FREE ARTICLE PREVIEW: You are enjoying a free sample of exclusive
subscriber content. There is a limit of three free articles per week.

TABLE OF CONTENTS Mar 8 - 14, 2010 Volume 96 Number 3 - 0 comments

Domestic Vs. Foreign Exploration: Weighing The Risks And Rewards

TEXT SIZE bigger text smaller text
By: Vivian Danielson
2010-03-08

VANCOUVER -- Junior companies have showcased their discoveries at the Mineral Exploration Roundup for decades, with foreign finds often overshadowing domestic projects since the global expansion of the 1990s. While Canadian projects created most of the buzz this year, exploration risks were a hot-button topic across the sector, whether from legal challenges at home or country risks abroad.

One issue of concern was the Supreme Court of Canada ruling allowing Imperial Metals (III-T) to advance Red Chris, a porphyry copper- gold project in northwestern B.C., where recent deep drilling has returned long intersections with higher grades than found in existing resources.

The project faced a legal challenge from a group seeking full enforcement of the Canadian Environmental Assessment Act (CEAA), which the court agreed should be the case, yet declined to set aside federal approval of Red Chris.

Gavin Dirom, president of the Association for Mineral Exploration B.C., has described the decision as "good news, bad news" for companies active in Canada.

"It's very positive for Red Chris," he explained. "They're able to move forward, receive permits and go into production. That said, the ruling also means that a mine proponent with a project under CEAA has to do a comprehensive study, which is not good news in these changing (economic) times."

Dirom says industry associations are working hard to resolve the issue as the court ruling also stated that duplication of environmental assessments by federal and provincial authorities is "inappropriate."

In the meantime, industry delegates are bracing for higher costs of environmental compliance and increased legal risks, mindful perhaps that politicians have long promised a more harmonized assessment system with little progress to date.

A looming issue for companies working abroad is Bill C-300, a federal private member's bill calling for a stronger regulatory framework to hold Canadian companies accountable in Canada for human rights, labour and environmental violations overseas. Many activist groups support the bill, claiming that resource companies aren't doing enough to adhere to voluntary standards of corporate social responsibility (CSR).

Tony Andrews, executive director of the Prospectors and Developers Association of Canada (PDAC), says Bill C-300 poses significant risks for all Canadian companies working abroad if passed into law.

"It's a nasty piece of legislation that PDAC and the Mining Association of Canada are fighting hard against," Andrews says. "Canada is as much a leader in CSR issues 'above ground' as they are in 'below ground' issues."

In the meantime, Canadian companies, whether working at home or abroad, appear to be strongly favouring jurisdictions where new discoveries and mines are most welcome. This trend was reflected by the Canadian projects featured at Roundup.

The White gold project owned by Underworld Resources (UW-V), described by many as the "best Canadian gold discovery in 2009," is in the Dawson gold camp of mining-friendly Yukony. Potash One (KCL-T) is advancing a feasibility- stage potash project in pro-development Saskatchewan. The Lalor project, a zinc-rich volcano-genic massive sulphide discovery by HudBay Minerals (HBM-T) is welcome news in Manitoba's Snow Lake camp, and the revival of the Timmins gold camp in Ontario by Lake Shore Gold (LSG-T) and others is bringing much needed jobs to the region.

The Yukon's profile was the strongest in years, with its decade-long hardrock-mine drought broken by the new Minto copper-gold mine of Capstone Mining (CS-T). Along with White Gold, featured exploration projects include Rau, a "Nevada-style" target being explored by ATAC Resources (ATC-V) in central Yukon, and Northern Freegold Resources' (NFR-V) Freegold Mountain gold project in the Tintina belt.

The Northwest Territories was a virtual no-show, with its regulatory and permitting regime often described as "dysfunctional" and "impossible." Nunavut's profile was enhanced by the new Meadowbank gold mine of Agnico-Eagle Mines (AEM-T, AEM-N) and the progress of Peregrine Diamonds (PGD-T) at the Chidliak diamond project on Baffin Island.

Copper-gold projects in B.C.'s Quesnel Trough attracted attention, as did gold projects in Ontario, such as the namesake project of Rainy River Resources (RR-V) in an under-explored, overburden-covered Archean greenstone belt in Richardson Twp.

As usual, Alaska dominated U.S. exploration projects, with International Tower Hill Mines (ITH-T, THM-X) and the Livengood gold district in the spotlight this year. Wyoming made a rare appearance, owing to work by Evolving Gold (EVG-V) at the Rattlesnake Hills alkaline gold project near Caspar.

International discoveries were showcased as well, with country risk continuing to cast uncertainty over some of the best discoveries of the past decade, such as the Fruta del Norte gold project in Ecuador. This giant epithermal deposit has a current measured and indicated gold resource of 5.7 million oz. grading 11.2 grams gold per tonne, plus an inferred resource of 6.1 million oz. Kinross Gold(K-T, KGC-N) acquired the project through a friendly bid for Aurelian Resources in 2008, though it was perceived as a risky move at the time given the nationalist sentiment of the Ecuador government.

The cloud of uncertainty over Fruta del Norte may be lifting as Kinross received government approval in late 2009 to resume exploration, and it plans an 18,000- meter drilling campaign this year. A pre-feasibility study is expected by year-end 2010.

Venezuela, a hot-spot for gold a decade ago, is now eclipsed by Colombia, thanks to a series of gold discoveries by senior and junior companies. The spotlight this year was on high-grade gold deposits in Colombia's Buritica district, an area explored by privately held Continental Gold with good success since late 2007. Continental is preparing for a TSX listing.

Argentina was on a back burner as well, with long-time Argentine explorer Exeter Resource (XRC-T) featuring its Caspiche gold-copper project in Chile's revived Maricunga district. Caspiche is situated midway between the Cerro Casale gold-copper deposit being developed into a US$4.2-billion mine by 75%- owner Barrick Gold (ABX-T, ABX-N) and the Refugio mine operated by Kinross.

Most of the projects featured as international exploration successes, including some new deposit types, are also located in mining-friendly jurisdictions.

The recent Merlin discovery by Ivanhoe Australia (IVA-A) in the Cloncurry district of northwest Queensland, Australia, was described as "the world's highest-grade molybdenum-rhenium project" and a new deposit type "in a class of its own" with no argument. A scoping study is expected shortly for the project, which hosts a current resource of 13 million tonnes grading 0.8% molybdenum and 14 grams rhenium per tonne. The project was initially explored for copper and wasn't recognized as having moly potential, but that changed as subsequent holes returned high-grade mineralization, with a highlight being 58 metres of 2.25% moly and 29 grams rhenium. (Primarily used in the aerospace industry, rhenium sells for US$4,000- US$5,500 per kg.)

Another featured project was Nachingwea in southeastern Tanzania, an emerging mining nation. The project is a potential new Proterozoic Age nickel district being explored by 70%-owner Continental Nickel (CNI-V). Current measured and indicated resources stand at 3.08 million tonnes grading 1.31% nickel and 0.24% copper. President Craig MacDougall says Inco explored the region in 1950s, but the first high-grade, nickel-copper sulphide discovery was made in 2006 by partner IMX Resources (IXR-A), with the discovery hole hitting 11.23% nickel, 1.74% copper and 0.15% cobalt over 3.0 metres. Six separate sulphide deposits and several other zones were discovered within a district considered to have geological similarities to Canada's Thompson, Raglan and Voisey's Bay nickel districts.

"These types of deposits are found once every twenty years," McDougall says.

Antares Minerals (ANM-V) showcased its Haquira East copper-moly- gold porphyry deposit in Peru's Andahuaylas-Yauri district, a favourable belt hosting several large copper-gold mines and deposits (Las Bambas, Tintaya, etc) owned by majors.

Antares vice-president Kevin Heather says the initial discovery was a "blind find in an area of no surface outcrop" that has since grown into a substantial resource of near-surface, leachable secondary copper mineralization within two main zones. The higher-grade primary sulphide mineralization at Haquira East was discovered below a secondary copper blanket in 2006. A new resource estimate has substantially increased tonnages and grades.

Also featured were new discoveries by Trevali Resource (TV-C, TREV-O) at the Santander zinc-lead-silver mine project in central Peru's polymetallic belt.

"They're modest to date, but we believe we can grow them," says president Mark Cruise. "Mines in the area go deep and are predictable, with no post-mineral faulting."

Trevali and partner Glencore International are fast-tracking the historic mine to production, with start-up expected later this year. A big attraction for metals giant Glencore is that Santander's coarse-grained mineralization has good recoveries and produces clean concentrates well-suited for blending with other concentrates.

The main risk at the Campo Morado project in Mexico's Guerrero State for years was the fine-grained mineralogy of four zinc-copper- lead-gold-silver deposits that yielded poor recoveries from conventional flotation. But Farallon Mining (FAN-T) continued drilling and was rewarded with the 2005 discovery of the G-9 deposit. The discovery hole returned 14.9 metres of 14.2% zinc and 1.7% copper of coarse mineralization amenable to flotation recovery, transforming the project. The company took another risk when it forged ahead to develop a mine without waiting to complete a feasibility study, yet achieved commercial production in 2009, less than four years later.

Technical risk was also an issue for various owners of the Penasquito project in Mexico's Zacatecas state over the years. Goldcorp (G-T, GG-N), which acquired the project through the 2006 takeover of Glamis Gold, saw potential for rewards as well.

"There were no towns to move, no indigenous people and no political risk," says Charles Ronkos, Goldcorp's vice-president of exploration. "But it was an unusual deposit type, a rare combination of diatreme and copper-gold skarn that was too large and complex for the early operators. They struggled with it."

Rather than focus on a small, precious metals-rich deposit in the centre of the larger deposit, Goldcorp envisioned a bulk-mining scenario that was successfully brought to fruition in 2009. Penasquito is expected to become Mexico's largest open-pit gold and silver producer, with annual production of about 500,000 oz. gold, 30 million oz. silver and more than 400 million lbs. zinc over an estimated 22-year life.

Africa is often associated with high risk, but Keegan Resources (KGN-T) made a convincing case that West Africa, and Ghana in particular, is a secure, prime hunting ground for new gold discoveries. The company featured its Esaase gold deposit in the Asankrangwa belt, which lies between the better known Ashanti and Sefwi belts. Since drilling its first hole the fall of 2006, Keegan has defined an indicated resource of 41.9 million tonnes averaging 1.5 grams gold, or 2.02 million contained ounces, plus another 28.6 million tonnes at 1.6 grams gold, or 1.45 million oz. Subsequent and ongoing drilling is expected to increase this March 2009 resource estimate.

--Based in Vancouver, the author is a freelance writer specializing in mining issues, and a former editor of The Northern Miner.



© 1915 - 2014 The Northern Miner. All Rights Reserved.


Photos

Stacking core samples at Imperial Metals' Red Chris poryphry copper-gold project in northwestern B.C.
Stacking core samples at Imperial Metals' Red Chris por...
Underworld Resources' White Gold project is in the Dawson gold camp, Yukon.
Underworld Resources' White Gold project is in the Daws...
Drilling by Trevali Resources on the Magistral Norte zone at its Santander Zn-Pb-Ag development project in west-central Peru.
Drilling by Trevali Resources on the Magistral Norte zo...

Monitor These Topics
More Topics »


Horizontal ruler
Horizontal Ruler

Post A Comment

Disclaimer
Note: By submitting your comments you acknowledge that Northern Miner has the right to reproduce, broadcast and publicize those comments or any part thereof in any manner whatsoever. Please note that due to the volume of e-mails we receive, not all comments will be published and those that are published will not be edited. However, all will be carefully read, considered and appreciated.

Your Name (this will appear with your post) *

Email Address (will not be published) *

Comments *



* mandatory fields