BC Holds Its Own

The performance of exploration and mining industries in British Columbia remained strong in 2008. Exploration spending in the province was $367 million, the second highest yearly expenditure on record. More than $1 million was spent on 98 of the 395 active exploration projects. Of the more than 20 proposed mine development projects in the province, many made significant progress last year.

The total value of solid mineral production in 2008 is estimated at $5.7 billion, slightly more than the $5.6 billion recorded in the previous year. Coal accounted for 51% of the total value due to increased production and record-high contract prices. The large majority of B. C.’s coal production is coking coal and all of it is exported. Copper remains in second place at 22%, followed by molybdenum and gold.

Major Exploration Projects

Exploration spending fell short of last year’s record of $416 million but remained remarkably strong given the challenging environment that many junior companies experienced late in 2008. At $367 million, the 2008 figure is well above the recent 5-year average and close to the inflation-adjusted peaks of the previous 35 years. Advanced-stage exploration projects accounted for more than 40% of total exploration spending. Grassroots exploration continues to be very limited, but it is encouraging to see early stage exploration at 30% of total spending. Mine evaluation spending continues to be significant at 16%, reflecting the number of projects being considered for mine development.

A number of projects were deferred or scaled back over the course of the year but planning and funding were in place for most of them before access to capital tightened. Flow-through tax incentives also helped extend the exploration industry’s momentum. Overall, the number of projects tracked by the B. C.’s regional geologists was down to 395 from 470 last year, and exploration drilling was down 16% in terms of total metres drilled.

Beginning in the northwest at the Yellow Jacket gold prospect near Atlin, Prize Mining began processing a bulk sample in a new pilot mill to recover coarse-nugget gold. To the east, Columbia Yukon Explorations further expanded the Storie molybdenum deposit near Cassiar.

South toward the Iskut region, Imperial Metals built better access routes to aid deep drilling and year-round exploration at the Red Chris copper-gold porphyry prospect. This follows 2007’s impressive deep drilling results. Romios Gold Resources found a new copper-gold-bearing breccia zone on the Trek prospect. To the east, Romios drilled at Newmont Lake to upgrade an inferred resource. Silver Standard Resources directed a major drilling program on its Snowfield property, east of the Mitchell deposit on the KSM property.

In the gold-rich Stewart district, Bravo Venture Group conducted a major drilling program on the Homestake Ridge project. Significant gold and silver intersections will augment the existing inferred resource. At the Dilworth gold-silver project, Ascot Resources explored a complex area with numerous showings, some with bonanza grades. There were several volcanogenic massive sulphide programs in the northwest; one at Todd Creek resulted in a discovery in 2008 by Intuitive Exploration.

South of Stewart, the past-producing Kitsault molybdenum mine was acquired by Avanti Mining. The company launched an exploration program with a view to reopening the mine.

Canadian Gold Hunter worked Zymo, the site of recently discovered porphyry copper-gold mineralization, west of Smithers. Bard Ventures delineated a substantial new molybdenum zone on its Lone Pine property, to the east. Amarc Resources advanced the Aspira project in the Sitlika belt, north of Burns Lake, from a grassroots zinc anomaly to a comprehensive program that included drilling.

Terrane Metals continued in-fill drilling of the Berg copper-molybdenum prospect northwest of Huckleberry mine, and was successful in expanding the resource.

In the Quesnel terrane northwest of Prince George, Serengeti Resources continued to achieve impressive results at its Kwanika porphyry copper-gold-molybdenum deposit. Geoinformatics Exploration announced that the first two holes drilled on its Falcon prospect returned encouraging porphyry molybdenum values.

North of Williston Lake, Canada Zinc Metals (formerly Mantle Resources) continued intensive exploration of its Akie Sedex lead-zinc-silver project. In June, the junior published an inferred resource.

Exploration in the Northeast coalfields increased in 2008. Among the projects, First Coal pursued an extensive drilling program on its Goodrich Central South property, southwest of the former Willow Creek mine. First Coal identified a 41-million-tonne measured and indicated metallurgical coal resource.

West of Prince George, Leeward Capital completed a drill program and published an inferred resource estimate for its Nithi Mountain porphyry molybdenum deposit, east of the Endako molybdenum mine. To the southeast, TTM Resources drilled its Chu prospect in 2008 and released a resource estimate and a preliminary economic assessment.

South of Prince George, exploration at the Spanish Mountain bulk-tonnage, sediment-hosted gold project, operated by Skygold Ventures and Wildrose Resources, continued with a large drill program. Fjordland Exploration and partner Cariboo Rose Resources concentrated their 2008 activities on the Southeast zone of the Woodjam copper-gold-molybdenum porphyry prospect. The work yielded some encouraging results.

Commerce Resources proceeded with drilling and bulk sampling at its Blue River tantalum and niobium project. Regional exploration resulted in the discovery of the Felix carbonatite. Work continued at the Aurizon and Peach 1 zones on GWR Resources’ Lac La Hache porphyry copper-gold property. Selkirk Metals continued an aggressive program at the Ruddock Creek lead-zinc-silver property with underground development and drilling. Newmac Resources set out to define the extent of its new zone at the Crazy Fox (formerly Anticlimax) porphyry moly-tungsten property, north of Little Fort.

On northern Vancouver Island, IMA Exploration drilled the NW Expo and Hushamu zones on its Island Copper porphyry copper-moly-gold project. Near Port Alberni, at Bitterroot Resources and Mineral Creek Ventures’ Mineral Creek project, processing of a bulk sample continued, as did drilling that intersected a new gold vein. Selkirk Metals drilled the Catface copper porphyry prospect north of Tofino with positive results, and, to the south, Logan Resources drilled the Brynnor magnetite skarn to upgrade an existing resource. Pacific Iron Ore, meanwhile, carried out drilling and airborne geophysics targeting magnetite skarn mineralization near Port Renfrew.

At the Taseko Lake porphyry copper, gold and molybdenum property, Galore Resources completed significant drilling on several zones. Near Kamloops, Abacus Mining and Exploration concentrated on optioned ground in and around the Ajax West and East pits. Drilling will contribute to a new resource estimate. And geological evidence suggests potential for further discoveries at Happy Creek Minerals’ Rateria porphyry copper- molybdenum property.

South of Princeton, the largest drilling program in the province occurred at Copper Mountain Mining’s Copper Mountain copper-gold porphyry project. The company is defining a resource in a proposed “super pit,” which would encompass three past- producing open pits. The company signed an agreement with Japan’s Mitsubishi Materials whereby the junior could get project financing and Mitsubishi would secure a source of concentrate.

To the east, Goldcliff Resources continued exploration for near-surface low-g
rade gold mineralization at the Panorama Ridge project near the historic Nickel Plate gold mine at Hedley.

In the Kootenays, Taranis Resources drilled the Thor property in the Ferguson area. Results to date suggest that various occurrences previously classified as polymetallic (silver, lead, zinc, gold and copper) veins, are part of a single, laterally extensive massive sulphide system.

Anglo Swiss Resources was active on its past-producing Kenville property, west of Nelson. Recent work focused on underground rehabilitation, mill upgrading and drilling. Activities at the Jumping Josephine property, west of Castlegar, undertaken by joint venture partners Astral Mining and Kootenay Gold, were centred on the JJ Main zone, a 2003 discovery of high-grade gold mineralization. The Jersey-Emerald project, south of Salmo, was the site of underground drilling by Sultan Minerals, designed to test the East Emerald tungsten and East Dodger molybdenum zones.

East of Kootenay Lake, Jasper Mining carried out a large diamond- drilling program on its McFarlane molybdenum property, where it investigated potential for both high- grade and bulk-tonnage material in a porphyry setting.

In the Crowsnest coal field, Kennecott Canada Exploration started to evaluate the Crowsnest metallurgical coal property in an effort to identify reserves amenable to underground longwall mining.

Development Projects

The Ministry of Energy, Mines and Petroleum Resources and the Environmental Assessment Office listed a total of 30 mine development projects as of November 2008. The list consisted of four fully permitted projects, 21 at either the pre-application or review stages, and five in more advanced stages.

In the northwest near Atlin, Adanac Moly temporarily halted the construction of its Ruby Creek open-pit molybdenum mine. Drilling expanded the deposit in 2008. Redfern Resources further developed its Tulsequah Chief copper-lead-zinc-gold-silver deposit.

East of Dease Lake, Sherwood Copper continued to delineate reserves at the proposed 4,000-tonne- per-day, open-pit mine at the Kutcho Creek VMS deposit. Sherwood merged with Capstone Mining late in 2008.

At Schaft Creek, Copper Fox Metals continued to collect information for an environmental assessment of a proposed 100,000 tonne-per-day, open-pit copper mine. At nearby Galore Creek, NovaGold Resources and Teck aimed engineering studies at reducing construction costs while going ahead with the mine access road.

To the southeast, the KSM (Kerr- Sulphurets-Mitchell) gold-copper project entered the environmental assessment process in 2008. Seabridge Gold contemplated a 120,000-tonne- per-day, open-pit mine at KSM.

Fortune Minerals updated its feasibility study of a 3-million-tonne- per-year mine at the Mount Klappan anthracite coal deposit, and began to seek a partner to help develop the property.

Pacific Booker Minerals carried out geotechnical and hydrogeological work on the Morrison copper-gold project northeast of Smithers. The company is working toward an environmental assessment submission. B. C.’s Environmental Assessment Office is reviewing a project report for the proposed Davidson underground molybdenum mine, located near Smithers, and owned by a subsidiary of Thompson Creek Metals.

On the Mt. Milligan project, Terrane Metals plans an updated feasibility study. Meanwhile, the environmental assessment review process, permitting, and pre-construction activities are ongoing.

Western Canadian Coal has two projects with Terrane certificates under development. The EB deposit, located near the Perry Creek operation, with an 8-million-tonne coal resource, and the nearby Hermann project. Peace River Coal continued prefeasibility work on the Roman Mountain project, located adjacent to the Trend mine, anticipating applications for environmental certification and a mines permit. North of Roman Mountain, Peace River Coal is seeking to develop the Horizon block as a combined open- pit/underground operation.

Southwest of Williams Lake, Taseko Mines’s Prosperity porphyry gold- copper deposit formally entered the environmental assessment process. At the Harper Creek copper project southwest of Vavenby, Yellowhead Mining filed a project description with the Environmental Assessment Office. Engineering and environmental studies are under way.

West of Kamloops, New Gold received a mines permit in the fall of 2007 for the New Afton porphyry copper-gold mine. The company started construction but production was pushed back to 2012.

Operating Mines

During 2008 British Columbia had 10 operating metal mines, nine operating coal mines, 35 industrial mineral operations and numerous aggregate quarries. The Lexington-Grenoble gold-copper mine opened and the rich Eskay Creek gold-silver mine closed. Mine expansion projects were started or planned at Highland Valley Copper, Endako, Gibraltar, Perry Creek (Wolverine), Brule and MAX. As of early 2009, most of these have been deferred as mines adopt cost saving measures.

The Eskay Creek gold-silver mine, operated in its later years by Barrick Gold, closed in early 2008. The mine produced more than 100 tonnes of gold over its 14-year life. To the east, Northgate Minerals’ Kemess copper- gold, open-pit mine had record gold production of more than 350,000 oz. in 2008. Projected mine life is until the third quarter of 2011.

Increases in B. C.’s coal production in 2008 are largely attributable to the newer mines in the Northeastern coal fields. Peace River Coal’s Trend mine, the Perry Creek and Brule mines of Western Canadian Coal together produced roughly 5 million tonnes. All three mines produce metallurgical coal. Perry Creek also produces a small amount of thermal coal. Brule’s output is a pulverized-coal-injection product.

West of Prince George, Thompson Creek Metals’ 45-year-old Endako open-pit molybdenum mine produced about 4,000 tonnes of molybdenum in 2008. A project to significantly expand mine and mill throughput began in 2008 but is now on hold, owing to low moly prices.

Operations continued as normal at Imperial Metals’ 50%-owned Huckleberry copper-moly porphyry deposit. A decision on whether to develop a low-grade resource must be made in 2009 if the mine is to continue production beyond 2010.

South of Prince George, Cross Lake Minerals’ QR gold mine moved underground in 2008. There was a temporary shutdown late in the year. Imperial Metals’ Mount Polley porphyry copper-gold mine increased mill throughput by around 5% in 2008 and reserves increased such that projected mine life now extends to 2015. At the Gibraltar copper-moly calc-alkalic porphyry, Taseko Mines announced a 28% increase in reserves. There are sufficient reserves to support the operation for 16 years. The first phase of a mill expansion was completed in April 2008.

Roca Mines’ new MAX underground molybdenum mine at Trout Lake began shipping concentrate in November 2007, and achieved full commercial production in April 2008.

Teck’s Highland Valley Copper continued with its ongoing plan to extend production to 2019. As a consequence of the work, production of copper and molybdenum was reduced in 2008.

On Vancouver Island, operations continued as normal at the Quinsam underground thermal coal mine near Campbell River. Hillsborough Resources’ work toward expanding and extending mine life continued. Breakwater Resources’ Myra Falls zinc-copper-gold-silver underground mine warned of a temporary shutdown in late 2008 or early 2009, although this had not occurred at presstime. In the Kootenays, Merit Mining’s new Lexington-Grenoble underground gold-copper mine reached commercial production in mid-2008. Merit also announced a temporary shutdown. Teck Coal, the world’s second-large
st supplier of seaborne metallurgical coal, operates Fording River, Greenhills, Line Creek, Elkview and Coal Mountain. These five large open-pit coal mines in the Elk Valley produced roughly 22 million tonnes coal, up slightly from the previous year.

Outlook

Production increases at the province’s coal mines, particularly those in the northeast, demonstrated the mining industry’s ability to respond to positive commodity markets in 2008. While the industry is now dealing with lower commodity prices and depressed equity markets, the investments made over the last number of years in exploration and mining projects in British Columbia suggest it should be well- placed to respond to the next upturn in commodity prices. For example, the recent mining boom has left the province with more than 20 mine development projects and a large number of advanced exploration projects.

For more information on the projects mentioned here, please see Exploration and Mining in British Columbia 2008 or British Columbia Mines and Mineral Exploration Overview 2008, published by the Ministry of Energy Mines and Petroleum Resources.