New Resources Emerging Because of Diminishing Arctic Ice Pack

The resource environment along Canada’s 162,000 kilometres of Arctic coast line, the lion’s share of it along Nunavut’s mainland and island archipelago, is daunting to say the least, but thankfully the wind-chill factors aren’t as brutal as they used to be.

At least that’s what you’d gather by the hardy few who are now proving the Arctic coastline is finally thawing on several fronts; including the emerging resource surge thanks to the diminishing Arctic ice pack.

It is paradoxically a sobering sign of global warming and a welcome boost to the viability of Arctic shipping, unlocking what geologists have always said is the world’s next great storehouse of minerals and energy.

But it gets complicated. The support systems needed for Arctic mines and mariners – weather and ice monitoring, rescue and recovery assets, political jurisdiction, insurance – are still being sorted out here in Canada and on the international political stage. Nevertheless, shipyards are already building new ice-ready hulls commissioned by carriers anticipating new polar customers.

The NWT and Nunavut now count only five producing mines, but coastal projects alone in the next three years could potentially add another three.  Following is a survey of the front runners, and a few of the long shots, on the Arctic horizon.

Diamonds

Peregrine Diamonds Limited’s blockbuster news of early December, 2013, vaulted it into the stratosphere as the one of the world’s richest diamond finds yet.  Boasting 2.7 very high-quality carats per tonne from its CH-6 strike, it makes the Chidliak cluster, which so far numbers 67 kimberlites – six of them potentially economic – a prime candidate for future production.

Just 120 kilometres northeast of Iqaluit, and even closer to tidewater on its eastern flank, Chidliak too will depend almost entirely on coastal transport.  Peregrine still has a ways to go to actually prove it is a mineable  resource, advising that over 2014-15, field programs will take the pipe to the feasibility stage and more bulk sampling.

It was welcome news for the diamond hunter, as De Beers Canada in October pulled out of an earn-in and joint venture agreement on the Chidliak project.  Peregrine now has to raise the cash to replace De Beers’ deep pockets, a challenge no doubt made somewhat easier by the sparkling results from CH-6.

From base metals on the borders of Northwest Territories and Yukon, to gold and iron ore on the northern extremes, to diamonds at the eastern-most part of Nunanvut, Canada’s Arctic contains riches beyond calculation.

The minerals in this massive part of Canada are the envy of the world and thanks to the companies mentioned in this article, and the others working on projects in the Arctic, Canada’s reputation as a leading mining country remains intact.

Coal

Nunvut’s longest of its long-shot projects might be Canada Coal Incorporated’s play on Ellesmere Island, where exploration going back 30 years suggests a world-class coal resource exceeding 20 billion tonnes.

The project is perhaps decades from economic viability. Among the challenges is that it has barely two months of open water. Equally difficult is winning the support of local Inuit. The island’s sole community of about 140 people in Grise Fiord has staunchly opposed future exploration over wildlife and archaeological concerns.

That’s precisely what the company needs to do: find out just how much of the deposit is high-value metallurgic coal and define an NI 43-101 compliant resource. Efforts to resolve the impasse continue.

Base Metals

After changing hands numerous times in the past decade, the Izok Lake massive zinc-copper zone on the NWT/Nunavut border now belongs to Australian multinational MMG Limited.

Even though it’s 350 kilometres inland, Izok’s bulk product has to have ocean-going transport to be viable. And that makes it enormously complicated; MMG has scoped out Gray’s Bay, just west of Bathurst Inlet, for its deep sea port and a very long all-weather road across storm-blown Barrenlands. That’s a feat that’s never been attempted at that scale.

The complexity, size and cost of the venture caused MMG to put a hold on its environmental review to late 2014, as it looks at alternative engineering options and more exploration. It has already outlined plans for a two million tonne per year concentrator, feeding 10 to 15 ships a year in an 80-day summer and fall window.

Junior explorer Darnley Bay Resources Limited has recently emerged from the shadows with news in October, 2013, of another massive geologic anomaly on its 14 million acres south of Paulatuk, 400 kilometres east of Inuvik.

Darnley Bay is still trying to figure out just what it has. It does know, from geomagnetic and gravity surveys and 1994 Geological Survey of Canada assessment, that it hosts massive signatures similar to copper-gold-nickel-platinum fields such as Ontario’s Sudbury, Russia’s Norilsk and Newfoundland’s Voisey Bay. It has also found evidence of diamonds, and has an options agreement with Diadem Resources Ltd. for future diamond development. It hopes to continue further geotechnical surveys of the intriguing ground.

Gold

Nunavut’s sole operating mine is the Meadowbank gold property, the 360,000 ounce per year producer owned by Toronto-based Agnico Eagle Mines Limited. While it’s some 300 kilometres inland from Hudson’s Bay, it is supplied by ship and barge, and is the model for how to develop a sister gold deposit, the Meliadine, a mere 25 kilometres from tidewater at Rankin Inlet.

Economical ocean transport, plus the modern infrastructure and workforce in Rankin Inlet, gives the Meliadine project enormous advantage over most start-ups in Nunavut. Agnico Eagle has built progressive social and business relations with the region, an investment that should pay off when it starts to pour the Meliadine’s estimated 3 million ounce gold reserve. The company has not said when that might be, and is now focused on definition drilling over its 80-kilometre-long strike zone, permitting, and ramp development.

TMAC Resources picked up the Hope Bay gold-silver find early in 2013, 25 years after BHP Billiton found it and just months after Newmont Mining walked away from its $1 billion-plus investment in favour of more attractive options.

A seasoned team of miners formed TMAC exclusively to take on Hope Bay, raised cash and restarted research and drilling programs. In November, 2013, it released what it called a “robust” preliminary economic and resource estimate.

Iron

Baffinland Iron Mines Corporation’s Mary River project, (featured in the article on Pages 16-19) is 1,000 kilometres northwest of Iqaluit in north Baffin Island and is set to be a social and economic game changer for the whole region. The lure is four ore bodies of incredible purity: Deposit No. 1 alone holds 350 million tonnes grading 64 per cent iron, rich enough to feed European smelters without processing.

Last year, Baffinland radically trimmed initial plans to invest $4 billion in development, including a 100-kilometre railway to tidewater and an ore carrier departing every two days. The more modest $740 million plan, announced in September of 2013, calls for open-pit mining and trucking 3.5 million tonnes a year starting in 2015. That will ramp up to 20 million tonnes a year by 2020 once rail and expanded port facilities are built.

The company completed its 2013 sealift in October, with 12 ships landing 32,700 dry tonnes of construction supplies and 33 million litres of fuel. Weekly crew change flights by Boeing 737 started that month from the Kitchener- Waterloo airport, via Iqaluit, with Quebec-based Nolinor.

Advanced Explorations Incorporated’s combined Roche Bay and Tuktu deposits on the Melville Peninsula in central Nunavut could easily rival Baffinland’s. With inferred and indicated resources of over 1.3 billion tonnes, the find has considerable transportation advantages — it’s at tidewater with a natural deep water port and a very fortuitous nine-month shipping window.

AEI is aggressively assessing the two deposits, planning a drill program for 2014 to pinpoint where the most profitable direct-ship ore can be found. A $50 million definitive feasibility study is expected sometime in 2014. The company has secured off-take and partnership agreements with two Chinese buyers, and projects a $1.37 billion investment that could see ore shipped as soon as 2017. The start-up calls for 5.5 million tonnes a year growing to 8 million over at least 20 years.

A first for the Arctic could be to use LNG (liquefied natural gas) instead of diesel energy plants typical of remote mines. It is also looking at modular plant and site buildings, prefabbed off-shore and brought in by ship.

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