The shortage of manpower and resources that exploration companies had to contend with in 2008 looms yet again, said Atkinson.
Gold prices in the $1,300 to $1,400 an ounce range fueled most of the activity, but the easier availability of risk capital and surging demand for other commodities, including base metals, industrial minerals and rare earth and rare metals, including lithium, contributed to the increased pace of exploration activity.
In northeastern Ontario, “all of our mines are operating at full capacity,” said Atkinson.
Lake Shore Gold declared commercial production at its new Timmins Mine in January and is using the infrastructure there to explore its parallel Thunder Creek Zone. The company is also conducting underground exploration at its Bell Creek Mine, a former producer acquired from the Porcupine Joint Venture in 2007, and drifting underground to the Vogel and Schumacher properties. An NI 43-101 resource estimate for Bell Creek published in December reported a resource of 8.4 million tonnes at an average grade of 4.4 g/t for a total of 1,192,900 ounces in the inferred category.
Goldcorp’s Porcupine division in Timmins is also in overdrive. In January, it awarded a contract to Cementation Canada to sink a 1,847-metre internal shaft (a winze) at its Hoyle Pond Mine and is in the permitting stage for its Hollinger Project, a proposed open pit on the site of the past-producing Hollinger and McIntyre Mines in downtown Timmins.
Two hundred and fifty kilometres northeast of Timmins, Detour Gold Corp. is spending $1 billion to bring its Detour Lake project into production. The company has satisfied all of the Ontario government’s permitting requirements and is busy developing infrastructure and acquiring capital equipment. Work has begun on a 1,000- person construction camp, a right-of-way is being cleared for the 135-kilometre segment of a powerline and site excavation is underway. Two Terex excavators and 23 Caterpillar haul trucks have been ordered. Billed as Canada’s largest pure gold play, with gold reserves of 14.9 million ounces, Detour Lake is slated to produce 649,000 ounces a year over a mine life of 21 years. Placer Dome operated a mine at the same site from 1983 to 1999, producing 1.8 million ounces.
Also advancing toward production in the northeast is Northgate Minerals’ Young-Davidson project in Matachewan. The $339 million capital project on the site of two former-producing mines is scheduled to begin pouring gold in 2012. A final feasibility study released in January reported a proven and probable gold reserve of 2.8 million ounces and projected annual production of 180,000 ounces at a net cash cost of $351 per ounce.
Other producers in the northeast are Brigus Gold Corp.’s Black Fox Mine, which was due to produce up to 85,000 ounces of gold in 2010, and St. Andrews Goldfields, which commenced production at its Holloway Mine in October 2009 and is currently working to bring the nearby Holt Mine into full production this year.
In the Kirkland Lake camp, Kirkland Lake Gold boosted employment from 430 to 600 in 2010 and is planning to expand further to 900 employees, said Atkinson. A development and mine refurbishment
program scheduled to be wrapped up later this year will increase production to between 180,000 and 200,000 ounces per year. Also in Kirkland Lake, Queenston Mining Inc. announced a strategic investment by Agnico-Eagle Mines Ltd. in October and completed a private placement financing of $20 million in November 2010, giving it approximately $90 million in working capital to fund an ambitious drilling program on its five properties. As a result of the private placement, Agnico-Eagle will own 8.83 per cent of Queenston’s issued and outstanding shares and 11.47 per cent on a fully diluted basis.
Exploration companies are also busy in the Swayze Greenstone Belt, where Trewlaney Mining and Exploration has begun shipping bulk samples from its Chester gold property and expects to go into commercial production this summer (see story on Page 19.) Other companies active in the Swayze belt are Red Pine Exploration, Tamaka Gold and Mantis Minerals.
One of the most exciting discoveries in the northeast, according to Atkinson, is Probe Mines’ Borden Lake property in an unexplored part of the Kapuskasing Structural Zone, 20 kilometres east of Chapleau (see story on Page 17.) Recently published results from a phase 2 drilling program confirmed the continuation of a significant gold mineralized zone over an additional 300 metres of strike length to the northwest of the original discovery holes. To date, the gold horizon has been identified over a total of 560 metres of strike length. The mineralized zone has been intersected over widths of up to 200 metres to a vertical depth of 200 metres and remains open along strike and at depth.
All of this is an addition to “the discovery of the century” in the Ring of Fire and the decision by Cliffs Resources to develop a world-class chromite deposit it controls as a result of its acquisition of Freewest Resources and Spider Resources.
Also active in the Ring of Fire are Noront Resources, McDonald Mines, UC Resources, Probe Mines and KWG Resources. In total, the region accounted for $66 million of exploration activity in 2010. In addition to the large chromium deposit, the isolated region also hosts deposits of nickel, copper, zinc and gold. The development of Cliffs’ chromium deposits will result in billions of dollars of spending for infrastructure and mine development.
Gold was responsible for approximately 75 per cent of the exploration activity in northwestern Ontario, according to Mark Smyk, regional resident geologist for the Thunder Bay district. Red Lake, Rainy River, Atikokan and the Geraldton-Beardmore area were all busy.
In November, Rubicon Minerals reported an NI 43-101 inferred resource of 6.2 million tonnes grading 20.1 g/t for a total of 4.0 million ounces of gold at its Phoenix project in the Red Lake camp. A $60 million exploration program is underway, a shaft has been dewatered and deepened to 305 metres, and permitting is in progress with the objective of commencing production in 2012.
Goldcorp’s Red Lake Complex produced more than 700,000 ounces of gold in 2010 and began development of a five-kilometre, high-speed haulage drift connecting the Cochenour shaft with the Red Lake mine on the 5400-foot level. The drift will enable ore from the Cochenour/Bruce Channel deposit to be hauled directly to the Red Lake mine for processing at the existing mill facilities, thus adding an important source of high grade, low-cost production commencing near the end of 2014.
Also busy in the Red Lake camp are Claude Resources, Premier Gold and Mega Precious Metals (see story on Page 20).
Rainy River Resources
Rainy River Resources completed close to 100,000 metres of drilling in 2010 on its Rainy River project, 50 kilometres northwest of Fort Frances, and a preliminary economic assessment is planned for this year. In January, the company closed a $75 million private placement, bulking up its treasury to $138 million. The company has also recruited several people with development experience, accelerating its transition from an exploration company to development, said Smyk.
Last year, Osisko Mining Corp. acquired Brett Resources Inc. and its 6.7-million ounce Hammond Reef project near Atikokan. The company spent $13 million exploring the large, low-grade deposit in 2010 and has17 drills turning.
In the Geraldton-Beardmore camp, Premier Gold completed 110,000 metres of drilling on its Hardrock project, which hosts several past-producing mines with historical production of more than 3.0 million ounces of gold, primarily from shallow depths of less than 600 metres. The company plans to release an updated resource estimate this quarter and apply for permits for dewatering and ramp construction.
This year, eight drills will be active, further delineating resources at Hardrock.
Two discoveries of particular interest in the northwest are Magma Metals’ Thunder Bay North property and the Northern Superior Resources/Rainy River Resources TPK project.
The Thunder Bay North discovery, 50 kilometres northeast of Thunder Bay, has turned heads because it demonstrates the existence of higher-grade, nickel-copper-PGE deposits in the Mid Continent Rift system extending from the U.S. mid-west north into Ontario.
“It’s a rock that wasn’t exposed on surface, so it was never mapped in,” said Smyk.
Similar to the Eagle and Tamarack discoveries by Rio Tinto-owned Kennecott Exploration in Upper Michigan and Minnesota, respectively, the Thunder Bay North discovery has sparked a staking rush north of Thunder Bay in an area that hasn’t attracted a lot of interest until now. Duluth Metals Limited, a spinoff of Sudbury-based Wallbridge Mining Company, has a 60 per cent interest in the Nokomis project, another Mid Continent Rift nickel-copper-PGE deposit in northeastern Minnesota.
The TPK project, located 470 kilometres northeast of Thunder Bay, was originally explored for diamonds, but bedrock drilling resulted in the discovery of gold. In December, the company intersected 25.9 g/t gold over 13.5 metres, “so it’s quite a sizeable discovery and they’re very excited about that,” said Smyk.
Platinum Group Metals
Another development of interest in 2010 was the acquisition of Marathon PGM by the Stillwater Mining Company. A feasibility study released early last year for the PGE-copper deposit, 10 kilometres north of Marathon, Ontario, reported a proven and probable reserve of 2.44 million ounces of palladium and 696,000 ounces of platinum.
The northwest’s existing PGE producer, North American Palladium, restarted production at its Lac des Iles Mine in April after being idle for approximately 16 months due to depressed prices. An ambitious exploration program has led to the discovery of several new zones of mineralization, resulting in a January 20th announcement of a planned 75 per cent increase in palladium production and a $147 million capital program to expand ramp access and put down a shaft to access underground ore.
Barring any major economic disruptions, 2011 could be another banner year for Northern Ontario’s exploration industry.
“This year is looking good as well because the companies have refinanced, so they’re flush with cash and exploration dollars are available,” said Atkinson. “I wouldn’t be surprised if we start seeing a another shortage of drills and experienced people because there are so many good projects on the books.”