Company aims for second gold boom
World-class deposit remains just outside city limits, says mining company
Walter Strong
Northern News Services
Published Wednesday, March 12, 2014
SOMBA K'E/YELLOWKNIFE
The next big gold boom may be literally on Yellowknife's doorstep, according to TerraX president Joe Campbell.
Joe Campbell, president of TerraX Minerals Inc., shows Yellowknifer a drill core with thick ribbons of quartz. On the ground surrounding Campbell are fragments of drill core collected in the late 1940s. When the site was abandoned, the core samples were left stacked on wooden racks which have since collapsed. Core sample data logs and recent resampling suggest tremendous value exists in the set of properties know as the Yellowknife City Gold Project, which recently received approval to begin advanced exploratory drilling in the area. - Lyndsay Herman/NNSL photo
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A potentially rich gold deposit had been rediscovered north of Giant Mine. A March 7, 2014 land use approval from the Mackenzie Valley Land and Water Board released this week gave TerraX Minerals Inc. (TerraX) regulatory permission to begin exploratory drilling on a set of mining leases starting 10 km north of Yellowknife.
The Yellowknife City Gold Project - formerly the Northbelt gold project - is comprised of three properties; the Northbelt, Goodwin, Walsh Lake, and some unnamed smaller parcels along property borders.
Initial exploration will focus on the Northbelt property which has already seen much exploratory drilling and coring.
"Over 450 holes have (previously) been drilled, and over 100 trenches are already there," said David Connelly, TerraX strategic and community engagement advisor. "There's more already known about it (the area) than one would expect."
One of the most significant things known about the Northbelt deposit is that it wasn't considered profitable enough for Giant Mine to process.
"It was the wrong type of ore for Giant," said Campbell.
"It requires a completely different process than (possible) for the type of plant they had."
Giant used a roasting process to separate out the gold from ore, but the process needed gold ore with high level of sulfide minerals to make the process work. At Giant, arsenic was one of the major components of the sulfide, and left behind a nearly $1-billion decontamination problem the NWT is still grappling with today.
"In the case of the Crestaurum deposit (where TerraX will focus their initial drilling), there's almost no sulfide," Campbell said. "The Crestaurum deposit is a free-milling ore. As the name suggests, it's easier to free the gold. But this was a problem for Giant. It was the wrong process for the type of plant they had."
A 1998 exploration report on the Yellowknife Northbelt properties cited in a February 2014 TerraX publication stated the roasting process used at Giant Mine would have provided a low rate
of gold recovery, as low as 44 to 62 per cent. Modern recovery methods would be expected, stated the report, to have a 95 per cent gold recovery rate.
"Historically, Giant was producing around 10 or 11 grams per tonne, which is great in today's market," Connelly said.
How did such a potentially profitable and easily accessible deposit remain unnoticed while major mining companies move forward elsewhere with projects that need gold to be more than $1,300/oz to be profitable?
"The Yellowknife area had been forgotten by the industry," Campbell said. "There really wasn't a lot of interest in this property before we acquired it and started to tell people about it."
The Northbelt property had been essentially off the market since the late 1930s when it was first discovered. It was passed through two sets of mining bankruptcies before Campbell came across the set of leases up for the taking.
He recognized the location and knew there could be value there. After raising funds internally, TerraX purchased the mineral leases for $211,000 a little more than a year ago. Following that purchase, TerraX was able to acquire the Goodwin property for $10,000 and optioned the Walsh Lake property under an undisclosed arrangement.
When Campbell purchased the mineral rights, he didn't know that a wealth of data was waiting to be found at the former Giant Mine site. More than 180 core samples and logs were preserved - strictly by chance - at the mine property.
"Fortunately for us, there were reams of information stored at the Giant Mine site in their archives," Campbell said.
"That information ... allowed us to push the project forward to where it is today."
The cores samples and data represent about $10 million worth of exploration and several years of work. Preliminary low-threshold field work - work not requiring environmental permitting - has already confirmed the data contained in the found logs.
"It really put us in a favourable position for advanced exploration," Campbell added.
Campbell places the potential value of the Yellowknife City Gold Project to be among a handful of the most valuable deposits in Canada.
Although it's too early to say where the market value of gold would need to be to get the Yellowknife City Gold Project into production, the deposit has more going for it than simply rich mineralization.
"The big difference-maker for this project is not just the gold grade, it's the location," Campbell said. "The thing that causes projects to fail or not be brought to production are mostly associated with infrastructure. If you have a lack of infrastructure it's very hard to bring projects in.
This project has a leg up on most other projects in the NWT."
Assuming good results, it could still take at least 10 years to take Yellowknife City Gold from advanced exploration to mining, with significant financing and environmental hurdles to overcome along the way.
"Our goal to be in a position to meet a 10-year timeline," Campbell said. "We need to have a project description in place over the next five years. That's what we're shooting at now - to define an ore body, put together a project description and be ready to move into the next stage in five years."
The land use permit does not, at the request of TerraX, include the Goodwin property because of sensitive land issues. Drilling will begin within the Northbelt property and expand according to findings within permit approval guidelines.
Phase-one drilling should begin before the middle of March, and will be spread out over five or six months, including pauses in drilling activity to accommodate the annual Yellowknife ski loppet, and a work shutdown during spring breakup.
