In December, Goldcorp invested almost $22 million to take a 9.8% position in Wolfden by acquiring 6 million shares priced at $3.60 apiece via a private placement. Wolfden also has an extensive portfolio of gold projects, including four separate joint ventures in the Red Lake camp of northwestern Ontario — Goldcorp’s backyard.
Wolfden’s president, Ewan Downie, says the company will use Goldcorp’s banking connections to pursue and identify financing opportunities for the development of High Lake. There is also the possibility of a deal down the road similar to the agreement
The 100%-owned High Lake project is in the advanced stages of prefeasibility work, under the direction of Wardrop Engineering. Prior to the start of the 2005 exploration program, the project hosted indicated resources of 14.3 million tonnes grading 2.34% copper, 3.53% zinc and 0.32% lead, plus 1.01 grams gold and 76 grams silver per tonne, at a 2% copper-equivalent cutoff. An additional 1.3 million tonnes of 1.17% copper, 3.36% zinc and 0.28% lead, 0.78 gram gold and 65 grams silver is inferred.
Wolfden is evaluating the economics of two separate open pits targeting the A/B and D zones, in combination with underground development of the newly discovered West zone and deeper portions of the A/B and D zones.
“Our plan is to have a port on the Arctic Ocean,” Downie explained at last year’s BMO Nesbitt Burns Global Resources Conference. The project sits inland some 45 km from tidewater, 550 km northeast of Yellowknife, N.W.T. The mill would be located on-site and the concentrates trucked along an all-season road to a dock facility on Grays Bay in Coronation Gulf, Nunavut. Wolfden is also considering developing its 100%-owned Ulu gold deposit, 55 km south, in conjunction with High Lake.
Wolfden can expect an average 10-week shipping window in the Coronation Gulf for ice-strengthened cargo vessels using the western route through the Pacific, according to a recently completed study. This is well within the 15- to 17-week shipping guidelines proposed under the Arctic pollution prevention regulations.
The study also concluded Grays Bay is deep enough to accommodate ocean-going vessels. Preliminary draft designs have been prepared for the proposed port sites.
It’s an expensive proposition building a mine in the Arctic, with immense challenges: adverse climate, isolation, difficult access and a restricted shipping season. Base metal deposits, in particular, need to be rich in grade or world-class in size to offset some of the added capital and operating expenses of developing remote bodies lacking existing infrastructure. The Far North landscape is littered with undeveloped base metal deposits, including Izod Lake, Hood River, Gondor and Hackett River.
The richest of the bunch is
“Substantial infrastructure costs associated with the property’s remote location have been an impediment to its development,” says the company’s website. Inmet put the project on hold in 1994 after feasibility work showed infrastructure costs were too high. The project needs a 368-km-long road built to a proposed port site on Bathurst Inlet.
In 2002, the federal and Nunavut governments, along with the private sector, completed a $6-million study to determine the feasibility of constructing an access road and deep port facility in the Kitikmeot region of Nunavut. The study awaits the completion of an environmental impact assessment.
Both the Nanisivik and Polaris mines operated in the High Arctic for more than two decades. The Nanisivik mine on the northern tip of Baffin Island opened in 1976, followed by Polaris on the Arctic Island of Little Cornwallis in 1982. Both mines closed in 2002 due to depleted ore reserves. Nanisivik was put into production based on a 12-year life to mine 6.3 million tonnes grading 14% zinc, with significant credits of lead and silver. Successful exploration resulted in a 26-year life that produced more than 2.7 million tonnes of zinc concentrate.
Polaris, with 22 million tonnes of ore grading 14% zinc and 4% lead, produced 4.4 million tonnes of zinc concentrate and 900,000 tonnes of lead concentrate over its life. Not only was it a rich orebody, the main portal and processing facility were right on the ocean, next to the loading dock.
Towards the end of their lives, Nanisivik and Polaris shipped around 350,000 tonnes of concentrate annually. Nanisivik’s shipping season extended from the end of June through to the end of October. Polaris was able to ship from mid-July to mid-October.
In 2003, Wolfden reached an agreement with
The 30-year-old mill has a proven capacity of 780,000 tonnes per year using conventional crushing, rod-and-ball milling, and differential lead and zinc flotation, with a concentrated dryer. Breakwater installed a newly commissioned dense media separation plant in the mill about a year before shutting down operations.
The Nanisivik assets should provide Wolfden with a competitive advantage for developing High Lake and its wholly owned satellite Ulu gold deposit, 55 km south of High Lake.
The dismantling and cleanup of the Nanisivik mill complex is nearing completion; it will be ready for shipping in 2006, said Wolfden in a recent update. All the components were inspected and assessed in detail by Wardrop for use at High Lake.
The development of the High Lake and Ulu deposits will require a significant investment in transportation and site-service facilities, Wolfden reports. The preliminary design is proceeding for a dock facility on Grays Bay, an all-season road from Grays Bay to the High Lake site, a winter road from High Lake to Ulu, as well as all services and support infrastructure for the mining facilities themselves.
Prefeasibility
Most of the High Lake prefeasibility study has been completed, with current activities focused on optimization and trade-off studies to enhance the project’s economics and maximize the rate of return on investment. The engineering work includes open-pit and underground mine design, metallurgical testing, infrastructure design, capital cost estimate and a pretax economic analysis.
Preliminary pit designs are being refined to reflect updated projections of metal prices, production rates and optimized location of waste stockpile areas. Underground mine planning and design studies are examining ways to optimize the sequence of mining, access development, backfilling and production scheduling. The West-zone isn’t expected to come on-line until the third or fourth year of the mine plan.
The West zone will be mined both within and below permafrost, which introduces “significant complexity” in the mine planning, extraction sequences, backfill techniques, mine dewatering and ventilation systems, Wolfden says.
Met
allurgical testing is ongoing as Wolfden explores ways to improve performance, including gravity gold separation on the West zone mineralization, which contains the highest gold grades.
“The ratio of copper to zinc varies dramatically throughout the High Lake zones and preliminary test work suggests varying recoveries for metals reporting to the copper and zinc concentrates,” says a January 2005 technical report by GH Wahl & Associates. The report recommended “further assessment of these ratios throughout the various zone solids and assessment of likely ranges of feed grades . . . to guide the collection of future metallurgical samples. This will ensure that they fully represent typical feed through the life of the mine plan.”
The company also is considering what effect refining some of the trace elements, like germanium and selenium, would have on concentrate sales. Metallurgical work on the West zone shows the presence of selenium, mercury, bismuth, arsenic, antimony and other deleterious elements.
Wolfden believes it may be able to get by initially with only a copper recovery circuit in the mill, deferring the expense of building a zinc circuit until a later date. The A/B zone, which is scheduled to be mined first, contains a small inventory of zinc.
The A/B zone hosts an indicated resource of 2.8 million tonnes grading 4.08% copper, 0.57% zinc and 0.03% lead, plus 0.58 gram gold and 28.2 grams silver per tonne. A composite metallurgical sample of 650 kg derived from two holes drilled in 2004 delivered 93% of the copper, 63% of the gold and 85% of the silver to a copper concentrate grading 30%.
The A/B zone consists of 12 separate lenses of mineralization. The largest is 150 metres long, 360 metres downdip, and up to 80 metres wide. The highest grade and the best widths in this deposit occur close to surface. Some of the near-surface holes have hit up to 71 metres of 6.9% copper, 0.6 gram gold and 49 grams silver. The A zone is largely comprised of stringer-style sulphides located stratigraphically below the more massive sulphide B zone mineralization. Copper-rich areas of the A zone are associated with massive sulphide lenses at its core.
A north-trending, 25-metre-wide diabase dyke divides the A from the B zone, whose southern end appears to be cut off by a granodiorite complex. The B zone mineralization occurs as bands and pods, and consists of pyrite, magnetite, pyrrhotite, chalcopyrite, sphalerite and galena. The copper-rich portion of the deposit grades into silver-enriched pyritic tuff along strike to the north.
The D zone is 560 metres south of A/B. It consists of four separate sulphide lenses, the largest being 150 metres long, up to 35 metres thick and a downdip of 320 metres. Narrow bands of sphalerite and chalcopyrite result in a zinc-rich western portion and a copper-rich eastern end, which grades into stringer mineralization. The D zone contains indicated resources of 2.3 million tonnes grading 1.67% copper, 3.51% zinc and 0.29% lead, plus 0.43 gram gold and 51.7 grams silver.
Preliminary metallurgical work on D zone drill core showed 80% of the zinc reported to a 50% zinc concentrate.
In preparation for submitting an environmental impact statement (EIS), Wolfden has been gathering data about the natural and human environments in the project area through field studies, meetings and community consultations since 2003. Gartner Lee was hired to lead the EIS and permitting processes. Of the $17 million budgeted for High Lake in 2005, $3.5 million was earmarked for environmental baseline and socioeconomic studies.
High Lake history
High Lake is a volcanogenic massive sulphide deposit hosted in the Slave Province’s High Lake greenstone belt. This belt of rocks extends 140 km southward from the Coronation Gulf and ranges from 5 to 30 km in width. Stratiform and stringer sulphide mineralization occur as discrete north and northeast trending bodies within a felsic volcanic sequence.
The High Lake discovery was originally made in the mid-1950s by Kennarctic Explorations (now Kennecott) and Hudson’s Bay Arctic on an 80/20 partnership basis. Fifty-two drill holes totalling 7,150 metres were completed in 1956 and 1957. Most of that drilling was done on the A/B and D zones.
The project essentially sat dormant until 1990 when Kennecott and Hudson’s Bay revisited the area by conducting a program of geological mapping and 140 km of electromagnetic (EM) and magnetic geophysical surveys. In 1992, Aber Resources (now
As a result of the economic diamond discovery of Diavik, priorities shifted and High Lake remained on the backburner until Wolfden bought out both Rio Tinto and Aber’s interests in 2001. Rio Tinto retains a 1.5% net smelter return royalty. At the time, the project contained a 5.3-million-tonne inferred resource.
In 2003, Wolfden made the promising West zone discovery while following up on a regional airborne anomaly, 1.3 km away from the existing A/B and D zones. The discovery hole into the anomaly drew 19.4 metres of 3.85% copper, 1.38% zinc, 0.89 gram gold and 104 grams silver per tonne.
“It took us 10 months to delineate 10 million tonnes in the West zone, a very high rate of discovery,” Downie says. “We think that the High Lake project is developing into a world-class deposit.”
The discovery of the West zone is what drives High Lake. The West zone is composed of three steeply dipping mineralized lenses. Chalcopyrite, sphalerite and pyrite mineralization occurs as stringers, massive and semi-massive sulphides hosted in a chloritic felsic tuff. The main zone is about 250 metres long, 25 metres thick and plunges to a depth of 700 metres downdip. The deepest hole prior to the 2005 program had intersected 45.7 metres of 3.07% copper, 0.52% zinc, 1.3 grams gold and 48 grams silver in hole 4-75.
“It’s wide open for expansion,” Downie says.
Indicated resources total 9.1 million tonnes grading 1.97% copper, 4.44% zinc and 0.42% lead, plus 1.29 grams gold and 96 grams silver. Another 1.3 million tonnes averaging 1.19% copper, 3.39% zinc and 0.27% lead, plus 0.8 gram gold and 63 grams silver is inferred.
Preliminary metallurgical test work on four composites collected from drill core showed 84-89% of the copper reporting to concentrates grading 24-29% copper, while 60-67% of the zinc was recovered in concentrates averaging 52-55% zinc. Gold recoveries ranged from 73-82%, whereas silver came in at 50-65%. Coarse grains of gold found in the copper concentrates suggest gravity gold separation may be viable.
“We’ve had good gold recoveries but we lost a lot of it to the tails, so we are looking at ways to optimize gold recovery, which, in turn, would help the model,” Downie explains.
During the 2005 program, drilling extended the West zone another 150 metres at depth by intersecting a broad, extensively altered zone of stringer and massive sulphides at about 900 metres below surface. Hole 5-171 cut multiple lenses, including: 8 metres of 4.72% copper, 1.96 grams gold and 22.7 grams silver at 876 metres down-hole; 10 metres of 1.55% copper, 0.9 gram gold and 16.7 grams silver at the 906-metre mark; followed by 27 metres grading 4.4% copper, 2.18% zinc, 0.82 gram gold and 66.7 grams silver at 925 metres down-hole.
Wolfden says the nature and composition of the alteration and mineralization encountered in this hole is indicative of a possible feeder system.
The West zone also contains the 007 horizon, an overlying sub-parallel lens containing 418,000 tonnes of indicated and 223,000 tonnes of inferred resources at about the same grade or better than the West lens. The 007 horizon extends along a 350-metre strike length and to 200 metres depth. There had been lots of hope prior to the 2005 field seaso
n that the 007 horizon would continue to depth. That proved not the case, as it pinches out. However, Downie says, there is potential for smaller lenses at depth in that particular horizon.
At the end of the 2004 season, Wolfden discovered the Gambler zone while drilling the tail end of an EM conductor that extends 1,200 metres under High Lake. The new horizon is sub-parallel and 200 metres east of the D zone. The Gambler discovery showed some initial promise; the first two holes into the horizon intersected a 2.8-metre section grading 0.37% copper, 5.7% zinc, 2.92 grams gold and 292 grams silver, and 17.8 metres of 0.43% copper, 2% zinc, 0.98 gram gold and 73 grams silver per tonne. But with further drilling in 2005, Gambler turned out to be a sub-ore grade zone.
Exploration emphasis
The 2005 program had a renewed focus on exploration. “We are looking for the next discovery in the belt,” Downie says. Wolfden controls 40 km of the High Lake greenstone belt. This past year’s program included regional prospecting, deep ground geophysical surveys and 62 new drill holes for a total of 19,950 metres. A lot of the drilling, however, was done as condemnation under High Lake, the proposed site of the tailings pond.
Some of the largest and most extensive airborne conductors run under Sand Lake, 11 km north of High Lake. Historic grab sampling from a 100 by 150-metre gossanous showing of chlorite altered tuffs at the edge of the lake showed values up to 1.12% copper, 1.8% zinc and 130 grams silver. The lake has been the focus of previous drilling campaigns.
Wolfden tested one of the main conductors with three holes after completing detailed ground geophysics across the lake in the spring. Stringer, semi-massive and massive sulphides were intersected in each of the holes, which tested a strike length of 100 metres. The best intercept averaged 2.71% copper, 0.17% zinc, 0.29 gram gold and 20.8 grams silver across 21 metres, starting at 105 metres down-hole. The furthest hole south cut 2.5 metres of 2.64% copper, 3.52% zinc, 0.3 gram gold and 81.5 grams silver.
“It’s our prime exploration target,” Downie says. “We think that Sand Lake could host another cluster, much like High Lake. There is a bunch of conductors under the lake and the problem is deciding which conductors are real and which are lake-bottom.”
But while Downie says the alteration and setting are as good as at High Lake, he cautions: “it’s probably going to take a lot of drilling on a lot of dead conductors.”
Follow-up prospecting in the summer discovered angular pieces of mineralized float, 200 metres south of the main showing, carrying values up to 14% zinc and 27 grams silver.
Wolfden continues to turn up new prospects in the High Lake camp. Two holes from a single setup on the Cairo showing, 1.6 km north of the West zone along strike, intersected narrow but good grade mineralization, with up to 3.71% copper and 8 grams silver across 2 metres. Prospecting returned grab samples of up to 6.16% copper and 0.8 gram gold from the new WW showing, 3.5 km west of High Lake.
Ulu gold
Wolfden owns the advanced-stage Ulu underground gold project, 55 km south of High Lake, where an inferred resource equal to 565,400 oz. has been outlined in the Flood zone. Wolfden purchased the Ulu project in early 2004 from
Ulu is being incorporated into the High Lake prefeasibility study.
“If it looks quite positive and helps the overall story, you will probably see us go underground this year and do some test mining,” Downie says. Planned underground work in 2005 was put on hold so that exploration spending in the Red Lake camp could be increased.
The Ulu purchase came with a fully equipped 50-person mining camp and a runway with year-round access, along with heavy mining equipment and machinery. More than $40 million has been previously spent exploring and developing Ulu, which hosts an inferred resource of 1.4 million tonnes grading 12.9 grams gold, down to the 360-metre level. The resource was based on the work done by Echo Bay up to September 1997 when the project was put on standby due to low gold prices.
Reconnaissance sampling by
Echo Bay went underground at Ulu by driving a ramp and completed over 1,700 metres of development on the Flood zone in 1996 and 1997. Echo Bay drilled off the zone at 40-metre centres with an additional 139 surface and underground delineation holes totalling 40,480 metres.
The Flood zone is described as a shear-hosted, sulphide-enrichment gold deposit, which occurs on the western flank of a regional F1 anticline. Composed of 14 individual mineralized veins, the Flood zone is 600 metres long, from 2-18 metres wide and at least 610 metres deep.
There is a high degree of variability in the dimension of the veins in the Flood zone, which pinches and swells.
“The anatomizing nature of the veins means that a detailed drilling program (25 metres) would need to be undertaken before the resource figure could be upgraded from the inferred category,” concludes a June 2004 technical report prepared by Harron & Associates.
Wolfden completed a 44-hole, 18,570-metre, surface diamond-drilling program on the Flood zone in 2004. The focus of the program was to check gaps in the sample pattern and to look for extensions of existing zones.
“Basically it was to firm up the resource,” Downie says.
Mineralization typically consists of native gold associated with disseminated-to-massive arsenopyrite, and vein-hosted pyrite and arsenopyrite in silicified, chloritic and sericitic altered schists, within a broad zone of potassium metasomatism and wall rock sulphidation.
Preliminary metallurgical test work by BHP on composite drill core samples of minus 200 mesh showed that more than 95% of the gold is recoverable by flotation and greater than 90% by straight cyanidation. BHP’s work indicated most of the Ulu gold mineralization is fine-grained and will require fine grinding.
Echo Bay extracted a 317-kg mini-bulk sample from the underground workings in 1996 to determine the compatibility of processing the Ulu mineralization at its then-operating Lupin mill. Test work suggested that approximately 90% of the gold could be recovered by cyanidation.
Wolfden has about 61 million shares outstanding or 64 million fully diluted, with upward of $30 million in cash.
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