Greenland is key to canadian junior’s dream

An upstart Canadian junior with big dreams is breaking new ground in remote territories -geographically, politically, and in the eccentric world of international gem marketing.

True North Gems Inc. (TGX: TSX-V) is hoping its Aappaluttoq deposit, on Greenland’s remote southwest Kitaa Coast, will be its genesis as the world’s first viable, long-term marketer of that most exclusive precious stone: the ruby.

TNG has yet to bring a mine to production, but its lofty mission is to be North America’s pioneer finder and developer of exclusively the Big Three: emeralds, sapphires and rubies.

From its roots with the Tsa Da Glisza emerald find in southeast Yukon in 2001, to the Beluga sapphire discovery in southern Baffin Island in 2002, TNG rounded out its portfolio with the Aappaluttoq ruby/sapphire deposit in 2004, and is now concentrating solely on that development.

Aiming to be world ruby marketer

“There is no ruby mine in the world at present producing the consistency that we can offer,” says Nick Houghton, a past director who is now president and CEO of the Vancouver-based company.

And while he’s mindful that TNG is a foreigner still seeking a place in Greenland’s emerging mining economy, he’s also looking beyond the day mining starts.

The British-born Houghton, who applies his 35 years working with gemstones, jewellery and marketing with gusto, says TNG envisions building a secure supply for top-end rubies that will change the otherwise sporadic way rubies are globally traded.

Because rubies are not commodified, he believes they can be the global supplier to a select market, much as site buyers operate in the diamond trade.

The strategy would see high-end jewellers building expanded branding and marketing plans exclusive to the Greenland stones. The deposit is so rich in high-quality corundum (independently assayed at 481 carats/tonne of gem and near-gem rubies) Houghton says TNG can supply customers with the quality, size and quantity they need to match their production.

But don’t expect to buy a bargain-priced ruby anytime soon.

“You move with a tight hand,” says Houghton, who wants to grow the demand, yet keep the supply and the price firmly in his favour.

So how rich is rich?

Based on current data, Aappaluttoq ( “Big Red” in Greenlandic) equates to a gold deposit averaging a handsome three to four ounces a ton says Houghton.

With about $16 million invested so far, Houghton believes production can begin with an additional $15 to $20 million for a property that could turn $44.5 million a year. Aappaluttoq, found in the 1960s, is so far the best of 31 corundum showings on TNG’s 823 square kilometer lease 160 kilometers south of the capital, Nuuk.

With a presence in Bangkok, the Dubai Gems Club, New York and Switzerland, Houghton is building a marketing foundation that today’s principal ruby miner, Myanmar (Burma), with all its political strife, cannot guarantee.

But before world ruby domination can happen, they have to get a permit from Greenland’s Bureau of Minerals and Petroleum (BMP).

TNG is so confident of its deposit, and its plan, it wants to bypass the usual bankable feasibility study and go straight into permitting for production — and make the deal with a Greenlandic bureaucracy that’s fresh out of the starting block.

Greenland’s new homerule government took over from Denmark on New Year’s Day 2010. That means its tiny indigenous population of 56,000 has just assumed the full responsibility for governing and regulating the world’s largest island.

Because the mine is small and low-impact, Houghton suggests Aappaluttoq is a good learning ground for everyone. “We’re under a bit of a microscope in this… it’s all about educating each other.”

As in Canada, TNG and Greenland have environmental, financial and social components to iron out, as well as to negotiate taxation and royalty rates on an exotic commodity that has few valuation standards.

Canada leads Greenlandic exploration

TNG’s is one of about 90 exploration permits now in play in Greenland, including plays for lead-zinc, molybdenum, gold, rare-earths, diamonds, zirconium and iron. Canadian companies lead the charge among offshore explorers, along with Australians, British and Swedish interests.

Canada has favoured-nation status for the Greenlanders for a number of reasons, says Jrn Skov Nielsen, Director of the BMP says.

“Canada is the most advanced exploration country in the world, you have a good stable workforce, a good education and a good infrastructure, so in many ways Canada is a country worth looking into when you are developing an industry like this.”

“We have made marketing efforts for a number of years into Canada, including the PDAC and Round-up events,” says Nielsen. “Greenland and Canadian exploration in many ways are very comparable, the geology is very much the same.”

Houghton is complimentary of his Greenland hosts, observing, “they have no fear of asking to learn — and that’s great. They’re willing to roll up their sleeves and get into it.”

Both are also experiencing first-hand the clash between modern mining practice and the deep-set traditional and cultural values of Greenland’s Inuit.

A small group of Inuit gem prospectors and artisans calling themselves the August 16 Union has mounted an international campaign to overturn the BMP’s granting of exclusive rights to TNG of its 823 square-kilometre mining lease.

They claim their own government department has violated their historic freedom to harvest the land’s natural and mineral resources — including the coastal ruby deposits — for personal and subsistence use.

The BMP’s Nielsen says the country’s new mining Act was actually written to allow the very small scale activity that Niels Madsen, and Inuit carver and activist, argues is still too much hassle.

TNG, plainly caught in the middle of this dilemma, is talking with both sides.

“We’ll work through to a solution as long as it’s fair for everybody,” says Houghton.

“We will be an ethical miner, we will give back to Greenland as much as we can,” he says. “There is not a problem working with the Greenland government whatsoever… it’s just a matter of making sure everyone works from the same page and making sure everyone wins from there.”

As TNG is still in the permitting stage, Nielsen declined to comment on its status. But he expects that his country will have at least five new mines in production within five years; there are only two now.

Houghton sizes up Greenland mining potential as massive, untapped. “Everything is there.”

And with a nod to the well-educated country he wants to work in, he adds, “they are making sure they are open for business, but business done correctly.”

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