Advanced Explorations’ Tuktu averages 34% iron

Nunavut is proving to be fertile ground for Toronto-based junior Advanced Explorations (AXI-V).

Not only does the company’s flagship Roche Bay project on the east coast of the Melville peninsula have an inferred resource of 357 million tonnes grading 28.1% percent total iron, but summer mapping and prospecting has uncovered a massive banded iron formation not too far away.

The new iron ore discovery named Tuktu — the Inuit word for caribou — is about 60 km northwest of the Roche Bay project as the crow flies, and about 45 km due west of Foxe Basin, an inland sea north of Hudson’s Bay (and an arm of the Atlantic Ocean between Melville peninsula and Baffin Island). Advanced Explorations has now staked 11 claims covering about 22,000 hectares of previously unexplored land on the peninsula.

“Roche Bay is almost literally right on the ocean but the iron formations extend almost 80 km to the southwest and another 70 km to the north so the resource potential is almost infinite,” the company’s chief executive, John Gingerich, explained in an interview.

Gingerich noted that BIFs in the area “stand out like sore thumbs” and Advanced Exploration could see that there was a massive folded area of magnetic signature to the north of Roche Bay.

The Tuktu deposit is roughly 2,700 metres in length, up to 700 metres in width and stands 60 metres high with massive magnetite mineralization exposed extensively at surface. The down-dip extent of the mineralization is unknown, but the company says field mapping has shown that the BIF beds are dipping at about 70 degrees to the southwest.

Seventy-five rock samples from various lithologies were collected from the discovery area. BIF samples were analyzed for iron and other elements using whole rock analysis and Satmagan testing procedures.

The results demonstrate that the Tuktu deposit has low contaminate levels and a very consistent iron grade of 34%. A large portion of the banded iron formation graded 0.04% sulfur or less. The low contaminant levels are important as iron ore can be processed more easily, making it appealing to the steel industry.

The samples have been sent for metallurgical testing to determine if a high grade (plus 63%) iron product can be produced.

There is potential for higher grade zones at Tuktu, similar to intersections of 53% iron and 63% iron found in Roche Bay’s C-Zone, Gingerich noted.

The Tuktu discovery will add flexibility to the development scenarios of the Roche Bay project, Gingerich explained, adding that Tuktu exhibited iron grades that were about 20% higher than those in the C-Zone at Roche Bay, and lower sulphur levels.

“If we get the numbers we expect [from Tuktu] it could add some real flexibility to our development options,” he said. “Despite being further away from the ocean, depending on the metallurgy, it could potentially become a satellite type operation and obviously if you can pull that off it would have a significant impact on the economics.”

Roche Bay is about 5-10 km away from a naturally deep harbor and just nine days sailing to Europe. Despite its northern location, it still averages a 270-day ice class shipping window.

In June, Advanced Explorations, which has the option to acquire 100% of Roche Bay, completed its preliminary economic assessment of the project. The study outlined the potential for a pre-tax net present value (NPV) of US$2.76 billion at a 10% discount rate (and at US$750 per tonne nugget). Annual production was forecast to be 1 million tonnes of “high value 96%-98% direct reduced iron nuggets.”

The study was based on the 357-million tonne inferred resource of the C-Zone only. The historical and non-National Instrument 43-101 resource of 700 million tonnes from the A, B and D-Zones was not included in preliminary economic assessment but is considered an excellent exploration target for future drill programs.

“The current [C-zone] resource represents only about 2 km of strike length,” Gingerich pointed out. “So it’s a very small portion of the total strike length in the region.”

“The one thing about the North is there are always Arctic challenges,” he added. “But the good news is that it’s barely been explored and scratched and there are more iron discoveries to be found and others like gold that will emerge from the area.”

“Last summer the government launched a major mapping program of the north so there will be a whole lot more known about the area when they get reports out and I think it will be a stimulus for development.”

At presstime Advanced Explorations was trading at 20¢ per share. Over the last year the company has traded between a low of 4.5¢ per share and 28.5¢ per share. It has 79.5 million shares outstanding.