Cumberland proves up Nunavut projects

While many of its peers are chasing mineral deposits in Africa, Latin America and Southeast Asia, Cumberland Resources (CBD-T) has chosen to concentrate its exploration efforts in Canada’s Far North. And with two gold projects in the Eastern Arctic of Canada fast-approaching prefeasibility levels, the company is beginning to enjoy some stay-at-home success.

The Vancouver-based junior owns a 100% interest in the Meadowbank project, 70 km north of the ocean-accessible community of Baker Lake, an ultimate 20% carried interest in the Meliadine West project, 20 km north of Rankin Inlet, and a 50% interest in the adjoining Meliadine East property.

The projects are situated in the Kivalliq region of the Northwest Territories. In 1999, the region becomes part of Nunavut (Inuktitut for Our Land), a new, separate territory in the Eastern and Central Arctic to be administered by the Inuit. Cumberland’s mineral rights are grandfathered under the Nunavut agreement, which stipulates that pre-existing tenure rights be maintained.

“Exploration in Nunavut certainly has its advantages,” explained Senior Vice-President Kerry Curtis, who spoke to The Northern Miner during a visit to the Meadowbank project. “Because land claims have been settled, Nunavut offers an area that is stable and politically low risk. Also Nunavut has huge unexplored greenstone belts. This really is the frontier of Canada, much like northern Quebec.”

Meliadine West is operated by WMC International, a unit of Australian-based Western Mining Corp., which has earned a 56% interest in the project. Cumberland and Comaplex Minerals (CMF-T) each hold a 22% carried interest through to production. WMC has the option of buying a further 4% at the time of production.

The Meliadine East project is a 50-50 joint venture between Cumberland and Comaplex. Cumberland’s share of a 1997 property resource inventory of 5.1 million contained ounces of gold is 2.4 million oz.

Total project expenditures in 1998 are expected to exceed $10 million. Of the 50,000 metres of drilling scheduled, about 18,000 metres are earmarked for Meadowbank, and 38,000 metres for Meliadine West. “It really is Canada’s biggest exploration push,” said Curtis.

Cumberland acquired a 60% interest in the Meadowbank property and a 50% interest in each of the Meliadine and Parker Lake projects from Asamera Minerals in mid-1993 for $450,000 cash and a 2% net smelter return royalty, which was later bought out for an additional $400,000, plus 50,000 shares and 100,000 share purchase warrants.

At the time of Cumberland’s purchase, Meadowbank hosted a preliminary resource of about 900,000 tonnes grading 6.51 grams gold per tonne, equivalent to 190,000 contained ounces, whereas the discovery zone at Meliadine East contained a 816,000-tonne resource grading 9.94 grams, equivalent to 261,000 oz.

In 1997, Cumberland boosted to 100% its interest in Meadowbank by buying out Comaplex’s 40% interest for $3.2 million cash, 1.5 million shares and 1.5 million warrants (exercisable into 750,000 shares at $4.25 per share by July 1999).

Cumberland considers Meadowbank to be its biggest asset, with an in situ resource base estimated at 1.5 million oz., based on 220 diamond drill holes and a cutoff grade of 2 grams. The resource lies within 225 metres of surface.

Meadowbank is accessible from Baker Lake by a 20-minute helicopter ride, or by winter road. The project area is set on lowlands and is covered by glacial overburden and shallow lakes. It experiences long cold winters, with cool summers. Winter temperatures can drop to minus 40 degrees.

Work to date has defined three closely spaced gold deposits in the same banded iron formation horizon, which extends along strike for a length of 4-5 km. The deposits are separated by about 500 metres.

The Meadowbank property is underlain by metavolcanic and metasedimentary rocks of the Sisson-Tehek Lake greenstone belt of Archean age. Mineralization is hosted in a tightly folded banded iron formation. The structural history is complex, with three principle deformation events: an early event of tight, isoclinal folding; subsequent kink-folding; and a much gentler compressional folding creating a “wavy” overprint. “There are some pretty funky fold patterns happening,” remarked Project Manager Brian Alexander.

Sulphide mineralization of predominantly pyrite and pyrrhotite is believed to have occurred as a replacement of magnetite oxide iron formation. Gold mineralization is related to the sulphides, but Alexander cautions that not all sulphide facies are gold-bearing. In the banded iron formation, visible gold is associated with a secondary enrichment of quartz veining.

This spring, Cumberland completed 47 holes in 12,000 metres, and the company is currently winding down an additional 40-hole, 6,000-metre summer program.

“Drilling this year has outlined resource expansions and continues to do so,” said Curtis. “Of the 47 holes from the phase 1 [spring] program, 35 intersected ore grades. We’re moving well toward that 2-million-oz. resource that we want to see by the end of this year.”

Cumberland envisions developing Meadowbank as a Lupin-style mine — a fly-in/fly-out, open-pit and underground operation with winter road access. The project includes two potential open-pit deposits — Third Portage and North Portage — and a third, deeper target known as Goose Island.

The Third Portage is the largest deposit, containing a near-surface resource of 4.5 million tonnes grading 7.06 grams, or about 1 million oz. Approximately 550,000 oz. have been drilled off on 20-metre centres. All of the resource is within 145 metres of surface, with grades of up to 17.1 grams at surface. Curtis said the significant tonnage near surface combined with such grades augur well for a small starter pit.

During the spring program, most of the drilling was carried out just west of Third Portage on the adjacent Bay zone, a 1997 discovery that returned some encouraging near-surface values. Curtis said the Bay zone will be brought into a resource this year. “There are some very nice grades [at the Bay zone],” he said, “and we hope the larger part of that will be open-pittable.”

Spring drill results from the Bay zone included 12.5 grams over 4 metres in hole 243, and 8.5 grams over 4 metres in the southernmost hole, No. 272. Drilling revealed multiple horizons that, at depth, seem to congeal into one. This is a common feature on the property, according to Curtis.

Spring stepouts west of the central part of the Third Portage deposit yielded 9.9 grams over 6.3 metres in hole 261, 3.3 grams over 5.4 metres in hole 219, and 9.5 grams over 4.1 metres in hole 248. In the last month, Cumberland has been encountering some impressive sulphide mineralization updip, to the east of Third Portage, where the zone appears to have flattened out.

To the north, the North Portage zone contains a near-surface resource of 818,000 tonnes grading 5.73 grams gold per tonne, equivalent to 150,700 contained ounces.

“We spent quite a bit of time up there this summer and completed quite a few new holes in the area,” said Curtis. “We think there are going to be some interesting results coming out of that area.” Assay results from the summer drilling program are pending.

During the spring, Cumberland put down some widely spaced holes between North Portage and Third Portage. “We had some good intersections in that area and pretty much proved continuity of the geology and of the mineralization,” said Curtis. “Although there are not a lot of holes there to warrant bringing it into a resource calculation, we certainly have some blue-sky in this area and some good resource potential.”

The Goose Island zone, about 500 metres south of Third Portage, hosts 976,800 tonnes grading 11.5 grams, cut to 34 grams, equivalent to 359,000 contained ounces. Curtis said Goose Island has a lot more visible gold than the other zones and, accordingly, has to be treated for the nugget effect. Uncut, the deposit averages a grade of 19.2 grams. Deep drilling in 1997 intersected grades of up to 25.8 grams over 5.2 metres, some
200 metres below current resources. The geology is complex, however, and limited follow-up drilling in 1998 has encountered intervals that are much narrower.

A preliminary scoping study of the Meadowbank project was completed earlier this year by MRDI Canada, a division of H.A. Simons. The study proposes that a combined open-pit and underground mine, operating at a milling rate of 2,000 tonnes per day, could produce an average of 120,000 oz. per year over a mine life of 10 years at a cash operating cost of US$156 per oz.

Required capital expenditures are estimated at US$66 million, with a quick payback period of 2.7 years. “That’s the effect of those near-surface, high grades in the Third Portage,” explained Curtis.

Open-pit, diluted, minable resources in the Third Portage zone are estimated at 4.9 million tonnes grading 6.46 grams at a stripping ratio of 7-to-1, whereas the diluted underground resource at Goose Island stands at 780,000 tonnes grading 10 grams.

Ongoing geotechnical studies indicate there is potential to lower stripping ratios by increasing the proposed pit angle.

The mineralization is non-refractory, with a small percentage of arsenopyrite. Prefeasibility-level metallurgical tests suggest high gold recoveries in the range of 94-96%, using a combination of gravity and leach techniques. Gravity separation methods alone recovered 22.5-56.4% of the gold from samples of Third Portage zone, whereas Goose Island samples averaged better than 40%. The large variability in the gravity is explained by the nugget effect.

The study assumes a gold price of US$325 per oz. and predicts an after-tax rate-of-return of 18.9%. The net present value at a 5% discount is estimated at US$46.6 million. At a lower gold price of US$300 per oz., the rate-of-return falls to 15.1%, while at US$275, it falls to 11.1%.

The studies, though of a preliminary nature, have provided the company with the incentive to advance the project as quickly as possible.

Engineering and environmental studies are well under way, and, at the time of our visit, a quality control program was in check and MRDI had begun independent confirmation drilling.

Cumberland has been examining methods for tailings impoundment, including frozen tailings, submerged tailings, and a mixture of both. A recent orthophoto survey will offer 1:1,000-scale topographic maps to aid in site engineering and planning.

The company recently purchased a 250,000-litre-capacity, 5-tank fuel farm for Meadowbank in preparation for the use of heavy equipment. It is expected to take about six months to install the tanks.

Meanwhile, environmental studies are collecting base-line data on fish population, weather, wildlife, water quality and acid rock drainage.

Cumberland hopes to be in a position to complete prefeasibility studies in the first quarter of 1999.

The Vancouver-based company has 22.9 million shares outstanding, or 25.3 million fully diluted, and a cash position of $7 million, with no debt.