belt of what appear to be high-grade gold deposits along a 140-km stretch of land that they’ve called the “Ridge Lake Prospect,” near the site of the old Foxe 2 and Dewar Lakes DEW Line sites.

Committee Bay Resources

Committee Bay Resources spent $8 million this year exploring for gold along a 300 km belt of rock northeast of Baker Lake that’s believed to contain rich gold deposits similar to those found at Red Lake, Timmins, and Kirkland Lake in northern Ontario.

They’re especially interested in a site called “Three Bluffs,” which they guess many contain 487,000 ounces of gold. The area, called the “Committee Bay Greenstone Belt,” contains numerous other gold deposits that the company is now trying to measure more accurately through exploration work. This year, Committee Bay Resources spent $8 million on exploration.

Miramar Mining Corp.

The Miramar Mining Corp. is now steering its small Doris North gold mine proposal through an environmental review by the Nunavut Impact Review Board that started earlier this year.

The Doris North deposit is just one of three sites that make up Miramar’s Hope Bay project, which is located just east of Bay Chimo and about 160 km southwest of Cambridge Bay.

The Doris North mine, which would have a life of only two or three years, and produce about 330,000 ounces of gold, is intended to help the company finance the development of the rest of the Hope Bay project. The company believes Hope Bay may end up producing about five million ounces of gold.

Cumberland Sound Resources

Cumberland Sound’s proposed Meadowbank gold mine, about 70 km north of Baker Lake, is entering the final stages of an environmental review by the Nunavut Impact Review Board, and the company hopes to receive all necessary licences and permits in early 2006.

The mine would last for at least eight years, produce about three million ounces of gold, and employ about 250 people, a quarter to a third of whom are likely to be Inuit from Baker Lake and other communities in the Kivalliq region.

The company has yet to announce the conclusion of an Inuit impact and benefits agreement with the Kivalliq Inuit Association.

Cumberland also owns a 50 per cent interest in the promising Meliadine East gold project, about 20 km from Rankin Inlet, and a 22 per cent interest in the Meliadine West project. So far, however, proven gold reserves at Meliadine are much smaller than those found at the Meadowbank site.

Others

Other gold exploration projects in Nunavut include: Wolfden Resources (Ulu and High Lake in the Kitikmeot), Tanqueray Resources (Kivalliq region), Miramar Mining and Kinross Gold Corp. (George Lake and Goose Lake in the Kitikmeot).

Uranium

Cameco Corp./De Beers Canada

The Cameco Corp. of Saskatchewan, the world’s largest producer of uranium, worked out an agreement with De Beers Canada last month to search for uranium in the Aberdeen Lake area, about 150 km west of Baker Lake.

De Beers, one of the world’s biggest diamond producers, first staked the area in 1998 to search for diamonds. Under the deal, Cameco must spend $1.8 million on exploration over the next four years. If they find any uranium, Cameco must mine and market the product and De Beers will give them 60 per cent ownership of the property.

The world price of uranium has risen sharply in recent years, mostly because of plans by China to build 40 nuclear reactors by 2020.

Pathfinder Resources

A small exploration company based in Vancouver, Pathfinder Resources is searching for uranium in the Thelon Basin, an area of the Northwest Territories that runs up against the Nunavut boundary.

Other metals

Baffinland Iron Mines Corp.

In 2004, Baffinland launched an aggressive plan to revive the long-dormant Mary River iron ore deposits south of Pond Inlet on north Baffin, which is believed to contain tens of millions of tonnes of high-grade iron ore.

The company believes that if their plan proves feasible, they can ship 10 million tonnes of iron ore a year to buyers in Europe, through a deep-sea port that would possibly be built at Milne Inlet.

Wolfden Resources

Wolfden, a small company based in northern Ontario, is developing a rich copper-zinc-gold-silver deposit at High Lake in the Kitikmeot region, about 175 km southeast of Kugluktuk.

The company says that it’s ready to start working on studies aimed at proving the feasibility of a commercial mine at the site.