U.S. REPORT Explorers shun recent sale of Minnesota mineral leases

Minnesota has been left out in the cold as exploration gears up in the Rhinelander-Ladysmith greenstone belt of neighboring Wisconsin. Although Minnesota put thousands of mineral leases up for sale during a recent auction, only four bidders showed up to vie for a total of 12 leases.

“There was not a lot of interest,” said William Ulland, president of both the Minnesota Exploration Association and his own company, American Shield.

Minnesota, which lowered its mining tax rate this year to stimulate exploration, shows good potential for gold and silver mineralization, according to a recent report by the U.S. Geological Survey (USGS).

The lease offer, covering a huge ground area surrounding the Duluth Gabbro Complex and several greenstone belts in northern Minnesota, opens up some of most prospective ground in the state to exploration.

But, according to Ulland, most of the best ground has already been tied up by companies like Noranda (TSE), Newmont Mining (NYSE) and Fleck Resources (VSE) (which is developing the Dunka Road copper-nickel deposit). Besides, many Canadian juniors, now struggling to raise financing for exploration in their own country, were noticeably absent from the auction.

As well, most of the lease area is covered by a thick layer of glacial overburden that makes gold exploration virtually impossible.

The USGS is just coming up with new exploration methods to combat this problem, including analytical techniques that can detect small geochemical differences between samples.

By contrast, Wisconsin is currently benefiting from a renewed interest in exploration as at least two companies probe the Rhinelander-Ladysmith belt for base metals.

Despite the problems, however, Ulland believes Minnesota may be on the brink of a precious metals discovery which could stimulate exploration in the state.

“Someone is going to find a deposit in an area of shallow overburden, and when that happens, we’ll see a much higher level of exploration,” he said.

Although the geology of northern Minnesota is similar to that of northwestern Ontario, the state has never been a prime hunting ground for gold, partly because of the thick overburden, but mostly because the tradition of leasing rather than staking ground has acted as a disincentive.