Yellowknife (Nov 24/04) - The future of mining exploration in the North looks diamond-bright.

Permits were issued for 26 million acres of mineral rights in 2004, and four million acres of new claims were staked.

The year "2004 has had the highest level of diamond exploration activity that we've seen in the last three or four years," said Scott Cairns, district geologist with the NWT Geoscience Office and presenter on NWT mineral exploration at the 32nd Annual Geoscience Forum held last week.

"There are 47 different diamond exploration projects (in the NWT) right now, under 17 companies," said Cairns in his presentation. "And that's probably a minimum."

With world market prices for gold and base metals high, Cairns expects exploration to pick up in the next year.

"We're in a global boom right now," he said.

But with the closing of Giant Mine in July, there are no longer any metal mines, as opposed to diamond mines, operating in the NWT.

That would change with the opening of the Fortune Minerals NICO gold-cobalt-bismuth mine, 160 km northwest of Yellowknife.

"In a perfect world, we're going to complete a bankable feasibility study around the first quarter of 2005. We're going to be doing a bulk sample next year subject to receiving permits," explained Robin Goad, the company's president.

Given a little over a year for the permitting process -- "some people think that's optimistic," said Goad -- construction would begin by the end of 2005, with commercial production commencing in mid-2007.

Bulk sample testing is about 80 per cent complete, said Goad. "It's looking very encouraging."

At current prices, the most important metal in the deposit is cobalt.

"Cobalt within the last two years has traded between $6 and $25 a pound," said Goad.

He also pointed out that gold has risen to $430 from $260 per ounce over the last three or four years. At current rates, cobalt is more profitable to extract than gold. Bismuth prices are relatively stable.

Those values, however, are mitigated by the rising Canadian dollar.

"You sell in U.S. dollars, and you produce in Canadian dollars," said Goad. "Things are going our way, but not as much as you might think by looking at metal prices alone."

Mine means new jobs

With a very conservative estimate of metal prices, Goad said the mine's lifespan would be about 15 years. With current prices, and co-operative exchange rates, that could extend to 25 or 30 years.

"Two hundred direct jobs is our current estimate, on a full-time basis, and then substantially more indirect jobs during construction and for service-related activities," said Goad.

The total cost of opening the mine is at around $120 million, Goad said. Fortune is currently in negotiations with Miramar to buy equipment from the defunct Con mine.