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Exploration

High gold price fuels exploration

March 1, 2010
by Norm Tollinsky
In: Exploration with 0 Comments

Exploration spending was down in Canada and around the world in 2009, but Ontario fared better than most jurisdictions.

“Levels of activity and claim staking were down a little, but all things considered, it was a very active year,” said Mark Smyk, regional resident geologist for the Thunder Bay North District.

Record mineral and deposit appraisal spending of $799.3 million reported by the Ontario Ministry of Northern Development and Mines for 2008 represented 24.4 per cent of total exploration spending in Canada. Ontario’s total for 2009 is expected to come in at just under $600 million, but will represent 31.3 per cent of expenditures across the country.

Ontario’s respectable performance in 2009 was largely attributable to activity in the so-called Ring of Fire in the province’s Far North, where some 45 exploration companies spent in the neighbourhood of $60 million, said Brian Atkinson, regional resident geologist for the Timmins District.

The other big contributor was gold, which hit record prices through the year and fueled major spending on projects across Northern Ontario. The hot spots were Red Lake, the Beardmore-Geraldton area and Timmins.

In Red Lake, Goldcorp announced plans to build a high-speed underground tramway connecting its Red Lake Gold Mines Complex with its Bruce Channel deposit, acquired last year from Gold Eagle Mines. The five-kilometre tramway will connect the two properties at the 5,400-foot level and should be completed by early 2011. The company has also decided to dewater the nearby Cochenour shaft to access and drill off the Bruce Channel deposit.

The underground tramway will cut through the Rahill-Bonanza project, a joint venture between Goldcorp and junior miner Premier Gold, which has a 49 per cent interest in the project.

“If they reach a production decision on the Rahill-Bonanza project, they can hook right into that infrastructure,” said Andreas Lichtblau, regional resident geologist for the Red Lake District.

It all means “another generation of mining” for Red Lake, said Lichtblau.

Widely regarded as the world’s richest gold mine, the Red Lake Gold Mine Complex itself has a minimum of another 14 years of mine life and probably more.

Rubicon

Also active in the Red Lake District is Rubicon Minerals, whose Phoenix Project hosts the F2 deposit six kilometres from the Red Lake Gold Mine Complex. Rubicon is proceeding with permitting and the deepening of an exploration shaft, which was last used in the 1980s by McFinley Red Lake Mine. An 80,000-metre drilling program is scheduled to be completed this spring and will be followed by a 120,000-metre drill program at a cost of $60 million.

The 122-metre shaft will be extended to 330 metres, from which point Rubicon will drive a drift to the F2 zone and extract a bulk sample. The company is 25 per cent owned by Rob McEwan, who is widely credited with injecting new life into the Red Lake Gold Mine Complex as the former president and CEO of Goldcorp.

Elsewhere in northwestern Ontario, Rainy River Resources has five drills turning on its Rainy River project 80 kilometres south of Kenora and plans to announce a new resource this spring.

Vancouver-based Brett Resources has high hopes for its Hammond Reef project, which boasts a 6.7 million ounce resource contained in 227 million tonnes grading 0.87 grams of gold per tonne. A positive scoping study for Hammond Reef, located 20 kilometres southwest of Atikokan, projects annual production of 463,000 ounces of gold from the near surface horizontally-oriented deposit.  A 70,000-metre drilling program is due for completion by September.

Beadmore-Geraldton

Further east, the Beadmore-Geraldton area continues to see a resurgence in gold exploration.

Leading the way in this historic gold mining region is Premier Gold, which spent $10 to $12 million on its Hardrock Project, near Geraldton.

“Premier Gold plans to do 100,000 metres of drilling on its Hardrock Project and is meeting with a lot of success,” said Smyk, whose Thunder Bay North District encompasses the Beardmore-Gerladton belt.

“They had planned to put out a resource estimate in the fourth quarter of 2009, but they kept pushing it back because they were getting so many encouraging intersections. They’re going great guns with three or four drills at a time.

“Premier has given credibility to the whole belt and it has made people look at some of these older camps in a new light,” said Smyk.  “The last production there was 40 years ago. Now, it looks as though there may be production there again.”

Other exploration companies actively exploring for gold in the Beardmore-Geraldton area are Kodiak Resources, Sage Gold, Alto Ventures and Ontex Resources.

Total exploration expenditures in the belt are expected to exceed $20 million for 2009, said Smyk, which “is nice because it’s a belt that hasn’t seen a lot of activity over the years. Everyone thought of it as a dead camp.”

Also in Smyk’s territory is Goldcorp’s Musselwhite Mine, which spent $10 million on exploration in 2009. Goldcorp is on track to produce 235,000 ounces of gold at Musselwhite.

“They’ve been replacing reserves and finding new ones,” said Smyk. “They were getting one million ounces per kilometre of strike length. Now it looks like they may get double that.”

Ring of Fire

The big story for exploration in 2009 was the Ring of Fire, where several junior mining companies are sitting on a 14-kilometre chromite deposit which appears likely to be developed as North America’s first and only chromite mine within three or four years.

The region also hosts nickel, copper, zinc and gold, often in the same drill hole as the chromite, “keeping geologists on their toes,” said Smyk.

“We really don’t know what the potential is up there. It’s remarkable. The sky’s the limit at this point. It’s just a phenomenal area, well endowed in terms of mineral deposits, but very challenging logistically.

“Eight years ago we had no idea what was there. We knew it was underlain by a Greenstone Belt, but that was it.”

De Beers and two junior mining companies, KWG Resources and Spider Resources got things going with a search for diamonds, but ended up finding copper and zinc. Noront Resources picked up some ground and found a high-grade nickel deposit. Further drilling revealed a world-class chromite deposit.

Cliffs Natural Resources, a major U.S.-based iron ore mining company, swooped in to acquire a 19.9 per cent stake in KWG and followed up with a successful bid for Freewest Resources, a junior miner with a 100 per cent stake in the Black Thor chromite deposit and a joint venture partner with KWG and Spider on the adjacent Big Daddy deposit.

It’s still to be determined where along the 14-kilometre strike length of the deposit an open pit mine will be developed and whether Cliffs will go it alone on Black Thor or partner with KWG and Spider, but plans for a $1.3 billion investment, including a $600 million rail line, a concentrator and ferrochrome processing facility, are already under way.

Northeast

In northeastern Ontario, the buzz is about Lake Shore Gold Corp.’s Timmins Mine, 20 kilometres west of Timmins. Lake Shore Gold has sunk a shaft down to the 710-metre level and is preparing to extract a 50,000-tonne bulk sample. A merger with West Timmins Mining Corp., with which Lake Shore Gold had a joint venture on the Thunder Creek Zone, 800 metres to the south of the Timmins Mine, brought the two adjacent properties under common ownership. The company has also refurbished the Bell Creek Mill to accommodate a 1,500 tonne per day throughput and is dewatering the Bell Creek Mine.

Northeast of Timmins, Detour Gold is moving ahead with permitting on its Detour Lake property and is planning for a 45,000 tonne per day operation.

The company drilled just over 100,000 metres in 2009 and boasts a gold reserve of 8.8 million ounces. Plans call for an open pit mine that would produce 560,000 ounces of gold per year over a 15-year lifespan. Bringing the former Placer Dome operation back into production will requires an investment of $863 million.

In Kirkland Lake, Kirkland Lake Gold continues to increase proven and probable reserves at its Macassa Mine, which is now a beehive of activity with more than 400 employees. Apollo Gold put its Black Fox Mine into production in 2009 and Northgate Minerals is planning to start construction on its Young-Davidson property in Matachewan this year with full production of 170,000 ounces per year slated for 2012.

Meanwhile, Queenston Mining’s total NI 43-101 gold resource in the Kirkland Lake camp has increased to 640,000 measured and indicated ounces and 577,000 inferred ounces as a result of continued work on its properties. The combined McBean and Anoki deposits provide a resource base of 217,000 measured and indicated ounces and 237,000 inferred ounces. Both deposits remain open at depth, along strike and are currently being explored by surface drilling. The McBean and Anoki resources are a key component in Queenston’s strategy of advancing four 100-per cent owned gold deposits in the Kirkland Lake camp towards production supported by a central mill.

Sudbury

Vale Inco’s mines have been idle since July 2009 as a result of a strike, but Xstrata Nickel has been busy ramping up its state-of-the art Nickel Rim South Mine. Also in Sudbury, FNX Mining Co. Inc. has discovered wide, high-grade deposits of nickel, copper and precious metals at its Victoria property. 

The company plans to spend about $7.2 million exploring the property, located about 40 kilometres west of Sudbury. 

The discovery is in an area close to Vale Inco’s newly developed Totten Mine and is the company’s “first significant involvement” with offset dyke type deposits, which are mined extensively in the Sudbury Basin.

“All things considered, it was a pretty busy year,” said Smyk. “None of the folks I know are looking for work. Everyone’s busy. The craziness of 2007 and 2008 has come back to earth a bit, but it’s still very busy.”

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