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"If you find the right rocks, you'd better hang in there and find the orebody," serial minefinder Mike Muzylowski told an 800-plus audience as he was being inducted into the Canadian Mining Hall of Fame this year. "Mother Nature has had forever...


“If you find the right rocks, you’d better hang in there and find the orebody,” serial minefinder Mike Muzylowski told an 800-plus audience as he was being inducted into the Canadian Mining Hall of Fame this year. “Mother Nature has had forever to create it, but we only have one lifetime to find it.”

Half a lifetime after Muzylowski discovered the Trout Lake copper-zinc mine in central Manitoba – one of many economic discoveries attributed to him – he and others are still hanging in there, finding orebodies. The main difference is that the “right rocks” are often hiding at depth, rather than outcropping at surface, and the infrastructure for mining and processing is well established.

Muzylowski is president and CEO of Callinan Mines (CAA-V), a Vancouver-based company that derives royalties from mines near Flin Flon, then uses the income to fund Canadian exploration projects. (In October, Callinan announced that it was spinning out its exploration projects into a new company and retaining the royalties in the original company.) In Manitoba, Callinan is drilling the Gossan Hill gold project near the town of Cranberry Portage, one of several projects dotted along the metallogenic belts that run through north-central Manitoba and Saskatchewan.

As many as six new mines could sprout up in the region within the year. The hotspot is the Flin Flon-Snow Lake belt that straddles the border, host to numerous world-class volcanogenic massive sulphide (VMS) deposits, including three operating mines (777, Trout Lake, and Chisel North) all belonging to HudBay Minerals (HBM-T, HBM-N) and several past-producers.

Gold exploration in Saskatchewan is also undergoing somewhat of a renaissance thanks to record gold prices. The provincial government expects 2010 gold exploration expenditures will top $10 million, up substantially from spending the previous year. La Ronge now boasts two producers following the first gold pour from Golden Band Resources‘ (GBN-V) Roy Lloyd mine in January and there are plans to reopen a former producer in the northwestern corner of the province.

Exploration and development accelerate ahead of Trout Lake closure

In the current culture where exploration usually takes a back seat to mergers and acquisitions as a means to grow resources, HudBay Minerals’ president and CEO David Garofalo may be the modern-day Muzylowski. He has increased HudBay’s annual exploration budget to $59 million from $42 million in 2010. More than half those expenses will be devoted to exploring the Flin Flon-Snow Lake belt with $23 million allotted to greenfields exploration and another $10 million to advanced exploration and G&A.

Recent exploration efforts in the area are infused with a sense of urgency because of the imminent closure of Trout Lake, discovered by Muzylowski 36 years ago and now operated by HudBay. “There is a push on to replace that production, especially the copper,” says Chris Beaumont-Smith, manager of minerals policy and business development for the Manitoba Geological Survey.

The highest profile exploration project in the region is HudBay’s Lalor project, where three drills continue to follow up strong copper-gold-zinc mineralization both in and around the known deposit and along its periphery.

A blind deposit discovered during a deep-penetrating pulse Pulse EM (DPEM) survey north of the Chisel North mine a few years ago, Lalor is on a fast track to production by the second quarter 2012. HudBay is currently running a ramp from Chisel North in order to gain underground access to the deposit’s copper and gold zones for infill drilling, says vice-president of exploration Cashel Meagher.

Lalor’s gold zone has an inferred resource of 5.4 million tonnes grading 4.7 grams gold per tonne, 30.6 grams silver, 0.47% copper and 0.46% zinc. The base metal zone contains indicated resources of 13.3 million tonnes grading 1.6 grams gold, 24.9 grams silver, 0.66% copper and 8.87% zinc and inferred resources of 4.8 million tonnes grading 1.3 grams gold, 26.2 grams silver, 0.58% copper and 9.25% zinc.

And while the company is not opposed to outright acquisition (it just announced plans to acquire Norsemont Mining [NOM-T] and its Peruvian copper project), HudBay is also investing in juniors exploring along the belt, working towards National Instrument 43-101 compliant resource estimates for both Halo Resources‘ (HLO-V) Lost property in the Sherridon camp northeast of Flin Flon and VMS Ventures‘ (VMS-V) Reed Lake copper discovery south of Snow Lake.

Halo recently raised $4.5 million through a private placement to fund ongoing exploration in the Sherridon camp, where the junior controls 200 sq. km hosting the past-producing Sherridon copper-zinc mine. HudBay was the main subscriber for the placement, taking a 14.5% interest in Halo with the option to increase its stake by exercising warrants. The senior is earning a 67.5% in the Lost and Cold portion of Halo’s property package with the intention of using the zinc ore from the Lost deposit as feed for its concentrator in Flin Flon. The Sherridon property holds 6.5 million indicated tonnes grading 0.85% copper and 1.22% zinc, plus 15.9 million inferred tonnes grading 0.68% copper and 0.84% zinc in four deposits.

Likewise, VMS Ventures is raising about $5 million by issuing flow-through shares. VMS holds several copper-zinc-gold-silver massive sulphide deposits along the Flin Flon-Snow Lake belt, including Reed Lake, a joint venture with HudBay that could be in production as early as next year to provide copper feed for the Flin Flon concentrator. An NI 43-101 compliant resource is expected for Reed Lake (where the discovery hole in 2007 hit 43 metres of 4.38% copper, 1.56% zinc, 0.85 gram gold and 13.09 grams silver per tonne) by the end of the first quarter of 2011. Outside of the Snow Lake camp, VMS is exploring massive sulphide properties near the past-producing Fox Lake and Ruttan copper-zinc mines, near Lynn Lake and Leaf Rapids in northern Manitoba.

And Rockcliff Resources (RCR-V) will use the $4 million raised at the end of last year to continue drilling on its Rail deposit in the Snow Lake camp, where the company has identified an indicated resource of 822,000 tonnes  grading 3.04% copper, 0.9% zinc, 9.25 grams silver and 0.66 gram gold per tonne. The resource remains open in all directions. Additional targets include the nearby Tower and Lon deposits and geophysical targets at the Reed and Freebeth properties.

The common denominator of many of these recent massive sulphide discoveries is that they were detected not by the hammer and compass prospecting that led to many of the historical discoveries along the belt, but by sophisticated geophysical tools that can penetrate at depth to find buried orebodies. These include the versatile time-domain electromagnetic (VTEM), ZTEM (Z Axis Tipper) and gravity systems for airborne surveys and DPEM for ground surveys.

Meagher says HudBay is using these techniques to uncover thousands of new geophysical targets for follow-up along the swampy belt, where surface expressions of geology and mineralization are scant.

“We’d like to make other discoveries within trucking distance of Flin Flon,” he says, adding that compared to similar-sized belts such as the Abitibi greenstone belt straddling Ontario and Quebec that hosts several mining camps, the 250-km-long Flin Flon-Snow Lake belt remains relatively unexplored.

The Geological Survey of Canada (GSC) and provincial government surveys are also taking a keen interest in the southern portion of the Flin Flon-Snow Lake belt, where the Precambrian rocks that outcrop to the north dive under a thick Paleozoic cover of limestone. They believe that further massive sulphide discoveries will be made under the cover and – partly funded by the GSC’s Targeted Geoscience Initiative (TGI) to encourage new discoveries in established mining communities – are piecing together drill-hole and geophysical data to find buried targets.

“The integration of the seismic data with other geological data resulted in a 3-D model that successfully imaged the volcanic stratigraphy of the (Flin Flon) camp down to a depth of two thousand metres,” says Sally Pehrsson, project leader of the five-year Flin Flon TGI, noting that HudBay was able to find a new ore lens below the 777 deposit using the TGI model. “This result demonstrates the broader applicability of integrated 3-D modelling to reduce exploration risk in similar greenstone-type terrain of the Canadian Shield.”

Gold price encourages advanced exploration

Though many of the VMS deposits in central Manitoba contain gold as a byproduct, there are few pure gold deposits in the area. A standout is the Snow Lake gold mine (formerly the New Britannia mine) that is expected to reopen in early 2012. Owner Alexis Minerals (AMC-T) recently raised $12 million to continue exploration on the former producer and on its other gold properties in Manitoba and Quebec and expects to produce at least 80,000 oz. gold annually from Snow Lake over a mine life of six years.

In southeastern Manitoba, the main gold player is San Gold (SGR-T), which continues to pull “spectacular results” from its targets in and around the Rice Lake and Hinge mines, Beaumont-Smith says. The company has delineated several high-grade gold zones within reach of the Hinge ramp and increased its third-quarter production by 37% to 12,600 oz. in 2010 for a quarterly operating profit of $4.1 million.

Though the Rice Lake mine, in production since 1932, has often lost money in the past because it is so deep, the discovery of the new high-grade zones nearer to surface should halve production costs, estimates Beaumont-Smith. “The sustainability of the mine is directly related to these discoveries in the hangingwall,” he says.

Close to the Ontario border, Mega Precious Metals (MPG-V) envisions a 64,000 oz. annual producer at its Monument Bay gold project, where a 12,000-metre drilling program is under way to expand and upgrade the resource with plans to go underground by early 2012. A 2009 preliminary economic assessment on Monument Bay calculated  an inferred resource of 6.3 million tonnes grading 5.98 grams gold per tonne.

Mega took full ownership of Monument Bay late last year with the acquisition of Rolling Rock Resources. Beaumont-Smith says the project, under a memo of understanding (MOU) with the Red Sucker Lake First Nation, will provide a template for future negotiations with First Nations groups wary of the resurgence of advanced exploration and development in the province.

Thompson Nickel belt quiet

The nearby Thompson nickel belt is quieter as a result of nickel prices that, at US$11-12 per lb., are less than half the level they reached four years go. In late 2010, Crowflight Minerals (CML-T) suspended production at the Bucko Lake nickel mine and is being sued by its mining contractor for $7 million.

Victory Nickel (NI-T), the owner of Minago, a large undeveloped sulphide nickel deposit along the belt, is having better luck. Last year, the company completed a feasibility study and began the permitting process on Minago. Victory is currently testing geophysical evidence that the main Nose deposit and the North limb satellite are one continuous mineralized body. Still, the company’s share price has been bouncing around in the 10-20¢ range for a couple of years now, after nearly reaching $1 in 2007. Minago holds 54.2 million measured and indicated tonnes grading 0.52% nickel and 14.6 million inferred tonnes at 0.53% nickel.

Saskatchewan welcomes new gold producer

While Saskatchewan’s mineral wealth is usually associated with uranium and potash, the province has a history of gold mining activity that dates back to the opening of the Box (1930-1942) and Prince Albert (1937-1942) mines in along the La Ronge belt in the 1930s, followed by the Jolu, Star Lake and Jasper Mines.

But up until this year, Claude Resources‘ (CRJ-T, CGR-X) Seabee mine 125 km northeast of La Ronge was the only remaining operating gold mine in the province. Seabee produced 47,300 oz. gold in 2010, up marginally from the previous year. Claude plans to add ounces from the new Santoy 8 mine, upping annual production to 70,000 oz. over the next few years.

In December, Seabee was joined by a new producer north of La Ronge: Golden Band’s Roy Lloyd mine (Bingo deposit). While processing about 400 tonnes per day from the mine, Golden Band plans to develop a series of gold deposits in the area and feed the resulting ore into the centrally located, 100%-owned Jolu mill. The company has 750 sq. km of property along the La Ronge gold belt, which hosts 12 known gold deposits and four former producers.

Claude and Golden Band may soon be joined by others. In the far northwestern corner of the province on the Goldfields property, Brigus Gold (BRD-T, BRD-X) has reached feasibility on the formerly producing Box deposit and prefeasibility on its Athona deposit. The company is planning on annual gold production of 70,000 oz. to 90,000 oz. at total cash costs in the low US$400’s per oz.

High commodity prices, an urgent need for new concentrator feed, and sophisticated geophysical and data processing tools have breathed new life into the old gold and base metal mining camps of Manitoba and Saskatchewan. Over the next few years, the opening of several new mines will demonstrate that the region still has plenty of the right rocks.

– The author is a freelance writer specializing in mining issues, and principal of Toronto-based Geopen Communications (www.geopen.com).


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