From the Field: Kiyuk Lake Summer Program Update
The Prosperity Goldfields team has been hard at work on our 2012 Summer Program at Kiyuk Lake, Nunavut. In this update, CEO Adrian Fleming discusses the scope of work currently taking place and highlights the top results from the 2012 Spring Drill Program.
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Nunavut: Canada's Last Mining Frontier
Unprecedented demand for precious metals from rapidly growing economies such as China and India have sent thousands of Canadian mineral exploration companies scrambling to the far reaches of the earth hoping for the next multi-million ounce discovery. However, one of the last great frontiers in mining could be closer to home than originally thought.
Nunavut has become Canada’s hotbed for exploration and mining of resources as the region's rich geological structure hosts a wide rage of mineral targets including gold, silver, zinc, diamonds and uranium. The territory was formed in 1999 as a result of North America's largest Aboriginal land claim agreement, the Nunavut Land Claims Agreement (NLCA). Since then, exploration and mining companies alike have been targeting the region. Exploration spending is increasing by leaps and bounds year after year. As recently as 2006 exploration spending topped out at $210.6 million, but has since exploded to nearly $400 million in 2011. A recent survey has predicted that exploration spending in Nunavut to reach a record $568 million in 2012.
Why Nunavut Now?
Nunavut has vast landmass ripe with mineral potential, which has seen substantially less exploration than other jurisdictions with similar geology. When asked why Nunavut is such an important target for his company, Dr. Quinton Hennigh of Prosperity Goldfields stated, “The Kiyuk Lake region is host to known geochemical anomalies identified through lake sediment sampling in the 1970s that is consistent with other great gold belts. While many other parts of Nunavut with known deposits are very isolated, this property is located further south and is in closer proximity to existing infrastructure across the border in Manitoba.”
Favorable government policy has given way to many junior exploration projects and mining companies operating in Nunavut. In a recent address to the Nunavut Mining Symposium (April 2012) premier Eva Aariak stated, "We have been very clear. Nunavut is open for business. Nunavut wants and supports responsible development of our natural resources. The Government of Nunavut is committed to working constructively with resource companies to give you the certainty and consistency you need to manage risk and make informed decisions."
Although most of Nunavut is isolated in terms of infrastructure, the mineral potential that this province has is attracting infrastructure development through development partnership agreements. There are plans under consideration to improve infrastructure, including projects to build a port and road at Bathurst Inlet and a road to connect Manitoba with Nunavut's Kivalliq region along the Hudson Bay coast.
The remoteness of many deposits have not deterred mining companies however. Agnico-Eagle Mines’ (AEM) Meadowbank project opened it’s doors in 2010. With a proven resource of 2.2 million ounces of gold and a five year expected life span, the project has already proven to be a boon for the local economy. Through jobs and contracts with local companies AEM spends more than $200 million per year in Nunavut, with over $19 million towards payroll alone. In addition to stimulating the economy, the company has implemented several community programs focused on increasing the number of local workers in skilled positions at the mine and educating students on the opportunities for high paying jobs in the mining industry.
AEM’s advanced-exploration gold play, Meliadine lays 290 southeast of Meadowbank is already starting to make it’s mark, pumping $30 million into locally based companies in only eight months of activity in 2011. This project is currently undergoing a second feasibility study with an increased production rate after successful exploration results in 2010.
Further north is North Country Gold’s advanced-exploration project Three Bluffs. The company has several targets along the Committee Bay Greenstone belt, with a potential deposit of 2.5 million ounces of gold.
This is just the beginning for Canada’s next gold frontier. While the full-scale resource potential of Nunavut is still unknown, the rush is on as more and more Canadian exploration companies turn north in search of their next big hit.
Nunavut Part II: Government Policy Encourages Mineral Exploration
Nunavut was created as a result of the largest land claims agreement in Canadian history. It includes most of the 500 million year old Canadian Shield, with considerable mineral potential for gold, silver, iron, diamonds, uranium and base metals. Mineral development is being encouraged by both national and local governments, with the majority indigenous population (Inuit) adopting progressive mining policies.
Land tenure for minerals is administered by the federal government on public lands, and by the NTI (Nunavut Tunngavik Inc.) on Inuit owned lands. The Nunavut Land Claims Agreement essentially provides the Inuit with a combination of surface and subsurface rights, income, and the right to participate in the management and regulation of surface rights, both land and water. All major project developers have to negotiate agreements known as Impact and Benefit Agreements (IIBAs) with the Inuit - these concern training, employment and business aspects.
Both the government and the Inuit share responsibility for management of resources, and the sanction of exploration, regulatory approvals, relevant permits and licenses for exploration and mining. Nunavut benefits from Canada’s Mineral Exploration Tax Credit which is intended to give a tax incentive to investors. The Government of Nunavut in turn provides a tax incentive to mining and exploration companies to offset high energy costs, and allows mining companies to recover most of their initial capital costs should a mine be developed. These, and other similar measures, have created an economic climate where 4.7% of Nunavut’s land area is covered by prospecting claims, mineral claims or mineral leases, making it 4th in Canada in terms of overall investment. There are at least 100 active exploration projects underway in Nunavut right now.
There are of course challenges to mineral development: Regulations are often complex, operation costs tend to be high, infrastructure is underdeveloped, and work forces are often in need of specialized training. One example of regulations that can complicate exploration operations are those concerning archeological sites where precious artifacts may be at risk. An artifact is defined as “any tangible evidence of human activity that is more than 50 years old and for which there is a broken chain of possession.” In fact the extremely cold, dry Arctic climate allows archeologists to find signs of human habitation visible right on the surface. these include well-preserved tools made of antler, ivory and bone dating back as far as 4,000 years ago.
Since the Department of Indian and Northern Affairs Canada turned into Aboriginal Affairs and Northern Development Canada (AANDC) in 2011, the emphasis has been on environmental issues and land use planning. Before a mine can be developed these days, the mining company has to have a well-planned exit strategy in place. The aim is to modernize mining regulations through ongoing consultation among all the interested parties. Work is also underway to clarify water regulations. A number of geoscience surveys are being conducted, including one to study the permafrost and terrain conditions in the capital city of Iqaluit. The once continuous permafrost is now warming and thawing in places, with serious implications for strategic infrastructure, including the airport.
The 2012 Nunavut Mining Symposium held in the capital Iqualit in April included in its program entire sessions on regulatory developments and community engagement – these aspects of mineral exploration are clearly major preoccupations at all levels of government in Nunavut.
With progressive attitudes towards mineral exploration and mine development from both community and government stakeholders, it is clear that Nunavut is open for business to the world's mining community.
Source: Prosperity Goldfields
http://www.prosperitygoldfields.com/investor/video/
Disclosure: Prosperity Goldfields is a Vulture Bargain Candidate of Interest (VBCI). Members of the GGR team may hold long positions in PPG.V .
