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IKPIARJUK/ARCTIC BAY - Baffinland Iron Mines, the company behind the $4.1 billion Mary River mine currently under development southeast of Arctic Bay, has formed a joint-venture partnership with Nunavut Tunngavik Incorporated (NTI) with the aim of exploring the outlying areas around three deposits that make up Mary River.

Two workers at Baffinland Iron Mines' Mary River iron ore deposit place a charge into the ground to extract ore last May. Baffinland is extending its focus to the areas around the Mary River deposits, partnering with Nunavut Tunngavik Incorporated to explore Mary River's outlying areas, which Baffinland believes is host to additional minerals. - NNSL file photo

These deposits are wholly-owned by Baffinland but the land around them - the land the joint-venture will explore for additional mineral potential - are Inuit lands whose surface and minerals are owned by NTI.

"This is a 300-page joint venture agreement that's taken a long time to negotiate and finalize," said Gord McCreary, president of Baffinland.

"We feel that there's significant prospective ground for additional deposits in the area. We believe the Mary River deposits that we have right now are indicative of a district. And we believe that this is a world-class iron-ore district."

Mary River is made up of four deposits. Deposit 1 is the Mary River mine, slated to begin production in 2014.Deposits 2 and 3 could constitute a second mine that would use the infrastructure built for the Mary River mine, according to McCreary. Deposit 4 does not fall under the parameters of the joint-venture.

It's the outlying areas around all three deposits that require more work, he said.

Since acquiring the Mary River district in 2004, Baffinland has conducted the first airborne geophysical work done on these outskirts in 40 years.

"The (areas) we're dealing with now on deposits one, two and four all have a surface expression," said McCreary. "In the surrounding areas, we think that there's excellent potential for the establishment of additional deposits that are perhaps buried, that don't have a surface expression."

Once a feasibility study on the joint-venture area is finalized, NTI will have a big decision to make: either it can participate on the project as an investor, putting forward 28 per cent of the mine's total cost, or simply take part as a royalty player, collecting 12 per cent of the net profits for Inuit land claims beneficiaries.

The latter role has its downsides, said McCreary.

"If you're a royalty holder, you don't have a voice at a joint-venture committee level in terms of budgets being brought forward. You take whatever royalty stream flows to you. In this case, it's profits. That means the property would have had to generate profits before you can get anything out of it."

"If we think it's not going to work out, we'll be satisfied with the 12 per cent royalty," said James Eetoolook, first vice-president of NTI.

Eetoolook said the Baffinland deal is a good template for future joint-venture partnerships.

"This is just one area. We have another 70 mineral exploration agreements across Nunavut," he said.

Eetoolook added that Baffinland's record of employing people from communities near the Mary River site, hamlets like Pond Inlet and Clyde River, was one of several factors that made the venture a no-brainer.

"Anybody that's exploring on Inuit-owned lands, we want to be partners with them and perhaps we can bring more benefits to the land claims organizations," said Eetoolook.