SANIRAJAK/HALL BEACH - Now that they've got the money, it's time to spend.

About 40 people from the Qikiqtani region were employed by Advanced Exploration during the company's 2010 exploration season. - photo courtesy of Advanced Exploration

This year, junior exploration company Advanced Exploration will spend between $3 million to $5 million on further drilling at its Roche Bay iron ore project, located 60 km northeast of Hall Beach.

The money is coming from China, which is enabling Advanced to aggressively develop its property, which in turn will provide China with much-needed iron ore.

As it announced last fall, 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.

After the announcement, Advanced said it would look to release the project's feasibility study in the second quarter of 2012.

But now, "We're hoping to have it done by the end of this year," said John Gingerich, president and CEO of Advanced Exploration.

The Chinese have made no secret of their wish to increase the mine's planned annual output, but that won't come at the cost of the mine life, because the Chinese are also very interested in increasing the resource, hence this year's drilling program.

"Certainly when we have access to a partner that has the technical and financial capacity to do a much bigger program, then it's certainly in our interests to see if we can grow," said Gingerich. "It will have a bigger impact on cash flow. It will have a bigger impact on net present value, etc. So it's certainly in our interests as well to go bigger if we have the resources to go bigger.

"The potential to increase the resource by multiple-fold is certainly there. Thus, the enhanced mine plan really doesn't have any significant impact on the life of mine."

In Advanced's preliminary economic assessment of the deposit, released in 2009, the mine's capital cost was estimated at $1.1 billion.

Last year, Advanced spent approximately $2 million on a drilling program meant to increase the mine's resource count, which currently stands at 357 million inferred tonnes.

The summer exploration campaign employed around 40 people from Hall Beach, Iglulik and Repulse Bay.

Gingerich said he expects the local labour contingent to be similar this year.

"We try to hire as many as possible, especially those who've been trained," he said. "I notice we've had a number of local people who have drill training.

"Any of our contractors, we basically ask that they go out and find as many of the skilled people as possible, to hire locally, and they all do."

As the project proceeds through development, the types of jobs that Inuit are tapped for will trend more towards the skilled sort, as opposed to running the camp or serving as labours, which is typically the type of job most Inuit take up at exploration camps.

"When we were looking before, we were primarily labour-driven where we're now moving into more skilled sets," said Gingerich. "Broader range of environmental work, different kinds of engineering, maybe some more heavy equipment operators."

The entry of the Chinese has helped raised the Roche Bay project's profile throughout the Baffin region, where Baffinland Iron Mines' Mary River iron ore project, located 160 km south of Pond Inlet, has traditionally grabbed headlines, said Gingerich.

As of press time, Gingerich was scheduled to attend a meeting of Baffin region mayors in Iqaluit.

"It's a chance to reach out on a broader base," he said.

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