NWT Mining and Mineral Exploration Update 2016
This year marks 25th anniversary of the diamond discovery at Lac de Gras by geologists Chuck Fipke and Stewart Blusson. This news caused the largest staking rush in Canadian history. Their discovery resulted in Canada’s first diamond mine, Ekati, and ignited a $28-billion-dollar industry that established Canada as the world’s third largest diamond producer by value and fifth by volume.
Despite tough financial market conditions, NWT mineral producers and explorers managed to advance their projects in 2016, including the opening of the NWT’s fourth diamond mine in September. The total estimated value of minerals and diamonds produced in the NWT in 2015 was $1.79 billion, of which diamonds account for 97 percent of the value. Both Diavik, the territories’ second diamond mine, and Ekati are working on expansion projects.
Explorers are becoming cautiously optimistic about being able to raise money for exploration activities.
In December 2015, DeBeers Group of Companies (DeBeers) placed its Snap Lake Diamond Mine on care and maintenance. With a remaining diamond resource of 25 million carats, DeBeers has decided to try to sell the property.
On September 20, 2016 DeBeers opened the $1 billion Gahcho Kué Diamond Mine (DeBeers 51 percent, Mountain Province Diamonds 49 percent). Following the plant commissioning, full production is expected in early 2017. Ore will be mined from three open pits, starting with the 5034 kimberlite. Stripping on the Hearne kimberlite is scheduled to start 2019, and mining will be completed by 2024. Finally, stripping and production from the Tuzo pipe is scheduled to start in 2020, and finish in 2028. A fourth pipe, Tesla, is not currently included in the mine plan.
Gahcho Kué is expected to produce 54 million carats from 35 million tonnes of ore over a 12-year mine life. In 2014, Gahcho Kué diamonds were valued at an average of $174 US/carat, with values of test parcels ranging from $88 US/carat from the Hearne Pipe to $298 US/carat for diamonds from the Tuzo pipe. Gahcho Kué will inject about $6.7 billion into the Canadian economy, with a significant portion in the NWT. At full capacity, the project will provide 530 direct full time jobs; including supply and service chain jobs, the project is expected to support more than 2,700 jobs.
At the Ekati Mine, Dominion Diamond Corporation (Dominion) produced ore from the Koala, Misery and Pigeon pipes. A fire at the Ekati processing plant caused a stoppage to mining and milling operations and resulted in the temporary layoff of over 300 employees. To offset the loss, mining operations were continued in the higher value Koala underground and Misery main pit. Mining in the lower value Pigeon and Lynx open pits were temporarily suspended.
In September 2016 Dominion announced the sale of a 186-carat gem quality diamond for US$2.8 million, recovered in early June from the Pigeon kimberlite. The stone was the largest diamond ever recovered at Ekati.
Repairs to the process plant were completed September 21, and Dominion intends to continue processing the higher value ore for the remainder of the fiscal year.
After successful completion of the Jay kimberlite environmental assessment, Dominion plans to proceed with development following receipt of water licences and land use permts. Jay is expected to produce 78.6 million carats of diamond from 44.7 million tonnes of ore (1.8 carats/tonne) with an estimated value of $53 US/carat. The project has a post tax net present value (NPV) of $398 million US at a 7 percent discount for a post tax internal rate of return (IRR) of 15.6 percent.
Ore production is scheduled to start in late 2022 and will add about 10 years to Ekati’s mine plan, extending the life of the mine to 2033.
Dominion released a pre-feasibility study on the Sable kimberlite, which will be mined as an incremental development facilitated by the Jay project. Sable is expected to produce 10.1 million carats of diamond from 12 million tonnes of kimberlite (0.8 ct/tonne) with an estimated value of $140 US/carat. By coordinating development with the Jay pipe, the project has a NPV of $137 million US with a 16.2 percent post tax IRR at a 7 percent discount.
The Diavik Diamond Mine announced in May 2016 that the mine had produced 100 million carats since start-up. The mine is a joint venture between Rio Tinto plc’s subsidiary Diavik Diamond Mines (60 percent) and Dominion Diamond Corporation (40 percent).
Current mining activities at Diavik are exclusively underground at A154 South, A154 North and A-418 kimberlites. Development of the A-21 pipe, located below the water of Lac de Gras, was approved in 2014 and is progressing as planned. The A-21 pipe has a mineral reserve of ten million carats with an additional one million carats as an indicated resource, and 2.3 million carats as an inferred resource. Production from A-21 is scheduled to begin in 2018 and finish by to 2023.
Metal Exploration Highlights
Canadian Zinc Corporation completed a preliminary feasibility study on its 100-percent owned Prairie Creek lead, silver, zinc property. The new study incorporates results from the 2015 underground exploration program, as well as process optimization work completed over the past three years. Results showed increased measured and indicated resource tonnages by 32 percent and proven and probable reserves by 46 percent from previous estimates. The project shows a pretax NPV of $284 million using 8 percent discount with an IRR of 23 percent. On a post-tax basis, the project has a NPV of $302 million, with an IRR of 26 percent. Pre-production capital costs, estimated at $244 million, have a three-year payback.
Canadian Zinc signed production memorandums of understanding (MOU) with smelters Boliden and Korea Zinc that will allow sale of all of the mine’s zinc concentrate and half of the operations lead concentrate.
Canadian Zinc anticipates 220 direct full time jobs over a 17-year mine life, as well as a several indirect jobs elated to mine supply, transportation, and monitoring.
DEMCO, a subsidiary of Denendeh Development Corporation, continued a program to service and preserve historical drill core stored at the Terra mine site. Re-logging and preserving the core has shown the potential for polymetallic mineralization in the historic mining district.
In July, Nighthawk Gold started a 10,000 m drill program on its Indin Lake Gold property. The program will test high priority targets at the Colomac and Goldcrest Deposits. Initial results on the Colomac 1.5 zone showed an intersection of 52.07 m (ca. 40 m true width) of 7.72 gram/tonne Au and 72.65 metres (ca. 50 metre true width) of 5.58 gram/tonne Au. Immediately following the release of these results Nighthawk announced a $10.1 million strategic investment by Kinross Gold Corporation.
Ninety Two Resource Corporation took a series of grab samples from spodumene-bearing pegmatites on its Hidden Lake property approximately 40 km northeast of Yellowknife. Grab samples assayed up to 3.06% Li2O. The grab sampling was followed up with channel sampling, with multiple channel samples taken across four of the more promising pegmatites. Assays are pending.
Selwyn Chihong Mining continued environmental and engineering activities to advance the large zinc property towards production. The project includes 15 zinc-lead deposits over a strike length of 37.5 kilometres with the bulk located in eastern Yukon extending southeastward into the NWT. The global indicated resource for 2012 was 185.57 million tonnes grading 5.2 percent Zn and 1.79 percent Pb for a metal content of 9.64 billion kg of zinc and 3.31 billion kg of lead. The inferred resource was 237.86 million tonnes grading 4.47 percent Zn and 1.38 percent Pb for a metal content of 10.63 billion kg of zinc and 3.27 billion kg of lead. Selwyn Chihong is continuing to define a larger scale open-pit mine with expanded mine life with a 35,000 tonne-per-day mill option. Six of the eight mineralized zones are being considered for open pit development.
Silver Range Resources Limited purchased the Up Town Gold property comprised of six claims over 3267 hectares, located approximately five kilometres southwest of downtown Yellowknife, from Panarc Resources Limited. Summer exploration on the property included systematic sampling, alteration mapping and airborne magnetic and radiometric surveys. In the fall, Silver Range entered into an option agreement with Rover Metals Corporation on the project.
Strategic Metals Ltd. completed a two-week program consisting of mapping, prospecting and channel sampling Li Property which hosts the Little Nahanni Pegmatite Group, a suite of lithium-cesium-tantalum pegmatite dikes that have been traced for over 13 km. The property is located near the Yukon border 37 km northwest of the Cantung Mine. Grab samples from spodumene-bearing pegmatites assayed up to 3.77Li2O. Channel samples from LCT type pegmatite boulders and outcrop on the Li property have returned up to 1.59 percent Li2O across 10 metres. Equitorial Exploration Corp. subsequently purchased a 100 percent interest of the LNPG property.
TerraX Minerals Inc. continued an aggressive exploration program on its wholly owned Yellowknife Gold Project. The property is a 129 km2 covering 23 km of strike of the Yellowknife Volcanic Belt. TerraX completed a winter and summer exploration program of diamond core drilling, sampling and other investigations.
Early in the year, TerraX provided reported results from their 2015 summer sampling program. Several new high-grade gold veins returned multi-ounce assays. Samples of the Ryan Lake Pluton, and shear zones within the pluton, returned polymetallic assays with significant values of Au, Ag, Pb, Zn and Mo.
Nine holes totaling 1,364 m were completed on the Mispickel zone, during winter 2015/2016 drilling. Mispickel has high grade Au in quartz veins surrounded by lower tenor Au in altered metasedimentary rocks. Hole TWL16-016 from the winter program returned a best assay of 60.60 grams/tonne over 8.0 metres (intersection width). Initial results from summer drilling on the Mispickel zone returned a best result of 5.53 metres @ 29.85 gram/tonne Au.
The Sam-Otto zone received 1,501 metres of drilling in nine holes during the winter drill program. Pervasive alteration and mineralization was intersected on all nine holes. Sam-Otto mineralization is characterized by low-grade wide intersections within altered volcanic rocks. The best intersection from the program is reported as 1.0 gram/tonne Au over 49.70 metres.
Six holes were completed on the Homer Lake targets for 1,147 metres. Two holes intersected a previously untested north-striking quartz vein and sulphide gold zone cutting the Homer base metal structure. This structure returned 15.91 metres at 1.78 gram/tonne Au and 14.9 gram/tonne Ag. Four other holes targeting the Homer Lake structure proper all intersected base metal mineralization with a best assay of 0.53 gram/tonne Au, 57.1 gram/tonne Ag, 3.82 percent Pb and 4.63 percent Zn over 4.00 metres in hole THL16-010.
At Hebert-Brent, TerraX drilled 19 holes totaling 784 metres. The best assay interval returned 3.21 g/t Au over 8.00 metres.
The Barney Lake prospect received three holes totaling 1,593 metres. All holes intersected mineralization. The best assay from the work returned 18.10 metres of 1.10 gram/tonne Au. One hole on the Barney target also reported spinifex textured ultramafic flows, a rarity for the Yellowknife Greenstone Belt.
Ten holes, for a total of 913 metres were drilled on the AES, Pinto and VSB targets, and some intersected low grade gold mineralization.
Most results from the summer exploration program are still pending, with 27,000 metres of diamond drilling planned.
Diamond Exploration Highlights
Canterra Minerals Corporation (Canterra) received kimberlite indicator mineral (KIM) picking results from 96 samples from their Southern Slave Prism, Gwen, and Marlin properties. On Prism, results helped define two KIM train cutoffs. On the Marlin property, results help define a KIM anomaly which appears to be sourced on the property. One hundred and eight till samples from their Rex property remain to be picked. Canterra completed 60 line-kilometres of magnetic and resistivity ground surveys on its Hilltop property in February 2016.
Kennady Diamonds had a busy year exploring their Kennady North property that includes MZ, Doyle, Kelvin, Hobbes and Faraday kimberlites, completing extensive drilling programs in their winter and summer exploration programs. Kennady reported intersecting a new, third kimberlite in the Faraday cluster. A diamond coring rig was used to drill 17 holes on the new Faraday 3 kimberlite during the winter 2016 program, and a further five holes helped further delineate the body during the summer drilling program. The new kimberlite is located approximately 80 m southwest of the Faraday 1. The core rig also helped delineate the Faraday 1 and 2 kimberlites, and was used for exploration drilling on the Hobbes kimberlite.
Continuing the exploration of the Kelvin North Lobe, Kennady completed 29 large diameter reverse circulation (LDRC) holes to recover a 612 tonne bulk sample. DMS separation at the Saskatchewan Research Council (SRC) recovered 1,278 ct of diamonds >+0.85mm screen, for a grade of 2.09 ct/tonne. Forty-four diamonds greater than one carat were recovered, including a 3.43 ct white/colourless transparent octahedral twin with no inclusions.
Three LDRC holes were drilled in the Kelvin Southeast lobe to improve geological modelling in this area.
The Faraday 2 kimberlite was also sampled with the LDRC rig, collecting a 21.1 tonne mini-bulk sample from two holes. The sample returned 2.69 ct/tonne using Dense Media Separation (DMS) at the SRC. The DMS sinks were processed using caustic fusion rather than x-ray sorting and grease tables due to a high number of background x-ray luminescent minerals in the Faraday kimberlite.
North Arrow Minerals Inc. conducted a spring drilling program on its Redemption Diamond Project. North Arrow has earned a 55% interest in the property from Arctic Star Exploration Corporation. Redemption is an 11,500 hectare property 30 kilometres south of the Ekati Mine. Ten diamond drill holes totaling 951 metres and 18 reverse circulation (RC) holes totaling 626 metres failed to locate a source for the South Coppermine Kimberlite Indicator Mineral train. Geophysical anomalies drilled during the program were explained by complex geophysical signatures in magnetic granitoids, pegmatites, and metasedimentary rocks. Based on these results North Arrow has relinquished its earn-in interest on the Redemption Project, excepting one claim. North Arrow also carried out a ground geophysical program on wholly North Arrow-owned claims along the Monument kimberlite cluster to the east of the Redemption property. Ground geophysics on these claims identified a number of drill targets.
South and east of the Redemption property, on their Loki project, North Arrow holds a 100 percent interest in 13 claims covering 7,059 hectares. Fifty-six till samples were collected from the property in August. Results are pending.
In March, Proxima Diamonds Corporation explored its Cullinan property, west of Diavik Mine. Following up on previously identified airborne geophysical anomalies, Proxima completing five ground, magnetic, gravity and 3D capacitively coupled resistivity surveys. A review of the preliminary data over the CN-04 target area has identified coincident gravity and conductivity anomalies beneath a small lake, at the head of a strong KIM train that includes G10 pyrope garnets.
Till sampling at Proxima’s Eureka project, located southeast of Snap Lake and west of Gahcho Kué, helped define the head of a KIM train west of the CL-25 kimberlite. On the company’s Orlov property, immediately east of the Snap Lake Mine, abundant KIM’s were recovered in an area where previous sampling had not identified KIM’s. MN