The Super Giants: They’re out there, and they’re coming

By Loren McGinnis On the horizon sit a group of mineral deposits that could, someday, provide hundreds of millions of tonnes of ore over decades and, in so doing, smooth out mining’s boom and bust cycles in the North. The very nomenclature associated with them – the super giants – makes them sound mythical. In some cases, they almost are. In all cases, this group of up-and-coming monsters has years before any one of them might be put into production.

A super giant is defined by the size of the mineral deposit. The North boasts a handful of these huge, world-class deposits, but poor infrastructure makes the prospect of getting the minerals out of the ground and to market a costly proposition. How to power the mine? And how to transport workers and materials in and out and get the goods to market? In the case of the North’s super giants, who pays for that infrastructure is an unanswered question. Until it is answered, the potential of these super giants will remain out there, on the horizon. And smaller mining operations nearby, which could open with new power and transportation infrastructure, will remain untenable, too. But that doesn’t dampen the enthusiasm of the people driving these projects. For them, the question is always when, not if.

The NWT & Nunavut Chamber of Mines has set the development of infrastructure as a top priority. No doubt, mining companies with operations that sit a few years out on the horizon are heartened to see it. However, Lou Covello, a long-time director of the chamber, makes no bones about his frustration with what he sees as the federal government’s reluctance to invest in the North. “If the same deposits were in the south, the infrastructure would be developed tomorrow,” says Covello, “but because we don’t have the people – or the votes – it’s not happening here.”

Covello is confident that once this group of super giants has the infrastructure to move into production, it will create the possibility for new, yet undiscovered and even unimagined projects to take hold. Like the people driving the next group of super giants, Covello walks the line between frustration and enthusiasm. While disappointed with the atmosphere in which mining companies are trying to operate in the North, we have one thing going for us. “World wide, with respect to mineral endowment,” he says, “we’re second to none.”

The big heavy
Project name: Mary River
Location: Baffin Island, near Pond Inlet
Minerals: Iron ore
Owner: Baffinland Iron Mines
Earliest possible production date: 2015

When asked what the mine-life of the Baffinland iron ore project could be, company chairman Richard McCloskey chuckles and wonders, “Forever?” Only after a good laugh does he settle into a consideration of just how big and promising this super giant deposit on North Baffin Island is, and of how long it could be mined at projected production rates. “We’ve reported 350 million tons of reserve. That’s 20 years at 18 million tons a year. We have an additional 550 tons of resource and that’s the beginning of it.” The resource is not infinite, but it’s truly huge and could take multiple generations to mine. McCloskey is quick to focus on the impact three generations of employment opportunities would have on the people of Nunavut.

The plan is to operate and ship out iron ore year-round. The plan to do that involves a rail line which would move the volume of ore to the coast where it would then be shipped, primarily to Europe. McCloskey says the transportation plan does not involve inventing anything new, but it is expensive. Some of the rail route will run over permafrost. That means soil in those places will have to be insulated so that it doesn’t melt and destabilize the rail tracks. Once the ore is at the coast it will be loaded onto ships with ice breaking capability that are designed though not yet built. “Do these ships exist: no they don’t,” says McCloskey, “but we have guarantees these ships will work, 100 per cent.”

Between the over-land rail and the ice breaking ships, McCloskey says the transportation infrastructure will make up around three-quarters of the over $4-billion expected cost of start-up. No surprise, finding that kind of money is the main thing slowing the project down. “If we had $4-billion, it would take two years to permit and four years to build,” says McCloskey. “We’re permitting now, but the financing isn’t there yet.” So where does McCloskey get his enthusiasm? From the size and quality of the resource. Drilling into the Baffinland super giant, says McCloskey, “is like drilling into an engine block. It’s pure iron.”

At the time of publication, Baffinland was considering a hostile takeover bid made by an Australian company, Iron Ore Holdings LP, valued at $274-million.

The trans-boundary super giant
Project name: Howard’s Pass
Location: Yukon-NWT border
Minerals: Lead and zinc
Owner: Selwyn Chihong Mining
Earliest possible production date: 2014

The Selwyn Chihong project in Howard’s Pass straddles the Yukon-NWT border. Covello says it is an undisputed super giant: “It could have 100 years of production,” he says.

Harlan Meade, president and CEO of joint-venture partner Selwyn Resources, calls it, “Canada’s national treasure in zinc and lead. I mean, it’s big.” The project got a big shot in the arm this summer with the closure of a $100-million deal with China’s Chihong Zinc and Germanium Company. For the Howard’s Pass project, it means stable financing and access to Chinese bank loans.

Most of the deposit is on the Yukon side of the border and permitting for the project has been focussed in that territory, but Meade says he hopes that does not mean people in the NWT won’t benefit. He expects that the mine, once it is in production, will employ between 350 and 400 full-time employees. Those jobs would be up for grabs across borders, and Meade also sees the potential for economic spinoffs across the territorial border. Primarily, says Meade, those opportunities rest in the mines infrastructure needs.

By Meade’s assessment, those infrastructure needs are very simple: “roads and power.” He says the company has initiated talks with First Nations in the Sahtu region about whether they could supply power to the mine. He also notes that First Nations have not observed territorial divisions in the past, and says, “We’ve suggested that they might find other ways to collaborate across boundaries on opportunities.”

Meade is not comfortable speculating on 100 year timelines, but he does say a 40 to 50 year mine-life is entirely feasible. He also compares Selwyn Chihong’s deposit in the Howard’s Pass to a past lead, zinc and silver super giant: British Columbia’s Sullivan deposit. It was mined for over 90 years, going out of production in 2001. Finally, Meade trumpets the wide-spread impact of strategic investments in roads and power generation: “This will open up the eastern Yukon, an area that has always been held back by infrastructure.”

The anomalous one
Project name: The Anomaly
Location: Paulatuk, NWT
Minerals: unknown
Owner: Darnley Bay Resources
Earliest possible production date: 2020

The lore surrounding Darnley Bay is fairly widely known in the mining community: A plane flying over the arctic community of Paulatuk, NWT in 1954 had its compass thrown into a tizzy by a huge magnetic force. That force is now known as the Darnley Bay anomaly. Nobody is sure of the cause, but if it is base metals – of a high enough grade and close enough to the surface – it could end up being a super giant.

Comparisons are often drawn between the magnetic activity at Darnley Bay and those that led to huge mineral discoveries and mining operations in Sudbury, Ontario and Norilsk, Russia.

Even compared to either of them, the Darnley Bay anomaly is huge, but let’s not get ahead of ourselves. Darnley Bay Resources’ corporate presentation begins with the warning that the forward-looking nature of the presentation means a lot could change: the market for base metals, the nature and magnitude of the deposit, and the uncertainties of financing exploration and development. All of this is to say that, as a potential super giant out there on the horizon, Darnley Bay is a little further off than the rest.

Still, the second slide in the company’s corporate presentation gets into just how big and how significant this deposit could be. The gravity anomaly is the strongest in North America and may be the largest isolated anomaly in the world. At this point, though, Darnley Bay is not sure what is under the ground causing it.

Initially, the sole focus was on base metal exploration, but since coming across kimberlite indicators in 2000, the company’s exploration focus has been split. Using airborne geophysical surveying technology, the company has identified seven drill sites, hoping to find the source of the anomaly within a thousand metres of the surface. There are also 186 kimberlite targets based on magnetic anomalies on the property.

The fact that the anomaly is so close to Paulatuk makes exploration relatively convenient. There is infrastructure such as the air strip and access to fuel. The community also offers the human resources necessary to operate the camp and gather samples. But if Darnley Bay’s claim on the anomaly turns out to bear mineral fruit, Paulatuk’s Arctic location and the lack of a road will make construction and production difficult. Company CEO Stephen Reford is not holding his breath, and so deliberately understates that, “a road from Inuvik to Paulatuk would be nice.”

Covello, similar to Reford, is not yet pushing for infrastructure to support Darnley Bay. It’s still a little early. If it is to happen, it is likely a 10 year time horizon, says Covello, but this is still at a highly speculative stage.

Since 1997 the company has spent around $20-million trying to determine how much mineralization is accessible at Darnley Bay. Ultimately, says Covello, that spending would have to balloon into the hundreds of millions of dollars, if not more, to get a mine running. Again that high cost is tied to the complexity of power generation and transportation so far north. Reford says the magnitude of the anomaly, coupled with the magnitude of the expense, mean, “it’s go big or go home because of the infrastructure cost.”