Having acquired the entire Hope Bay greenstone belt, 685 km northeast of here, in Nunavut, equal partners
The Hope Bay greenstone belt is 65 km east of Bathurst Inlet; the centre of the belt lies about 160 km north of the Arctic Circle. The nearest settlements are Omingmaktok, 65 km to the west on the east coast of Bathurst Inlet, and Cambrige Bay, 170 km to the northeast on Victoria Island.
The area can be reached by plane from Yellowknife and, during the summer months, is also accessible by barge from the Arctic Ocean. Lithologically, the greenstone belt trends in a north-southerly direction and extends for 80 km from the tip of the Arctic coastline southward. At the northern tip of the belt, just 6 km from tidewater, lies the Doris deposit. The more advanced, Boston deposit is 60 km farther south.
The region has short cool summers and long dark winters, with winter temperatures often hitting minus 30 C. The mean annual precipitation is less than 150 mm, and the permafrost reaches depths of up to 500 metres.
On a recent visit to the Boston and Windy Lake camps, The Northern Miner observed that current infrastructure consists of three 100-man exploration camps. Supplies and equipment are flown in via Hercules aircraft.
The Hope Bay greenstone belt was discovered by government geologists in 1962, though the first significant gold discovery not made until 30 years later, when
BHP spent $85 million on work that included about 180,000 metres of drilling in 231 surface and 182 underground holes. The corporation also performed 2,300 metres of underground development and collected 27,000 tonnes of material for bulk sampling. Metallurgical testing, preliminary scoping studies and extensive environmental baseline work were also carried out.
The Hope Bay project became available when BHP decided to sell its gold assets and focus on its other core businesses. In December 1999, Miramar and Cambiex acquired the two principal deposits, Boston and Doris, and gained control over a 1,180-sq.-km land position, which blankets the Hope Bay belt. In February, the partners initiated an extensive work program to advance the two principal deposits.
In the current year, the Hope Bay joint venture expects to spend $14 million on a 40,000-metre program of infill drilling. Included in the budget is $750,000 worth of environmental studies plus $500,000 for scoping and prefeasibility work.
“We are focusing on increasing the resource confidence at the Doris and Boston deposits so that we can start a feasibility study and get this project into production as quickly as possible,” said Stephen Quin, executive vice-president of Miramar.
For its half-interest, Miramar has paid Cambiex US$13.3 million and will spend $2 million on exploration. As part of the deal, the company must arrange for third-party financing (no less than 60% of the total), should the project be advanced to production. Cambiex is managing the exploration program, whereas Miramar will manage the feasibility and development phases, if they are warranted. Cambiex acquired the ground from BHP for US$18.5 million.
Miramar and Cambiex hope to launch a gold mining camp that will produce in excess of 300,000 oz. gold per year at cash costs well under US$200 per oz.
Gold has been discovered at a number of sites within the Hope Bay greenstone belt. The key deposits, Boston and Doris, both remain open at depth as well as along strike.
The last preliminary resource estimate for the Boston deposit was 5.66 million tonnes grading 13.10 grams gold per tonne, or 2.4 million contained ounces. The Doris resource was pegged at 2.1 million tonnes grading 17.8 grams gold per tonne, or 1.2 million contained ounces.
The Madrid deposit, south of Doris, contains 5.03 million tonnes grading 4.26 grams gold, or 690,000 contained ounces.
Roscoe Postle Associates audited the resource estimate using a cutoff grade of 5 grams gold per tonne, and the results confirmed BHP’s original calculations.
The acquisition cost was US$18 million, or US$4.30 per oz.
The Boston deposit was discovered in outcrop and has been drilled to a depth of 720 metres. Gold is associated with a flexure in the Hope Bay shear zone and occurs in zones of extensive hydrothermal alteration. The yellow metal is associated with sulphides (mainly pyrite), which form clots in and around an en echelon system of quartz carbonate veins.
To date, three principal zones — B-2, B-3 and B-4 — have been discovered. These are in the 300-metre-wide Hope Bay Break and represent distinct areas of quartz veining hosted in altered and sheared basalts.
The B-2 vein contains about 75% of the Boston resource and is characterized by a series of parallel, en-echelon quartz-carbonate veins developed at or near a basalt-sediment contact. B-2 contains 4.16 million tonnes grading 12.16 grams gold per tonne, (1.6 million contained oz.).
The B-3 zone consists of stock work quartz-carbonate veins hosted within basalt or at a basalt-ultramafic interface. These veins are more erratic when compared with the B-2 veins. B-3 contains 1.21 million tonnes grading 16.90 grams gold, (657,414 contained oz.).
The B-4 veins are clustered near lithologic contacts and are approximately parallel to them. B-4 contains 294,000 tonnes grading 12 grams gold, or 113,362 contained ounces.
BHP drove a minus-16 decline, measuring 3.5 by 5 metres, down to a depth of 185 metres below the surface and proceeded to develop three levels. Drill stations were established every 10 metres, crosscuts were driven into the B-2 and B-3 zones, and drives were placed along strike in the ore lenses. The major mined about 27,000 tonnes of material from the two zones and determined that there was a good correlation between underground drift samples and the results of its tightly spaced drill program (BHP drilled 182 holes into the B-2 zone and 68 holes into the B-3). The bulk sample returned a grade 5% higher than the model estimate that resulted from definition drilling.
The Boston deposit remains open to depth, as well as along strike. To the north, the deposit is cut off by a younger fault. This faulted extension of the deposit, as well as the southern limit of mineralization, has yet to be explored extensively.
Also, the joint-venture partners report that several trends of the B-4 zone require follow-up work. Teaser intersections include 3 metres averaging 60.73 grams gold and 3.6 metres of 28.05 grams gold.
The Doris deposit comprises distinct massive quartz veins with only minor associated sulphides. To date, four different quartz vein systems — Lakeshore, Central, West Valley Wall and Island — have been identified as part of the Doris Lake deposit. Two of the veins, Lakeshore and Central, have been tested sufficiently to provide a resource estimate. These two veins have been traced for about 2 km along surface and to a depth of about 400 metres.
Drilling has been completed on a 50-metre grid from surface, and 57,800 metres in 201 holes have been put down. The partners intend to tighten the grid down to 50-by-25 metres and complete further infill drilling as required. The Doris system comprises several sub-parallel veins that have been traced for more than 3 km along strike and to depths of 400 metres below surface.
Previously, the Central and Lakeshore veins were interpreted as being roughly parallel and between 2 and 25 metres apart, but recent drill results indicate that they are two limbs of a single, isoclinally folded vein that plunges to the north. The western limb is represented by the higher-grade Central vein, which varies from 2.5 to 12 metres in thickness and terminates 10-15 metres below the Hinge zone. The Lakeshore vein, with a more variable grade, is typically 4-8 metres thick and persistent along strike and downdip. Where intersected, the vein in the Hinge zone typically thickens to 8-13 metres, with higher grades occurring on the hangingwall side. The Hinge zone outcrops at surface to the south and appears to be faulted off to the north and south. The highest-grade material is said to occur in the hangingwall and footwall of the vein system.
Although a diabase dyke intersects the Doris veins about 100-200 metres below surface, drilling has confirmed that mineralized veins continue below the dyke. The full depth and strike potential of the Doris system has yet to be determined.
Previously, BHP calculated a resource, minable by open-pit methods, of 434,000 tonnes grading 21.6 grams gold per tonne, equivalent to 301,000 contained ounces. The stripping ratio was pegged at 14.4-to-1. Miramar and Cambiex plan to table revised estimates by year-end.
On the metallurgical side, the Doris deposit is simple insofar as there is less than 1% sulphides and it is all free-milling. The work that BHP performed on some core samples returned recoveries of 95-98% on a combination of gravity and cyanidation processes.
The Boston deposit has a larger sulphide content, generally 3-5%, and is also free-milling. Previous work from BHP returned recoveries of 95% on gravity and cyanidation.
“We don’t see any metallurgical issues,” said Quin. “It is just straightforward free-milling mineralization with a lot of free gold.”
Miramar and Cambiex also have their eye on two promising targets in the vicinity of the Doris deposit: Madrid and South Patch. The Madrid target is the most advanced; however, the partners believe that the South Patch target offers the best immediate potential to add high-grade reserves. Significant intercepts at South Patch include 48.06 grams gold over 4.21 metres and 22.4 grams over 13.06 metres. Situated 10 km south of the Doris Central zone, the target is a quartz-veined, altered shear structure with a strike length exceeding 1.1 km.
Drilling at Madrid identified a shallow but lower-grade resource. Miramar and Cambiex believe there is still potential to discover a high-grade core that would be amenable to open-pit mining.
In addition, 14 other targets of economic interest have been identified through exploration drilling, all of which require further evaluation. Numerous other surface anomalies have been identified, and the partners believe that the exploration potential of the Hope Bay greenstone belt is substantial.
Miramar and Cambiex plan to develop the high-grade Doris open pit initially, and use the waste from stripping to construct an all-weather road connecting the Boston to the Doris deposit and the port to the north. High-grade ore from the Doris pit would be stockpiled and processed during the first year of operation. A barge-mounted mill would be floated up to the site and placed at the coast, where, initially, it would process stockpiled Doris ore.
While this material is being milled, declines would be developed at Doris from the new open pit, and additional declines would be developed at Boston. Ore would be trucked north to the barge mill at Hope Bay from the Boston deposit. Plans call for a 2,000-tonne-per-day mill capable of producing an average of 340,000 oz. per year. Preliminary capital costs are pegged at US$100-150 million, with life-of-mine cash costs expected to fall below US$200 per oz.
Originally, BHP estimated a capital cost of US$225 million and a cash cost of US$245 per oz., based on a scenario that included a mill at the site of the Boston deposit. The principal reduction in capital cost for the joint venture can be attributed to the three factors: a barge-mounted mill; use of open-pit waste material from Doris for road construction; and utilization of the existing decline for Boston production. BHP’s cost-per-tonne estimate was US$71.72, similar to the US$72.50 calculated by Miramar and Cambiex. The slight reduction reflects the incorporation of high-grade material from the Doris open-pit and from underground.
Feasibility studies, permitting and infill drilling will be carried out until 2003, at which time mill construction is expected to begin (most likely in eastern Canada, to reduce construction costs), along with road construction and prestripping of the Doris open pit. The barge-mounted mill is to be floated to the site in the summer of 2004, and production is slated to begin in the following year.
Development in the Hope Bay region must address various issues relating to the local Inuit culture. Through community consultation programs, BHP started evaluating the socio-economic impact that mining would have on the Inuit, and on northerners in general. Miramar and Cambiex are committed to continue this evaluation. Prior to commercial production, a socio-economic agreement must be negotiated with the Kitikmeot Inuit Association.
Environmentally, the most sensitive issue affecting the project is the impact of mining on the calving grounds and migratory patterns of caribou. BHP has documented seasonal movements of the animals and compiled an extensive portfolio of environmental baseline data.
Permitting and overall project approval will depend on an environmental assessment process coupled with community consultations. The partners anticipate that the permitting process will take 18-24 months.
Miramar reported a first-quarter loss of $1.5 million (or 3 per share) on revenue of $11.5 million, compared with a loss of $2.5 million (4 per share) on revenue of $6.6 million in the year-earlier period. These results include the consolidated losses in
“The first three months of 2000 marked the beginning of a new era for Miramar Mining, with its restructuring efforts largely complete and its Northern platform delivering positive results,” says President Anthony Walsh. “During the first quarter, the Hope Bay project demonstrated its tremendous potential by delivering excellent results form both the Boston and Doris deposits, exceeding our expectations for this exciting project.”
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