BASE METALS — Search continues for more Labrador nickel — Teck, Falco join thinning field of juniors

Although the rumble of helicopters and diamond drills will once again be heard over Voisey’s Bay, Labrador, the ranks of junior companies exploring in the region are thinning.

Only a handful of companies remain, following the massive staking rush that was triggered by the discovery, by Diamond Fields Resources in late 1995, of a massive nickel-Copper-Cobalt deposit. That deposit now belongs to Inco (N-T). Many senior mining companies currently have a stake in many of the area’s most promising projects, lending a certain credibility to a region that was fast becoming a field of penny-stock longshots.

Drilling by Inco at the Voisey’s Bay project continues, and the company claims to be on its way to proving up an inferred mineral resource of 150 million tonnes. Reserves at the Ovoid deposit currently stand at 32 million tonnes grading 2.83% nickel, 1.68% copper and 0.12% cobalt. The Eastern Deeps deposit, which lies east of the Ovoid, has an indicated resource of 50 million tonnes grading 1.36% nickel, 0.67% copper and 0.09% cobalt. Drilling there, and west of the Ovoid, continues in anticipation of a production startup in late 1999.

Unlike last season, Inco’s exploration team is focusing solely on Block 1, which contains all of the known reserves and resources. Seven drill rigs will be used during this year’s $37-Million program, which has already begun. That program will include: drill testing to extend both ends of the cigar-shaped, high-grade zone previously discovered near the Western Extension zone; drilling along 9 km between the Ashley prospect and the Ovoid zone; and an extension, to the east of the Eastern Deeps zone.

North of the bay itself, on a peninsula which juts seaward, Falconbridge (FL-T) is helping juniors Columbia Yukon Resources (CYR-A) and International CanAlaska Resources (ICA-V) in their attempt to locate, on the VBE-1 property, a deep-seated extension of the Eastern Deeps.

An option agreement among Columbia Yukon, CanAlaska and Falconbridge calls for each company to contribute equally to a $3.3-Million exploration program on VBE-1 this season. Beginning in 1998, Falconbridge can elect to earn a 25% interest in the property by spending $22 million over three years. It can raise its interest to earn 51% by delivering a bankable feasibility study and to 60% by advancing the property to commercial production.

Lantech Drilling Services has been awarded a 13,500-Metre diamond drilling contract. Initial geophysics will be conducted by Val d’Or Geophysics, which conducted similar work for Inco at Voisey’s Bay.

The program, to be conducted on the western boundary of VBE-1, will initially consist of two north-south lines of deeply penetrating geophysical surveys designed to evaluate 11 potential drill targets. Three drill rigs, which are expected to be operational by early July, will sink holes at least 1,500 metres deep.

MPH Consulting will act as the project manager there, whereas Falconbridge will interpret geophysical and geological field data.

CanAlaska has persevered through two lean field seasons, and President Harry Barr is pleased that Falconbridge has joined the project. “In these times, with all the things that have happened in this industry, having a major partner adding financial resources and technical expertise to the project lends credibility to what we’re doing,” he says.

Nevertheless, Barr knows that fruitless exploration cannot continue indefinitely. “Typically, Canadian plays last about two to three years, and this is year three,” he explains. “If we don’t find something, we’re getting a little long in the tooth on the concept of a proximity situation.” Although Barr claims that a recent, unsuccessful deep drilling program on a property just east of VBE-1 “didn’t bother us,” there is a shadow of doubt as to the validity of the Eastern Deeps extension theory.

At that property, known as claim Block N, Absolut Resources (ALR-A) announced that down-hole electromagnetic (EM) surveys in hole 97-01, which was drilled to a depth of 4,966 ft., “did not indicate any sulphides within a 400-ft.

radius.” No further drilling is planned.

The company notes, however, that although “[the] result of this hole is disappointing . . . one drill hole does not eliminate the possibility of mineralized sulphides occurring on this block.”

Those results may have been poor, but they do not prove that VBE-1 is barren.

“We’ve got to drill it to find out,” says Barr. “Someone might even find the diamonds that the Voisey’s Bay discovery team was looking for in the beginning. Who knows? You’ve just got to keep looking.”

Now that Teck (TEK-T) has joined Donner Resources (DRZ-V), the latter’s project south of Voisey’s Bay looks more promising than it did last season.

Teck has a 10% equity interest in Donner.

The companies are preparing a $5-Million, 10,000-Metre summer drill program in which Teck will sink holes deeper than any previously drilled on Donner’s joint-Venture properties. “It’s just a matter of announcing a start date,” says Donner spokesman David Brook.

Scant activity remains in the once-promising Okak South area, which lies between Okak Bay and Voisey’s Bay. However, the most prominent (if not infamous) junior working there has not thrown in the towel.

.SCartaway keeps busy

Cartaway Resources (CWA-A) flourished in May 1996 following an optimistic announcement (which was later found to be based solely on visual inspection of the core) from the Cirque property. However, assay results revealed less than spectacular grades.

Cartaway, now a penny stock, has since optioned a 40% interest in the Cirque property to a private company. Work continues there, as well as at several other of the company’s properties in the area.

Previous work at the Cirque revealed disseminated-To-Massive pyrrhotite, which contains minor copper and nickel, hosted in layered mafic intrusive rocks of the Nain Plutonic Suite. Previous drilling from the top of a cirque structure (a steep-walled hollow in a mountain) has defined a lens of disseminated-To-Massive pyrrhotite dipping 65 east-Northeast. A Cartaway consultant has characterized the mineralization as being the distal and medial part of a phase of remobilized mineralization which may be sourced in a nickel-rich zone.

Cartaway attempted to intersect the down-plunge portion of the mineralization in holes 7, 8, 9 and 10 but was unsuccessful. Down-hole pulse EM surveys have defined an area of exploration containing two anomalies, A and B. Anomaly A represents the down-plunge extension of the cirque-Top mineralization.

Drilling is hampered by topography, but two holes totalling 1,500 metres have been planned to test anomaly A.

Cartaway also optioned 40% of its Puttuaalu Brook property to the same private company. Puttuaalu Brook, which is 15 km north of the Cirque property, is underlain by a layered succession of anorthosites and troctolites, considered to be near the base of the Nain Plutonic Suite.

Cartaway has completed four different geophysical surveys and drilled three holes on two previously identified anomalies. Two holes drilled on the southern anomaly intersected net-Textured sulphides with minor copper-Nickel content at the base of troctolite layers within anorthosites. The third hole intersected a succession of layered anorthosites and troctolites but no appreciable sulphides. Cartaway has also identified five separate anomalies which require drilling.

Cartaway has an option to earn a 60% interest from International CanAlaska and International Freegold Mineral Development (ITF-V) on the CanAlaska property, which lies south of Puttuaalu Brook.

Most of the CanAlaska property is at a high elevation and underlain by anorthosites. These are considered to be near the base of the Nain Plutonic Suite and contain small lenses of massive sulphides grading up to 1% nickel.

A consultant to Cartaway has recommended that three geophysical anomalies be subjected to at least 400 metres of drilling, though geological mapping and prospecting in the vicinity of the targets will be completed before a decision is made.

Cartaway
has also struck a deal with Ace Developments (AE-V) granting it an option to acquire three of that company’s licences in the Okak South area.

Those properties — 910M, 911M and 912M — are underlain by anorthosites containing small lenses of massive pyrrhotite. Ace completed an EM survey, though it was rendered ineffective by rough terrain. Cartaway has planned programs of geological mapping and ground geophysics.

Cartaway has a 100% interest in License 3307M, which is in the southern Nain Intrusive Complex, 100 km south of Voisey’s Bay. It will be drill-Tested with one hole.

In order to finance its ambitious Labrador work, Cartaway proposes to raise funds by way of a rights issue.

Meanwhile, Cartaway’s Okak South neighbor, Canadian States Resources (CSRS-C) has, for the time being, abandoned its Block 1514M and Block 1558M properties, both of which were once thought to be strong contenders for the title of “Voisey’s Bay II.”

“In my view, it would take a lot of deep drilling to advance the project any,” explains Canadian States President Harvey Keats. “At the moment, we’re waiting to see what some other people find with their deep drilling. We don’t need to do any work there this year, but we still have the flexibility of going back, because we still have a camp there.”

Despite the poor track record of companies exploring for nickel in Okak South and other parts of north-Central Labrador, Keats believes those areas are “a nickel camp, for certain.”

Keats, who last served as Diamond Fields’ vice-president of exploration, explains that nickel in north-Central Labrador occurs either in troctolite, as in the Voisey’s Bay deposits, or in anorthosite. A lot of the showings are in anorthosite, but no one has yet found the tonnage and grade required for an economic deposit.

“One of the things to do is to drill deep, near the showings in the anorthosite,” he says. “But it would take a lot of money to drill deep on all of our properties.

“I think there are possibilities. The odds of finding ore grades and significant tonnages comparable to Voisey’s Bay are better in the troctolites than outside.

“But it was only three years ago that no one was looking in troctolites either,” he notes. “The anorthosite model is not well-understood. It will take a lot of money and a lot of drilling to figure it out.” In the meantime, the company has refocused its efforts on northern Quebec, near Falconbridge’s advanced Raglan nickel project.

Canadian States is earning a half interest in a nickel-Copper property 12 km south of Raglan from Ungava Minerals (UNGV-C). That agreement is subject to due diligence and regulatory approval.

Canadian States can earn its interest by completing 10,000 metres of drilling before Dec. 31, 2000. Under certain circumstances, Canadian States may accelerate the vesting of its half interest in the property by paying $10 million to Ungava. The company can earn 57% by completing a bankable feasibility study, and 60% upon arranging financing to bring the property into production.

The property consists of several permits and claims covering approximately 650 sq. km within the Ungava Trough. Prospecting and exploration in the Ungava Trough in the 1950s resulted in the discovery of the Raglan, Expo-Ungava and Cominga showings. On the Expo-Ungava deposit, Amax Exploration reported a resource of 19 million tons grading 0.47% nickel and 0.51% copper with significant amounts of cobalt and precious metals. Included in that resource are 4.2 million tons grading 0.75% nickel and 0.85% copper considered amenable to open-pit mining at a waste-To-ore ratio of 2.75-To-1.

The deposit has been explored over a strike length of 900 metres.

Mineralization include zones of high-grade massive sulphides that still require detailed follow-up drilling. In addition to the Expo-Ungava deposit, seven other mineralized zones and 11 airborne anomalies have been selected by Canadian States for follow-up surface exploration and diamond drilling.

“We’ve got open potential in all directions,” says Glen Erikson, president of Ungava.

“With all the scandals and problems elsewhere, it’s nice to work in an area where a major company — in our case, Amax — provided the results.” “I quite like the property,” explains Keats. “A lot of showings have been found and drilled but, in my view, not followed up properly.” Keats says he expects to be in a position to drill by mid-August.