SANIRAJAK/HALL BEACH - Two weeks ago, Toronto-based Advanced Explorations Inc. was but a speck on the map of companies exploring Nunavut's mineral riches – just one of many junior exploration companies struggling to raise cash and advance their projects.

John Gingerich, president and CEO of Advanced Explorations Inc., middle, gives a tour of the Roche Bay iron ore project near Hall Beach to senior executives Guo Shijin, left, and Xu Lanjun, right, of XinXing Pipes Group Co. Ltd. (XXP), in August. XXP, a Chinese state-owned company, has agreed to fund the project to the tune of more than $1 billion. - photo courtesy of Advanced Explorations Inc.

Now, thanks to a recently signed deal with a Chinese state-owned company, Advanced – which acquired the Roche Bay iron project near Hall Beach in 2007 – is now in a strong position to aggressively push the project into production.

As the company announced on Sept. 27, Advanced has formed a joint venture with Xinxing Ductile Iron Pipes Co., Ltd., the subsidiary of XinXing Pipes Group Co. Ltd. (XXP).

Under the terms of the deal, in exchange for 50 per cent of the project's iron ore, XXP has agreed to provide Advanced with a staggering $1 billion to support further development, in addition to $20 million over the next year to complete the project's feasibility study and yet another $30 million of working capital upon completion of the study.

In Advanced's preliminary economic assessment of the deposit, released last year, the mine's capital cost was estimated at $1.1 billion.

While the announcement appears to have come out of nowhere, Advanced was working on the deal for almost three years, before the economic slowdown sent investors scurrying, said president and CEO John Gingerich.

"In 2008 and 2009, when the markets and the economy were still in the tank, we still had relationships (built)," said Gingerich. "We had opened the door. So when the economies turned around, people went and knocked around and we know there's certainly huge amounts of capital available in China to build projects."

Roche Bay is not the only project in Nunavut to attract Chinese investment in the last two years.

In June 2009, Australia-based OZ Minerals sold the majority of its assets – which included the zinc deposits at High Lake and Izok Lake, located near Kugluktuk – to China Minmetals Corp. - Minmetals for short.

Following the sale, Minmetals created a Canadian subsidiary named Minerals and Metals Group (MMG), which is targeting a late November or early December release date for its pre-feasibility study on Izok Lake.

The entrance of China into the Roche Bay iron ore project means the mine's development can be fast-tracked. For instance, instead of proceeding to the second economic analysis stage – the pre-feasibility study stage – Advanced is eyeing to release its feasibility study in the second quarter of 2012.

"When the Chinese came in, they said, 'We have enough information to go directly to a feasibility study,'" said Gingerich.

But the companies do have differences of opinion, particularly on the mine's operating life, which Advanced has posited at 50 years.

"We have different scenarios of development, and the reality is the Chinese will probably take a more aggressive approach to development," said Gingerich, meaning the Chinese may consider a faster production rate and thus a shorter mine life. "But even at that more aggressive development schedule, it's still a multi-generational opportunity."

For the hamlet of Hall Beach, which stands 60 km northeast of the deposit, XXP's investment presents a huge opportunity, said Ammie Kipsigak, mayor of the 700-person community.

"We are really pleased (that) Advanced Exploration found investors from overseas," said Kipsigak. "They're investing a quite a lot of money for a few years to start the project, and that means that there's going to be some money, employment, for our people."

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