Magma Adds The Ounces At Thunder Bay North

The Thunder Bay North nickel-copper- platinum group metals (PGM) project in northwestern Ontario is a greenfields success story, and one of a series of higher-grade, base metal-PGM discoveries in the mid-continental rift region that wraps around Lake Superior’s North Shore region and extends south into Michigan.

Perth-based Magma Metals (MMW-T, MMW-A) staked its key claim block 50 km northeast of Thunder Bay in 2005 and has been quietly proving up resources at the project ever since.

The latest estimate includes an indicated resource of 4.6 million tonnes grading 2.88 grams per tonne platinum equivalent (PtEq) and an inferred resource of 3.6 million tonnes grading 2.29 grams per tonne PtEq within the project’s Current Lake intrusive complex.

Recent results suggest the resource will continue to grow and be upgraded. An ongoing 50,000-metre infill drilling program just intercepted the best results yet: a 2.6-metre massive sulphide zone grading 52.7 grams platinum per tonne, 41.5 grams palladium per tonne, 3.9 grams gold per tonne, 61.0 grams silver per tonne, 11.6% copper and 3.3% nickel. This high-grade zone sits within a wider zone of 44.7 metres grading 5.5 grams platinum, 4.8 grams palladium, 1.2% copper and 0.5% nickel from 145 metres down-hole.

“This is the fourth massive sulphide intersection we’ve had and the best we’ve seen,” says Bill Stone, Magma’s vice-president of exploration. “Aside from our routine borehole electromagnetic surveying, we’re going to be trying some borehole magnetometric resistivity and surface geophysics to help us better target the drilling to follow up this intercept.”

The Thunder Bay North project may have never come to fruition if it hadn’t been for the wherewithal of consulting geologist Graham Wilson, who discovered mineralized peridotite boulders on the west side of Current Lake in 2001.

“Unless you cracked open the boulders, you would not have thought they were mineralized,” says Stone. “They were obviously ultramafic rocks that are favourable host rocks of this type of mineralization, but they weren’t obviously rusty.”

The discovery went unheralded until Wilson’s former PhD associate at Cambridge University, Keith Watkins, launched Magma Metals with the intention of acquiring nickel-copper-PGM prospects in Australia and Canada.

While shopping around for properties, Watkins reconnected with Wilson, who took him to the site of the Thunder Bay boulder discovery. Watkins recognized that the angularity of the boulders meant they couldn’t have travelled far.

Taking into account the direction of glacial ice flow, Watkins and his team homed in on a second location on the east side of Current Lake that was strewn with the same type of mineralized boulders, only this time they appeared to be in situ, lifted directly from the underlying outcrop by frost heave.

Magma staked the surrounding ground and launched an aeromagnetic survey of the claim block in July 2006, indentifying a prominent linear anomaly beneath Current Lake and a reversely magnetized, bulls-eye magnetic anomaly on the adjacent Beaver Lake claim.

The junior drilled the Current Lake anomaly that winter, hitting 10.5 metres of precious and nickel-copper mineralization and confirming that an underlying peridotite intrusion was indeed the source of the mineralized glacial boulders.

Subsequent work revealed that the intrusion is part of the larger Current Lake intrusive complex, a 5-km-long mafic-ultramafic magma conduit.

Magma Metals has since identified two other nearby complexes — Steepledge Lake and Lone Island Lake — with similar nickel-copper-PGM potential.

In late 2009 Magma listed in Canada and completed an equity financing and a concurrent private placement for gross proceeds of $13.2 million.

The company intends to use the cash to further explore and develop the Thunder Bay North project and for general corporate purposes. At the end of 2009, Magma had $22.1 million in its treasury.

An ongoing scoping study is investigating potential mining strategies, metallurgy and process engineering, and environmental and permitting requirements. Magma intends to incorporate a new resource estimate into the study based on a combined database of 105,000 metres of drilling. The results of the study, expected by September, will determine the economic potential of the updated resource.

Magma expects to spend roughly $10 million on the project this year. At presstime, four drills were turning — including one at the nearby Steepledge Lake complex — and Magma was considering adding a fifth. Stone says the company submits exploration reports to First Nations groups in the area on a regular basis.

Thunder Bay North joins a growing list of nickel-copper-PGM projects in the Proterozoic mid-continental rift region. Though the area hosts PGM producers (e. g. North American Palladium’s [PDL-T, PAL-X] Lac des Îles mine northwest of Thunder Bay) and lower-grade deposits (e. g. Marathon in Ontario and Nokomis in Minnesota), several higher-grade discoveries over the past decade, including Rio Tinto’s (RTP-N, RIO-L) Eagle Lake, Lakeview and Tamarack prospects have reawakened interest.

In 2007 Rio Tinto won approval to develop Eagle Lake in Michigan’s Upper Peninsula, though the permit is being contested by anti-mining groups. The US$300-million mine is slated to operate at a rate of 2,000 tonnes per day from a decline ramp, exploiting a resource of 3.6 million tonnes grading 3.8% nickel, 3% copper, 0.8 gram platinum, 0.5 gram palladium and 0.3 gram gold.

Initial drilling on Rio Tinto’s earlier-stage Lakeview project in Minnesota detected significant disseminated sulphide mineralization, including a 138-metre intersection grading 1.6% nickel and 1.1% copper.

Rio Tinto’s third grassroots discovery, the Tamarack, occurs within a 15-km-long, mafic-ultramafic intrusion in northern Minnesota and comprises disseminated, semi-massive and massive sulphides within a late gabbroic phase. Massive sulphide lenses occur in country rock metasediments peripheral to the intrusion.

A little farther north in the Duluth intrusive complex, Duluth Metals (DM-T) is planning to develop the Nokomis deposit in a joint venture with Antofagasta (ANFGY-O, ANTO-L). Nokomis contains indicated resources of 50 million tonnes grading 0.64% copper, 0.20% nickel, 0.66 gram PGM per tonne plus 274 million inferred tonnes at 0.63% copper, 0.21% nickel and 0.685 gram PGM.

And on the northeast side of Lake Superior, Marathon PGM(MAR-T) is in the midst of obtaining permits for its Marathon deposit, estimated to contain an open-pit reserve of 91.5 million tonnes grading 0.83 gram palladium, 0.24 gram platinum, 0.09 gram gold, 0.25% copper and 1.4 gram silver.

Marathon was discovered in the 1960s and has gone through several waves of exploration.

The new discoveries and development projects suggest the billion-year-old geological rift has the potential to become a significant source of nickel, copper and PGMs just as some major global producers are becoming long in the tooth.

“Better exploration techniques and a better understanding of the geological setting of this area is allowing companies to target areas for more detailed exploration,” says Stone. “Metal prices have been favourable and there’s growing uncertainty of the future of PGM mining in South Africa and Russia, the two dominant producers.” –The author is a freelance writer specializing in mining issues, and principal of Toronto-based GeoPen Communications. www.geopen.com