Manitoba's Mineral Industry

Exploration and Development Highlights 2010

Base and precious metals by Chris Beaumont-Smith, Minerals Policy and Business Development Branch; specialty/industrial minerals by Jim Bamburak, Manitoba Geological Survey, Manitoba Innovation, Energy and Mines

Current as of October 2010

Base Metals
Precious Metals
Specialty/Industrial Minerals


Manitoba’s mining industry has experienced a modest recovery from the global economic downturn that occurred in the latter half of 2008 and in 2009.  Exploration and deposit appraisal expenditures totalled $97.8 million in 2009, down from the 2008 peak of $152 million, and are projected to drop slightly in 2010 to $85.9 million.  This drop does not reflect the considerable exploration and development successes in Manitoba’s minerals sector in 2010.

Base Metals

Base-metal exploration and development highlights in 2010 reflect optimism, resulting from exploration success, and setbacks generated by the closure of HudBay Minerals Inc.’s Flin Flon copper smelter.  On June 11th, 2010 the Flin Flon copper smelter cast its final anode, ending more that 80 years of service.  This was partially offset by a number of very positive exploration successes and announcements by HudBay.

HudBay Minerals maintained an aggressive exploration and development program in the Flin Flon–Snow Lake greenstone belt and announced two development projects in 2010.  The company is proceeding with the 777 North expansion project, which will provide additional feed to its Flin Flon concentrator and zinc plant and additional exploration opportunities.

Aerial view of the Lalor Project (Photo courtesy of HudBay Minerals Inc.)HudBay also announced a positive production decision for their Lalor deposit in Snow Lake, which will result in the construction of a 3500 tonne per day underground mine and upgrades to their Snow Lake concentrator. The project is projected to cost $560 million with initial production commencing in late 2012 and full production in 2014.  The Lalor deposit consists of three zones of stacked mineralization comprising the Base Metal, Gold, and Copper-Gold Zones.  The Indicated base metal resource stands at 13.3 million tonnes grading 8.87% zinc with an inferred resource of 4.8 million tonnes grading 9.25% zinc.  The Gold Zone inferred resource is 5.4 million tonnes grading 4.7 grams per tonne gold.  HudBay anticipates additional gold resources will be delineated with further exploration to be conducted underground. Conceptual estimates indicate the potential for an additional 5.1 to 6.1 million tonnes grading between 4.3 and 5.1 grams per tonne for the Gold Zone and an additional 1.8 to 2.2 million tonnes grading 5.8 to 7.0 grams per tonne gold and 3.2% to 4.0% copper for the Copper-Gold Zone.

HudBay is advancing two exploration projects with joint-venture partners that the company anticipates will proceed to the feasibility study stage.  Along with partner VMS Ventures Inc., HudBay continues to drill the Reed Lake copper discovery south of Snow Lake and anticipates completing a National Instrument (NI) 43-101–compliant resource estimate for the deposit by the end of 2010.

HudBay also partnered with Halo Resources Ltd. on the Lost Lake joint-venture project in the Sherridon area.  HudBay has initiated an accelerated evaluation program for the Lost deposit, including a 12-hole drill program and metallurgical testing to assess the feasibility of developing the deposit.  HudBay has started pre-feasibility engineering, which is expected to be completed in early 2011.

Rockcliff Resources Inc. continued the evaluation of the Rail deposit, southwest of Snow Lake, with a 10-hole drill program.  Rockcliff was successful in extending high-grade copper mineralization south of the previously known limit of mineralization and borehole geophysics detected a large, untested anomaly continuing south. Highlights of the most recent drilling include 5.05% copper over 3.62 m and 5.05% copper over 4.05 m.  The Rail deposit remains open in all directions and has been intersected over a strike length of approximately 800 m. Rockcliff also drilled borehole targets on their Reed Lake volcanogenic massive sulphide (VMS) property and began initial fieldwork in preparation for a winter drill program at their Tower VMS property, north of Grand Rapids.

VMS Ventures Inc. continued to explore their Reed Lake property beyond the Reed Lake discovery zone.  Geophysical surveys identified additional electromagnetic (EM) targets at the Tower zone, east of the Reed Lake deposit, which forms part of the Reed Lake “Super Zone”. The subsequent phase 2 Tower Zone drill program, which targeted seven surface pulse-EM survey (DEEP-EM) anomalies, was halted pending the conclusion of joint-venture negotiations with HudBay Minerals.  An initial 5-hole drill program at the Copper Project failed to return economic mineralization and Manitoba government forest fire bans restricted VMS Ventures’ summer exploration plans. The postponed geophysical and follow-up drill programs for their Sails Lake, Morton Lake, Puella Bay and Copper projects are planned for later this year.

Vale continues with the modernization program at its Thompson nickel refinery through the installation of automation equipment. The $116 million project will allow the company to enhance the efficiency of its current electrolytic nickel production and improve working conditions. The first phase of an initiative to upgrade its tailings management area involving a $25 million program to install new tailings lines and pumps to reduce water consumption also continues.

Crowflight Minerals Inc. temporarily suspended production at their Bucko Lake Nickel Project near Wabowden on October 1, 2010. Production was stopped to facilitate the introduction of the company’s own underground mining equipment and team and to make adjustments to address certain operational issues. The shutdown follows the return to commercial production levels during the second quarter following a three-month production shutdown that began in November, 2009. The 2009 shutdown was required to adjust mining methods in order to deliver and sustain production of 1000 tonnes per day (tpd). The change in production methods improved grade control and increased head grades resulting in an increase in the average grade processed and in the amount of concentrate produced.  Crowflight has successfully 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. Crowflight also has at least four other satellite nickel deposits in the Wabowden area that are within trucking distance of the mill.  The company reported that recent drilling at the nearby M11A deposit was encouraging.

In the wake of positive results from a feasibility study for its Minago nickel deposit north of Grand Rapids, Victory Nickel Inc. continues to advance the project towards development with the initiation of the permitting process.  The Definitive Feasibility Study (DFS) was based on mining open-pit reserves only and concluded that capital costs for development of an open pit and concentrator would be $596 million. The DFS incorporated Proven and Probable Reserves of 25.2 million tonnes grading 0.43% nickel with average annual ore production of 3.6 million tonnes over a seven-year production life. The study also included the production of frac sand which could be a by-product of processing part of the overburden. The company plans to conduct 6000 m of drilling in 2010 to increase reserves.  Recent drilling identified high-grade zones within the open-pit shell that were originally thought to be waste. Grades ranging up to 1.34% nickel over 20.94 m were returned, including 18.37 m grading 1.14% nickel, 24.89 m grading 1.04% nickel and 31.21 m grading 1.02% nickel.  The addition of this mineralization will upgrade the reserve base, enhance the project economics and demonstrate the potential for the extension of the projected mine life.

Prophecy Resources Corp. acquired the Lynn Lake nickel project from Victory Nickel and initiated a 3000 m drill program to test five recently identified induced polarization (IP) anomalies.  The Lynn Lake nickel mine produced 20 151 146 tonnes of ore at an average grade of 1.023% nickel and 0.535% copper from two mines over the 24-year period. The remaining resource is estimated at 17 million tonnes with an average grade of 0.62% nickel and 0.31% copper.

Mustang Minerals Corp. continues work on the ongoing feasibility study of the Maskwa deposit near Lac du Bonnet and exploration work at the nearby Mayville property.

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Precious Metals

San Gold Corporation continues to experience improved operational performance and exploration success at its Rice Lake and Hinge mines in Bissett.  San Gold reported record production levels in 2010 and their first operational profit in late 2009. The company continues to develop and produce from the high-grade 98, 98 FW and RL East veins at the eastern ends of the 26 and 28 levels of the Rice Lake mine and from the Hinge mine. The improved operational performance is the result of increased production levels from the high-grade, ramp-accessible Hinge mine.  Hinge mine ramp development successfully intersected the adjacent 007 zone at the 240 m level and bulk sampling and development are underway in preparation of production.  An aggressive, multi-year exploration program has delineated a number of high-grade, near-surface gold zones within easy Hinge zone ramp access.  These include the 007, Cohiba, L-13 and Emperor zones.  The measured and indicated mineral resources stand at 270,100 ounces of gold for the Rice Lake mine and 197,700 ounces of gold for the Hinge mine.  The Inferred resources stand at 439,010 ounces of gold for the Rice Lake mine and 538,700 ounces of gold for the Hinge mine.  The total reported project resource is 828,105 ounces of gold for the measured and indicated category, and 1,814,870 ounces of gold for the inferred.

Precious metal exploration and development in Manitoba has largely focused on the re-evaluation of past-producing gold mines.  This year saw a marked increase in this exploration strategy with the evaluation of four past-producing gold mines.

Alexis Minerals’ Snow Lake mine scheduled for gold production in 2012 (Photo courtesy of Marc Jackson)Alexis Minerals Corporation acquired Garson Gold Corp. in a friendly takeover in late 2009 and completed a feasibility study for the reopening of the Snow Lake mine (formerly the New Britannia mine) in Snow Lake.  The results of the feasibility study demonstrate positive economics for reopening the Main Mine and the No. 3 Zone with a combined 2000 tonnes per day production rate.  The mine is forecast to produce 80,000 to 90,000 ounces of gold per year and operate for a minimum of six years.  Alexis has secured $60 million in project financing and plans to begin pre-production development in January 2011.  Gold production is scheduled to begin in early 2012.

St. Eugene Mining Corporation Ltd. completed the acquisition of the Tartan Lake gold mine northeast of Flin Flon.  The Tartan Lake mine produced 45,000 ounces of gold between 1987 and 1989. St. Eugene is upgrading the Tartan Lake historic gold resources base to a NI 43-101– compliant resource in advance of mine de-watering and the initiation of an underground exploration and test mining program.

Auriga Gold Corp. is acquiring the past-producing Puffy Lake gold mine and adjacent Nokomis gold property south of Sherridon from Pioneer Metals ULC.  Auriga has renamed the project “Maverick Gold” and intends to mount a substantial drill program and anticipates “near-term” gold production.  The historic, non NI 43-101–compliant resource stands at 339,652 ounces of gold in the indicated category and 203,146 ounces of gold in the inferred category.  The Puffy Lake mine produced 28,000 ounces of gold in 1988 and 1989.

Following the recapitalization of the company, Carlisle Goldfields Limited is planning to restart exploration activity at the MacLellan Gold mine in Lynn Lake. The MacLellan gold mine produced 144,000 ounces of gold between 1986 and 1989.  Carlisle released an updated NI 43-101–compliant open pit and underground resource estimate in August that increased the measured and indicated resource to 5.3 million tonnes grading 3.85 grams per tonne gold equivalent (includes silver) and the inferred resource to 4.4 million tonnes grading 3.56 grams per tonne gold equivalent. The total resource is reported at 1,035,200 ounces of gold and 9,344,000 ounces of silver.  The MacLellan mineralization remains open along strike and down dip.  Carlisle is planning a 120 line-km IP survey over the entire deposit area to assist follow-up drill targeting.

Bison Gold Resources Inc. continued to explore the past-producing Ogama mine on their Central Manitoba property southeast of Bissett.  Bison completed a 9-hole drill program that successfully returned high-grade gold results from the Ogama Vein 1. Assays up to 34.99 grams per tonne gold over 4.73 m were intersected approximately 175 m northwest of the historic mine workings.  Bison is encouraged by the strike continuity and apparent increase in the width of the Ogama Vein 1 northwest of the mine.  A follow-up airborne radar elevation (LIDAR) survey is planned for the property.  The past-producing Ogama-Rockland mining operation produced 45,440 ounces of gold from 1948 to1951.

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. The 21-hole drill program confirmed down-dip mineralization continuity of the Gold Rock vein and successfully delineated additional structures parallel to the Gold Rock vein.  The new Richard vein, northeast of the Gold Rock vein, returned assays up to 14.4 grams per tonne gold over 3.3 m.

Wildcat Exploration Ltd. maintains an aggressive gold exploration program on their expanding portfolio of Rice Lake gold projects. The company conducted drill programs on the Jeep and Poundmaker properties and advanced a number of other properties towards the drilling stage.  Wildcat also announced the acquisition of the South Thompson Nickel Property, located approximately 55 km south of Thompson in the Thompson Nickel Belt, through an option agreement with Anglo American Exploration (Canada) Limited. Wildcat can acquire 100% interest in the property by funding $2 million of exploration expenditures over a five-year period.

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Specialty/Industrial Minerals

In December 2009, Westcore Energy Ltd. reported that it had entered into a binding agreement with Goldsource Mines Inc. in which the latter would apply its proprietary Coal Identification Matrix (CIM) to Westcore’s Fugro airborne geophysical data for 100,000 Westcore common shares, plus other incentive agreement terms. Under the agreement, Goldsource provided Westcore with specific drill sites having a high probability of intersecting significant intervals of coal; three of these targets (Cyclops – Hole BD10-02; Ambit – Hole BD10-03; Athena – Hole BD10-04) successfully returned very thick intercepts of coal during the 2009/2010 winter drilling program. The coal ranked from Lignite A to Sub-bituminous C.

Drillcore from the Gossan Resources Inwood Magnesium Project.In May 2009, Gossan Resources Limited successfully completed Phase I bench-scale testing of the Zuliani (high-efficiency magnesium) process for its Inwood Magnesium Project. Phase II tests designed to facilitate a complete mass balance and to confirm the quality of magnesium metal (and by-products), were completed in September 2009. In April 2010, Phase III bench-scale tests confirmed that the Zuliani Process produces magnesium metal, under atmospheric conditions, at exceptionally high raw-material efficiencies. Phase IV testing, with a hundred-fold increase in experimental scale compared to Phase III, was to begin in 2010.

Gossan Resources drill-outlined two zones of high-purity silica sand near Manigotagan on the east shore of the south basin of Lake Winnipeg. The zones extend for over 400 and 600 m in length and have thicknesses exceeding 5 m, and widths of over 15 m. In May 2010, Gossan Resources completed a series of proppant tests that indicated the sand exceeds all of the minimum oil and gas industry frac sand standards. The company also announced that a marketing study is underway to evaluate its use in the glass, construction metallurgical flux and other markets; in addition to frac sand.

In September 2009, Victory Nickel Inc. announced it had drilled a (NI 43-101–compliant) indicated resource of 15 million tonnes of Ordovician Winnipeg Formation silica sand (containing 84% marketable frac sand) 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. As of September 2010, 23 additional holes, passing through the sand, had been drilled, and another 60 holes are planned for completion by the end of May 2011.

Tantalum Mining Corporation of Canada Limited (TANCO) is currently mining pollucite, which contains cesium, to produce cesium formate (a drilling fluid for the petroleum industry). At least nine years of pollucite reserves have been identified underground; and additional resources are available on surface in tailings ponds. Staff levels have increased back to 67 employees, and could increase by another 30, following layoffs in 2009. Resumption of spodumene production is also contemplated.

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