Manitoba's Mineral Industry

Exploration and Development Highlights 2009

Current as of November, 2009

Base Metals
Precious Metals
Specialty/Industrial Minerals

Like most sectors of the global economy, Manitoba’s mining industry fell victim to the economic downturn that gripped many nations around the world in the later half of 2008. After experiencing unprecedented expenditures of $141.5 million (preliminary estimates) on exploration and deposit appraisals in 2008, expenditures for 2009 are estimated to be approximately $77.4 million, almost a 50% drop from 2008 spending. The drop in base-metal prices, market demand and a prolonged slump in stock markets made it very difficult for many junior explorers to raise working capital. As a result, many juniors deferred work commitments and braced themselves for the economic downturn in hopes of just being able to hang onto their properties until conditions improved.

Base Metals

HudBay Minerals’ flagship 777 copper-zinc mine in Flin FlonHudBay Minerals Inc. continued to receive positive drilling results at their Lalor deposit near Snow Lake. Results were so encouraging that the drilling budget at Lalor for 2009 was nearly doubled in the second quarter to $13.0 million. In January, HudBay announced drilling at Lalor had discovered a new and separate (from the solid sulphide lenses) gold zone which returned significant results including 36.85 m of 13.83 g/t gold and 134.9 g/t silver. In September 2009, the company announced they had encountered what is believed to be another new zone of copper-gold rich mineralization where drilling intersected 13.35 g/t gold and 5.33% copper over a 34.54 m interval which is lower in the stratigraphy than the previously announced zones. In October, the company announced $85 million in expenditures towards Phase 1 development of the project, which is a production ramp from its Chisel North mine to the Lalor zinc-rich base-metals zone. The company also plans to complete a pre-feasibility study for Lalor by the end of 2009 and a feasibility study in 2010. HudBay is considering re-starting operations at the Chisel North mine during the ramp development period to provide a continuous supply of zinc ore to the Snow Lake concentrator and zinc concentrate to the Flin Flon zinc plant. Work on the ramp was expected to begin in October. A National Instrument (NI) 43-101 report from September 2008 concluded Lalor has an Indicated Resource of 3.4 million tonnes of 8.82% zinc and 0.71% copper. The 2007 Lalor discovery received the 2009 Prospectors and Developers Association of Canada Bill Dennis Award for the most significant Canadian mineral discovery. The company also continued to drill in the vicinity of present and past-producing mines in the Flin Flon and Snow Lake area.

Rockcliff Resources Inc. conducted a 13-hole drill program at their Reed Lake, Eel and Jackfish properties southwest of Snow Lake. The company reported drilling at Jackfish intersected significant copper-nickel values including 1.83% nickel and 0.23% copper across 0.93 m. Summer work consisted of ground proofing of untested Versatile Time-domain Electromagnetic (VTEM) anomalies and geological mapping at volcanogenic massive-sulphide deposits at the Lon, Rail and Reed Lake properties.

A 4-hole drill program conducted by VMS Ventures Inc. at their Puella Bay property southeast of Snow Lake helped to identify a large alteration zone that the company believes may host mineralization. A ground geophysical survey was later conducted to hopefully define deep-seated conductors at the margins of the alteration. Geological mapping and sampling programs were undertaken at the Puella Bay, Sails Lake and Morton Lake properties which are all in the Snow Lake area.

Crowflight Minerals Inc. commenced production from their Bucko Lake mine near Wabowden in the fourth quarter of 2008. The first nickel concentrate was shipped to the refinery in February 2009. The company has been dealing with various mining and milling issues to bring the operation to full-scale production of 1000 tonnes per day (tpd). Positive results from surface and underground drilling programs have increased the Proven and Probable Reserves at Bucko to 3.71 million tonnes of 1.45% nickel, an increase of 22% in contained nickel from the 2007 feasibility study report. The company announced in July 2009 that a new high-grade zone had been discovered that is accessible from the 500 ft. mining level. Drilling from the access ramp returned encouraging results including 8.2 m of 5.24% nickel and 12 m of 3.56% nickel. Crowflight also has at least 4 other satellite nickel deposits in the Wabowden area that are within trucking distance of the mill.

International Samuel Exploration Corp. and Canasia Industries Corporation completed an 8-hole drill program at their Reed Lake property. Drilling identified a stockwork feeder system containing sulphides and magnetite, but no economic grades were retuned in assays. A second phase of exploration is planned.

Marathon PGM Corporation conducted winter drilling at the Ore Fault and Page zones on their Bird River property in southeastern Manitoba. The company was testing new geophysical targets adjacent to resources already defined by Marathon. The drill program, which was designed to increase the current resources, returned more encouraging results including 2.8 m of 2.66% nickel, 2.10% copper, 15.85 g/t silver and 2.03 g/t platinum group metals (PGM)+gold at Page. Similar good news was encountered at Ore Fault where a sulphide intersection assayed 2.23% zinc, 0.74% copper and 50.47 g/t silver. The Bird River project is a joint venture with Gossan Resources Limited.

Mustang Minerals Corp. conducted drilling at their Maskwa nickel deposit to increase the existing resource and to identify new nickel-copper-PGM resources. Drilling returned a 42.5 m section grading 0.32% nickel and .05% copper. Work on the ongoing feasibility study continued with resampling and relogging of historical drillholes to update the resource model as well as metallurgical testing.

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Precious Metals

Breakthrough round on the Hinge Zone (photo courtesy of San Gold Corporation)An aggressive approach to exploration conducted by San Gold Corporation at and in the vicinity of their Rice Lake mine continued to return impressive results. In early 2008, San Gold announced the discovery of the high-grade Hinge zone lenses. Since then, drilling has returned very encouraging results including a 2.3 m intersection of 207 g/t gold announced in April 2009. A decline from surface accessed the hinge zone lenses in April 2009. A bulk sample of approximately 10 600 tonnes with a stope mining grade of 21.7 g/t was extracted and processed, with total operating costs coming in at US$158 per ounce of gold. The Hinge mine has the potential to contribute significantly to San Gold’s Rice Lake operation. At the Rice Lake mine, recent results from ongoing definition and exploration drilling at depth are also yielding some high-grade gold numbers from a new extension of the “98” vein and new discoveries above the 26th level. For example, hole 28-09-15 from an extension of the “98” vein intersected 5.9 m of 43.8 g/t gold, including a 1.0 m section of 129.8 g/t gold.

Rolling Rock Resources Corporation released results from a preliminary economic assessment on the Monument Bay gold project located in northeastern Manitoba. The report concluded that to create a 1000 tpd underground mine, it would cost $140 million and have an estimated 11-year mine life. Using a 5.00 g/t cutoff, the Inferred Resource stands at 2.3 million tonnes grading 9.85 g/t. The viability of the project depends on the long-term price of gold. Using a US$750 per ounce gold price, the project would have an internal rate of return of 8.14% and an undiscounted net present value of $45 million.

Wildcat Exploration Ltd. conducted a mapping and sampling program at their Jeep property east of Bissett. The work resulted in the discovery of 3 new additional high-grade gold occurrences, one of which returned an assay of 35.39 g/t gold. In late July, the company commenced a program of overburden stripping to further evaluate the new occurrences.

Garson Gold Corp. released results from the preliminary assessment on the No. 3 zone at the company’s New Britannia mine property in Snow Lake. The study assessed the economics of mining at No. 3 zone and reactivating the 2150 tpd New Britannia mill. This was based on mining and processing of approximately 149,000 oz. of gold from 753 000 tonnes grading 6.14 g/t gold. The study concluded project pre-production capital expenditures of C$22.33 million and an average operating cost of US$362.38 per ounce of gold. At a mining rate of approximately 900 tpd, the mine would have a 3-year operating life at present reserve levels; however the No. 3 zone is open for expansion at depth.

Copper Reef Mining Corporation conducted drilling at their Gold Rock property west of Snow Lake. The Gold Rock zone lies on strike on the same shear zone hosting the North Star gold deposit. Drilling from Gold Rock has been returning some high-grade values including 3.2 m of 104.4 g/t and 1.6 m of 81.73 g/t gold. Recent drill results have extended the strike length of the Gold Rock vein to 345 m.

Callinan Mines Limited intersected a narrow, gold-bearing quartz zone at their Berry Creek property located south of Snow Lake. The 3-hole drill program returned a 0.47 m intersection of 15.40 g/t gold over a larger width of 6.49 m of 1.26 g/t. Callinan was planning to follow up this success with a mobile metal ion sampling survey and trenching program.

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Specialty/Industrial Minerals

Berger Peat Moss Ltd. officially opened its first peat production plant in Manitoba at Hadashville in September 2008. The $6 million plant, located next to the peat bog, employs about 20 staff.

FPM Peat Moss Co., a wholly-owned Canadian subsidiary of Conrad Fafard Inc. of New Brunswick, held a sod-turning ceremony in May 2008 for a new 3000 m2 peat processing and mix facility 2 km south of Vassar. Construction of the plant has been completed. The operation is nearing production and employs approximately 20 workers. The plant is designed to produce packaged peat moss and peat-based professional mixes and potting soils for markets in central and western United States.

Westcore Energy Ltd. announced completion of a 5-hole drill program in April 2009 on its 19 440 ha Black Diamond property in west-central Manitoba, immediately east of Goldsource Mines Inc.’s Border property in Saskatchewan. Three of the holes intersected a coal zone comprising black to brown carbonaceous material, within Cretaceous-age Mannville-equivalent Swan River Formation, beneath 22.2 to 25.9 m of overburden. The carbonaceous zone includes coal, silty/sandy coal (high-ash units) and partings of poor to moderately consolidated sedimentary units of sand, sandstone or siltstone. Washability tests on 19 samples from Hole WTR09-01 were released in June 2009 indicating that a 23.1 drillcore interval could be increased in calorific value by 24.4% and decreased in ash content by 30.8%. The coal samples ranged from Lignite A to Sub-bituminous C in rank. The drill results and subsequent analyses appear to confirm the continuation of Goldsource Mines’ Durango coal seam into Manitoba.

Canadian Infrastructure Corp. has obtained 100 quarry leases for high-calcium limestone in two areas located southwest of Dauphin and southeast of Winnipegosis. The high-calcium limestone in the Dauphin area leases is situated within relatively near-surface beds of the Marco Calcarenite of the Assiniboine Member of the Cretaceous Favel Formation. The high-calcium limestone in the Winnipegosis Formation comprises beds within the Devonian Dawson Bay and Souris River formations.

Agrium Inc., a leading global producer of agricultural nutrients holds a five-year, 45 000 ha potash exploration permit in the St. Lazare area. The company has conducted preliminary seismic surveys and has the option to convert the exploration permit to a potash mineral lease by 2010.

BHP Billiton, the largest diversified mining company in the world, is investing $15 million to explore Manitoba’s untapped potash deposits in the Russell-Binscarth area of southwestern Manitoba.

Western Potash Corp. completed a 9-hole drilling program on its 1000 km2 Russell-Miniota potash project. The project is adjacent to BHP Billiton leases and Agrium exploration permits along the Manitoba-Saskatchewan boundary. Most of the holes penetrated the Esterhazy Member of the Devonian Prairie Evaporite, which is mined 30 km to the northeast at Rocanville, Saskatchewan by Saskatchewan Potash Corporation. In August 2008, a 175 km 2-D seismic program was completed on the property at a cost of $1.2 million to assist in the interpretation of salt and potash sequences. The last four holes of the drilling program targeted the potash sequences identified by the seismic program in the Russell South portion of their property. Three of these holes intersected potash mineralization. Further drilling was planned in the second quarter of 2009 to firm up and test the extent of the indicated mineralization and to generate an NI 43-101–compliant resource.

Canexus Limited Partnership continues to produce sodium chlorate for the pulp and paper industry at its Brandon plant, the world’s largest at 296 000 tonnes per year (4 times the size of the average North American sodium chlorate plant). Canexus purchases salt for the plant from Saskatchewan potash producers. A $45.9-million expansion to increase annual production capacity by 12% was completed in February 2008. The expansion could increase capacity by 30 000 to 40 000 tonnes over the next 2 to 5 years. The Brandon operation is the lowest-cost plant in North America, due primarily to Manitoba’s low electricity rates, and accounts for over 80% of the company’s North American sodium chlorate production.

Gossan Resources Limited released NI 43-101–compliant measured, indicated and inferred high-purity dolomite resources estimates for its Inwood Magnesium Project in September 2008. The measured resources estimate indicates 28 819 000 tonnes grading 21.15% MgO and 5 057 000 tonnes at 21.40% MgO based on 35 drillcores within a 100 hectare area. Inferred resources of 131 236 000 tonnes at 21.64% were estimated from 53 drillcores within a 450 hectare block. In May 2009, Phase I bench-scale testing of the Zuliani (high-efficiency magnesium) process indicated that 98.9% of the magnesium was volatilized under experimental conditions at the desired temperature range, confirming previous chemical thermodynamic studies. Phase II tests designed to facilitate a complete mass balance and to confirm the quality of magnesium metal (and by-products) were to be completed in August 2009.

Gossan Resources completed a 23-hole sonic drill program in December 2006 on its high-purity silica sand property on the east shore of the south basin of Lake Winnipeg. The drilling outlined the edge of two zones with thicknesses greater than 8 m and average thickness of 11.5 m. In June 2007, two shallow test-pits were dug near the east end of the property and in August 2007, an initial series of proppant tests were completed on various sized sand samples; results exceeded all minimum oil and gas industry standards for frac sand. In addition, the sand also appears to meet metallurgical standards.

Victory Nickel Inc. announced an NI 43-101–compliant Indicated Resource estimate of 15 million tonnes of Ordovician Winnipeg Formation silica sand (containing 84% marketable frac sand) in September 2009. The estimate is based on drilling results above its Minago Nose nickel deposit south of Thompson. The sand, which forms part of the overburden, must be removed before the nickel can be open-pit mined. Two years ago, the company had projected a potential net sales revenue of $187 million based on an annual production of 517 360 tonnes of sand for 13.4 years (at an average free on board (FOB) Minago mine site price of $26.84/tonne). The overburden includes 53 m of limestone overlying the sand, which may also be used to generate by-product revenue, such as sales of road and rail construction aggregate.

Tantalum Mining Corporation of Canada Limited (TANCO) ceased production of tantalum concentrate at its Bernic Lake mining facility in southeastern Manitoba in April 2009 and ceased mining of tantalum ore from its underground mine in May 2009. As a result, the TANCO operation has seen a significant reduction in staff.

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