Nunavut is Canada’s last frontier for mineral exploration. It rivals the size of Western Europe and hosts some of the largest undeveloped gold resources.
The expansive territory of Nunavut rivals the size of Western Europe, and hosts some of the largest undeveloped gold resources in Canada. As well, modern exploration techniques in gold mining in Nunavut have led to the discovery of new gold camps across the territory.
Two of those discoveries are now producing gold mines: Agnico Eagle Mines’ (TSX:ASM,NYSE:AEM) Meadowbank, and most recently the Doris gold mine at TMAC Resources’ (TSX:TMR) Hope Bay project. In 2019, Agnico Eagle plans to commence production at two new mines in the resource-rich Kivalliq region — Amaruk, a satellite deposit to the north of Meadowbank, and Meliadine, which has proven and probable reserves of 14.5 million tonnes at 7.32 g/t gold.
“Agnico Eagle has paved the way to proving gold mines can be very profitable in Nunavut,” said Chris Pennimpede, operations manager at CSA Global, one of the mining industry’s top consultancy firms.
Gold mining in Nunavut: Explorers are unlocking value
The low cost of entry and high potential for discovery and expansion in a mining-friendly jurisdiction is highly appealing for junior resource companies. Although Nunavut is considered a frontier district, previously explored properties with valuable data and existing infrastructure are available for those companies looking for attractive acquisition targets.
Cache Exploration’s Kiyuk Lake project has the potential to be a new district play in the Kivalliq region. Covering the majority of the Proterozoic Kiyuk Basin, the early stage property has been explored intermittently since 1992 by various companies, including Comaplex Minerals, Newmont Mining (NYSE:NEM) and Prosperity Goldfields.
Cache’s acquisition of the project in early 2017 included a 12,000-meter drill database (2008 to 2013), a fully functioning mining camp already on site and sufficient fuel for a large drill program.
The large 590-square-kilometer Kiyuk Lake claim block hosts numerous intrusion-related gold showings over a 15-kilometer strike length that remains largely untested by drilling. Four distinct mineralized zones with significant expansion potential have been identified at Kiyuk Lake. The exploration data on the property shows multiple gold intercepts of over 3 g/t gold.
Cache is looking to leverage the property’s 12,000-meter database toward potential new discoveries at Kiyuk Lake. Its most recent exploration program was aimed at expanding the known gold mineralization at the Rusty and Gold Point zones through drilling and identifying new mineralized zones through grid till sampling and prospecting. So far, five new additional target areas have been identified and are ready for drilling.
Located in one of the largest undeveloped greenstone-iron formation gold belts in the territory (the Foxe Gold Belt), the Baffin gold project covers a mineralized gold system hosting known high-grade gold occurrences in multiple geological settings, with structural similarities to Meadowbank. In 2017, Kivalliq Energy cut a deal with Commander Resources (TSXV:CMD), adding the nearly 409,000-hectare Baffin gold property to its Nunavut portfolio, which includes two quality uranium properties, Angilak and Baker Basin.
The over $25 million worth of exploration and geoscience databases that came with the property were an attractive feature for Kivalliq. Those databases include work conducted by BHP Billiton (ASX:BHP,LSE:BLT,NYSE:BHP), Falconbridge, AngloGold Ashanti (NYSE:AU) and Commander Resources between 2001 and 2011. “Our team will benefit greatly from the significant exploration expenditures from previous operators, which generated extremely high-grade gold numbers at exploration targets that also exhibited potential for significant size and scale,” said Kivalliq Energy CEO Jim Paterson.
The existing infrastructure at Baffin (including a camp and two 1,200-meter DEW Line airstrips), along with 15 prospecting permits and a mineral exploration agreement with Nunavut Tunngavik already in place, will help Kivalliq rapidly advance exploration and the potential development of the project.
Gold mining in Nunavut: Potential for new discoveries
“Until recently, Nunavut remained untouched by modern gold exploration, leaving much of the territory relatively unexplored compared to more mature provinces such as Ontario, Quebec and BC,” explained Pennimpede.
Many new discoveries have been made over the last few years, including those by Nord Gold (FWB:RTSD) at Pistol Bay, Auryn Resources (TSX:AUG,NYSEMKT:AUG) at Committee Bay and Dunnedin Ventures‘ (TSXV:DVI) recent gold discovery at Kahuna in the Kivalliq region.
The 380,000-hectare Committee Bay gold project is situated along the Committee Bay Greenstone Belt, about 180 kilometers northeast of the Meadowbank mine. Auryn has identified 17 high-priority targets along the belt. The project hosts the Three Bluffs gold deposit with an indicated resource of 524,000 ounces grading 7.85 g/t gold and an inferred resource of 720,000 ounces grading 7.64 g/t gold.
During its 2015 exploration program at the high-grade diamond Kahuna project, Dunnedin made a unique discovery of gold adjacent to the project’s diamond-bearing kimberlites. Four gold belts, including the Kannuqa Belt, have been identified on the 120,000-hectare property, which is surrounded by Agnico Eagle’s Meliadine gold mine to the north, west and south.
Gold mining in Nunavut: Boosting local economy
The gold-mining industry is fueling a period of economic prosperity and investment in Nunavut. The territory’s first gold mine, Meadowbank, began production in 2010, breathing new life into the economy. In 2017, Meadowbank produced approximately 320,000 ounces of gold. The mine represents 15 percent of Nunavut’s GDP, has 300 Inuit employees and generates $280 million in local business procurement each year, according to Pierre Graton, president and CEO of the Mining Association of Canada. Agnico Eagle recently announced plans to spend $1.6 billion on the development of its projects in the Kivalliq region over the next three years.
Speaking at the 20th annual Nunavut Mining Symposium in April 2017, Nunavut’s senior economist, Francois Picotte, called Agnico Eagle’s Meliadine a “game changer” for the territory. Picotte projects that mining production in Nunavut will reach $1.5 billion by 2020 — double the figure for 2016.
Gold mining in Nunavut: The newest gold mine
Taking notice of Agnico Eagle’s success, other major and mid-tier miners have gained a foothold in the territory. Glencore’s (LSE:GLEN) acquisition of the Hackett River silver–zinc project, Nord Gold’s purchase of the Pistol Bay gold project (Kivalliq region) and TMAC Resources’ acquisition of the Hope Bay gold project are notable examples.
TMAC Resources acquired the now-producing Hope Bay in 2013 from a wholly owned subsidiary of Newmont Mining. Named after the Hope Bay Greenstone Belt in which it lies, the project has a historical database dating back to work conducted by BHP in 1988. Impact and benefit agreements with the Kitikmeot Inuit Association were in place under Newmont. The property also benefited from existing infrastructure, which allowed development of the project to progress quickly with the addition of a mill.
The first operating mine in the Kitikmeot region in more than a decade, TMAC’s Doris mine at Hope Bay reached commercial production in May 2017. The company expects to commence production at the project’s other two deposits, Madrid and Boston, in 2020 and 2022, respectively. Hope Bay has total proven and probable reserves of 14.2 million tonnes grading 7.7 g/t gold.
Gold mining in Nunavut: Strongly supportive government and Inuit associations
Infrastructure does pose a challenge for miners working in this Arctic region, said Pennimpede, who is also a member of Cache Exploration’s board of directors and a geologist well experienced with mineral exploration in Nunavut, Yukon and Alaska. “However, Agnico Eagle and TMAC Resources have proven mining can be profitable with limited infrastructure by using winter roads, ice runways and eventually building roads to support operations. Importantly, all of these activities have been supported by local communities and government.”
The government of Nunavut and the Kitikmeot Inuit Association are partnering on a proposed project to build the longest road in Nunavut. The Grays Bay road and port project will be a 227-kilometer all-season road that will connect a proposed deepwater port at Grays Bay (located along the Northwest Passage route) to the winter road that services the Northwest Territories’ diamond mines. The road will be a boon to the region’s current producing and exploration projects. In the future, the Grays Bay road could become a transportation link to Yellowknife and other regions of Canada.
Producers and explorers alike clearly see Nunavut as a safe jurisdiction in which to invest, and both the territorial and local governments are strongly supportive. “Compared to other provinces and territories,” added Pennimpede, “Nunavut is supporting development at an exceptional rate, recognizing the benefit it brings to the region while still holding companies accountable to a high standard of community and environmental consultation and regulation.”
This is an updated version of an article first published by the Investing News Network in 2017.
This INNspired article was written according to INN editorial standards to educate investors.