Manitoba's Mineral Industry
Exploration and Development Highlights 2011
Base and precious metals by Chris Beaumont-Smith, Minerals Policy and Business Development; specialty/industrial minerals by Jim Bamburak, Manitoba Geological Survey, Manitoba Innovation, Energy and Mines
Current as of September 2011
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 and remains optimistic in the face of the current global economic uncertainty related to sovereign debt. Exploration and deposit appraisal expenditures totalled $97.8 million in 2010, a significant decrease from the 2008 peak of $152 million, but are projected to rebound strongly in 2011 to $115.7 million.
Base Metals
Base-metal exploration and development highlights in 2011 reflect cautious optimism, resulting from exploration successes juxtaposed with the setback of Vale’s closure plans for the Thompson smelter and refinery by 2015. In addition, market volatility generated by sovereign debt issues have resulted in global economic uncertainly and a softening in commodity prices. The drop in prices may translate into a tightening of mine financing, which may have a negative effect on a number of near-term development projects in the province. Fortunately, Manitoba’s base-metal sector is benefitting from recent discoveries and is moving forward with a number of major development projects.
HudBay Minerals Inc. maintained an aggressive exploration and development program in the Flin Flon–Snow Lake greenstone belt and continues to move forward on two development projects announced in 2010:
- the 777 North expansion project, which will provide additional feed to its Flin Flon concentrator and zinc plant and additional exploration opportunities.
- the Lalor deposit in Snow Lake, which will result in the construction of a 4500 tonne per day underground mine.
The development of the Lalor mine near Snow Lake is proceeding on schedule and on budget. In July, the company committed to construct a new 4500 tonne per day concentrator bringing total development costs to $704 million. Initial mine production will start in 2012 via a production ramp from the nearby Chisel North mine and full production is anticipated to begin in 2014 through shaft infrastructure currently in development.
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 anticipating an additional mine development project with their Reed Lake joint venture located south of Snow Lake. Successful joint-venture negotiations with partner VMS Ventures, Inc. to expand the scope of their partnership has led to significant project advancement. HudBay has initiated permitting to authorize initial mine development leading to the extraction of a bulk sample for metallurgical testing. The Reed Lake deposit contains a NI 43-101–compliant Indicated resource estimate of 2.5 million tonnes grading 4.55% copper. HudBay plans to start site preparation in November and expects to complete the extraction of a 10 000 tonne bulk sample in the fourth quarter of 2012. A production decision is expected early in 2013. The expanded joint venture also afforded HudBay the opportunity to conduct exploration drilling elsewhere on the property, which led to the discovery of additional copper mineralization. In July, HudBay announced the discovery of significant copper mineralization northeast of the Reed Lake deposit with a drill intercept of 7.18 metres of 7.44% copper. Additional drilling to assess the discovery is ongoing.
HudBay also partnered with Halo Resources Ltd. on the Lost Lake joint-venture project in the Sherridon area and continues to assess the feasibility of developing the deposit. HudBay has started pre-feasibility engineering, which is expected to be completed in 2011.
CaNickel Mining Ltd. (previously Crowflight Minerals Inc.) returned to commercial production at their Bucko Lake Nickel Project near Wabowden in the second quarter of 2011. The introduction of company-owned mine production and modifications to mine development and production methods has resulted in a significant increase in nickel-ore grade, which is having a positive effect on the economics of the mine. CaNickel has successfully increased the Proven and Probable reserves at Bucko to 3.71 million tonnes of 1.45% nickel, an increase of 122% in contained nickel from the 2007 feasibility study, extending the projected mine life to 10 years. The company is also having considerable exploration success on the nearby M11A deposit, which may provide additional life to the mining operation.
Further optimism on the base-metal front was generated by the successful environmental licensing of Victory Nickel Inc.’s Minago nickel mine north of Grand Rapids. The granting of the Environment Act Licence authorizes Victory to construct and operate the Minago mine and represents the final regulatory hurdle for the project. The planned mine will produce 25 million pounds of nickel in concentrate and 1.15 million tonnes of by-product frac sand per year for 10 years. The company plans to start initial pre-stripping of the open-pit area in winter 2011-12 and the construction of the mine and supporting infrastructure will begin in the second quarter of 2012, provided the $600 million in project financing can be successfully secured. Victory continues to explore the Minago property and anticipates the completion of a resource estimate for the North Limb deposit located near the planed open pit. The North Limb deposit represents a potential economic resource that will add significantly to the project mine life.
Rockcliff Resources Inc. maintains an aggressive exploration program on their Snow Lake area properties. Rockcliff completed their evaluation of the Rail deposit, southwest of Snow Lake, with the release of a NI 43-101–compliant Indicated resource of 822 000 tonnes grading 3.04% copper for the deposit. Rockcliff continues to explore the property, targeting untested geophysical anomalies with the goal of further expanding the resource. Rockcliff also began a diamond-drill program at their Tower VMS property north of Grand Rapids. Initial results outlined multiple copper-gold VMS systems over a 700 m strike length and additional drilling is ongoing. The Tower property is a joint-venture with Pure Nickel Inc. and represents a copper-zinc-rich VMS deposit in the Thompson Nickel Belt.
Mustang Minerals Corp. continues work on the ongoing feasibility study of the Makwa deposit near Lac du Bonnet and exploration work at the nearby Mayville property. The Makwa deposit comprises a NI 43-101-compliant resource of 9.855 million tonnes in the Probable category containing 0.541% nickel, 0.113% copper and 0.433 g/t PGM. The Mayville deposit contains a NI 43-101 Indicated resource of 9.227 million tonnes containing 0.61% copper, 0.23% nickel and 0.174 g/t palladium. Mustang believes the Mayville deposit has the potential to host a significant PGM resource. The company recently completed the purchase of the Bouchard Herbert mill near Rouyn-Noranda, Quebec. The mill will be relocated and potentially provide a significant reduction in the capital costs incorporated in the feasibility study expected to be completed this year.
VMS Ventures Inc.’s exploration and development successes with partner HudBay Minerals were complemented by exploration successes on their large stable of Snow Lake properties.
Exploration was highlighted by a gold discovery on the Sails Lake project that returned a drill intercept of 56.89 m grading 1.21 grams per tonne gold and a new zinc discovery on the Copper project.
The current trend of exploring past-producing mine properties is not restricted to gold properties in Manitoba. Prophecy Resources Corp. and Corazon Mining Ltd. are exploring past-producing nickel mines originally operated by Sherritt Gordon Mines in Lynn Lake. Employing advanced exploration techniques and technology, both companies have been successful discovering new mineralization and expanding the remaining resources at the Lynn Lake and El mines.
Precious Metals
Precious metals, led by gold, continue to benefit from the current economic uncertainty that has resulted in considerable appreciation in their value. In Manitoba, this is manifest in a considerable increase in exploration and deposit appraisal expenditures for gold. The primary focus is the re-evaluation of past-producing gold deposits. This trend was started with San Gold Corporation with their purchase of the Rice Lake mine in Bissett from Harmony Gold Inc., which was brought back to producer status in 2007.
San Gold continues to experience improved operational performance and exploration success at its Rice Lake and Hinge mines in Bissett. San Gold has achieved record quarterly production in successive quarters, which has lead to a corresponding increase in operational profit. During their most recent quarter, San Gold reported record operating margins resulting from a significant decrease in operating expenses and strong gold prices. San Gold is on pace to produce 80,000 ounces of gold in 2011.
San Gold’s operational success is largely due to their considerable exploration success and their ability to identify and develop high-grade, near-surface deposits hosted by the Shoreline Basalt in the hanging wall of the Rice Lake mine. This has resulted in the opening of the Hinge and 007 mines that are accessed through ramps from surface. Several other zones hosted by the Shoreline Basalt are currently in the advanced stages of exploration and pre-production development. The company anticipates increases in annual gold production over the next few years.
Also in the Rice Lake belt, Bison Gold Resources Inc. continues to explore the past-producing Ogama mine on their Central Manitoba property southeast of Bissett. Bison completed a 31-hole drill program that successfully returned high-grade gold results from the Ogama Vein 1 and Eldorado zone. A winter drill program will focus on the assessment of the Eldorado zone over its 1 km strike length. The past-producing Ogama-Rockland mining operation produced 45,440 ounces of gold from 1948 to1951.
Elsewhere in the Rice Lake belt, Wildcat Exploration Ltd. maintains an aggressive gold exploration program with joint-venture partner San Gold on their portfolio of Rice Lake gold projects. The company conducted drill programs on the Mike Power, Jeep and Poundmaker properties and advanced a number of other properties towards the drilling stage.
Strikepoint Gold maintains an active gold exploration program on their Strikepoint property adjacent to San Gold’s Rice Lake mine and their joint-ventured Rice Lake properties with San Gold.
Greenstone belts located in the Trans-Hudson Orogen are also attracting considerable attention in the current environment of elevated gold prices. The large number of past-producing mines and their largely intact infrastructure represent attractive targets for junior gold explorers.
In the Snow Lake area, Alexis Minerals Corporation continues to evaluate the reopening of the past-producing Snow Lake gold mine (previously the New Britannia mine). Alexis delayed their anticipated production decision to reopen the mine in order to include additional gold resources not reported in the December 2009 feasibility study. The additional resources will increase the projected mine life and will improve the already robust economics of reopening the Snow Lake gold mine. The 2009 feasibility study forecast production of 80,000 to 90,000 ounces of gold per year for a minimum of six years. Alexis anticipates the completion of the revised feasibility study in 2012. If Alexis is successful, it will be the second reopening of the Snow Lake mine. New Britannia produced 858,000 ounces of gold between 1995 and 2005 and 760,000 ounces of gold between 1949 and 1958 as the Nor Acme mine.
Also in the Flin Flon-Snow Lake greenstone belt, Auriga Gold Corp. continues to advance their Maverick gold project towards “near-term” gold production. The Maverick project comprises the past-producing Puffy Lake gold mine and adjacent Nokomis gold property south of Sherridon. Auriga completed a 41-hole drilling program that culminated in the release of NI 43-101-compliant optimized in-pit and underground Indicated resources totalling 174,000 ounces gold and Inferred resources totalling 558,000 ounces. The gold resources are hosted in a number of east-dipping, parallel, mineralized vein structures including the Upper, Sheridan, Main and Lower Zones. Auriga has commissioned a Preliminary Economic Assessment (PEA) looking at the potential economic viability of an initial open-pit mining operation utilizing the on-site Puffy Lake mill and other existing infrastructure. The company expects the PEA to be completed in October 2011 and a positive result will provide the basis to refurbish the Puffy Lake mill and commence test mining within the next year. The Puffy Lake mine produced 28,000 ounces of gold in 1988 and 1989.
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, with an Indicated mineral resource of 1 000 000 tonnes at 4.0 g/tonne gold (130,000 ounces) and an additional Inferred mineral resource of 1 900 000 tonnes at 3.9g/tonne gold (240,000 ounces). St. Eugene continues to expand mineral resources through a 4000 m surface exploration drilling program and is working towards mine de-watering and the initiation of an underground exploration and test mining program.
The Lynn Lake greenstone belt, located in the northern Trans-Hudson Orogen, hosts a number of past-producing gold mines. Carlisle Goldfields Limited continues to assess the potential redevelopment of four past-producing gold mines in the Lynn Lake region with a 40 000 metre drill program. The centrepiece is the MacLellan Gold mine that contains a NI 43-101–compliant open pit and underground Measured and Indicated resource estimate of 1,035,200 ounces of gold and 9,344,000 ounces of silver. Carlisle commissioned a Preliminary Economic Assessment for the MacLellan mine as an open-pit operation. Exploration drilling at the nearby BT open pit mine, which operated between 1994 and 1996, the Lasthope deposit, and past-producing Farley Lake mine focuses on the delineation of potential incremental feed for an envisioned regional gold mill.
Gold exploration activity is not limited to past-producing deposits located in established greenstone belts, but also includes a number of advanced exploration projects located in more frontier regions of the province. The highest profile project is Mega Precious Metals Inc.’s Monument Bay gold project near Red Sucker Lake in northeastern Manitoba. Mega continues with an aggressive infill and exploration drill program and recently released an updated NI 43-101-compliant Measured resource of 221 510 tonnes grading 12.48 g/tonne, plus an Indicated resource of 2 199 100 tonnes grading 7.12 g/tonne plus Inferred resources of 6 147 000 tonnes grading 6.01 g/tonne using a 3.0 g/tonne cut-off grade. This represents a 47% increase in the resource estimate to 1,294,999 contained ounces. Mega continues to advance the Monument Bay project towards initial mine development through an Advanced Exploration Permit in 2012.
Mega’s exploration success at Monument Bay and the favourable geology has attracted a number of junior gold explorers to the Archean Northern Superior Province southeast of Thompson. The list includes Gossan Resources Limited, Alto Ventures Ltd. and QMC Quantum Minerals Corp. This under-explored accretionary terrane is viewed by explorers as having the potential to host a number of gold deposits in a regional camp.
Specialty/Industrial Minerals
In March 2011, Westcore Energy Ltd. reported that it had completed 39 vertical holes on its 2011 drilling program on its wholly owned Black Diamond and FNR JV coal properties near The Pas. A total of 4529 m of drilling was done, with 516 coal core samples recovered for Proximate Analysis. In addition, a bulk sample of coal was shipped to the Quantex Energy Ltd. lab in Morgantown, West Virginia in February 2011 for coal liquefaction analysis. The breakeven cost of the Quantex process is estimated at less than $50 per barrel of oil. A gravity-gradient airborne survey was completed during the summer of 2011 and a 2012 winter drilling program is planned on the gravity anomalies. A NI 43-101 resource report is expected upon completion of the 2012 work.
In late 2009, Saturn Minerals Inc. completed a preliminary airborne gravity survey over its Overflowing property south of The Pas and immediately to the east of Westcore Energy’s properties (described above). Seven vertical holes were drilled early in 2011 of which 6 intersected the Saturn coal seam in the company’s Karolina Coal Basin. One coal intersection was reported to be 88.98 m in core length. Positive washability results on coal samples were received and a follow-up airborne gravity survey flown by late August 2011. The newly acquired analytical data is being incorporated into the company’s exploration model to identify new drill targets for its 2011 summer drill program.
Gossan Resources Limited has 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. A marketing study, completed on the property in October 2010, concluded that the sand meets the specifications and appears suitable for the frac sand proppant, fibreglass, recreation, metallurgical, construction, filtration and well pack markets.
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. In September 2011, Victory Nickel was granted an Environmental Act Licence for the Minago mine and its board of directors approved the development, including a frac sand component.
