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Exploration tops $1 billion

March 1, 2012
by Norm Tollinsky
In: Exploration with 0 Comments
Exploration tops $1 Billion

Exploration tops $1 Billion

Mining and exploration companies chalked up another record year for exploration and deposit appraisal expenditures in Northern Ontario, surpassing $1 billion for the first time. The preliminary estimate released by the Ontario Ministry of Northern Development and Mines for 2011 compares with a final tally of $801 million for 2010 and $536 million in 2009.

Spending was about evenly split between northeastern and northwestern Ontario, and heavily focused on gold, which averaged US $1,570 an ounce for the year.In the northwest, there were approximately 300 active projects, 170 exploration companies and close to two dozen advanced stage projects, reported Mark Smyk, northwest regional manager, Ontario Geological Survey.Several of these projects are “well along in terms of production decisions or environmental assessments,” including Rubicon Minerals’ Phoenix Gold project in the Red Lake camp, Osisko Mining’s Hammond Reef project, 23 kilometres northeast of Atikokan, Rainy River Resources’ Rainy River project, 65 kilometres northwest of Fort Frances and Canadian Stillwater’s Marathon PGM project, 10 kilometres north of Marathon.Red Lake“Red Lake is undergoing a bit of a renaissance because a lot of past producing properties have been revisited in the last few years,” said Smyk.Goldcorp is refurbishing the Cochenour shaft to develop its Bruce Channel deposit and has completed 36 per cent of a five-kilometre, high-speed haulage drift connecting the Cochenour shaft to the Red Lake Mine on the 5400-foot level. The Bruce Channel deposit has a resource of 2.7 million ounces and is forecast to produce 250,000 ounces annually. The five-kilometre drift will also facilitate underground exploration of the Goldcorp/Premier Goldjointly owned Rahill-Bonanza property situated between the Red Lake and Cochenour shafts.Just to the north of Goldcorp’s Red Lake Complex, Rubicon Minerals is planning to spend $55 million on its Phoenix Gold project in 2012 with the intention of going into production in 2013.A power line was brought to the site, a headframe extension completed and a refurbished hoist plant commissioned last year in preparation for shaft sinking from 338 metres to 610 metres. Permitting is well underway and a closure plan approved. The company is projecting annual production of 180,000 ounces of gold, a mine life of 12 years and a diluted grade of 13.87 g/t.Goldcorp’s Red Lake Complex, one of the richest gold mines in the world, “is also going great guns,” forecasting production of 650,000 ounces in 2012, said Smyk.

Rainy River Resources has completed a preliminary economic assessment on its project northwest of Fort Frances and is looking at a combined open pit and underground operation with a mine life of 13 years. The junior miner has 12 drill rigs on the property and has plans for 170,000 metres of drilling this year. An updated resource and a feasibility study are also in the works for 2012.

The large tonnage, low-grade Hammond Reef project, acquired by Osisko Mining in May 2010, also looks promising. Some 300,000 metres of drilling in just over a year has outlined a resource of 10.5 million ounces, and another 130,000 metres of drilling was completed early this year. Another resource update is planned by the end of Q1 2012 to be followed by feasibility study.

“At one point, said Smyk, there were close to 20 drill rigs turning on the Hammond Reef project, so they’re obviously bullish on the prospects there. Osisko put the Canadian Malartic Mine in Quebec into production last year, so they have some experience behind them.”

Elsewhere in the northwest, Premier Gold has a measured and indicated resource of 2.5 million ounces of gold at its Hardrock project in the Beardmore-Geraldton Greenstone Belt.  Premier Gold hopes to get started on a preliminary economic assessment this year.

In the Pickle Lake camp, PC Gold has a 1.2 million ounce NI 43-101 compliant resource on its past producing Pickle Crow property. Scoping studies and permitting are underway with dewatering and reconditioning of the mine’s historical workings to follow.

Also in the northwest, an Australian company, Cameron Resources, has completed more than 100,000 metres of drilling on its Cameron Lake project 80 kilometres southeast of Kenora and has a resource of 1.4 million ounces.

Most of the exploration activity in the region has focused on gold, but there are also some promising platinum and palladium discoveries.  Magma Metals, another Australian company, has “close to the magic number of one million ounces of platinum” at its Thunder Bay North property, 50 kilometres northeast of Thunder Bay, said Smyk.

An extension of  the Duluth Complex in Minnesota,  “it’s a new style of mineralization that we’re not used to seeing up here. It has generated a lot of excitement because the rocks that this deposit are hosted in are very poor at being exposed, so conventional prospecting and mapping techniques won’t pick them up.

“This area north of Thunder Bay has been moose pasture for years and years and is now staked solid as a result.”

Another PGM project by Stillwater Canada is currently undergoing an environmental assessment. Located 10 kilometres north of Marathon and acquired in 2010 from Marathon PGM, the property has an open pit resource of 2.4 million ounces of palladium and copper. The company is planning a production throughput of 22,000 tons per day and a mine life of approximately 11.5 years with production start-up scheduled for 2015.

Three established mines in the region are also in the process of expanding or embarking on feasibility studies. North American Palladium is sinking a 7,000 tpd-capacity shaft down to the 4815-foot level to access the Offset Zone at its Lac des Iles Mine and planning to produce between 150,000 and 160,000 ounces of palladium in 2012. By 2015, the company intends to ramp up production to 250,000 ounces per year. Capital expenditures planned for 2012 are budgeted at $116 million.

In the Hemlo camp, Barrick Gold is undertaking a feasibility study at its Williams and David Bell mines with a view to deepening the open pit and extending the mine life from 2015 to 2026.

Meanwhile, production from Goldcorp’s Musselwhite Mine is expected to increase from 242,600 ounces in 2011 to 270,000 ounces this year.

Exploration activity also continues in the Ring of Fire, where Cliffs Natural Resources and Noront Resources are both undergoing environmental assessments. Cliffs hopes to begin commercial production from its Black Thor chromite deposit by 2015, while Noront is projecting a 2016 startup for its Eagle’s Nest nickel-PGE deposit. (See Page 33 for a more in-depth report on the Ring of Fire.)

Timmins

In the northeast, there were 28 mines in operation in 2011, including 11 gold mines, 13 base metal mines, two industrial mineral operations, a diamond mine and a phosphate mine, reported Ontario Geological Survey regional manager Rob Ferguson. Included in the total are St. Andrew Goldfields’ Holt Mine and First Nickel’s Lockerby Mine in Sudbury, which resumed production in the year.

The region also boasts 16 advanced exploration projects, several of which are due to go into production this year or next. Among them is Detour Gold’s Detour Lake Mine, which is scheduled for start-up early next year. Located 185 kilometres northeast of Cochrane, Detour Lake boasts a resource of 15.6 million ounces and will produce approximately 650,000 ounces of gold per year over a projected mine life of 22 years. Planned daily throughput of 55,000 tpd could increase to 75,000 tpd. The capital cost of the project is just shy of $1 billion.

In Timmins, Goldcorp’s Porcupine Group has three mines in operation and two development projects either underway or planned. The Hollinger Mine, Canada’s biggest historical gold producer, is going back into operation later this year as an open pit at a cost of $75 million. Located in the heart of the city, the pit is expected to produce approximately three million ounces of gold over an eight-year mine life.

Goldcorp’s other major project in the Timmins camp is at its Hoyle Pond Mine, where it is spending $150 million sinking an internal shaft down to the 2,200-metre level and exploring its TVZ Zone with up to 10 drill rigs.

Also busy in the Timmins camp is Lake Shore Gold, which increased production to 86,000 ounces at its Timmins Mine in 2011.

“They’re also drilling off their Thunder Creek Zone, a parallel zone, and planning to integrate the two deposits,” said Brian Atkinson, regional resident geologist for the Timmins district.

“On an adjoining property optioned from Adventure Gold, they drilled a three-kilometre hole looking for an extension of the Timmins Mine deposit and intersected a zone with mineralization, so they’re happy about that because it extends the down plunge continuation 1.9 kilometres.”

Lake Shore Gold is also doing advanced exploration at its Bell Creek property and adding resources at its Thorne and Fenn-Gibb properties. Expansion of its Bell Creek Mill from 2,200 tpd to 3,000 tpd is also underway.

Probe Mines’ Borden Lake property, 15 kilometres from Chapleau, is a new discovery with an indicated and inferred resource of approximately four million ounces.

“It’s exciting for us geologically because it’s an area that hasn’t been explored before,” said Atkinson. “It’s on the west side of the Kapuskasing Structural Zone that cuts off the Greenstone belt going to the west and demonstrates that the gold zone continues [to the other side].”

Further south, about 120 kilometres south of Timmins off Highway 144, Trelawney Mining and Exploration’s Coté Lake project has an open pit resource of 131 million tonnes grading 1.0g/t for a total of 4.22 million ounces. Trelawney has budgeted $25 million for continued exploration through 2012 and has six drill rigs on site.

Also in the Timmins District, Xstrata Copper announced the completion of a $120 million expansion at its Kidd Mine from 9,100 to 9,600 feet, extending operations to 2018.

Another base metal miner, Liberty Mines, is planning to resume production at its Redstone and McWaters mines and is working on permitting of its Hart deposit, all of which are located in the Shaw Dome nickel belt south of Timmins.

Kirkland Lake

In the Kirkland Lake region, Kirkland Lake Gold’s Macassa Mine “has approximately 900 employees and just keeps growing,” said regional resident geologist Dave Guindon. “They’re expanding the resource on their South Mine Complex and made a deal with Queenston Mining on adjacent properties where drilling has produced positive results.” Gold production last year totalled approximately 100,000 ounces.

Queenston is focusing its exploration efforts on the Upper Beaver, McBean-Anoki, Bidgood and Upper Canada gold properties in Gauthier Township. The goal is to outline a resource of six million ounces to feed a central milling facility it hopes to build on the Upper Canada site. Queenston spent $25 million on exploration in 2011.

St. Andrew Goldfields operates the Holt and Holloway underground mines and the Hislop open pit in the Kirkland Lake region. Gold production totalled 74,000 ounces in 2011 and is expected to increase to between 90,000 and 100,000 ounces this year. The Holt and Holloway mines were acquired by St. Andrew Goldfields from Newmont Mining in November 2006.

Open pit pre-production development at the Young-Davidson project in Matachewan got underway in November 2011. The first three years of production from the Young-Davidson operation will come from the open pit, while underground development progresses toward an expected startup in 2014. In October 2011, ownership of the property was transferred to AuRico Gold following the latter’s acquisition of Northgate Minerals. The Toronto-based miner has five operating mines, including three in Mexico and two in Australia. Production at the Young-Davidson property is expected to ramp up to 200,000 ounces per year by 2014.

Brigus Gold’s open pit and underground Black Fox Mine east of Matheson is also in production. The mid-tier miner produced approximately 41,000 ounces in the first three quarters of 2011 and is finding high grade gold on its 147 and Contact Zones. The company is planning to spend $8 million on exploration in 2012 and has four drill rigs in operation on the property.

Armistice Resources began hoisting and stockpiling ore from its McGarry Mine near Virginiatown in December 2011 with plans to produce 25,000 ounces of gold this year. The underground operation has a three-compartment vertical shaft to a depth of 2,290 feet and a 10-foot double drum hoist. It’s situated adjacent to the past producing Kerr Addison Mine, which yielded 12 million ounces of gold over a 58-year operating life.

Sudbury 

In Sudbury, two new mines are in the works and operations have resumed at several others. Quadra FNX, soon to be acquired by Polish copper miner KGHM Polska Miedz, has increased its resource estimate for the Victoria project to 14.5 million tonnes grading 2.5% copper, 2.5% nickel and 7.6 g/t total precious metals and has announced plans to sink two shafts on the property this year. Capital costs for Victoria are estimated at $750 million over a seven-year development period. Drilling will continue through 2012 to fully define the resource.

Also in the Sudbury Basin, Wallbridge Mining is busy advancing its Broken Hammer copper-PGE project. The company has plans to complete more than 15,000 metres of exploration drilling on joint venture projects with Lonmin Plc and Impala Platinum Holdings. Wallbridge processed a 30,000-tonne bulk sample from the Broken Hammer project at Xstrata’s Strathcona Mill in 2011 and has hired Tetra Tech to do a feasibility study. Permitting and a production decision are planned for this year.

First Nickel initiated a capital spending program and resumed production at its Lockerby Mine in 2011 following a successful exploration and ore delineation program targeting its Depth Zone. Commercial production is scheduled for mid-2012. Lockerby Mine was operated by Falconbridge from 1974 to 2004, yielding more than eight million tonnes of ore during that period. First Nickel acquired the property in June 2005, commenced commercial production in 2006 and placed it on care and maintenance in October when nickel prices plunged.

Thirty-five kilometres east of Sudbury, Vale is busy bringing its Totten Mine into production. One year behind schedule, Totten is now scheduled to begin producing ore later this year.

There is also a significant amount of gold exploration in the Sudbury area, said Ferguson. Currie Rose Resources, he said, has completed 43 diamond drill holes on its Scadding property, 25 kilometres east of Sudbury, while Ginguro Exploration drilled its Pardo, Four Corners and Grigg/Stobie properties northeast of the city.

Record spending on exploration has been a boon for the region’s economy. Hotel rooms in Timmins are booked up, drill rigs are scarce and geologists are in short supply.

“We get calls from companies every week looking for geologists,” said Smyk. “The Ministry  [of Northern Development and Mines] is in the same boat. It’s really tough to find people with experience because they can pick and choose where they want to work.”

Record enrollment in Lakehead University’s Geology program has been another side-effect of the surge in exploration spending, “so the news is getting out,” said Smyk.

Exploration activity is expected to continue at current levels through 2012, dependent, of course, on the price of gold.

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