Mining North of 60 by DEL Communications Inc.

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Mineral industry overviews from Alaska, Nunavut, Yukon and The Northwest Territories Community and commitment – Donlin Gold is developing one of the world’s largest gold deposits relying on old-fashioned values Chances taken – Eagle Plains Resources turns a conversation into lucrative opportunities Heavy metal – North American Tungsten Corporation Ltd.’s Cantung Mine

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table of contents

Mining North of 60 Message from Minister of Aboriginal Affairs and Northern Development – John Duncan.................................................................................. 5 Alaska mineral industry overview – Endowed with natural resources, and a bright future......................................................... 6

2009

Nunavut mineral industry overview – This is where golden opportunities abound....................................................................... 10

is published by DEL Communications Inc. Suite 300, 6 Roslyn Road Winnipeg, Manitoba, Canada R3L 0G5 www.delcommunications.com

Yukon mineral industry overview – Yukon’s modern mining rush digs in for the long term.................................................... 14

President David Langstaff

The Northwest Territories mineral industry overview – A colourful past influences an exciting future.................................................................... 18

Publisher Jason Stefanik

Yellowknife Chamber of Commerce – Outside looking in – How can Yellowknife tap into the north’s mineral rush?............. 22 NWT & Nunavut Chamber of Mines – What a rush – New mining projects proposed for the NWT and nunavut.................... 24 Digging up the past – forging a path forward – As Graham Farquharson looks to retirement, he is rewarded for years of service...... 28 Atlas Copco – Safety, innovation and productivity............................................................ 30 Arctic Mission Specialist – Ocean combines the knowledge and equipment to work with the unique conditions of Canada’s north................................ 32 Mineral exploration versus mining – One industry, two sectors looking at the challenges from an exploration perspective............................................ 36 Community and commitment – Donlin Gold is developing one of the world’s largest gold deposits relying on old-fashioned values and mutual respect................ 40 Chances taken – Eagle Plains Resources turns a conversation in to lucrative opportunities.......................................................................... 42 NUNA Group of Companies – Joint ventures and partnerships committed to developing long term business relationships........................................... 46 Looking at the bright side – Sheer determination drives Jericho Diamond Mine forward.......................................... 48 Heavy metal – North American Tungsten Corporation Ltd.’s Cantung Mine, and Mactung Property hold much potential.......................................... 50

Managing Editor Carly Peters Advertising Account Executives Cheryl Ezinicki Dayna Oulion

Production services provided by: S.G. Bennett Marketing Services www.sgbennett.com Art Director Kathy Cable Layout & Design Dana Jensen Advertising Art Deryn Bothe Julie Weaver © Copyright 2011, DEL Communications Inc. All rights reserved.The contents of this publication may not be reproduced by any means, in whole or in part, without prior written consent of the publisher.

While every effort has been made to ensure the accuracy of the information contained in and the reliability of the source, the publisherin no way guarantees nor warrants the information and is not responsible for errors, omissions or statements made by advertisers. Opinions and recommendations made by contributors or advertisers are not necessarily those of the publisher, its directors, officers or employees.

Iron Man – Advanced Explorations Inc. – Progressing towards Nunavut iron ore mine...................................................................... 54

Publications mail agreement #40934510 Return undeliverable Canadian addresses to: DEL Communications Inc. Suite 300, 6 Roslyn Road, Winnipeg, Manitoba, Canada R3L 0G5 Email: david@delcommunications.com

Unlock the value – Peregrine Diamonds Ltd. advances the Chidliak Project on Baffin Island..................... 58

PRINTED IN CANADA | 11/2011

Index to advertisers................................................................................................................. 62

Mining North of 60 | Winter 2011-2012

DEL

Communications Inc.

MINISTER’s message

John Duncan, PC, MP

Minister of Aboriginal Affairs and Northern Development I am pleased to have the opportunity to address the mining community through this year’s edition of the North of 60 Mining and Exploration Review. Canada’s north is rich in resources and possibilities, and the mining sector, as it continues to expand and develop, is providing employment and economic opportunities for northerners, for Aboriginal people and for all Canadians. Our Government of Canada recognizes that investment and research in the north are critical to fostering a strong northern economy and, at the same time, wants to ensure that development happens in a sustainable way and that Northerners benefit directly from economic growth. Through commitments under Canada’s Northern Strategy, we are taking action to encourage future exploration and development in the region. For instance, the Action Plan to improve northern regulatory regimes will ensure that northern regulatory regimes are strong, effective, efficient and predictable. Our government is also encouraging exploration and development across the north by extending the Mineral Exploration Tax Credit, which will help fund grassroots exploration being undertaken by the junior mining sector. An additional investment of $16.5 million has also been made for northern geoscience work, to improve our knowledge of areas in the north that are rich in metals, diamonds and other commodities. This will help encourage exploration companies to invest in all three territories. Mining is an important part of life for many in Canada’s north, including in Yukon, where investment in exploration and project development is forecasted to reach record levels this year.

In the Northwest Territories (NWT), the forecast for the mining sector is positive. Production has increased at several mines in the territory, such as the Diavik and Snap Lake diamond operations. The NWT’s Cantung tungsten mine, which was able to reopen due to higher tungsten prices, was re-evaluated and its life has now been extended to four years. In Nunavut, our government continues to work on developing a map selection system for claim staking, and there is ongoing commercial production at mines in the territory, including the Meadowbank

Gold Mine. Underground development for the Hope Bay Gold Project began in October 2010, and there are seven additional development proposals currently in different stages of the regulatory process in Nunavut. In Canada’s north, mining activities continue to be cornerstones of sustained economic activity. I am confident that by continuing to work closely with northerners and other stakeholders, our government is helping to create long-term prosperity for northern communities. n

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overview

Alaska Mineral Industry Overview Endowed with natural resources, and a bright future By David Szumigala, Alaska Division of Geological & Geophysical Surveys

Exploration drilling at the Palmer volcanogenic massive sulfide deposit. Photo provided by Constantine Metal Resources Ltd.

Alaska, known as “The Last Frontier,” is richly endowed with natural resources, and mining has been an important part of Alaska’s economy since the discovery of gold near Juneau in the 1880s. Mines and mineral industry activities across the state provide thousands of jobs for Alaskans, millions of dollars in state revenue and produce a wide variety of metals and materials for United States and global markets. The value of mineral production from Alaska totaled an estimated $2.9 billion in 2009 and $3.1 billion in 2010. The 2011 production value is expected to be higher due to increased production volumes and record metal prices. Mining production contributed an estimated $933 million to Alaska’s gross state product in 2009; with estimates likely to increase in 2010 and 2011. The Alaskan mineral industry expended an estimated $268 million on development projects in 2010, which may drop slightly in 2011. Record metal prices and high undiscovered resource potential has continued to fuel mineral exploration

Mining North of 60 | Winter 2011-2012

in Alaska, and as a result, exploration investment in 2011 is expected to surpass the $242 million estimated expenditures in 2010. Alaska has seven lode producing mines. Production from Teck Ltd.-NANA’s Red Dog Mine in northwestern Alaska, one of the world’s largest zinc mines, accounts for over 50 per cent of Alaska’s annual mineral industry value. The Red Dog Mine set a new record for mill throughput in 2010 and produced 593,043 tons of zinc, 121,144 tons of lead and 6,784,065 ounces of silver. Mining of the Aqqaluk deposit, the extension of the main deposit, began in 2010 and is projected to provide ore for the next 20 years. Red Dog’s 2011 production forecast is approximately 612,000 tons of zinc, 94,000 tons of lead, and more than five million ounces of silver. Approximately two-thirds of the mill feed will be from the Aqqaluk deposit. Hecla Mining’s Greens Creek Mine is the fifth largest silver mine in the world. This underground mine near Juneau produced 7.2 million ounces of silver, 68,838 ounces

of gold, 74,496 tons of zinc and 25,336 tons of lead in 2010. Metal production per fiscal quarter has been higher in 2011 than 2010 to date. Sumitomo’s Pogo Mine, near Delta Junction, is the largest gold producer in Alaska, with 383,434 ounces of gold production in 2010. Gold production and mill throughput should be steady through 2011. Kinross Gold’s Fort Knox Mine, near Fairbanks, produced 349,729 ounces of gold in 2010 and 2011 gold production is expected to be 262,342 ounces. Projected mill throughout in 2011 is expected to be 14.8 million tons and heap leach tonnage is expected to increase from 13.8 million tons in 2010 to a projected 17 million tons in 2011. Heap leach ore production is expected to extend the life of the mine to 2018. Coeur d’Alene Mines Inc.’s Kensington Mine, near Juneau, began gold production on June 24, 2010. The underground mine produced 43,143 ounces of gold from 174,028 tons of ore milled during 2010 and is expected to produce about

125,000 ounces of gold annually over an initial 12.5-year mine life. Fire River Gold’s Nixon Fork Mine, near McGrath, began gold and silver production in July 2011. This historic underground mine will produce doré containing 60 per cent gold and 30 per cent silver. A copper concentrate will also be produced. Approximately 25,000 ounces of gold will be produced in 2011. Usibelli Coal Mine, near Healy, produced a record 2,061,000 tons of coal in 2010 for Alaskan and Pacific Rim customers. NovaGold Resources’ Rock Creek Mine on the Seward Peninsula is in care and maintenance. PacRim Coal LP continues to advance the Chuitna coal project near Anchorage towards construction. Placer gold production in 2010 from over 200 operators was more than 64,400 ounces and continued high gold prices will likely lead to more operators and placer gold production in 2011. Mineral exploration in Alaska continues at a boom level. Mineral exploration expenditures in Alaska account for approximately one-third of the annual United States total. In 2010, at least 65 Alaskan projects spent more than $100,000 each, and 30 of those projects spent more than $1 million each. These projects spanned Alaska. Copper–gold–molybdenum porphyry systems were the major exploration target in 2010 and 2011, followed by intrusion-related gold deposits. Exploration was also conducted on various gold– quartz vein deposits, base-metal-rich, polymetallic massive-sulfide deposits, platinum-group-element–nickel–copper ultramafic-hosted deposits and rareearth-element, diamond, tin, coal, placer gold, and other deposit types. Alaska remains largely unexplored, especially when compared to the rest of the United States. Even so, several world-class deposits have been discovered and extensively explored over the past two decades. These advanced exploration projects include, the 42.3 million ounce Donlin Creek intrusion-hosted gold project near Aniak, the Pebble copper–gold–molybdenum porphyry project in southwestern Alaska and the 7.3 million ton Niblack polymetallic (copper, gold, silver, and zinc) volcanogenic massive sulfide project in southeastern Alaska. The Pebble project, with resources of 80.6 billion pounds of copper,

107.4 million ounces of gold and 5.6 billion pounds of molybdenum, was the largest exploration project in 2010 and 2011. The Money Knob deposit near Livengood leads the pack in new mineral discoveries in Alaska. In 2011, International Tower Hill Mines Ltd. announced measured, indicated and inferred gold resources totaling 13.3 million ounces of gold at Money Knob. Alaska State and Federal government agencies distribute Alaska geological and mineral information necessary to design and implement exploration programs in

Alaska through a single Internet portal: http://AKGeology.info. Available Alaska minerals information includes mining claim status, mineral localities, geochemistry, geologic maps and reports, and links to State and Federal regulatory agencies. The State of Alaska acquires relatively detailed airborne magnetic and electromagnetic geophysical surveys for mineralrich, State-owned lands and funds subsequent geologic mapping. More than 10.5 million acres of Alaska have been flown for detailed geophysical surveys and about three million acres of 1:63,360- and

Mining North of 60 | Winter 2011-2012

A full report on the Alaska mineral industry can be found at http://www.dggs.alaska.gov/index.php?menu_link=minerals&link=minerals_overview. The State of Alaska conducts geological mapping projects in areas of high mineral potential. Photo by David Szumigala, Alaska Division of Geological & Geophysical Surveys.

1:50,000-scale geologic maps have been produced since the mid 1990s. Federally-funded airborne geophysical surveys in Alaska have added additional geophysical information covering 4.1 million acres. Alaska has an innovative large mine permitting process ensuring a consistent and predictable review by regulatory agencies. The Alaska Department of Natural Resources coordinates the process with a project manager leading permitting activities of the state interagency team working on a large mine project. The large mine project team works cooperatively with large mine applicants and operators, federal resource agencies, and the Alaskan public to ensure that projects are designed, operated and reclaimed in a manner consistent with the public interest. The team consists of mining engineers, hydrologists, biologists, and other professionals with extensive experience in mine project permitting. More information can be found at http://www.dnr.state.ak.us/mlw/mining/largemine/index.htm. n

Gold-bearing quartz veins in the underground adit at the Kensington Mine, Alaska’s newest major lode mine. The Kensington Mine was previously operated from 1887 to 1929. Photo by David Szumigala.

Placer gold from the Little Squaw Mine. Photo courtesy of Goldrich Mining Co.

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a series of chemical baths before dipping it into a last 840° bath in which zinc chemically bonds to the steel. In the techniques final step, the newly galvanized material is exposed to a natural cycle of temperature and atmospheric change which causes a patina to form on the zinc and affords the steel maximum protection. Steel frameworks can be powder-coated with a drip-free finish that not only looks great but provides your building with an additional layer of protection against rusting, chipping, scratching, and fading. All building covers are constructed of 12 to 14 oz. / yard squared polyethylene fabric and 32 oz. PVC fabrics. Coverings for larger buildings (80’-200’ wide) are stretched over individual bays. A key feature advantage of Horizon Structures’ individual bay system is that over time it offers considerable cost savings in

Horizon Structures can provide you with structures ranging in size from 26 to 200 feet wide. Foundational options depend on the size of the building and that can be set on different foundational options including pre-cast blocks, Jersey barriers or T or L panels. For added stability, wind cable and wind reducer supports are incorporated into the steel frameworks of larger buildings to ensure your building withstands the very harshest weather. Horizon Structures provides a truly superior outdoor building for all your mining and storage needs. Our experienced and knowledgeable sales team will work with you to provide you with a customized structure that explicitly meets your mining and drilling requirements.

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overview

Nunavut Mineral Industry Overview This is where golden opportunities abound Submitted by Aboriginal Affairs and Northern Development Canada, Nunavut Regional Office, Mineral Resources Division Nunavut continues to be a destination of choice for mineral explorers and presents an attractive investment climate for major companies. Actual expenditures in Nunavut’s exploration industry may push past the initial $322 million spending intentions estimated by Natural Resources Canada. The reason is two-fold: growing participation in advanced projects by major companies, and new projects that have emerged since the beginning of the year. Project Acquisitions Baffinland Iron Mines Corporation, operator of the Mary River iron ore project located on northern Baffin Island, was purchased jointly by ArcelorMittal S.A. (70 per cent) and Nunavut Iron Ore Acquisitions (30 per cent) in February 2011, after several months of competing bids for control of the company. The Mary River project is going through the environmental review process, and ArcelorMittal has stated its intention to develop the high grade deposits. Two other companies announced transactions this summer. Sabina Gold & Silver Corporation agreed to sell its silver-rich copper-zinc project at Hackett River and the surrounding Wishbone claims with base metal potential to Xstrata Zinc Canada. Sabina retained the nearby Back River gold project, which is now the main focus of its exploration work. MMG Resources Inc. announced the sale of the past-producing Lupin gold mine and the Ulu gold deposit to Elgin Mining Inc. This sale will concentrate MMG’s efforts on its base metal deposits, Izok Lake and High Lake. Territory-Wide Exploration Exploration is ongoing in Nunavut’s three regions, the Kitikmeot, Kivalliq and Qikiqtaaluk, for such diverse commodities as base metals, diamonds, gold, iron, uranium and rare earth elements. Both junior and senior mining companies explored at more than 40 projects across the territory

10 Mining North of 60 | Winter 2011-2012

this field season. Some highlights of the work in each region are discussed here. The majority of activity in the Kitikmeot region is on gold, with three major and several early-stage projects undergoing active exploration. Earlier this year, Hope Bay Mining Ltd., a subsidiary of Newmont Mining Corporation, announced a budget of $300 million for surface and underground exploration at Doris North. This expenditure includes 90,000 metres of drilling, mine development and infrastructure construction. Sabina is very active with work on its Back River gold project, with most activity occurring in the Goose Lake area. The company is working to expand two zones discovered in 2010, and continues to search for new sources of gold mineralization with potential for open pit mining. North Country Gold Corp. is focusing on resource delineation and expansion of

the 4.1 kilometre Walker Lake trend with a $25 million exploration program on its Three Bluffs gold project in the Committee Bay gold belt. In the Kivalliq region, the main exploration commodities are gold and uranium. Agnico-Eagle Mines Ltd. has two major gold projects in the region, the Meadowbank gold mine near Baker Lake and the Meliadine gold project near Rankin Inlet. The Meadowbank mine quickly resumed full production after a fire earlier this year, which destroyed the kitchen and dining facilities. Since its 2010 acquisition of the Meliadine project, Agnico-Eagle has ramped up delineation work on the known deposits. With a budget for 2011 of $65 million, the company’s plans include: 95,000 metres of drilling, including a combination of exploration and definition drilling on known deposits, regional

Photo: Tim Keane (Fednav)

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exploration, an underground bulk sample, camp expansion and other site improvements. AREVA Resources Canada Inc. continues work at its Kiggavik uranium project in the Thelon Basin near Baker Lake. Kiggavik is the most advanced uranium project in the territory and the company expects to complete a draft environmental impact statement by the end of 2011. Cameco Corp. is exploring at its Aberdeen and Turqavik properties, also in the Thelon Basin. In April, Cameco announced the discovery of two new zones of uranium mineralization: the Tatiggaq (Crane) Zone on Turqavik, and Qavvik (Wolverine) Zone on Aberdeen. At Kivalliq Energyâ&#x20AC;&#x2122;s Angilak project, the discovery of western and eastern extensions of the Lac Cinquante uranium deposit has extended the known strike-length to 2.3 kilometres. Forum Uranium Corp. is drilling at its North Thelon uranium project, which lies adjacent to Kiggavik. Exploration in the Qikiqtaaluk (Baffin) region is focused on iron, diamonds and gold. The largest project in the region is Baffinlandâ&#x20AC;&#x2122;s Mary River iron project. The

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company is currently working on a draft environmental impact statement in support of its proposed development of one high grade iron deposit on the property. This year, the company focused on geotechnical, engineering and baseline work, to prepare for possible construction in 2013. Advanced Explorations Inc. conducted exploration on its Roche Bay and Tuktu iron projects and acquired a nickel-copper showing nearby, on the western edge of the Melville Peninsula. A news release from Advanced Explorations indicates that Vale Inco has recently acquired a large land package close to this showing. Iron exploration is also newly underway in southern Hudson Bay on the Belcher Islands, near the community of Sanikiluaq, where Ca-

nadian Orebodies Inc. is conducting a drill program on its Haig Inlet iron ore project. On southern Baffin Island, Peregrine Diamonds Ltd., in joint venture with BHP Billiton, is continuing exploration on its Chidliak diamond project, as well as on its wholly-owned Cumberland and Qilaq projects. The 2011 Chidliak program includes drill-testing geophysical anomalies and drilling into known kimberlite bodies, as well as mini-bulk samples from two others and further reconnaissance work. Eight new kimberlites have been discovered this year. On the Qilaq project, Peregrine drill tested two kimberlites discovered in 2010 and identified a third. Commander Resources Ltd., financed by AngloGold Ashanti, continued to work on its Baffin Island Gold project. Activities

focused on the Kanosak prospect, and included a large geophysical survey over the property, as well as prospecting and mapping. Commander also completed an airborne geophysical survey on its whollyowned Storm copper project, located on Somerset Island. Mineral exploration in Nunavut has attracted increased interest in 2011, with multinational involvement from investors and operators as well as an influx of new companies and projects. Many commodities are being explored for throughout the territory, and large under-explored areas still remain. The number of projects advancing through the regulatory process suggests that Nunavutâ&#x20AC;&#x2122;s mineral production will increase substantially in the coming years. n

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Mining North of 60 | Winter 2011-2012 13

overview

Yukon Mineral Industry Overview

Yukon’s modern mining rush digs in for the long term An MD900 helicopter lands at the ATAC Resources Osiris camp in northeastern Yukon. Photo courtesy of the Government of Yukon. Yukon continues to be in the limelight with the previous years’ gold exploration successes leading to definition of gold deposits in 2011. Gold is the leading commodity in terms of exploration, but silver, base metals and tungsten are the leading commodities in terms of mine development. A number of regions are continuing to attract high-profile attention with two of Yukon’s operating mines expanding their reserves and new discoveries continuing throughout the territory. The year has been very exciting so far. A new “stake first, explore later” technique is now in play in Yukon. Where companies used to conduct regional reconnaissance-level prospecting and sampling before staking large properties, they now stake first, based on public data such as regional stream sediment data sets, and do the reconnaissance work after. Much of this years’ exploration consists of reconnaissance exploration of the nearly 78,000 claims staked in the first half of 2011. Another significant change in exploration strategy is the higher speed of information gathering in the field. Utilizing onsite analysis methods, such as portable geochemical analyzers and specialized

14 Mining North of 60 | Winter 2011-2012

software, companies can create digital 3D geochemical models in real time and use these to guide exploration programs. Drill targets can now be chosen quantitatively before assay data is received; what used to take several years to accomplish is now being done in one season. Exploration After Kinross Gold Corporation’s friendly takeover of Underworld Resources in mid-2010, Kinross defined a NI 43-101 compliant resource of 1.5 million ounces of gold in late 2010. Successful definition of the White Gold deposit two years after the 2009 discovery is a testament to the Kinross team and the potential of the White Gold area. Kaminak Gold Resources’ has followed up last year’s discovery on the Coffee property in the White Gold area with continued success, such as 74.9 grams per tonne over four metres, and is working towards a NI 43-101 compliant inferred gold resource. Much to the exploration community’s delight, new discoveries in the area continue. For example, Pacific Ridge Exploration Ltd.’s first diamond drill hole on its Mariposa property intersected 2.44 grams

per tonne gold over a 38.9 metre interval that includes 6.44 g/t gold over an 11.1 metre interval. ATAC Resources is also continuing its exploration success on the Rackla Gold Project which encompasses over 1,600 square kilometres of quartz claims in central Yukon along the north margin of the Selwyn Basin. Highlights of this project include, definition of a NI 43-101 compliant gold resource at the Tiger zone expected in late-2011, extensive diamond drilling of the Osiris zone, 100 kilometres east of the Tiger zone and regional exploration between Osiris and Tiger zones. Recent results from this summer’s drilling have been impressive, among them is 3.15 grams per tonne gold over 115 metres. Exploration companies that defined drill targets in 2010 are now actively drilling, while companies new to properties are undertaking extensive soil sampling programs. Over 200,000 soil samples are estimated for the White Gold area this year alone. Companies such as Radius Gold Incorporated and the Constantine Metal Resources – Carlin Gold Corporation joint venture staked ground along the margin of the Selwyn Basin last winter and are now

conducting reconnaissance-level exploration and are defining drill targets for 2012. Development Impressive progress has been made by Alexco Resource Corporation on development of the Bellekeno mine which officially opened in May of this year. The mine is now fully operational and is on track to meet its 2011 silver production target of 2.5 million ounces. Further exploration success by Alexco at the Lucky Queen and

Onek deposits has increased the total indicated resource on Alexco’s properties in the Keno Hill District by approximately 40 per cent. Capstone’s Minto Mine has been in continuous production since 2007. An amendment to the company’s mining license has been approved, which allowed Capstone to increase production to 3,600 tonnes of ore per day. Minto is also starting underground development with the aim of bringing underground production

online late in 2011 or early in 2012. Thanks to recent exploration successes, the total mineral resource at the Minto Mine now exceeds one billion pounds of copper which should extend the life of the mine well past its projected seven year life span. Open pit mining of Victoria Gold Corporation’s Eagle Gold deposit and underground mining of North American Tungsten’s Mactung deposit are both under assessment by the Yukon Environmental and Socioeconomic Assessment Board which is part of the regulatory and permitting process for Yukon mines. Western Copper Corporation spent 2011 preparing for the assessment and permitting process for the Casino property in the southern Dawson Range. The Selwyn-Chihong Mining Limited spent 2011 preparing for the assessment and permitting process for development of the XY and Don deposits in the Howard’s Pass District. SelwynChihong also started an advanced underground exploration program this year with the aim of getting a 30 tonne bulk sample for metallurgical testing. Yukon’s Commitment The Government of Yukon is committed to continually improving the investment climate by providing regulatory certainty. Supporting the exploration and mining industry continues to be a priority for the Yukon Geological Survey and they have initiated or continued geological studies, such as bedrock mapping, in the Rackla area. The Place To Be Success has been pervasive in every aspect of Yukon’s growing mineral industry, including expanding resources at the operating Minto and Bellekeno mines, exploration in the White Gold area, the Rackla Gold Project and a host of other Yukon projects. Two mines are in the assessment process and several other Yukon projects are continuing their economic and environmental studies adding to the number of potential near term mines. 2011 has been an exciting one with mining and exploration clearly establishing itself as one of Yukon’s main industries for the foreseeable future. For more information on Yukon’s mineral resources, visit: Miningyukon.com. n

16 Mining North of 60 | Winter 2011-2012

overview

The Northwest Territories Mineral Industry Overview

A colourful past influences an exciting future

The Northwest Territories (NWT) is a unique district within the Canadian landscape. Boasting frigid, dark winters and a vast, often unforgiving terrain, residents of the territory have become known for their tenacity and determination – characteristics that cross over to all sectors of the territory. The NWT mining industry is no exception. The vast territory is filled with opportunity, and several diverse mining operations are working to maximize this potential – some by taking the road travelled before, and others by breaking new ground entirely. With four mines in production, and several in various stages of the permitting process, this is an exciting time for the NWT mining Save time and money Information = Intelligent decisions Mining Engineering Forestry Government Industry

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18 Mining North of 60 | Winter 2011-2012

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industry – an industry that has proven, like the territory’s residents, to be strong and resilient. Diamonds at the Forefront When most people think of the mining industry in the NWT, the first thing that comes to mind is diamonds, and for good reason. Currently, with three operating mines, the NWT is the world’s third largest producer of rough diamonds by value – one of several numbers that demonstrate the massive impact the industry has had on the NWT’s economy over the past several years. The territory’s three commercially producing diamond mines employ thousands of NWT residents, and have spent over $8 billion to date in goods and services from NWT businesses. Preliminary numbers for 2010 indicate that the diamond mining industry contributed $967 million to the economy of the NWT, nearly one third of the territory’s total GDP. And the industry shows no signs of slowing down. BHP Billiton’s EKATI Mine, Rio Tinto’s Diavik Mine and De Beers Canada’s Snap Lake Mine are on track to produce over 10 million carats of diamonds combined in 2011, and a fourth proposed diamond mine, De Beers Canada and Mountain Province Diamonds’ Gahcho Kué diamond project, is currently undergoing an environmental impact review. Once it begins production, it is estimated that Gahcho Kué could produce as many as 49 million carats in diamonds over its lifetime.

A Diverse Future However, Gahcho Kué is not the only potential project on the horizon for the territory, and a landscape bursting with potential seems primed to make a major splash in many mineral markets over the next several years. Currently, the only non-diamond mine operating in the NWT is North American Tungsten Corporation’s Cantung Mine. Cantung is located just east of the NWT-Yukon border and its history predates any of the territory’s diamond mines, having begun producing tungsten in 1962 – nearly 50 years ago. This resilient mine recently reopened after a short shutdown due to the global economic recession and is continuing exploration in addition to production in order to extend the mine’s life. This resiliency may not be any more prominent than in the imminent return of the NWT’s long-dormant gold mining industry. Once the lynchpin of the territory’s economy, gold mining ceased in the NWT with the closure of Giant Mine in 2004. However, Tyhee Development Corporation recently released a prefeasibility study on their Yellowknife Gold Project – located just 90 kilometres north of Yellowknife; it could potentially produce over 800,000 ounces of gold. Fortune Minerals’ NICO Project is currently moving through the permitting process as well and contains 21.8 million tonnes of proven and probable gold, cobalt and bismuth reserves suitable for a 15 year mine life. As well, Seabridge Gold’s Courageous Lake Project represents one of the largest undeveloped reserves of gold in Canada. Located 240 kilometres northeast of Yellowknife, Courageous Lake

represents over 4.2 million measured and indicated reserves of gold and is currently moving through the exploration process. Collectively, these three projects represent a link to the NWT’s past – and represent that even now, more than 100 years since B.A. Blakeney first discovered gold in the territory in 1898, it is still a viable destination for the gold mining industry. The mining history of the NWT is not solely based on gold, and another exciting development is aiming to bring back another northern staple. The historic Pine Point Mine, located on the south side of the Great Slave Lake, 129 kilometres south of Yellowknife and 80 kilometres east of Hay River, was the largest and most profitable lead zinc mine in Canadian history before its closure in 1987. In the present day, Tamerlane Ventures plans to commence construction required for a one million tonne bulk sample at the Pine Point property in late 2011. The bulk sample is fully permitted and is designed to test the viability of mining the other deposits on the property – yet another exciting development for the NWT’s mining future.

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While these developments may hearken to the region’s past, others represent the wave of the future. Avalon Rare Metals’ proposed Nechalacho Project, located 100 kilometres southeast of Yellowknife, is a promising discovery of rare earth elements, which are imperative for many “green technologies” such as fuel efficient cars, cell phones, rechargeable batteries, television and computer monitors, wind turbines and high powered lasers. The proposed Nechalacho project has an estimated 57 million tonnes of indicated mineral resources, 226 million tonnes of inferred mineral resources, and an 18 year mine life, and is particularly rich in heavy rare earths – a more unique and lucrative deposit. As the globe continues to turn to fuel-efficient “green” alternatives, rare earth elements figure to be in greater demand worldwide, leaving the NWT poised to benefit from a world class deposit that could impact world markets for years to come. Avalon released an updated prefeasibility study in July of 2011 and hopes to have the mine producing by 2013. Finally, Canadian Zinc Corporation’s Prairie Creek Mine project is located 90 kilometres north of Nahanni Butte, within the Nahanni National Park Reserve. The Prairie Creek Property hosts nearly six million tonnes of measured and indicated mineral resources – including zinc, lead, copper, and silver - and excellent additional exploration potential. The company is entering the final stages of its environmental assessment and outstanding issues are being worked on in collaboration with key parties. Once in production, Prairie Creek will be another important addition to an ever-diversifying northern mining industry.

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20 Mining North of 60 | Winter 2011-2012

Looking Ahead The future for resource development and the ongoing exploration industry in the Northwest Territories is bright. World class gold, base metal and rare earth deposits are being worked on fervently all over the territory - creating an exciting, diverse future for an industry that currently relies heavily on diamonds. The tenacity and ingenuity that northerners are known for is once again looking to the future with great optimism and fortitude – both by breaking new ground, and using lessons learned from the past. The NWT has long been known for its mining industry, and it’s one that, like the territory itself, is priming to be sustainable and strong in the years to come. n

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Outside Looking In How can Yellowknife tap in to the north’s mineral rush? By Tim Doyle, Executive Director Yellowknife Chamber of Commerce It’s kind of ironic that Yellowknife, one of the newest Canadian capital cities and the place where the gold is paved with streets, is feeling left out of the largest mineral rush to hit the Canadian economy in history. It’s not because there aren’t any potential stakes to claim, there are, and the NWT is one of the vast areas left in Canada that is considered somewhat untapped for development. But, the Yukon and Nunavut are in the game to win. They are busy developing mines and permitting exploration and the resident population is benefitting from the permit fees for exploration and from the increased job activity associated with mining. Yellowknife was formerly home to the Con and Giant gold mines. Because of

22 Mining North of 60 | Winter 2011-2012

their location within city limits, the area grew with the mines over the years and developed into the city we see today. When they shut down operations the city would have faced a tough future had it not been for the discovery of diamonds and the development of that industry for the local economy. The difference was that the mines were not located in the city limits anymore and were now operated as remote camps with fly- in and fly- out teams of miners and support staff. It also created a migratory workforce over the last few years. The Yellowknife economy blossomed anyway, as a source of available experienced workers for the mines and as a supply hub for materials and services.

Somewhere along the way though, we forgot that resource economies need to keep exploring. There are people who want to explore but we have regulated ourselves out of the business. The investment dollars follow the path of least resistance and unfortunately we caused some resistance. With many of the decisions being made in Ottawa, there are review boards who cannot meet quorum because no one has been appointed to replace departing members and therefore, no decisions on permits can be made. In some cases, the sheer number of permits required for a project limits the size of company that can compete from day one due to costs of getting permits. Streamlining the process and reducing the

There are currently four mines operating in the NWT, and Yellowknife benefits from each of them. amount of permits needed would help a great deal in leveling the playing field. For example, do we really need a federal and a territorial environmental assessment completed if it’s the same firm doing both studies? Where is the value in those two studies? There are currently four mines operating in the NWT, and Yellowknife benefits from each of them. If regulations permit, and market conditions remain, we can increase that number to 10 mines in the not so distant future. With some of the existing diamond mines nearing the end of their lifespan, the topic of discussion should be about how we can get these new prospective mines open quickly before the closures happen. Until we see some true regulatory reform from all levels of government and a united effort by all stakeholders to P.O. # 4 Whitehorse,Yukon Y1A 5X9 streamline the process, we will continue B: (867) 668.3536 R: (867) 667.4971 F: (867) 668.5637 to watch from the sidelines as our neighbours to the east and west of us open their new mining projects at breakneck speed. They are riding the wave to keep up with the global demand for minerals and the generous amounts of investor money earmarked to prospect and build new mines. helidynamics@northwestel.net A fitting end to 2011 would be to see major advancements in projects such as 11/14/2008 1:15:49 PM the Avalon Resources project. Based onHeliDynamicsAd.indd 1 FONT: LilyUPC {BOLD} recent coordinated efforts by the Yellow#�� LOCAL: (604) 888-5066 knife and NWT Chambers of Commerce, #�� TOLL-FREE: 1 (800) 914-7819 the Northern Aboriginals Business Association (NABA), and the NWT and NunaNATIONAL NBT55 vut Chamber of Mines, we are confident EQUIPMENT LTD. that the tide is turning in the NWT for resource development, and that 2012 will be the start of a good year for Yellowknife and a resurgence of mining projects in the NWT. At this point we have nowhere to go but up and the people of YellowEQUIPMENT LTD. EQUIPMENT LTD. 18412 - 96 AVENUE SURREY, BC 4943 CONTINENTAL WAY PRINCE GEORGE, BC WWW.FALCONEQUIP.COM knife are looking forward to that. n

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NWT & Nunavut chamber of mines

What a Rush New Mining Projects Proposed for the Northwest Territories and Nunavut By Tom Hoefer and Elizabeth Kingston, NWT & Nunavut Chamber of Mines With their vast, remote and underexplored areas, the Northwest Territories (NWT) and Nunavut have tremendous mineral potential. Driven in no small part by strong global commodity markets, there are at least 10 mining projects proposed. At over one third the size of Canada, explorers have only scratched the surface of the NWT and Nunavut. But in the last 80 years, the regions have hosted some of Canada’s longest lived, biggest producers of gold, base metals and diamonds. Mining and exploration are the largest contributors to their economies and much infrastructure development has been the result of the minerals industry. With increasing participation of Aboriginal residents in their mining industry, we can expect increasing certainty and support from their governments. The NWT & Nunavut Chamber of Mines is pleased to continue its work to advocate actively for mining growth in both territories.

24 Mining North of 60 | Winter 2011-2012

Nunavut – A Huge Rebound in Investment Nunavut is undergoing a significant rebound in mining investment. Natural Resources Canada is projecting expenditures to exceed $320 million in 2011. Agnico-Eagle’s Meadowbank Gold Mine opened in early 2010 as Nunavut’s first new mine development since the creation of the territory in 1999. Today, there are three other mines officially proposed and perhaps as many as six others are soon to follow, for gold, silver, iron, base metals, uranium and diamonds. Subject to market conditions, regulatory and investor approvals, mining projects hold the potential to invest nearly $7 billion in Nunavut over the next 10 years in constructing new mines and associated port facilities, roads and airstrips. If all of these projects proceed, they would create over $50 billion in investment and tens of thousands of person years of employment over their mine lives.

The timing is certainly right for Nunavut. The territory is experiencing Canada’s only baby boom and population growth is the largest in the country. This is adding to already high unemployment in the communities. Nunavummiut need and deserve the significant opportunities that exploration and mining can bring. Since division of the two territories in 1999, the NWT & Nunavut Chamber of Mines has worked on behalf of Nunavut interests from its Yellowknife office. Given the mounting interest in Nunavut exploration, the strong support of Nunavummiut residents for mining, and the increasing number of Chamber members with operations throughout the territory, the time had come to establish a new office in Nunavut. That office was announced in April of this year, and we were pleased when the Prime Minister of Canada announced government support for the Chamber of Mines office in August. Elizabeth Kingston, a resident of Iqaluit, is the first General Manager. Mining holds great promise to help pave the way to Nunavut’s economic selfreliance. Mineral production from its first mine (Meadowbank) already accounts for nearly 20 per cent of the GDP. More than $280 million was spent on exploration and development in 2010. With additional investments in mineral exploration, the Nunavut mining industry will boost real GDP by over three per cent in 2011. Not only will governments and Nunavut residents benefit, but through the Nunavut Land Claim Agreement, the Inuit land claims organization Nunavut Tunngavik Inc. will also reap a considerable portion for its Inuit beneficiaries. Nunavut has managed to avoid the stops and starts that have marked the economic recovery of the provinces. Thanks to growing demand for raw materials, Nunavut has forged ahead at an impressive pace, and was ranked fourth in

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Canada for mineral potential on the latest survey of mining companies conducted by the Fraser Institute. Interestingly, Natural Resources Canada also projects investment this year will be the fourth largest in Canada. The future looks bright indeed for Nunavut. World Class Diamond Industry Active in Northwest Territories The strong commodity markets are helping the NWT shine as well, turning the north into a “have” rather than “have not” region. These heady times are being driven by a growing middle class in India and China, which are finding luxury items such as polished diamonds attractive, thus raising global demand. Using the latest statistics released from the Kimberly Process Certification Scheme, the Northwest Territories was the third largest producer of diamonds in the world by value in 2010 at $2.3 billion, and the fifth largest global producer by weight of diamonds produced at 11.8 million carats. Mining and its associated construction and transportation activities today contribute over one third of the NWT’s economy. There are six new mines proposed for cobalt, gold, bismuth, copper, diamonds and rare earth metals. Unlike Nunavut however, exploration in the NWT is dropping slightly this year, largely the result of grassroots projects running into Aboriginal consultation and regulatory challenges. With some land claims not yet settled in the territory, there is added complexity in the regulatory regime. The federal government has acknowledged these challenges and is working toward simplify-

ing the NWT legislative framework. As well, the Chamber of Mines has recently entered into a MOU with the Akaitcho Dene First Nations, which bodes well for mutually beneficial mineral exploration and development in the Akaitcho Territory. This land claim region has high mineral potential and much of the NWT’s past and current mineral production is located in asserted Akaitcho territory. We believe the MOU is an encouraging step toward attracting significant exploration investment back to the NWT. About the Chamber of Mines The NWT & Nunavut Chamber of Mines is the leading advocate for mining and mineral development in the NWT and Nunavut. Its key objectives are to encourage, assist and stimulate prosperous, orderly and environmentally responsible development and growth of mining and mineral exploration, in all modes and phases, in the NWT and Nunavut. The Chamber is a key organizer of two of the largest mining conferences in the North, and encourages active participation in the Chamber by mineral, consulting and service and supply companies, and individuals. Current membership exceeds 900. Visit the Chamber’s new website at www.miningnorth.com for more information on the NWT and Nunavut minerals industry and for locations of our two Chamber of Mines offices. Additional information can be provided by Tom Hoefer, Executive Director and/or Elizabeth Kingston, General Manager, Nunavut at email: info@miningnorth.com. n

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DIGGING UP THE PAST Forging a Path Forward As Graham Farquharson looks to retirement, he is rewarded for years of service By Melanie Franner

Born in Timmins into a family where his father’s first love was prospecting, it’s no wonder that Graham Farquharson, president of Strathcona Mineral Services Ltd., would eventually follow those same footsteps and carve out a rewarding career in the international mining industry. He may have worked in the hardware business for a few years after completing his high school education, but it wasn’t long

before Farquharson would pursue his real dreams with three years at the University of New Brunswick, followed by two years for a mining engineering degree from the University of Alberta and an MBA program at Queen’s University. “My first mining experience was in Newfoundland when I was at university,” recalls Farquharson. “I liked it right from the start.”

Fifty-one years later, Farquharson is getting ready to close this particular chapter of his life. He is the only one of three founding partners to remain at Strathcona Mineral Services and is getting ready to pass along the reins to a younger generation. “Retirement isn’t too far off now,” he jokes, adding that he will stay busy by maintaining his seats on a few industry

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boards, as well as continuing to act as Chairman of the Canadian Mineral Industry Education Foundation, a position he has held for the last 19 years. “I’ve really enjoyed the chance to work with the students over the years and look forward to continuing to do so.” The Foundation, which has been in existence for 47 years (Farquharson is the longest-serving chairman to date), is the largest Canadian provider of scholarships

of 2010 at Toronto’s Royal York Hotel in front of a crowd of around 800. “I didn’t know that a group of people had got together and put forward my nomination,” Farquharson concludes. “Needless to say, I was quite surprised to get the call.” The phone call may have been a surprise, but the award itself is due to an illustrious career that includes a continued commitment to serve the industry in the years ahead. n

Digging Up The Past is new a department in North of 60 Mining and Exploration Review that celebrates the people that have made contributions to the northern mining and exploration industry. If you have a particular person of interest you’d like to see featured, please send your suggestion to managing editor, Carly Peters at carlypeters@mts.net.

to students considering mining careers. It currently has 100 students involved in its scholarship programs. Highlights of a Stellar Career During his long history with the industry, Farquharson has worked in far-away, exotic places Uganda and Namibia. He has also been lucky enough to play an important role in the field. For one, he was part of a small group of people who conceived – and brought into production – a lead-zinc mine on northern Baffin Island at Nanisivik. “The mine was located 700 kilometres north of the Arctic Circle,” explains Farquharson. “That’s a long way north of Timmins.” The mine produced for 26 years – from 1976 to 2002. It was the basis of Strathcona Mineral Services, which was founded in 1974. Another “claim to fame” that can be attributed to Farquharson is blowing the whistle on a now notorious industry scandal. “In 1997, I had to make the phone call about a $6 billion mining company based in Indonesia called Bre-X,” he explains. “I had to let everyone know that there wasn’t a lot of gold there.” Of course, another highlight that was recently added to Farquharson’s long mining career was becoming an Inductee in the Canadian Mining Hall of Fame. Farquharson received his award in January Mining North of 60 | Winter 2011-2012 29

atlas copco

Safety, Innovation and Productivity Excore leads the way Performance-improvement and cost-savings challenges within the drilling industry have never been greater. On the job safety is critical and any operation trying to remain competitive in today’s market needs innovative solutions to ensure contracts are completed economically and on time. That’s why Service de Forage Orbit-Garant Drilling, one of the largest Canadian-based drilling companies, turned to Atlas Copco when it wanted to improve safety, cut back on downtime, reduce and optimize inventory. The company, which provides both underground and surface drilling services in Canada and internationally, says it will gain a competitive edge when it comes to putting core in the box by introducing a newly configured head assembly and improved safety overshot to its fleet of drilling rigs. Part of the Excore line of In-The-Hole drilling tools, the head assembly is adaptable for both surface and underground, and the improved safety overshot features an automatic mechanism that doesn’t need to be manually engaged by the drilling crew. “They saw the problems that we were facing with the old technology and they came up with solutions,” says Jacques Proulx, Service de Orbit-Garant’s Operation General Manager. The company was created in 2007 through the merger of Orbit Drilling and Garant Brothers Diamond Drilling. Both firms came from humble beginnings. When it was founded in 1985, Garant operated six drilling rigs and employed 30 people. Orbit got off the ground the following year, starting off with three drills and a dozen people on the payroll. At the time of the merger, both companies had become prominent Canadian operators. Each was equipped with some 80 rigs and a workforce of approximately 250 workers. Today, Service de Forage Orbit Garant operates 185 drills and employs approximately 900 employees throughout its international drilling operations. But like many other firms in today’s thriving industry, one of its greatest hurdles is the recruiting of skilled workers. “Our main challenge is labour. We have to train our own people because of the shortage and the booming industry,” says Proulx. The company has a strong core of experienced workers who take new hires under their wing. But, young workers often lack the hands-on experience of seasoned diamond drillers and are unable to manage onsite repairs, meaning rigs are fixed in the shops instead of in the field. “Every time you’re not drilling, you’re not bringing money in the box,” says Proulx. The company was also contending with delays and downtime due to mix ups at job sites between parts for underground and surface applications. But, with Excore, Service de Forage Orbit-Garant is now able to use the same parts for both applications.

30 Mining North of 60 | Winter 2011-2012

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Inner tube assembly about to be sent back for another drill run after 1200m of use. The new head, features a change out of the two seals from surface to underground, resulting in less wear on parts, fewer repairs and reduced downtime. Service de Forage Orbit-Garant says the Excore products have made life on the job easier for everyone. Even veteran drillers who are sometimes resistant to change are extremely pleased. “This product doesn’t slow production. You are always moving forward,” says the interviewed driller. “The back end never needs any maintenance, and its design makes it less complicated to fix. It never lets go when you drill.” Ronald Thibault, Service de Forage Orbit-Garant’s Surface Managers said the company has experienced some impressive results since it began testing the Excore products in the spring of 2011. The company has used the Excore multi-use head assembly for both surface and underground applications, drilling more than

From right to left: Ronald Thibault, Surface Operations Manager; Daniel Larose,Underground Operations Manager; Jacques Proulx, Operations General Manager. Christian Bergeron, Account Manager – Eastern Canada Produits d’Exploration Atlas Copco – Atlas Copco Exploration Products. Val d’Or, QC,Canada. From right to left: Gilles Roussy, Assistant Driller; RogerLaflamme, Superintendent; Gaetan Lecours, Driller.

Stephane Goupil, Product Line Manager / Core Drilling ITH, Atlas Copco Exploration Products, (left) and RogerLaflamme, Superintendent Orbit Garant Drilling Services Inc. 12,000 metres in both applications without having to make any repairs or change any parts. “That means a lot of money for the company because there’s no downtime and they’re drilling, just drilling,” says Thibault, noting production is up and there have been zero safety issues. He said the new auto-safe overshot, which is automatic and doesn’t need to be engaged manually by the drilling crew, is not only far safer but more efficient. This is because the process of retrieving the core doesn’t have to stop while pulling the inner tube. The product has simplified the drilling process and provided peace of mind to a company that puts the safety of its workers first. “Where the Excore is right now, I don’t have any safety issues, nothing. And the production went higher,” says Thibault, noting new drillers are benefiting by learning the job from the outset with safe and easy-to-maintain products. Jacques Proulx attributes the success of the Excore product line to Atlas Copco’s ability to listen and interact with its customers. “When they’re close to the customer like they are with us, they’re frequently coming to our sites and they ask questions about how they can improve,” he says. Headquartered in Val-d’Or, Que., Service de Forage Orbit-Garant provides services to mining companies, through each stage of mining exploration, development and production. The company makes significant investments in research and development and is now exploring automation. But when it comes to In-the-Hole tools and innovation, the

company relies on the expertise of suppliers such as Atlas Copco. “We need support from bigger companies like Atlas Copco for innovation for the products we use in the hole,” says Daniel Larose. “We need to try new stuff and often think outside the box if we want to move forward. And that’s what we ask of our supplier.” In the end, Service de Forage Orbit-Garant says the Excore products will help protect its workers, reduce per-metre drilling costs and save its customers money by making the company more competitive when it comes to bidding. Larosew admits that introducing new products to a fleet of 185 drills is a major undertaking. But he says the move is a proactive step that will help Service de Forage Orbit-Garant remain competitive in a fragmented market. “We have got to be innovative in our way of doing things,” says Larose, noting that’s the only way to stand out from the competition. Stephan Goupil, Atlas Copco’s ITH product line manager, says the company’s research and development team was devoted to delivering best value for customers while making safety and productivity a priority in the creation of the Excore line. “We’re very proud of what we’ve accomplished,” he says, noting Excore comes in direct response to customer needs. With a number of other exciting new projects now in the research and development stage, Goupil says Atlas Copco customers can expect the same innovation and quality as those products are rolled out over the next six to 24 months. n Mining North of 60 | Winter 2011-2012

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Arctic Mission Specialist Ocean combines the knowledge and equipment to work with the unique conditions of Canada’s north

In order to work effectively in the north, it takes recognized expertise and willpower to provide innovative services under sometimes difficult conditions. Ocean made the decision a number of years ago to become a top supplier of integrated marine services across the country, notably by specializing in Arctic missions. Today the company has emerged as an industry leader through its savvy partnerships, key acquisitions, visionary strategic development, diversified activities and highly trained management teams in the field. Ocean is an invaluable ally for both marine stakeholders and businesses in need of marine services such as harbor towing, ship escort services, dredging, underwater interventions, ship repairs and the rental of marine services or temporary marine equipment for construction work. Ocean’s involvement in northern Canada was bolstered by the signing of a partnership agreement with Qikiqtaaluk Corporation Inc. This new agreement positions Tulaktarvik, an Inuit-owned company and the operating entity of the partnership, as northern Canada’s maritime industry leader. It combines the know-how and equipment of Ocean with Qikiqtaaluk’s northern expertise to provide proven solutions that can be tailored to the unique conditions of the Arctic. Spudded Modular Floating Wharf – Made to Last Ocean has gained enviable expertise in installing floating wharves that meet

32 Mining North of 60 | Winter 2011-2012

every need, particularly for the mining industry. These spudded modular floating wharves, can be used for long periods, years even, providing clients with access to reliable and safe equipment while limiting the environmental impact and cost associated with building permanent facilities and decommissioning.

ballasting and construction work. Ocean’s wharves can be installed in under a week, making them an ideal turnkey solution that streamlines project implementation. From an economic standpoint,

These floating barge units have proven to be a success time and time again in the north, notably on Baffin Island. In 2008, Baffinland Iron Mines Corporation commissioned Ocean to install a wharf solid and stable enough to enable the mining company to load three ships with 10,000 metric tonnes of ore per day, around the clock. Since Milne Inlet is home to a number of narwhals, disrupting the sea floor to install a permanent facility was out of the question, especially since the entire structure had to be removed before the ice formed in October—just two months after installation. Ocean built the facility in just five days and delivered the client a heavy-duty structure that met its needs to a tee. Facilities like this are built and adapted to installation site use requirements and geometry and can be used for loading and unloading ships of all kinds. They make it possible to avoid months of costly dredging, blasting, pouring concrete,

these facilities provide round-the-clock access seven days a week, eliminating the need to wait for the right tide conditions and avoiding the cost overruns that building a permanent facility could entail. In terms of the environment, the elimination of dredging and blasting ensures that local ecosystems are better protected and saves on the cost of dismantling and restoring sites to their original condition once the facility reaches the end of its useful life. When building permanent facilities is the only option, Ocean makes rental equipment available to facilitate contractors’ work, as it is currently doing in Deception Bay. Ocean is assisting the contractor with its project to build a new transshipment wharf for the Nunavik Nickel project by providing it with equipment such as barges and workboats. Complete Respect for the Sea Floor As a marine services provider, Ocean is

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Next-Generation Dredge Although firmly established in its fields, Ocean continuously strives to excel. That’s why it began construction of a new 64.3 metredredge at its shipyard in the summer of 2011. The $25 million dredge will be equipped with new marine technology enabling the ship’s hull to split in two to unload cargo directly to a designated site. The ship will also be equipped with a trailing suction hopper that, when connected to a pumping system onboard the boat, can remove materials found on the sea floor and discharge it to shore disposal area. well aware of marine environmental issues and the importance of protecting sea life. As a result, it has developed a variety of dredging techniques that comply with all regulations and standards and deliver superior performance. Ocean demonstrated the breadth of its know-how when it was asked in January to help remove contaminated sediments that had accumulated on the sea floor in Sorel-Tracy. These sediments were interfering with navigation and preventing ships from docking normally at the Kildair plant wharves, thus compromising the company’s daily operations. This work, which had never been done before in winter, needed to be done as urgently as possible. Once again, Ocean had to brave the elements. The intense cold created unusual challenges, but the operation was a great success, despite the ice build up around the barges and the need for extreme caution when maneuvering hopper dredgers to minimize ice impacts.

Safety First Ocean plays a leading role in ensuring marine safety, particularly in Arctic waters, thanks to the ISO 9001:2008 and International Safety Management certification received by its towing service. Ocean also conducts rescue operations to prevent incidents from turning into nightmares. In September 2009, when engine failure set the MV Avataq adrift for three days between the Atlantic and the Arctic oceans, Ocean sent the Ocean Delta after the 113 metre ship. Within barely a week, the tug had towed the Avataq all the way to Igloolik. Thirty days earlier, Ocean had also towed the Clipper Adventurer, a cruise ship that had struck a rock in the Arctic. Another memorable operation was the salvage of the Swissair plane that had crashed eight kilometres off the cost of Nova Scotia on September 2, 1998.

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Fearless Identifying needs and finding innovative solutions to them has always been a key strength of Ocean’s founder and current President and CEO Gordon Bain. He launched his career at age 20 by founding a company specialized in underwater work in 1972 and since then has always been a leader. Over the years, Ocean has experienced growth as dazzling as it is firmly anchored. A man of rigor, vision and great attention to detail, Gordon Bain sought out the very best people, the most powerful tugboats and the most reliable infrastructures. This fearless man has invested massively without lowering any sails. With Bain at the helm, the company has made a number of important acquisitions over the years, including a shipyard, and launched several state-of-the-art tugboats. He is currently working on developing more powerful tugs able to escort ever larger ships while meeting both current and future environmental standards. Ocean employs between 450 and 500 people, depending on the season, has a fleet of 25 tugboats and 350 scows and barges, and is active in seven cities in eastern Canada in addition of Tulaktarvik head office in Iqualuit, Nunavut. Today, secure in the knowledge that the company he built is in the capable hands of his colleague, partner, and faithful friend Jacques Tanguay, Gordon Bain proudly watches as his seasoned management team fulfills his ambitions. With the increased development in the north and the some 50,000 merchant ships in service worldwide, there’s no shortage of opportunities. n

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MINING InDUSTRY HUMAN RESOURCES COUNCIL

Mineral Exploration Versus Mining – One Industry, Two Sectors

Looking at HR challenges from an exploration perspective By Lindsay Forcellini, Marketing & Communications Coordinator, Mining Industry Human Resources Council Mineral exploration differs from extraction and processing in several key ways, including, main activities performed, occupational mix, size and nature of organizations involved in the sector, type of work, location of work and demographic profile of the workforce. These differences present a number of unique HR challenges which are identified in a new report. A combination of labour shortages, an aging workforce in the professional sciences occupations and a trend of mid-career attrition could translate into a crisis for certain talent groups in Canada’s mineral exploration sector, particularly management and senior-level positions, according to a recent study released by the Mining Industry Human Resources Council (MiHR), in partner-

ship with the Prospectors and Developers Association of Canada (PDAC). The two organizations have joined forces to launch Unearthing Possibilities: Human Resources Challenges and Opportunities in the Canadian Mineral Exploration Sector, a report which analyzes labour market issues and the short- and long‐term HR challenges facing the exploration sector and serves as the basis for developing an industry strategy and action plan to address key HR issues. Common ground: An Aging Workforce Unearthing Possibilities revealed a common challenge for both mining and exploration -an aging workforce. Despite the younger

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middle. As older workers retire in the affected occupations, finding qualified people for senior-level positions will become increasingly difficult. Women While under-represented in both sectors (women currently make up 20 per cent of the exploration sector, and 14 per cent in mining), the study revealed a trend of midcareer attrition by women in exploration. Findings suggest this trend may be linked to field work and MiHR would like to build partnerships with geosciences groups to conduct further research on women in geosciences positions to better understand mid-career attrition.

age profile of the mineral exploration sector, some occupations will still face problems due to having a bulge of younger workers and older workers and few in the

38 Mining North of 60 | Winter 2011-2012

Training The study also identified a disconnect between educators and industry as students, job seekers and educators expressed a lack of field experience upon entering the workforce as a barrier. Working to build more direct links between industry and education and identifying solutions to logistical barriers is therefore

key to creating opportunities for careers seekers to gain this valuable experience. Organizational Needs In the mineral exploration sector, there are over 3,500 companies, and 95 per cent of employers are micro- and small establishments, whereas the mining sector is mainly comprised of fewer large, multinational employers. Therefore, the approach to researching, identifying and providing support for HR challenges and opportunities differs greatly between the sectors, despite several similarities. MiHR is exploring the possibility of further research on HR management in micro- and small-enterprises to better understand their needs and, ultimately, creating a hub to lend support to facilitate collaborative working between smaller companies to reduce costs. Aboriginal Inclusion The study also revealed the exploration sector under performs both the mining sector and the rest of the labour market in employment of Aboriginal peoples. The mining industry (e.g. including explora-

tion) is the number-one employer of Aboriginal people in Canada (with 6.8 per cent Aboriginal representation, compared to 3.2 per cent in the labour force); however, only 2.1 per cent of the exploration workforce is Aboriginal. Exploration activities are often located in close proximity to Aboriginal communities, but the sector also employs a large portion of highly educated professionals, (over 75 per cent of the workforce) making it uniquely positioned to grow the Aboriginal talent pool and support opportunities for higher education of Aboriginal peoples. Educational Requirements and Knowledge Workers The educational requirements of the industry are very high and increasing, which reduces the mobility of workers into exploration from other occupations and industries, as the skills required to work effectively in exploration require a high degree of sector-specific training. Therefore, any future labour shortages will most likely need to be alleviated by a combination of attracting more immigrants

with the necessary skills, and increasing enrolment in post-secondary programs geared towards the industry’s needs. The ever-increasing education requirement means that a large portion of the exploration workforce is knowledge workers, a trend that is expected to accelerate in the years ahead. This will impact development of technology and innovation in the sector, which in turn will raise educational requirements and attract more knowledge workers to the sector. Attracting knowledge workers in mining has its own set of HR challenges and issues that must be addressed. To this end, MiHR has recently partnered with the Canadian Mining Innovation Council (CMIC) to publish Making the Grade: Human Resources Challenges and Opportunities for Knowledge Workers in Canadian Mining to help employers better understand the impacts of this workforce segment on a sector, or on the mining industry as a whole. To read these studies in full, or for more information on mining HR-related research, please email research@mihr.ca. n

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• Industrial Mechanical Installations • Pressure pipe fitting, registered in NWT, Alberta and BC • Pressure pipe fitting welding, registered in NWT, Alberta, BC • Structural welding, CWB registered • Millwright services • Heat recovery installations • Mine site yard piping • Fuel tank farm piping and dispensing systems • Process piping • Dewatering installations • Sewage and water treatment plant installations • Design/Build installations

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Mining North of 60 | Winter 2011-2012 39

donlin Gold

Community and Commitment Donlin Gold is developing one of the world’s largest gold deposits relying on old-fashioned values and mutual respect When the phone rang very early one Monday morning in May with a cry for help, the Donlin Gold team sprang to action. Without hesitation, Donlin Gold Operations Manager, Bill Bieber assembled a team with four other employees to come to the aid of the residents of Crooked Creek, Alaska. Earlier in the evening an ice jam occurred in the Kuskokwim River spilling water and ice into the village. As floodwaters rose, quickly submerging 70 per cent of the town and destroying many homes, Crooked Creek Traditional Council President, Evelyn Thomas knew people needed to be evacuated. And, she knew Donlin Gold would come to her village’s rescue.

“We have the kind of rapport where she knew she could call me at any time,” comments Bieber. “They rarely ask for help, so when they do, it’s a done deal.” A float-equipped helicopter was dispatched to help shuttle people to the airport for a flight to the Donlin Camp, located about 13 miles north of Crooked Creek. Thomas was among the 53 evacuated to Donlin, along with other elders, parents and children. The company helicopter also flew supplies to the 80 people still in the village area and the services of Donlin’s paramedic were also made available. “Everyone at Donlin welcomed us and made sure we all had food and a warm place to sleep,” Thomas relayed in a letter

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to the editor that was published in the Anchorage Daily News. “Many of the people were evacuated without shoes or socks or a coat. We have warm shelter and excellent food at the Donlin Camp. The Donlin helicopter has been taking food and water to the people who are still in the community. Their generous employees have worked hard to take care of us.” This is just one example of how Donlin Gold is proving to be a good neighbour. Donlin Gold is one of the world's largest known undeveloped gold deposits. It is owned and operated by Donlin Gold LLC, which is owned equally by wholly-owned subsidiaries of NovaGold Resources Inc. and Barrick Gold Corporation. Based on the 2009 project feasibility study, Donlin Gold is expected to be one of just a handful of gold mines worldwide that produces more than one million ounces of gold annually, making it a true world-class asset. Based on over 33 million ounces of gold reserves, the anticipated mine life is approximately 27 years with an average 1.3 million ounces of gold production annually. An updated feasibility study, incorporating a natural gas pipeline is expected to be completed by the end of 2011 and the permitting process is expected to begin in the first quarter of 2012. The Donlin Gold property comprises more than 80,600 acres (32,600 hectares) with lands leased for mining from Alaska Native corporations. It is located in remote roadless area of Alaska approximately 276 miles west of Anchorage. The Kuskokwim Corporation (TKC), a consortium of 10 upriver villages closest to Donlin Gold, owns most of the surface land in the proposed mine area. The subsurface land is owned by Calista Corporation, the regional Native Corporation formed under the Alaska Native Claims Settlement Act to encompass the 56 villages in the YukonKuskokwim (YK) region. In total, there are

nearly 70 distinct communities near the Donlin project site and along the proposed natural gas pipeline. Committed to bringing benefits to local communities as the project advances, the Donlin team has worked diligently for more than a decade to build strong, longstanding relationships. It all starts with a cross-cultural learning strategy to unite economic development with centuriesold traditions. “The last 16 years have been a big learning experience for all of us,” explains Mary Sattler, manager, Community Development & Sustainability at Donlin Gold, whose Yup’ik heritage and experience as a Democratic member of the Alaska House of Representatives has given her a unique perspective on the people she now works with as part of the mine project. “Essentially, working with the mine project is a way for families to hunt and gather more and that traditional way of life is very important here. We believe generosity is the best value, not accumulation of goods. Steady work allows people to share with their families and communities. And, our sense

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The Donlin Gold property comprises more than 80,600 acres (32,600 hectares). of community is very strong.” Devoted to listening and learning from local Alaskan natives, doz ens of village meetings and mine tours are conducted each year. “Our commitment is to encourage constructive engagement and keep the channels of communication open, and this will continue as we move into permitting, construction and operation,” explains Sattler. While still many years away from generating revenue, Donlin Gold already plays a significant role in the YK region by contributing through employment and training opportunities for local people and business opportunities for local suppliers. Donlin Gold also boasts an impressive local-hire record. Its well-established local hire and contractor preference program means that over the last 15 years, Donlin Gold has hired, trained and promoted hundreds of local YK regional employees. Today, about 86 per cent of the workforce onsite comes from local communities, in-

cluding eight out of 10 supervisors. And it’s just the beginning. As the feasibility study revision is finalized later this year and the project proceeds through permitting, the on-site work program will evolve around maintenance of the camp facilities and providing support for ongoing studies and environmental data collection. This provides a great opportunity to focus on workforce training to ensure employment-interested residents have the skills needed to join the team if a construction decision is made. Donlin Gold is developing a training plan that will set a priority on training people from the YK region. Should the project advance to a construction decision, it is expected that many past employees will once again be employed by Donlin Gold. The project is estimated to provide 2,000 to 3,000 jobs during construction and up to 1,000 jobs during the project's 27-year mine life. n

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Eagle plains resources

Chances Taken Eagle Plains Resources turns a conversation in to lucrative opportunities

By Eagle Plains Resources

It was while winding down after a day of show and tell at an industry conference that the president of Eagle Plains Resources, Tim Termuende, struck up conversation with a representative of The Cordilleran Group. This conversation turned to be most fortuitous indeed for Eagle Plains. Eagle Plains, a mineral exploration com-

42 Mining North of 60 | Winter 2011-2012

pany utilizing the project generator business model, had been working for years exploring for metal deposits in western Canada, including the Mackenzie Mountains of western NWT. During this time, besides staking prospective ground in the NWT to conduct focused exploration activities, the company had also acquired

exploration permits. These permits are a unique form of tenure which grant exclusive rights for a company to explore within itâ&#x20AC;&#x2122;s boundary for up to three years. These permits cover large tracts of land, approximately 160 square kilometres per permit and after three years, the company shall have staked itâ&#x20AC;&#x2122;s interest within because these permits expire. The governmentâ&#x20AC;&#x2122;s intent with this type of tenure is to encourage and expedite grassroots exploration over large areas that have been relatively under-explored, then concentrate efforts on more defined areas found within to be prospective as a result of this overview. This overview type of exploration is commonly referred to as a Regional Geological Survey, or RGS. Geological mapping is a critical component of any exploration program, having accurate and detailed information enhances the chance of discovery. Available geologic information varies greatly with broad level mapping where information is sparse while other areas have detailed

mapping where information abounds. The NWT, being under-explored, is an area where information is sparse. At Eagle Plains, much expertise and effort is geared toward managing geological information. Basically, this is utilizing geological information that has been gathered and incorporating this information into maps. Exploring vast areas that have a three year deadline, are very remote and have little information, pose some significant challenges, hence the fortuitous meeting during the evening of that industry conference. It was then that a treasure trove of information was discovered to not only exist and was available for acquisition, it was proprietary. This information was in the form of 5,700 stream sediment samples that had been collected during the 1970s at great expense over a remote area of the Mackenzie Mountains covering approximately 19,000 square kilometres. These samples along with their associated maps had been laying dormant for 30 years in the trunk of a stored car. The deal was struck. In June 2006, Eagle Plains announced that it had acquired these samples and was in the process of analyzing them for use to guide exploration crews working on permits in the NWT. The samples, previously analyzed for only lead-zinc-silver were now subject to a 32 unit ICP analysis (a wide spectrum analysis of metals and indicator elements) in order to identify areas with anomalous values of the indicator elements and minerals sought. It had been identified through analysis of this proprietary data and the geological environment of the area, that the exploration permits Eagle Plains now controlled had good potential to host significant base metal deposits, in particular, SedEX deposits. This proprietary database combined with the discoveries in 2006 of significant new base metal occurrences led to the solution of another challenge posed to junior exploration companies, resources. Being averse to the risk of funding this endeavor entirely, Eagle Plains encouraged the participation of Teck Resources by sharing it’s knowledge of the area’s potential. In June 2007, Teck Resources and Eagle Plains formed a strategic alliance to explore the permit areas. Teck funded $1.5 million in 2007 and $2 million in 2008 in

return for the right of first refusal to option projects staked as a result of this exploration. In 2008, shortly after the economic downturn, Teck terminated this alliance. Eagle Plains remained in control of the discoveries that had been the result of $3.5 million of exploration work, as well as the proprietary database. Having survived the economic downturn and coming out of it stronger than ever, Eagle Plains continued with it’s business model of averting the financial risk of exploration by utilizing it’s in-house expertise, now TerraLogic Exploration Ser-

vices, and optioning it’s projects to other companies. Then, during 2009 gold was discovered in the Yukon to the west of the study/permit area and the rush was on again. Gold mineralization, not conforming to interprovincial/territorial boundaries and given similarities in the geological environments, was understood to have potential to exist to the east as well, in the NWT. The database was reviewed for gold pathfinders to assist with the permit selection and application in December 2010. In February 2011, with permits in hand, Aben Resources and Eagle Plains, with the

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common denominator being Ron Netolitzky, entered into an agreement where Aben was to acquire several projects in the Yukon, several exploration permits in the NWT along with access to the database in return for 6.5 million shares of their company and a major exploration program for the summer of 2011 to be carried out by TerraLogic Exploration Services. The 2011 work program to be carried out on the exploration permits is estimated to be $3.2 million. Looking back, the fortuitous after hours meeting during the 2006 industry conference which led to the acquisition of the 5,700 silt samples for a relative small amount of cash and corporate shares has developed into two major exploration programs, one by an industry giant and over $6 million in exploration work and counting. This database remains in Eagle Plains hands and information is the key to mineral exploration. n

Making a

difference Cameco is a leading producer of uranium. Our products are used to generate clean energy at nuclear power stations around the world. We are based in Saskatchewan where our largest mines are located. We work in partnership with northern people. About half our mine workers

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NUNA Group of Companies Joint ventures and partnerships committed to developing long term business relationships NUNA’s vision is to be the premier northern provider of value-added mining and construction services while fostering sustainable Aboriginal opportunities. NUNA was formed in 1993 and is a federal registered company. NUNA ownership consists of Nunasi Corporation (25.5 per cent), Kitikmeot Corporation (25.5 per cent) and Nuna Management Group (49 per cent). NUNA is 51 per cent Inuit owned and qualifies as a “northern company” under the Inuit Impact and Benefits Agreement. NUNA’s Management Team and on-site supervisors work closely with clients to ensure a complete and thorough understanding of their operational objectives, as well as the terms and conditions

of the planned work. Work in progress is monitored daily by management in order to maintain consistent cost control, and schedule performance, as well as the satisfactory achievement of overall client objectives. A high level of communication is maintained by all concerned and clients receive regular and detailed progress briefings at every stage of development. NUNA Offers Our Clients • Comprehensive and dependable construction, logistics, contract mining, infrastructure planning, earthworks, large diameter drilling, heavy equipment simulator/field contract training, mining support services and mining products to Canada’s mining and exploration industries.

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46 Mining North of 60 | Winter 2011-2012

• Multi-million dollar heavy construction equipment base, crusher plants, camps, shops, washbay, etc... • Track record of completing work within scheduled time. • Dedicated to on-going employee training. • Workforce in excess 600 people on various projects in Northern Canada. • 66 - 81 per cent of goods & services (by dollar volume) purchased from northern sources. NUNA Maintains High Standards of Services • Employing experienced and knowledgeable project managers and site supervisors for whom client satisfaction is a priority. • Developing a multi-disciplined management team focused on working closely with clients and committed to satisfactory project completion on time and within budget. • Training and hiring qualified Aboriginal/Inuit people and utilizing their intimate knowledge and operational skills to achieve superior performance under Arctic conditions. • Purchasing equipment designed for Arctic operation, maintaining equipment in safe working order • Maintaining adequate levels of support personnel, equipment and buildings to ensure safe and efficient operations. • Providing appropriate safeguards for employees and environment. n

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sHEAR DIAMONDS LTD.

Looking At The Bright Side Sheer determination drives Jericho Diamond Mine forward By Melanie Franner

To boldly go where others have gone, and

ber), the junior mining exploration com-

failed, doesn’t appear to be a deterrent

pany is betting it’s future on the recently

for Canadian-based Shear Diamonds Ltd.

acquired Jericho Diamond Mine located

Founded in 1999 as Shear Minerals Ltd.

in the Nunavut Territory. It’s been just over

(the name change took place last Decem-

a year since the fledgling company took

control of the bankruptcy-protected mine, which had been operating under the ownership of Tahera Diamond Corp. and Benachee Resources Inc. since 2006. “The acquisition of the Jericho mine is an absolute game changer for Shear Diamonds,” enthuses Julie Lassonde, chairman and chief executive officer of Shear Diamonds. “It will definitely change the future of this company.” Roughing it During Hard Times Shear Diamonds currently has a portfolio of nine diamond projects, eight of which are drill ready, including two advanced projects with production potential. The company has advanced its 62.3 per cent ownership of the Churchill Diamond Project into an expanding diamond district hosting 88 kimerlites in the Kivalliq region of Nunavut. But like other junior mining companies, Shear Diamonds was suffering the affects of a downturned economy. “Shear Minerals has a lot of great exploration prospects but in reality, 2008 was a very hard year on all juniors and it was nearly impossible for us to raise a penny for exploration,” explains Lassonde, who adds that the “shine” had also come off diamonds at that time. “Since last year, there has been a complete renaissance in diamonds. There has also been a huge upswing in interest from China and India.” This all helps to set the stage for the company’s newest mine acquisition. According to Lassonde, the past year of ownership of the Jericho mine has been a surprising – and eye-opening – one. “I won’t say that the last year hasn’t been challenging,” she admits. “The hardest thing has been that very few compa-

48 Mining North of 60 | Winter 2011-2012

nies have bought mines out of bankruptcy protection so there have been very few people who we can turn to for advice. The year was one where we sort of have been feeling our way through. It’s been like a discovery process, where something new turns up each month.” One critical aspect of the mine that the company has kept its focus on is the renewal of the water license. “This is a very highly intensive process and is a very well regulated one,” states Lassonde, who adds that it is a process that has kept the relatively small group of company employees relatively busy. “Luckily, we were able to get an extension so we now have until March 1st, 2012 before the license expires. The next major challenge is October 12th, which will be the final public hearing.”

These tests are at the heart of understanding how to restart operations at Jericho.” Regardless of when Shear Diamonds will begin these operations, one can rest assured that diamond production will eventually take place. The company’s sheer determination to succeed, coupled with changing market conditions, leads one to think that the future will offer a new opportunity for success. “Diamond prices today are at a historical high,” concludes Lassonde, adding that there are other reasons why she believes

Shear Diamonds can succeed where others haven’t. “I think that the major factor that will bring us closer to success is that more than anything, we have time on our side. When Tahera was putting Jericho in production, the exchange rate was considerably lower and they were pushing very hard to get it into production as quickly as possible. We have the luxury of time on our side. We can take a breather between steps to try to understand the process better and to ensure that the next step is the right one.” n

A Sparkling Future Jericho Diamond Mine was mined from 2006 to 2008, producing 780,000 carats (156 kg) of diamonds from 1.2 million tonnes of kimberlite. During this time, over $200 million was invested in the development of the Jericho operations, including the construction of a 2,000 tonnes-perday diamond recovery plant. Although Shear Diamonds’ Lassonde admits that the company isn’t anticipating achieving this kind of production anytime soon, she does speak of some imminent movement forward. “We’ve put together a two-phase plan,” explains Lassonde. “We will begin processing the tailings that are on the site in the near future. We believe that there are some very good opportunities for us to process tailings for the next 18 months before we have to go back into the pipe again.” Lassonde adds that the processing of these tailings will involve testing the processing plant, a step she considers vital to the success of the operation. “Test processing of small amounts of stockpiled material through the diamond recovery plant will give Shear a better understanding of how this plant may be able to process existing varied stockpiled ore at site,” she explains. “These tests will provide Shear with both a parcel of diamonds indicative of the recovery reject pile and with key information as to how to modify the plant to aid in diamond recovery. Mining North of 60 | Winter 2011-2012 49

NOrth american tungsten corporation ltd.

Heavy Metal North American Tungsten Corporation Ltd.’S Cantung mine, and Mactung property hold much potential North American Tungsten Corporation Ltd. is the western world's largest producer of tungsten concentrate, a strategic industrial metal required in a wide variety of products ranging from jet turbine engines and high-speed cutting tools to electronic circuitry and surgical instruments. North American Tungsten’s Cantung mine and the Mactung property projects in Canada’s north are ideally located to serve North American and European markets. Mining at Cantung is currently focused in two areas - E Zone Pillars (five remain) and in the West Extension (virgin mining). The plan is to migrate almost all mining toward the West Extension whereby greater production at more consistent levels can be achieved. To do this, Fraser Mackenzie Limited, in a recent report, suggests the company must improve ventilation and expose multiple working faces. While development on this front has lagged, the timeline suggests that the goal will be achieved toward the end of this calendar year. In the interim, they expect the company will hover around its current production target of 25,000 mtu per month translating to ~$3 million of operating cash flow at current pricing or ~$2 million net of capital spending.

50 Mining North of 60 | Winter 2011-2012

During their visit, Fraser Mackenzie gained a greater appreciation for the potential value that may be realized from the Mactung property relatively soon. North American Tungsten continues to receive significant interest from several industry leaders. Recall, the Mactung project has completed a feasibility study showing a $277MM pre-tax NPV (~$1.17/share) assuming only a US$300/mtu tungsten price. Potential partners are now accepting that long-term pricing above US$400/mtu is here to stay with APT currently at US$461/ mtu. An NPV using $400 APT would yield a value of around $400 million before-tax or $300 million after-tax (equating to $1.25 per NTC share). Fraser Mackenzie is incorporating a conservative $52 million value for the Mactung asset into their target price (adding $0.22/ share) partially offset by a revision to their near-term forecasts for Cantung (reducing our valuation on that asset to $0.58/share). The result in total is an increase in their target price $0.80 (from $0.70). Fraser Mackenzie continues to rate the shares a Strong Buy with potential upside beyond their target through an outright sale of Mactung, or even a takeover of the company as a whole.

Cantung Mine Fraser Mackenzie spent several hours visiting Cantung operations including a drive around the grounds (i.e. tailing ponds) and a tour of the mill, power station, staff quarters and administrative buildings. Most importantly, they went into the mine and witnessed the operations underway. The focus is in two areas including the E Zone Pillars and the West Extension. The mine plan also includes reserves from the Pit Underground (PUG Zone). However, development of the PUG has been side-lined in order to dedicate all efforts toward increasing production in the West Extension around the 3600’ level. This area is virgin ground and is expected to assist the company from getting more mineral out of the ground at more consistent rates. Progress in this respect has been slow largely as a result to labour constraints seen across the industry. Nonetheless, it is expected that at the tail end of this calendar year development (including ventilation and the exposure of multiple working faces) will be completed and almost all production will stem from this new area. One of the issues impacting production since the reopening of the mine in October 2010 has been power. With new

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generators fully installed and operating suggests power will no longerbe an issue going forward. Exploration continues at Cantung with a goal of increasing the mine life to six years from the previous estimated mine life of four years. It is believed that the resource extends below the 3600’ level in the west extension with an apparent increase in grade as it goes lower. An updated resource estimate is likely forthcoming within the next several months which could be a positive catalyst. There is also promise with a recent discovery of some ultra-high eight per cent tungsten material at surface (albeit fairly high up the mountain) and a huge amount of tungsten left in the tailings. It is estimated that tailing pond #3 has the equivalent of ~1 million mtu at a grade of 0.4 per cent (very high considering that most tungsten reserves worldwide are below this grade). These tailings alone have the potential to increase the mine life by another three years. Metallurgical work is being done to assess the feasibility of producing from these tailings and the findings from this analysis are likely to be known later on in the year.

Tungsten 101

Tungsten (WO3) is a steel-gray metal that has the highest melting point of all metals in pure form. It is extremely hard and heavy and is the most important alloy in tool and construction steels – enhancing hardness, cutting efficiency and speed with similar hardness to diamonds. Hard metal tools made from tungsten are used to shape metals, alloys, wood, composites, plastics and ceramics. Ammonium Paratungstate (APT) is the main secondary downstream tungsten product. The current APT price is around US$460/mtu. Tungsten outlook suggests a widening market shortfall in the years ahead with increased demand outpacing constrained supply. Demand is being largely driven by a strong recovery in China’s consumption growth while the rest of the world’s consumption growth is relatively flat due to a slow economic recovery and increased scrap consumption. Reduced Chinese exports are leading to a significant shortage of primary tungsten outside of the country. China’s policies restrict Chinese exports of tungsten ores and concentrates. China imposes high duties on tungsten products for export. Notably, tungsten was listed by the EU (June, 2010) as a “critical raw material”, due to its “high economic importance and high relative supply risk”. With the recommissioning of the Can-

most entirely fixed) will be maintained and

tung mine, clearly FY2011 has been a transi-

pricing remains at current levels. They also

tional year. Fraser Mackenzie expects much

foresee substantial free cash flow genera-

improved financial performance moving

tion during FY2012 leading to an elimina-

forward with the expectation that produc-

tion of net debt within the next 12 months

tion targets will be met; operating costs (al-

from the current level of $21 million.

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52 Mining North of 60 | Winter 2011-2012

Mactung Property On their visit, Fraser Mackenzie gained a greater appreciation for the potential value which may be realized from the Mactung property. North American Tungsten continues to receive significant interest from several industry leaders. That list of most interested parties includes large Japanese and European consumers (who need to secure tungsten for their own needs), as well as Chinese tungsten producers. With a Special Committee formed in Q2FY2011 to assess strategic alternatives regarding this asset, initial proposals from any interested parties are likely to be forthcoming soon which could provide some clarity as to a range of valuations and structure. The 100 per cent owned Mactung asset is the largest and highest grade undeveloped tungsten deposit currently known in the world. The company completed a feasibility study on this project in 2009, which demonstrated favourable economics including a 23.4 per cent IRR, 2.9 year pay-back and a $276.8 million pre-tax NPV at an eight per cent discount rate. The study estimates a capital cost of $400 million and a $104 per tonne operating cost (at the low end of the cost curve) while assuming a US$300/mtu tungsten price. Running a NPV calculation using a $400 APT (pricing currently at $461/mtu) would yield a value of around $400 million beforetax or $300 million after-tax (equating to $1.25 per NTC share). This suggests massive upside to Fraser Mackenzieâ&#x20AC;&#x2122;s target price assuming an outright sale of Mactung or the company as a whole. Conclusion In Fraser Mackenzieâ&#x20AC;&#x2122;s opinion, an investment in NTC provides a leveraged opportunity to play both an appealing sector and more specifically a producing mine and deposit with world-class attributes including a unique opportunity to remain one of the only two suppliers of tungsten concentrates in the western world. With China having set restrictions on the export of tungsten produced nationally, greater demand outside of China in this limited supply market has increased not only price, but also the strategic market position for NTC with control and ownership of world-class tungsten assets. Hence, the company maintains their STRONG BUY rating with a revised target price of $0.80 per share, offering potential upside of 176 per cent to their target. n Mining North of 60 | Winter 2011-2012 53

advanced explorations inc.

IRON MAN

Advanced Explorations Inc. progressing towards Nunavut iron ore mine What does it take to bring an iron ore mine successfully into production? If you ask John Gingerich, president & CEO of Toronto resource development company Advanced Explorations Inc. (AEI), the answer is short and simple - an excellent, experienced team with a strong partner by its side, a high quality asset and, above all, a favourable location at tide water. The company’s flagship project at Roche Bay, located on the eastern shore of the Melville Peninsula, possesses all of these characteristics, with the 140 kilometres of banded iron formation representing a potentially new iron ore district located adjacent to a natural deep water

54 Mining North of 60 | Winter 2011-2012

harbour. AEI’s management team and board of directors also bring an impressive mix of expertise and experience in mine development, financing, government and Inuit relations, the steel industry and so on to the project. Since September 2010, the company has been working diligently with its Chinese strategic partner, cast-iron pipe giant XinXing Pipes Group (XXP), who committed to project financing of up to $1 billion to bring the Roche Bay Project into production. Roche Bay Milestones The iron ore deposit known as Roche Bay represents but a small fraction of

the entire banded iron formation in the district and boasts a historic, non NI 43-101-compliant resource of one billion tonnes of iron ore with a global resource for the project’s C-Zone of over 500 million tonnes. The Roche Bay ore will be mined and then processed to produce a 67 per cent iron concentrate for steel producers and manufacturers such as XXP. Metallurgical results from the nearby A/B Zone even indicated that the production of a high quality, high grade 70 per cent iron concentrate is possible. “What makes this project so unique is its ocean location,” explains John Gingerich. “It is very rare that Mother Nature places

Iron Ore At Tidewater.

an ore body right next to a natural deep water harbour. Since we are producing and shipping millions of tonnes of product, logistics are the most crucial part of our business, and using the water is the cheapest form of transportation there is. We will have just a few kilometres between the open pit mine and the port, and with water depths beyond 50 metres this port will be able to handle any size of vessel.” AEI made tremendous progress on its flagship asset this year and expects to complete its feasibility study with the publication of a final report in early 2012 and a subsequent production decision. Reputable Chinese players such as the Han-Xing Mining Institute and the China Communications Construction Corporation, have joined the team of engineers who are reviewing the financial and technical aspects of the project as part of the feasibility process. For Nunavut, Roche Bay could become the very first iron ore mine, bringing economic development and employment opportunities to the hamlets of the region, Hall Beach, Igloolik and Repulse Bay. Continuous meetings with the communities, strong relationships with the Inuit Associations and regional and federal government, as well as an active involvement of XXP have contributed to the creation of a common vision for Nunavut’s future. AEI’s ongoing environmental baseline studies are now being compiled into the environmental impact statement which the company expects to submit by mid-2012. With further news on the Roche Bay resource and initial results of the feasibility study to be released, all eyes are on AEI and its North of 60 Iron Ore project.

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Pipeline Projects Approximately 60 kilometres north of Roche Bay along strike of the banded iron formation, AEI discovered an additional potentially large deposit named Tuktu in the fall of 2009. This year, the company completed an initial drill program on the Tuktu 1 claim, and continuously reported outstanding results that not only confirmed the size of the deposit and the consistency of the grade but also surpassed expectations in respect to the quality of the asset. High grade drill results above 30 per cent iron with intervals of over 40 per cent iron and even over 50 per cent iron were reported, and an NI 43-101 compliant resource estimate is expected this fall. “We had high expectations of Tuktu and were extremely pleased that our confidence in this discovery was confirmed in that the banded iron formation was consistent in all the drill holes and that the iron grades confirmed the 2009 surface sampling. Having high grade intervals in numerous holes raises the question of direct ship ore potential at Tuktu. We plan for additional metallurgical studies after an initial resource estimate to further investigate this potential,” states Gingerich. Not only the iron ore story heated up for AEI, but the company’s precious metal claims also became the centre of attention this summer when big players recognized the potential of a new nickel discovery on the West Melville Peninsula. With nickel, gold, copper, silver and molybdenum values reported, AEI plans to spin out all or some of these non-core commodities and thus create additional value for its shareholders. Another exciting year has brought Advanced Explorations closer to becoming one of Canada’s major commodity players. An ex-

perienced management and a strong partner make sure to keep the company on track with all its strategic objectives, advancing its assets and growing the company to ultimately bring wealth and economic sustainability to Nunavut. n

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peregrine diamonds ltd.

Unlock The Value Peregrine Diamonds Ltd. Advances the Chidliak Project on Baffin Island

Peregrine Diamonds Ltd. successfully completed an aggressive ex-

gistical planning and arrangements, have set the stage for bulk

ploration field program this year at the Chidliak diamond project

sampling of select kimberlites by way of large diameter reverse

(“Chidliak” or “the Project”) located 120 kilometres from Iqaluit on

circulation (“RC”) drilling, which is scheduled to commence in the

Baffin Island, Nunavut. One major objective of the program was

first quarter of 2012. The bulk sampling program aims to extract

to continue the detailed exploration of kimberlites with economic

roughly 200-carat diamond parcels per kimberlite to support in-

potential, in preparation for bulk sampling. The drilling of over

dependent diamond valuations, considered a crucial step towards

5,500 metres on six high-potential kimberlites, and extensive lo-

determining economic viability. Another objective this past sea-

58 Mining North of 60 | Winter 2011-2012

son was to find new kimberlites, and with the recent discovery of CH-59, nine kimberlites were discovered this year bringing the current number of known kimberlites at Chidliak to fifty-nine. In 2011, core drilling was completed on six of the seven kimberlites with economic potential identified on the Project to date, CH-6, CH-7, CH-28, CH-31, CH-44 and CH-45, and a 33.5 tonne mini-bulk sample was collected from surface at CH-28. The seventh kimberlite with economic potential, CH-1, will be the subject of extensive core drilling in 2012. CH-6 and CH-7 are scheduled for bulk sampling in 2012 and forthcoming diamond results from CH-31, CH-44 and CH-45 will allow prioritization of these bodies for bulk sampling next year. “The 2012 bulk sampling program is an important step along the development path at Chidliak and it will allow Peregrine to continue to unlock the value at this exciting diamond project,” says Eric Friedland, CEO. “Our goal is to deliver the first diamond mine on Baffin Island. We will work to achieve this goal by rapidly advancing the known kimberlites with economic potential as well as continuing to explore for additional diamondiferous pipes. Unresolved indicator mineral trains and the presence of kimberlite float at multiple localities not currently linked to sources give us confidence that more kimberlites will be discovered next season.” In preparation for the 2012 bulk sample, equipment, supplies and fuel are being shipped to Iqaliut by sealift. Additionally, site layout and access trails have been mapped, and a drilling contractor has been selected. Chidliak is a joint venture between Peregrine (49 per cent) and BHP Billiton (51 per cent). Peregrine is the operator of the 2011 program. n

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