Uranium And Iron Exploration Gain Momentum In Qubec

Over the past five years, Qubec has experienced an exceptional investment climate for mineral exploration. As of Oct. 7, 2008, more than 273,000 active mining titles were registered throughout the province, covering 12.47 million hectares, a new record.

Based on data provided by the Institut de la statistique du Qubec, exploration and deposit appraisal spending in Qubec remained above $200 million in each of the previous five years, peaking at $476 million in 2007.

According to revised company estimates, spending should reach $571 million in 2008. About 200 companies reported performing exploration or deposit appraisal work in Qubec as project manager: 22 major companies expected to spend $97 million and 178 junior companies estimated $375 million (this includes state- owned corporations).

Exploration and deposit appraisal activities, which accounted for $225.9 million or almost half of all spending, were largely focused on gold and other precious metals; roughly one-quarter or $118.3 million was allocated to base metals; $70.9 million was attributed to uranium; iron garnered $29.2 million; and diamonds accounted for $26.9 million.

Perhaps the most remarkable of all spending patterns is the jump in exploration spending for uranium and iron. In 2004, companies spent $1.4 million seeking uranium and $300,000 looking for iron. In 2008, those numbers increased to $70.9 million and $29.2 million, respectively

Exploration and deposit appraisal work was concentrated in three specific regions of Qubec, namely Nord-du-Qubec, where $269.3 million (56.5%) was spent; Abitibi-Tmiscamingue, $148.5 million (31.6%); and Cte-Nord, $39.3 million (8.2%).

In June 2008, the government of Qubec established a mining heritage fund, enabling the Qubec’s Minister of Natural Resources to secure $7 million per year for geological data acquisition work. With another $2 million granted under the Copper Plan, the total budget for new data acquisition in 2008-2009 reached $9 million.

Gold

In the James Bay region on the lonore property, Opinaca Mines continued its definition drilling program on the Roberto deposit, from 1,000 to 2,000 metres below surface. On the Opinaca project, Arianne Resources intersected significant gold values on three zones, including the Chino zone where one hole hit 14.58 grams gold per tonne over 5.4 metres. On the Aquilon Main property, Golden Tag Resources obtained significant drill results, namely 12.55 grams gold over 4.38 metres.

In the Abitibi Subprovince, at the Casa Berardi gold mine, north of La Sarre, Aurizon Mines is developing an exploration drift at the 810-metre level to explore the extensions of known mineralized zones. About 7.5 km east of Casa Berardi, Aurizon and Lake Shore Gold drilled a hole into a new gold-bearing zone that returned 8.58 grams gold per tonne over 10.4 metres.

East of Lebel-sur-Quvillon, Metanor Resources reached commercial production in October at the Barry open-pit mine, where there is an indicated resource of 385,000 tonnes grading 4.23 grams gold. On the Windfall Lake property, Noront Resources completed an exploration ramp to proceed with more sampling of zones F-11, F-17, and W-3. Cadiscor Resources finished an economic scoping study and filed a new resource estimate, reporting 1.2 million tonnes at 5.75 grams gold per tonne in measured and indicated resources. The inferred resource is 1.55 million tonnes averaging 5.93 grams gold in the Discovery property’s main zone. The company also conducted a drilling program at the Sleeping Giant gold-silver mine, which led to an increase in resources and reserves.

In the Rouyn-Noranda area, Yorbeau Resources launched a drilling program to test geophysical targets on its Rouyn property. Drill hole 457 intersected 10 metres grading 13.77 grams gold per tonne. Clifton Star Resources reported significant drill intercepts on its Beattie and Duquesne properties. Hole B08-16 on Beattie intersected 11.8 metres grading 12.22 grams gold per tonne. Aurizon Mines completed a major infill drilling program on its Joanna property in order to delineate a near-surface gold resource. Hole JA-08-322 included a 55.3-metre section (true width) at 1.6 grams gold. Typhoon Exploration reported assay results of 4.26 grams gold per tonne over 7 metres in hole FA-08-15 on its Fayolle property.

In the Cadillac area, Iamgold-Qubec Management fast-tracked exploration and development of its Westwood project, located east of the Doyon mine. Drill hole R14436-08 intersected two 1-metre intervals grading 848.1 grams gold per tonne and 372.6 grams gold, respectively. At the LaRonde mine, work continues on the LaRonde Extension where Agnico-Eagle Mines seeks to begin production in 2011. Proven and probable reserves under the Penna shaft were established at 34.9 million tonnes averaging 4.4 grams gold per tonne. The company is also conducting development work at the Lapa gold project.

In Malartic, Osisko Mining released a positive feasibility study for its large-scale Canadian Malartic open-pit project, which contains reserves of 183.3 million tonnes running 1.07 grams gold. Further east toward Val-d’Or, on its Malartic-Midway property, Northern Star Mining began excavating an exploration decline to reach the Chabela gold zone. About 3 km east of the Kiena mine, Wesdome Gold Mines discovered a gold-bearing structure in drill hole S-529, which hit 8 metres grading 6.92 grams gold.

The Val-d’Or area celebrated the launch of two gold mines, namely the Goldex mine held by Agnico-Eagle, where reserves stand at 22.8 million tonnes grading 2.2 grams gold, sufficient for 10 years of production; and the Lac Herbin mine held by Alexis Minerals, where reserves of 360,000 tonnes at 7.33 grams gold are expected to support 2.5 years of production. After ceasing operations at the Sigma-Lamaque open-pit mining complex in 2007, Century Mining also ended mining operations underground.

In the Tmiscamingue region, JAG Mines released results on the Aubelle project. Drill hole AUB-07-10 intersected a 1.8-metre interval grading 9.95 grams gold.

Base Metals

On the Coulon property, located 15 km north of Fontanges airport, Virginia Mines and Breakwater Resources continued drilling to delineate massive sulphide lenses. Virginia bought out Breakwater’s interest in Coulon in December 2008. In the Chibougamau area on its Scott Lake property, Cogitore Resources intersected new mineralized zones near the Central and West lenses, including a 53.7-metre interval grading 1.88% copper, 4.89% zinc, 0.39 gram gold per tonne, and 69.5 grams silver. In Matagami, Xstrata Zinc Canada (formerly Falconbridge) launched in September the Perseverance zinc-copper-silver-gold mine. On the Bracemac and McLeod zones, Donner Metals and Xstrata Zinc continued to intersect high-grade volcanogenic massive sulphide lenses, reporting drill results such as 26.23% zinc, 5.22% copper, 179 grams silver, and 1.38 grams gold over 1.6 metres. In late October, Breakwater Resources temporarily suspended operations at the Langlois zinc-silver-copper mine, located near Lebel-sur-Quvillon.

In Val-d’Or, Alexis Minerals discovered volcanogenic massive sulphides west of the former Louvicourt mine, where one drill hole hit 6.81% copper over 3.45 metres.

Northwest of Rouyn-Noranda, the Fabie copper mine, property of First Metals, reached commercial production in April 2008 but had suspended operations by December. The company also launched development work to access the Magusi deposit, 1 km farther west. To the south, Abcourt Mines finished a drilling program on its Aldermac project. Drill hole AL08-12 included a 40.3-metre section grading 1.16% copper, 5.42% zinc, 35.88 grams silver and 0.46 gram gold.

Nickel, Copper and PGEs

In the Cape Smith Belt about 20 km south of the Raglan mine, Canadian Royalties suspen
ded construction work at the Nunavik Nickel project. However, ongoing exploration led to the discovery of the Gurn showing where drill hole GRN-08-04 hit 2.44% nickel, 1.01% copper, 1.02 grams palladium per tonne and 3.09 grams platinum over 6.25 metres. About 80 km southeast of the Raglan mine, Goldbrook Ventures and its Chinese partner Jilin Jien Nickel Industry Co. continued to investigate the Mystery zone and reported several mineralized drill intercepts, including 0.91% nickel, 1.11% copper, 0.05% cobalt, 0.45 gram platinum, 2.16 grams palladium, and 0.33 gram gold over 76.3 metres in drill hole MYS08-031.

North of Matagami, Victory Nickel temporarily suspended development work at its Lac Rocher nickel-copper-cobalt project, following the results of a scoping study on the project. More drilling confirmed Southampton Ventures’ Horden Lake copper-nickel-PGEs deposit. Golden Goose Resources published a new resource estimate for the Lac Levac project, located 35 km east of Nemiscau airport, where measured and indicated resources now stand at 2.04 million tonnes grading 1.06% nickel, 0.55% copper, 0.07% cobalt, 1.03 grams palladium, and 0.23 gram platinum. The inferred resource stands at 1.05 million tonnes running 0.81% nickel, 0.32% copper, 0.06% cobalt, 1.06 grams palladium and 0.5 gram platinum.

West of Amos on the Dumont Nickel property, Royal Nickel defined a significant indicated nickel resource, with 365 million tonnes running 0.32% nickel.

In the Cte-Nord region, hole HPM-08-03 intersected 43.18 metres grading 1.74% nickel, 0.90% copper and 904 parts per million cobalt on Manicouagan Minerals’ HPM/Forgues project.

Diamonds

Stornoway Diamond and SOQUEM reported positive results from an economic study on the Renard diamond project, north of the Otish Mountains. In the Wemindji area, Metalex Ventures and its partners Dianor Resources and Wemindji Exploration announced the recovery of 3,411 coloured diamonds (sized 0.075 to 1.06 mm) on the Ekomiak II, IV, V, VI, VII, and PEM properties.

Uranium

In the James Bay area northeast of LG-3 Reservoir, Bonaventure Enterprises reported several uranium-bearing drill intercepts on the K9 project, including 13,000 grams per tonne U3O8 over 11.2 metres in drill hole K9-03. In the sedimentary Otish basin on the Matoush project, Strateco Resources released an economic scoping study and a new resource estimate with an indicated resource of 250,000 tonnes at 0.68% U3O8 in the AM-15 and MT-34 zones, and an inferred resource of 1.34 million tonnes at 0.44% U3O8 in the AM-15, MT-22, and MT-34 zones. Golden Valley Mines and partner Lexam Explorations reported several uranium-bearing drill intercepts on the Otish Uranium project, including 0.42% U3O8 over 2.37 metres in hole GRCO-08-17.

In the Cte-Nord region, Uracan Resources completed a resource estimate for the Double S zone on its North Shore property. Based on a lower cutoff of 0.009% U3O8, the deposit reportedly contains an inferred resource of 74.2 million tonnes averaging 0.012% U3O8.

Iron

In the Labrador Trough, Adriana Resources completed a definition drilling program on the Lac Otelnuk iron ore deposit. About 40 km northwest of Schefferville, New Millennium Capital released a mineral resource estimate for the Kmag iron ore project, reporting measured and indicated resources of 2.314 billion tonnes at 26.7% iron and an inferred resource of 1.034 billion tonnes at 27% iron. In the same area on the DSO iron ore project, the company launched prefeasibility and engineering studies. Farther south, Consolidated Thompson Iron Mines continues to develop the Bloom Lake iron ore mining project, located 13 km northwest of Fermont, in order to begin production in September of this year.

Industrial Minerals

Northeast of Murdochville in the Gaspsie region, Exploration Orbite V. S. P. A. continued exploration work on the Grande-Valle red clay deposit to delineate deposit reserves. The company is also planning to build a pilot plant in 2009 to extract high-purity alumina.

In March 2008, LAB Chrysotile permanently ceased operations at the Bell asbestos mine but also announced that it would resume operations at the Black Lake asbestos mine. In early November 2008, JM Asbestos said it would shut down the Jeffrey open-pit mine. The survival of the mine now lies with the underground operation.

In the Lac Nipisso area northeast of Sept-les (Cte-Nord region), N&R Blue Diamond discovered a gemstone (emerald) associated with a granitic pegmatite unit.

Attractive Tax Measures

Qubec offers tax measures for mineral exploration companies that can significantly reduce the net cost of work performed in Qubec and that aid in financing.

Qubec implemented two tax credits for companies that perform exploration work in the province: the refundable tax credit for resources (RTCR), and the credit on duties refundable for losses (CDRL).

The RTCR is granted to companies established in Qubec that incur eligible exploration expenses. The tax credit equals 35% of the amount of expenses incurred by companies that are not mining a mineral resource, or 15% for producers. These rates climb to 38.75% and 18.75% when expenses are incurred in Qubec’s Near North or Far North regions.

The CDRL is available for operators who incur losses and who perform eligible exploration, deposit appraisal, and mine development work in Qubec. It equals 12% of the lesser amount of the operator’s annual loss or incurred work expenses. This is a unique measure in Canada.

Qubec also helps mineral exploration companies obtain financing for their activities by offering an attractive flow-through share regime. An investor from Qubec who acquires flow-through shares from a company that foregoes its deductions for exploration expenses in favour of the investor, can benefit from tax deductions reaching 150% of the initial cost of his investment.

The latest edition of the Report on Mineral Exploration Activities in Qubec is now available for 2008 by visiting www.mrnf.gouv.qc.ca/english