Re-Awakening of the Golden Triangle

Many years ago, a remote and mountainous region in northwestern British Columbia gained considerable notoriety as an emergency mineral district.

With a rich mining history, one of the world’s largest silver mines (Eskay Creek discovered in 1998) and million ounce gold deposits – this area of incredible wealth become known as “The Golden Triangle”.

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This is a story of a Golden Triangle...

In a hidden corner of Northwestern Canada lies some of the world’s most significant mineral potential.

Billions of dollars of gold, silver and copper sit within an unexplored area that was one remote. Only recently have these world-class deposits become accessible for exploration and mining.

This is a story of a Golden Triangle…

NW Transmission Line approved – Explorers rejoice

Today the Association for Mineral Exploration BC (AME BC) joined the Northwest Power Line Coalition in celebrating the federal environmental approval of the Northwest Transmission Line project. This federal approval supports the decision taken by the BC Environmental Assessment Office to grant BC Hydro an environmental assessment certificate for the proposed $404 million, 344-kilometre transmission line project from the existing Skeena substation south of Terrace to a new substation near Bob Quinn Lake along Highway 37 in northwest British Columbia.

“We thank the federal government for their leadership in approving this line, which represents the start of a new era for the mineral exploration and development sector, and all communities, in northwest British Columbia,” said Gavin C. Dirom, President & CEO of AME BC. “We also again acknowledge the hard work of Prime Minister Stephen Harper and elected officials and staff in federal, provincial and local governments; First Nations; and Northwest Power Line Coalition members for their advocacy and support of the Northwest Transmission Line,” stated Dirom.

The Northwest Transmission Line is a fundamental infrastructure project that will be the gateway to the Golden Triangle. There are over 935 mineral occurrences identified in the region that could benefit from the transmission line, of which 67 have been documented in the resource category. In 2010, the provincial government identified 25 major exploration projects and proposed mine development in the corridor, and a 2008 study identified $15 billion in investment and 10,700 potential jobs resulting from the power line.

“The investment and job creation from this transmission line will support regional economic development as well as provide important tax revenue for health, education, and other important services,” concluded Dirom.

More information is available online at www.highway37.com. The federal announcement is at http://www.ceaa-acee.gc.ca/050/details-eng.cfm?evaluation=51726.

BCGS presents game-changer for explorers in NW Stikine

By: Lesley Stokes

VANCOUVER — Geologists Jeff Kyba and Joanne Nelson from the B.C. Geological Survey may have unlocked the secret to world-class porphyry- and intrusion-related gold-copper deposits in northwestern B.C. They’ve discovered that most of the major deposits in the region occur within 2 km of a regional stratigraphic contact, and according to Kyba, there are lithological and structural clues to narrow that window even more.

“The contact represents a period in earth’s history when a lot of deposits in B.C. were forming,” Kyba says during an interview with The Northern Miner. “But no one really knows what controlled their emplacement and where best to look. We’re trying to answer that question, and so far the results are exciting.”

Northwest B.C. contains the remnants of a much larger, ancient volcanic arc — similar to the present-day Philippines — called the Stikine terrane. Between 220 and 175 million years ago, subduction and volcanism along the arc promoted the emplacement of world-class deposits such as KSM, Brucejack, Eskay Creek, Schaft Creek and Red Chris — to name a few.

But during the Cretaceous period, starting 144 million years ago, the metal-rich arc was compressed to nearly half its length as the margin of western North America collided with other terranes. The deformation was so intense that it obliterated most structural clues related to the main mineralizing event, making it difficult for explorers to locate the deposits. “The rocks here are much older than those in the Philippines or Indonesia, so they’ve been banged up quite a bit,” he says. “But just because the geology is more complex, doesn’t mean the deposits aren’t there.”

Kyba points out that the KSM-Brucejack camp “are in a comparable gold league” with Freeport McMoRan’s Grasberg deposit in Indonesia. Grasberg has 39.7 million oz. gold in developed and undeveloped reserves, according to the company’s 2014 annual report.

Seabridge Gold’s (TSX: SEA; NYSE: SA) KSM deposit has total proven and probable reserves of 38.2 million oz. gold and 9.9 billion lb. copper at 2.2 billion tonnes of 0.55 gram gold per tonne and 0.21% copper. Pretium Resources’ (TSX: PVG; NYSE: PVG) Brucejack epithermal deposit has proven and probable reserves of 6.9 million oz. gold at 13.6 million tonnes of 15.7 grams gold.

“Over the past five years, the northwest Stikine has built its momentum towards becoming the world’s next big mineral province,” he says. “People are recognizing that these deposits have high-grade roots and big extensions they never thought were there.”

New to the neighbourhood is Imperial Metals’ (TSX: III; US-OTC: IPMLF) Red Chris mine, 80 km south of Dease Lake, that started production earlier this year. The open-ended porphyry contains measured and indicated resources of 1.3 billion tonnes of 0.32 gram gold and 0.3% copper.

Kyba and Nelson started their investigations at the KSM and Brucejack copper-gold camp, where Pretium geologists were finding evidence for an old tectonic event that influenced mineralization. What they found was a unique package of basal conglomerates and turbidites along the Stuhini-Hazelton group stratigraphic contact. “To a geologist, these rocks indicate a hiatus in ancient volcanism and an increase in earthquake activity,” he explains. “The land was uplifted along faults, and near its edges, the rocks were eroded and deposited into the basin below.”

Kyba believes this tectonism provided the framework for metal-rich fluids and intrusions to migrate along when volcanism resumed during Hazelton time. “You don’t see these conglomerates everywhere in the region, and that’s the whole point,” he says. “The idea is if you see them, you’re near a basin-bounding structure that may be hosting something big.”

But a change in lithology across the contact isn’t the only thing Kyba suggests is a useful proxy to finding “nation-building” ore deposits. Brucejack and KSM are both encased in a large halo of a highly deformed, quartz-sericite-altered host rock. Immediately east is a large, Cretaceous-aged thrust fault called “sulphurets” that caps the altered ore host. Kyba reckons that it’s no coincidence the prominent fault is so close to the deposits. “When the Stikine was compressed, all the prospective structures bounding these old basins were slippery because of the alteration associated with the porphyries. So they were the first to fail, and became reactivated as younger, prominent thrust faults.”

To test the theory elsewhere, Kyba and Nelson travelled 45 km northwest to the KSP project, owned by Colorado Resources’ (TSXV: CXO; US-OTC: CLASF). Across the 33,500-hectare (335 sq. km) property, they saw similar clastic sequences at the Stuhini-Hazelton contact, extensive alteration and most notably, a large-scale thrust called the “Sky Fault System.”

“If you can send out a couple of government geologists on your property and they come back with visible gold in grab samples, you know it must be pretty good,” Kyba jokes. “But what we saw were the same unique elements we’ve seen at the other camps, and that’s really encouraging.”

This year, they plan on testing the theory at Kaizen Discovery’s (TSXV: KZD; US-OTC: CCNCF) Tanzilla property, 20 km southeast of Dease Lake, which is under joint-venture with mining giant Freeport-McMoRan. “It’s still a fairly young concept, so we want to move into the other camps and districts, such as the Toodoggone, and see if it stands up there,” he says. “We’ve had a lot of input and support from companies so far — everyone is interested in seeing the bigger picture.”

Kyba mentions he has an “open-door” policy on the data he uses, and offers explorers a geological map that highlights the prospective contact as a thick, red line. “If you’re near that red line, and there’s a clastic sequence coupled with large-scale faults, then you might be in the neighbourhood of B.C.’s next big deposit,” he says. “And knowing that is a big game changer for explorers in the region, because it’ll get them closer to making a discovery.”

– See more at: http://www.northernminer.com/news/bcgs-presents-a-big-game-changer-for-explorers-in-nw-stikine/1003601910/?&er=NA#sthash.BZqu8vWI.dpuf

Seabridge Gold’s Rudi Fronk Talks KSM Mine Approval

By Charlotte McLeod – Exclusive to Gold Investing

Monday August 11, 2014, 4:30am PDT

British Columbia-focused mining companies have been in the spotlight this week on the back of a tailings pond breach at Imperial Metals’ (TSX:III) Mount Polley copper-gold mine. The incident released water and tailings into the surrounding area, causing physical damage and resulting in widespread water bans.

Unsurprisingly, the breach has shaken investors’ trust in Imperial, especially given that a spokesperson from BC’s Ministry of Environment has said the company was warned “repeatedly” about tailings pond levels before the accident happened.

Given that context, it was refreshing to speak with Rudi Fronk, chairman and CEO of Seabridge Gold (TSX:SEA, NYSE:SA). His company recently received final approval from BC’s environment and energy and mines ministers for its application for an Environmental Assessment Certificate for the KSM project, and Fronk emphasized that Seabridge is focused on following the rules as it advances KSM.

Getting to “yes”

KSM is only the second metal mine in five years to receive an Environmental Assessment Certificate from the province of BC, and according to Fronk, it’s not because no companies are applying. Rather, it’s because the process “is exhaustive and expensive.” It can also be tough to juggle the interests of various stakeholders; of course, as Seabridge has proved, it’s not impossible.

Explaining his company’s process, Fronk said, “one thing you have to recognize is that having the First Nations and treaty nations on side helps you get through the process. You need to make sure that in the process you’re satisfying the questions and concerns that they bring forward as you review the project designs with them.” For Seabridge, that has meant working with treaty nations and First Nations since 2008, a strategy that Fronk said has paid off “in terms of the public endorsement that [Seabridge] has received” from those groups. He added, “we’ve made a lot of design changes based on their input and their feedback.”

Encouragingly, that collaboration will continue into the future. Fronk said, “training of local groups is important to us in terms of being able to attract as much qualified, skilled labor as we can locally. We’re already on that in terms of education we’re supporting in the region.” Continuing, he noted, ”[KSM] will be one of the largest mines ever built in Canada. It’s going to employ thousands of people during the construction phase, and well over a thousand when we’re in operation. It’s a mine life that’ll extend, right now with known reserves, in excess of 50 years.”

Ready to meet challenges

KSM may be looking good in light of the Imperial Metals’ accident, but that hasn’t stopped some market watchers from worrying it will suffer the same roadblocks as Northern Dynasty Minerals’ (TSX:NDM, NYSEMKT:NAK) Pebble project in Southwest Alaska.

Fronk, however, was quick to shut down that line of thought. “There are no comparisons,” he said. “Canada has a well-defined environmental approval process that we’ve been in now since 2008. We’ve gone through the process with regulators, and they’ve come out and concluded that as designed, the project will not have a material adverse impact on the environment. It’s two different countries with two different approval processes.”

He added, “we also have the support of the local aboriginal people and the local community. You can’t say the same for the Pebble project.”

That said, he realizes that Seabridge is likely to face opposition in the 30-day comment period that’s just opened up. “When you design a mine the size of KSM there will always be people that are against the project,” he explained. Even so, Fronk isn’t too worried. “At the end of the day, we’ve done our work, we’ve done it properly and the proof will be in the pudding when we get the official approval,” he said.

Moving forward, investors can expect to see Seabridge search for a partner to fund KSM. That may prove tough given that Fronk believes there are probably only “10 companies or less in the world that can build and operate a mine of [its] size.” However, he sees the task being easier now that Seabridge has an Environmental Assessment Certificate in hand.

At close of day Friday, shares of Seabridge were selling for $10.53 each.

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Northwest Transmission Line

The proposed Northwest Transmission Line (NTL), is a 335 km, 287 kV transmission line between Skeena Substation (near Terrace) and a new substation to be built near Bob Quinn Lake. This new line would provide a reliable supply of clean power to potential industrial developments in the area; provide a secure interconnection point for clean generation projects; and potentially assist certain northwest communities to access the electricity grid, rather than obtaining their power from diesel generators.

Power Grid for Golden Triangle

The British Columbia Provincial Government in conjunction with the Federal Government of Canada, has recently approved the construction of a 200-mile high-voltage power line into the GOLDEN TRIANGLE. Funded in part by the Canadian Government, this line will deliver much needed, affordable electricity to the communities of northern British Columbia (communities, which at the moment, rely on expensive diesel-powered generation).

 

BC’s power play to open province’s northwest

Northern Miner 

By: Alisha Hiyate

Power is the missing ingredient in B.C.’s mineral -r ich northwest, and the proposed $404-mi l l ion Northwest Transmission Line (NTL) could finally bring it to the remote region.

The 335-km, 287-kilovolt line, which would extend power as far north as Bob Quinn from Terrace, B.C., is nearing the end stages of an environmental assessment and the upcoming months could mark a decision to move ahead with it.

The high-voltage line, which is to follow the region’s main artery, Highway 37, has seemed a certainty before.

Just a few years ago, it looked like the 287-kilovolt power line extension was a go — in 2007, NovaGold Resources (NG-T, NG-X) and Teck Resources (TCK. B-T, TCK-N) reached an agreement with BC Hydro to contribute $158 million toward the transmission line extension.

But spiralling cost estimates at Galore Creek put both the project and the power line on hold — until a massive lobbying effort on the part of B.C.’s mining industry and the communities in the province’s northwest revived the NTL.

Byng Giraud, secretary of the Northwest Powerline Coalition and vice-president corporate affairs for Imperial Metals (III-T), says there’s a sense that this time it really is going to happen.

“It’s no longer a roll of the dice, build it and maybe they’ll come. It’s pretty clear it’s not a white elephant,” he says. “Back in the ’60s, you could have just built a piece of infrastructure like this and not worried about that — now, you’ve really got to make a business case.”

Some of northwestern B.C.’s still-undeveloped mineral projects may be viable without externally supplied electric power. Capstone Mining (CS-T) is working on a prefeasibility study for a small, low-cost underground operation at its high-grade Kutcho Creek copper-zinc- gold-silver deposit, 120 km east of Dease Lake, powered by natural gas. And Fortune Minerals (FT-T) plans to use diesel power at its Mt. Klappan anthracite coal project, 330 km northeast of Prince Rupert, where it is updating a 2008 feasibility study. But there’s no doubt that electric power from the provincial grid is a prerequisite for many others in a region that hosts more than a handful of large porphyry deposits.

Last year, the federal government pledged $130 million toward the NTL under the “green infrastructure” fund, and the provincial government announced it would pick up much of the rest of the cost, with some help from the private sector.

More recently, negotiations with AltaGas (ALA-T) and its subsidiary, Coast Mountain Hydro, which has the Forrest Kerr hydroelectricity project near Bob Quinn Lake, yielded a $180-million commitment in return for a 60-year electricity purchase agreement.

While the six-month environmental assessment process has been delayed by 31 days — BC Hydro asked for and received in early September, a suspension of the process to give it more time to collect information, study the possible impacts of project developments, and conduct field studies — it doesn’t mean the high-voltage line will be derailed.

The process is now slated to finish in mid-November, and permits could be in place before the end of the year.

Red Chris: frontrunner

Despite the Galore Creek partners’ involvement in previous plans for the transmission line, the most likely first user of the NTL is Red Chris, owned by Imperial Metals.

Imperial fought hard to buy bc- Metals and its Red Chris porphyry copper-gold project in 2007, eventually besting rival bidder Taseko Mines (TKO-T, TGB-X).

While the transmission line extension did seem to be a reality in 2007, Imperial’s chairman Pierre Lebel says power wasn’t a major factor in the company’s interest in the project, located about 80 km south of Dease Lake.

“Our decision to acquire the project was not driven by the power line at the time,” Lebel says. “We accepted that sooner or later there would be a power line up there, so for us it was really based on the quality of that project and its potential for resource expansion.”

Red Chris has proved that potential: the most recent resource update in May 2010 (incorporating just 22 new drill holes) increased measured and indicated tonnage at Red Chris by 31% and inferred tonnage by 89%. Measured and indicated resources stand at 312 million tonnes grading 0.54% copper and 0.55 gram gold per tonne for 3.7 billion lbs. copper and 5.6 million oz. gold, with another 237.7 million inferred tonnes grading 0.46% copper and 0.5 gram gold for 2.4 billion lbs. copper and 3.8 million oz. gold.

Drilling continues to expand the deposit to the east and at depth.

A feasibility study was completed in 2004 on the assumption that power could be accessed from within 23 km at Tatogga, B.C. Imperial is currently working to update that feasibility with more realistic power assumptions, including the cost of running a line to Red Chris from Bob Quinn. The study, which is expected to be released in the fourth quarter, will also update other costs of the 30,000-tonne-per-day permitted development.

Imperial will need to build its own line to the access point at Bob Quinn, but it has some experience with that, having already built a 125-km, 138-kilovolt line to its 50%-owned Huckleberry copper-moly mine in Houston, B.C.

Galore Creek

Power has been top of mind for NovaGold Resources since it acquired the Galore Creek porphyry copper-gold-silver project in 2003. In 2006, the company bought Coast Mountain Power (now owned by AltaGas) for its Forrest Kerr hydro power project. But president and CEO Rick van Nieuwenhuyse says the goal was not to supply Galore Creek power itself, but to prove the business case so somebody else would.

“The whole concept was to complete a feasibility study on Forrest Kerr so that a power producer would then be able to put that power into the grid,” he says. “It was to add to the intent of bringing the grid to northern B.C.”

Assuming the permits come through, Forrest Kerr is indeed going to be a supplier of power to the NTL.

The Galore Creek partners’ more direct effort to bring power to the area by funding the power line fell apart when costs at the project soared as high as $5 billion, more than double the anticipated costs. The rising estimates were largely due to the design of the tailings dam, and labour and cost competition with the Vancouver Olympics and the booming oilsands.

NovaGold and its equal partner at Galore Creek, Teck, are now working on a prefeasibility study looking at a new development plan that would expand throughput and see the tailings dam located in higher terrain, rather than in the Galore Creek valley. A 13-km-long tunnel would convey the ore to the mill, located next to the tailings pond. The study is expected to be complete in the second quarter of 2011. Some aspects of the new plan would require new permits, but the majority of permits are still good.

Galore Creek holds measured and indicated resources of 785.7 million tonnes grading 0.52% copper, 0.29 gram gold and 4.87 grams silver for 8.9 billion lbs. copper, 7.27 million oz. gold and 123.1 million oz. silver. Inferred resources stand at 522.5 million tonnes grading 0.35% copper, 0.29 gram gold and 4.79 grams silver for 4 billion lbs. copper, 4.9 million oz. gold and 80.4 million oz. silver.

Copper Fox Metals (CUU-V) is aiming to have a feasibility study for its Schaft Creek copper-gold-silver-moly project completed by the end of the year.

A 2008 prefeasibility study on the porphyry project assumed that power would be supplied from the B.C. grid from Hwy 37 near Bob Quinn, stating: “While generation of power onsite is a consideration, it is felt that it would have serious implications to the financial viability of the project.”

Currently, the closest power is 150 km south at Meziadin Junction, but if the NTL is built, Copper Fox would still need to build a 110-km access line to Bob Quinn.

With its feasibility, the company is hoping to shorten the projected payback period (from 4.9 years) and reduce initial capital costs, estimated at US$2.95 billion.

The prefeasibility estimated that over 22.6 years, Schaft Creek would produce 4.76 billion lbs. copper, 4.5 million oz. gold, 32.5 million oz. silver and 255.2 million lbs. moly.

Measured resources stand at 463.5 million tonnes grading 0.3% copper, 0.23 gram gold per tonne, 0.02% molybdenum and 1.55 grams silver. Indicated resources come to 929.8 million tonnes grading 0.23% copper, 0.15 gram gold, 0.02% moly and 1.56 grams silver.

Geophysical surveys have indicated the deposit is open to the north, east and at depth. A recent drill hole returned visible mineralization to a depth of 450 metres, about twice as deep as other holes in the same section, and ended in visible mineralization.

Copper Fox has earned 100% of Schaft Creek from Teck Resources, subject to a 30% net proceeds interest held by Liard Copper Mines (a private company 78%-owned by Teck). By completing a positive feasibility study on its sole project, Copper Fox can earn that indirect interest. Teck has certain back-in rights that it could exercise for up to 75% of the project.

With the KSM gold project, 65 km northwest of Stewart, B.C., Seabridge Gold (SEA-T, SA-X) is in the enviable position of having a Plan B in case the NTL is delayed or fails to get its environmental assessment certificate. It’s close enough to existing power infrastructure that BC Hydro can meet its power needs at Meziadin Junction under existing tariffs. That plan would involve an upgrade of the line from Terrace to Meziadin Junction to 287 kilovolts from 138 kilovolts — something that would happen anyway under the NTL proposal.

“We would probably need to have power available for the site by 2015 and if they can accommodate that schedule, great,” says company president and CEO Rudi Fronk. “If they can’t, we can go ahead with our plans that we’re working on with them now under the existing tariffs.”

The company is not planning to develop the deposit itself; it’s aiming to interest a major to come in at some point as Seabridge proves its feasibility.

Building on a scoping study released in July 2009, Seabridge completed a prefeasibility study in March 2010 that estimated operating costs at US$144 per oz. gold. The study outlined a large-tonnage, 120,000-tonne-per-day, open-pit operation with a mine life of 37 years, and startup capital costs of US$3.4 billion (including a US$394- million contingency). Fronk says power only represents about 3% of that.

KSM hosts reserves of 1.6 billion tonnes grading 0.59 gram gold per tonne in three deposits: Kerr, Sulphurets and Mitchell.

Seabridge is working on an updated prefeasibility set for March 2011, and expects to file an environmental assessment application late this year.

It’s also keeping the drills going to add to reserves and to prove up a fourth gold-copper zone at KSM next to the Mitchell zone. The company says the Iron Cap target has a strike length of at least 900 metres, a width of 400 metres, and is up to 350 metres thick.

Silver Standard Resources’ (SSO-T, SSRI-Q) adjacent Snowfield and Brucejack projects are near neighbours to KSM. A recent preliminary assessment of a combined Snowfield/Brucejack project put initial capital costs at US$3.5 billion, including a US$454-million contingency.

In a base-case scenario, the study pegged the pretax internal rate of return (IRR) at 12.4%, the net present value (NPV) at US$2.3 billion (at a 5% discount rate) and put the payback period at 5.3 years.

The mine life of the open-pit operation at a mill feed rate of 120,000 tonnes per day, is expected to be 27 years.

Silver Standard is now deciding whether to treat the projects separately or as a single project.

Drilling this summer continued to expand deposits at both projects and the company will have updated resource estimates, incorporating 42,000 metres of 2010 drilling, in the first half of 2011.

Snowfield contains measured and indicated resources of 1.1 billion tonnes grading 0.63 gram gold, 1.75 grams silver, 0.11% copper, 89 parts per million moly, and 0.49% rhenium for 22 million oz. gold and 41.6 million oz. silver.

Brucejack hosts a measured and indicated 120.5 million tonnes grading 1.04 grams gold, and 16.9 grams silver for 4 million oz. gold and 65.4 million oz. silver.

The NTL would bring power to within 40 km of the project, at the Bell II substation (south of Bob Quinn and north of Meziadin Junction). The study assumed that Silver Standard would contribute about $20 million of the cost of the line.

There’s no doubt that Hard Creek Nickel’s (HNC-T) Turnagain nickel sulphide project is huge, with a measured and indicated resource of 695 million tonnes grading 0.216% nickel and 0.014% cobalt.

The metallurgy, however, has proven difficult, and the company is aiming to improve the concentrate grade at Turnagain to 6-8% from the 4% predicted in a preliminary assessment released in April.

The study, which assumed the NTL will go ahead, estimated capital costs for an open-pit operation producing 77 million lbs. nickel per year at US$2.92 billion. Each pound of nickel would cost US$3.30 to produce at the project, located 70 km east of Dease Lake. The payback period was estimated at 8 years, and the mine life at 24.4 years.

Hard Creek Nickel would need to build a 190-km power line to Dease Lake (it would then transfer ownership to BC Hydro for a nominal sum); and a 65-km line into the project from there.

A preliminary economic assessment for Skyline Gold’s (SK-V) Bronson porphyry gold-silver-moly deposit, pegged capital costs at $237 million, including the cost of building a transmission line to Bob Quinn, 70 km east.

The study, released in March 2009, put the payback period at 8.2 years and the mine life at 18.4 years. The after-tax IRR was estimated at 10% and the NPV (at a 7.5% discount rate and after taxes) was pegged at $38.3 million.

Hoping to improve those numbers, Skyline is updating the study, this time looking at a smaller, higher-grade initial pit that would target higher returns and faster payback. It’s also examining production of magnetite as a byproduct.

Bronson contains 225 million measured and indicated tonnes grading 0.36 gram gold, 2.22 grams silver, 0.14% copper and 0.0077% moly for 2.6 million oz. gold, 694.8 million lbs. copper, 16.1 million oz. silver and 38.2 million lbs. moly.

© 1915 – 2010The Northern Miner. All Rights Reserved.

Golden Triangle Today

The Vancouver Sun

Division of Canwest Publishing Inc.
Northwest gold explorers discovering reasons to be bullish

By Scott Simpson

Its unofficial name among British Columbia prospectors and mining entrepreneurs is the Golden Triangle.

Soon, it appears, the global mining community will be adopting that nickname in recognition of vast mineral wealth that new and recent discoveries suggest is available in northwest B.C.

A world-class copper-gold-silver property, Galore Creek is awaiting only a resolution of economic issues pertaining to development of a flagship mine in the northwest. Galore partners Teck Mining and NovaGold are expected to make an announcement in 2010.

Work could begin on a second potential mine, Imperial Metals’ Red Chris, next year pending a decisionin the Supreme Court of Canada on a petition by environmental groups seeking a ruling that the project, which already has provincial approval, also needs a full federal review. That ruling is anticipated early next year.

If the environmentalists lose, Red Chris is a go — and additional drilling results on nearby property suggest that the permitted mine, although relatively large, may be considerably smaller than the vast and rich copper-gold deposit on adjacent land that is also held by Imperial.

Drill core samples from at least two other northwest projects in early stages of development, Seabridge Gold’s Kerr-Sulphurets-Mitchell (KSM) project and Silver Standard Resources’ Snowfield-Bruce lake project, are also suggestive of exceptional deposits.

Silver Standard president and CEO Bob Quartermain said in an interview this week that one of the drill core samples collected this summer at Snowfield contained the highest-grade gold and silver mineralization he’d personally seen in his 33-year career as a mining geologist.

“At the start of the year, they had an estimated four million ounces of indicated gold resources in the main Snowfield zone, and about 14 million ounces of inferred resources,” Quartermain said. “We drilled over 40,000 metres of drill core up there [in 2009] and we did that from middle of June through middle of October. We had in excess of 80 people working at our sites, at seven drills and as a result of that we increased our measured and indicated resources on the project almost five-fold.

“We are now sitting on 23.8 million ounces of measured and indicated [gold] resources, and 14.9 million ounces of inferred. But more importantly, we had some pretty high-grade hits. At one hole we hit probably the highest grade gold I’ve seen in my career, for any project I’ve worked on personally — and I’ve been in the business since 1976.

“One of our holes hit massive visible gold that ran at assayed 16.9 kilograms of gold and eight kilograms of silver over one metre and a half.”

Meanwhile, Seabridge president and CEO Rudi Fronk saw the value of his company’s shares double this month from $11 to $22 after he told a Bloomberg News reporter that the company’s KSM copper-gold deposit — purchased for $200,000 from Placer Dome in 2000 — is far too large for the junior miner to develop by itself.

“When we bought it there were two known zones, the Kerr zone and the Sulphurets zone, which are the K and the S in KSM,” Fronk said in an interview. “Known resources were about 3.4 million ounces of gold and about 2.7 billion pounds of copper.”

The real discovery came after Seabridge began drilling in earnest two years ago at the Mitchell zone.

“At Mitchell, we are now at just about 40 million ounces of gold and over five billion pounds of copper. It’s the largest gold deposit ever found in Canada.

“The next big step for us is completing the preliminary feasibility study. At that point in time you’ve done enough engineering to quantify reserves. We will have that study done by March of 2010.”

There are precedents.

Snip Mine and Eskay Creek, two of the richest mines in B.C.’s history, were northwest discoveries.

There are other intriguing projects as well — B.C.’s geological survey database says there are 935 documented mineral occurrences in the Triangle, and ranks 67 in the “resource” category.

Both the federal and provincial governments have been awakening to the opportunities in the area, recognizing that development cannot proceed without major infrastructure, particularly a connection to the BC Hydro electricity grid.

The province last year committed $250 million to a high-voltage transmission line to service mining activity in the northwest along what is known as the Highway 37 route.

The federal government dramatically signaled its support when Prime Minister Stephen Harper announced at a meeting in Washington with President Barack Obama on Sept. 16 that Ottawa was kicking in $130 million for the transmission project.

“I don’t want to overemphasize it, but [the companies] are putting money into the ground there. They are drilling, and either they are making further discoveries or adding value to their resource,” said Gavin Dirom, president and CEO of the Association for Mineral Exploration BC. “It’s quite remarkable, and I don’t think that’s going to be changing anytime soon. But you’ve really got to demonstrate to the sector, to investors, to the government, that you are making a discovery, that you are serious, and that you are committed to building that mine. That is the best measure of success.”

Pierre Gratton, president and CEO of the Mining Association of B.C., noted that recent drill results announced for the Deep East zone outside the designated footprint of Red Chris suggest that the additional deposit, regardless of the outcome of the Supreme Court decision, is too large to ignore.

Last week, Imperial Metals reported mineral content in its final drill results from its 2009 Deep East program ran as high as 4.12 per cent copper and 8.83 grams of gold per tonne. Even the lowest concentration found at 10 Deep East drill sites, 0.82 per cent, would be ample to sustain a major new mine if they are consistent across the property.

“They have uncovered incredible results that are really positioning this, not just as a decent mine but as a pretty top-class copper mine, a multi-generational copper mine,” Gratton said in an interview.

“The results are significant in terms of what it means for porphyry deposits generally in North America. It’s changing the way people are looking at porphyry deposits here in B.C. So it’s actually huge news. We all hope [Imperial] wins in the court, but this is now a project that they will go back and do the federal environmental assessment for, if it’s required. This is going to get built.”

Steve Robertson, exploration manager for Imperial Metals, echoed those comments. He noted that the Deep Zone findings need to be mapped out through further exploration, and sit outside the area of the proposed Red Chris Mine.

But he said the results could change the way that mining companies think about opportunities in B.C.

“People had traditionally thought of British Columbia porphyry deposits as being modest in size and low in grade. This is making it appear Red Chris will be neither modest in size nor low in grade,” Robertson said. “It really is changing the goalposts for what we think is achievable for mineralization in B.C.”

Minister of State for Mining Randy Hawes expects the Highway 37 project, which is now in the process of a provincial environmental assessment, will give the region an additional spark beyond the buzz that companies like Imperial Metals are creating with Red Chris.

“We can’t go out and stir up the stock market, but this is happening on a regular basis right now, particularly up in the northwest. There is a huge amount of activity, and I really do believe the Highway 37 announcement has spurred this tremendously.”

ssimpson@vancouversun.com

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