Altius-Barrick deal triggers gold rush in Newfoundland

St. John’s, NFLD — An increased level of exploration activity in Newfoundland and Labrador has resulted in 30,500 new claims being staked this year (to the end of October), surpassing the previous high of 26,600 claims in 1988, set prior to the Voisey’s Bay nickel discovery.

Voisey’s Bay sparked an unprecedented staking rush in Labrador when almost 250,000 claims were staked in 1995.

There are currently just under 65,000 claims held in good standing in the province. Ken Andrews of the Mines and Energy Ministry’s Mineral Lands Division expects it could possibly reach 70,000 claims by the end of the year. This is considered quite an improvement over 2000 and 2001, when 46,000 and 47,000 claims, respectively, were held. “We’re getting back into some healthy levels of staking activity,” Andrews told delegates attending the recent annual conference of the Newfoundland branch of the Canadian Institute of Mining, Metallurgy and Petroleum, in St. John’s.

Exploration expenditures in the province for 2002 are forecast at $25 million, and may approach $30 million, which would make it quite comparable to US$28 million spent in 2001.

“This is very good, considering metal prices and the state of the industry,” says Andrews.

On the island of Newfoundland, approximately 25,000 claims have been staked to date. Much of the staking activity has focused on gold and known historical occurrences. Quite a large part of the staking has been in the north-central part of the island, specifically the Botwood Basin area.

A year ago, Barrick Gold (ABX-T) hooked up with St. John’s-based Altius Minerals (ALS-V) to explore for Carlin-type, sediment-hosted gold deposits along the 100-km-long Mustang trend in the eastern part of Botwood Basin. Altius is also exploring a high-grade, low-sulphidation epithermal gold system on the Moosehead joint venture with Sudbury Contact Mines (SUD-T) in the western part of the basin, near Bishop’s Falls.

The joint venture completed a third round of drilling this summer at Moosehead consisting of 33 holes totalling more than 3,200 metres. The drilling tested several fault-related zones, returning mixed results. Drilling encountered several bonanza-grade gold intercepts, but continuity remains questionable. Sudbury Contact recently committed to a second year of exploration as part of a 3-year option deal to earn an initial 51% interest of the Moosehead project.

Sudbury Contact also signed a deal with Cornerstone Capital Resources (CTP-V) in September, allowing it to earn up to an 84% interest in the Colchester gold-copper property, 8 km north of the coastal community of King’s Point in the historic Green Bay mining district. A line-cutting grid and soil sampling program was completed, followed by mapping, prospecting and trenching over targeted areas. Sudbury Contact is an exploration affiliate of Agnico-Eagle Mines (AGE-T).

Several junior companies have picked up land positions in the Botwood Basin area over the course of 2002, either through staking or joint ventures. These include Rubicon Minerals (RMX-T), Candente Resource (DNT-V), Moydow Mines International (MOY-T), Sparton Resources (YSP-V), Spruce Ridge Resources (YSC-V), CanAlaska Ventures (CVV-V), Linear Resources (LRR-V), Copper Hill (YCU-V), VVC Exploration (VVC-V), Wave Exploration (WA-V), Columbia Metals (YOM-V) and Grayd Resource (GYD-V).

Leading the Newfoundland gold rush is Rubicon Minerals, a company that has been active in base metal exploration in the province since 1996. In recent years, Rubicon has established a land position covering six district-size projects spanning the island’s northern tip to the southern Avalon zone.

“We really view Newfoundland as a gold province with a diversity of opportunities,” says Rubicon Chairman Garfield MacVeigh. “We’re certainly the dominant landholder in the Botwood Basin, but we’re looking beyond the Botwood Basin. We see a much more diverse range of opportunities.”

“We are a North American-focused company and we think this is one of the best early gold opportunities in the country,” adds MacVeigh.”

Rubicon made one of the more significant developments in Newfoundland this year with the grassroots discovery of the Golden Promise prospect. The discovery is outside the Botwood Basin, 15 km southeast of the town of Badger. The company conducted a small, 1,000-metre drill program during the summer to test the source of a train of large gold-bearing boulders discovered in May 2002 by local prospector William Mercer. Grab samples from the boulders had yielded bonanza-grade values of up to 353 grams. The discovery was made in an area with no record of any staking or previous exploration work.

Rubicon drilled 21 holes into a 225-metre strike length of the Jaclyn zone vein target to a vertical depth of only 50 metres. Of the 17 holes that intersected the vein zone, 15 contained visible gold. An additional three holes were lost as a result of technical difficulties, and a fourth hole was not drilled deep enough to reach its target. Selected highlights of the drilling include 69 grams over a true width of 0.21 metre, 11.4 grams over 1.8 metres, 16.6 grams over 1.6 metres, 7.05 grams over 2.2 metres, 17.7 grams over 0.94 metre, and 31.6 grams over 0.34 metre. The zone remains open for follow-up in all directions.

Rubicon has acquired a big land position covering 550 sq. km of this unexplored belt.

“This is a great example of the kind of opportunities that are here, and I think it just sets the stage for the big ones to come,” MacVeigh says.

Candente Resource is a Vancouver-based junior led by Joanne Freeze, with an extensive portfolio of early-stage Peruvian precious metal properties. The company expanded its focus to Newfoundland in early 2002 by optioning the Linear property from the KriASK Syndicate and hooking up with noted local prospectors Kevin and Allan Keats. Candente has since staked about 1,500 claims based on regional and structural controls, lake-bottom sediment surveys and the Keats’ knowledge of gold showings and anomalies. Regional exploration started in May 2002 and resulted in the optioning of several other properties in central Newfoundland, including the drill-ready Island Pond and Paul’s Pond from Cornerstone Capital.

The Island Pond property adjoins the southwestern end of Altius and Sudbury’s Moosehead joint venture. Candente began a small, 1,000-metre drilling program at Island Pond in mid-November to test the gold-bearing potential of a group of northwesterly oriented structural zones. Several of these targets have coinciding soil anomalies. Candente can earn a 51% interest by spending $1.5 million on exploration, issuing 115,000 shares and paying Cornerstone $115,000 over four years.

Chiouk Brook

Harry Barr’s CanAlaska Ventures (CVV-V) is funding exploration to earn an interest from Altius in the Chiouk Brook, Rolling Pond and Paradise Lake properties in the southern Botwood Basin. In October, a 1,000-metre drilling program began testing the source of large boulders that have returned gold grades of up to 17.4 grams. An airborne magnetic survey has been completed over the three properties. CanAlaska can earn an initial 51% interest by spending $1 million on exploration and paying Altius $110,000 cash and up to 500,000 shares over four years.

Altius also optioned off a 49-claim property near Gander to Linear Resources (LRR-V), a company led by Peter Dimmell. After successfully drilling a new tantalum discovery in northern Ontario earlier this year without any market fanfare, Linear began picking up several gold prospects in Newfoundland in late summer. The company tied on to the west side of the Mustang trend, and on to the east side of Candente’s Island Pond property. Linear also picked up an option on the 15-claim Powderhorn property at the northern end of the Burin Peninsula on Newfoundland’s East Coast. The property hosts the drill-ready, intrusion-related, gold-bearing Lodestar showing. “It’s an interesting diatreme breccia pipe situation,” says Dimmell.

GlobeNet Resources (GBR-V), Buchans River (BUV-V), Grayd Resource and Vulcan Minerals (VUL-V) all have either staked or optioned properties covering gold prospects in other regions of Newfoundland.

Jackson’s Arm

Kermode Resources (KLM-V) optioned a 100% interest in the Jackson’s Arm property from South Coast Ventures, a St. John’s-based private exploration company. Jackson’s Arm is on the western side of White Bay in the northwestern part of the island. Gold was originally discovered on the property in 1983 along a newly constructed access road to the Cat Arm hydroelectric project. Samples of rusty granitic material taken from a 2-km stretch of the road returned gold values in the 1-to-2-gram range. The prospect was optioned to BP Selco, which completed a total of 63 holes between 1985 and 1991 before the company decided to discontinue mineral exploration in Canada. The drilling targeted the mineralized granite, returning intercepts such as 1.23 grams over 51 metres. The gold mineralization is associated with sulphides occurring in veins, fractures and disseminations in a hydrothermal altered zone. The property came open for staking in 1999 and was picked up by South Coast Ventures.

Kermode feels the property has potential for Carlin-style mineralization. The granite is unconformably overlain by a lower Paleozoic carbonate sequence consisting of basal quartzites, calcareous argillites and argillaceous limestones. A review of BP Selco’s work has uncovered intercepts in the overlying platform sediments. One hole shows a 35-metre section of altered limestones, with a 23.35-metre section averaging 1.12 grams. This intersection was never followed up. The gold itself is micron-size and has an antimony-mercury-arsenic association in the platform carbonates.

Kermode can earn a 100% interest in the project by spending $2 million over five years and paying South Coast $285,000 and 550,000 shares over four years. The company has picked up additional ground in the area through a second option with Cornerstone.

Western Keltic Mines (WKM-V) has acquired the Hickey’s Pond and Paradise properties on the Burin Peninsula in the Avalon terrain. The properties cover previously documented gold showings and show signs of potential high-sulphidation epithermal mineralization. GeoVector Management, led by former members of WMC’s North American exploration division, is conducting exploration on behalf of Western Keltic.

Labrador

Approximately 5,500 claims have been staked to date in Labrador. Most of the interest and activity is for base metals.

BHP Billiton (BHP-N), in a joint venture with Gallery Resources (GYR-V), staked 2,250 claims northwest of Churchill Falls in western Labrador. The staking was done along a 100-km-long section of the east-west-trending Shabogamo mafic intrusion. BHP Billiton Diamonds uncovered showings of sulphide mineralization that ran up to 0.6% nickel and 0.6% copper in grab samples. Gallery will be the operator of the joint venture and can earn a half-interest by spending $1 million on exploration. An airborne survey was completed in July. In central Newfoundland, Gallery recently completed an initial 8-hole drilling program on the Bruce Pond gold prospect at its Black Bart Katie project.

Another large area, consisting of 1,000 claims, was staked for nickel by RAM Exploration in the Snegamook area of central Labrador. Majescor Resources (MAJ-V) staked 152 claims for diamonds in the Lac Pratt area of western Labrador. Celtic Minerals (CME-V) staked 338 claims covering nickel potential in the Trout Pond area, west of Voisey’s Bay. Also, International Silver Ridge Resources (ISG-V) picked-up 68 claims in the same area.

The Canadian exploration division of Anglo American (AAUK-Q) staked 128 claims covering a layered basic intrusion near the Pinware River in southeastern Labrador. Hudson Bay Exploration & Development added to its position in the general Hebron Fiord-Tasialuk Lake-Kingurutik River areas by staking a further 190 claims for nickel. Cornerstone optioned the Kingurutik and Staghorn properties, northwest of Nain. The properties are considered to have potential for platinum group elements.

Donner/Falconbridge

About $11 million is being spent on base metal exploration this year, with $9 million in Labrador and $2 million on the island of Newfoundland. The Voisey’s Bay South project was the single largest base metal program in the province. The South Voisey’s bay project, centred 75 km west of the Labrador coast and 90 km south of Inco’s Voisey’s Bay nickel deposit, covers 650 sq. km in which Donner Minerals (DML-V) holds varying interests ranging from 52% to 77%. Falconbridge (FL-T) can earn a half-interest in the project by spending $23 million on exploration over five years. The 2002 program began in early July and consisted of five holes totalling 1,980 metres, extensive geophysical surveys and geological mapping. The geophysical targets were explained by the drilling, which intercepted minor to significant but uneconomic sulphides at the base of the gabbro intrusion. Falconbridge has approved a budget proposal for a 2003 program at South Voisey’s Bay. In order to maintain its option, the company is required to spend at least $1.7 million next year. It has also committed $200,000 towards a regional program it operates with Donner on a 50-50 basis to generate potential targets in other areas of Labrador, outside of the South Voisey’s bay project.

Iron Ore Co. of Canada is in the second year of a 3-year, $5-million program in the vicinity of its iron ore mines in western Labrador.

On the island, Noranda (NRD-T) is in the second year of a joint venture with Cornerstone aimed at exploring for stratiform redbed-type copper deposits on the Avalon platform of eastern Newfoundland. Noranda can earn an initial 51% interest in the Red Cliff properties by spending $4 million on exploration and paying Cornerstone $200,000 over four years. The Red Cliff properties, covering 780 sq. km, extend over a belt of rocks some 95 km long.

Noranda began work on the project in 2001 with a 6-hole program next to the Blue Point showing, a coastal cliff exposure that yielded 0.93% copper and 13 grams silver across 13.5 metres of chip samples. The two best holes returned intercepts of 1% copper and 12.1 grams silver over 14.2 metres, and 0.8% copper and 7.7 grams silver over 9.7 metres.

Further work through 2001 and 2002 involved an extensive lake-sediment sampling survey and follow-up soil sampling, mapping and prospecting. Noranda carried out a second phase of drilling in August, with results pending. To date, Noranda has spent nearly $1.2 million on the project.

In the meantime, Cornerstone is investigating the potential for iron oxide-type copper-gold mineralization at its South Princess project on the Bonavista peninsula in eastern Newfoundland.

This past summer, Skygold Ventures (SKV-V) completed nine drill holes on the Long Lake base metal property held by Island Arc Exploration (IAD-V) under option from Noranda. The property is 40 km south of Buchans. The drilling intersected an exhalative horizon underlain by altered felsic rocks containing stringer sulphide mineralization. Skygold can earn a half-interest by spending at least $1 million over four years.