By Tom Hoefer, Executive Director of the NWT & Nunavut Chamber of Mines
This past year, COVID dealt a significant blow to the Northwest Territories (NWT), which is Canada’s main diamond-producing region. With all three of our mines producing diamonds, when the pandemic dealt significant effects on the diamond pipeline, we suffered with all of our “eggs in one basket”.
While our mines quickly proved they were able to protect their employees and operations from the pandemic – albeit it at significant cost and efforts – it was the global cutting factories and retail markets that did not fare as well. Pandemic-created closures and travel restrictions resulted in a plugged pipeline, depressing diamond prices significantly as a result. When you’re a mine and your market has been damaged significantly, you’re going to feel it. And feel it we did. All three mines faced new COVID costs in the face of lowered prices; one of our mines, the Ekati mine, was forced to seek bankruptcy protection and halted production for several months. Statistics from Natural Resources Canada show the value of NWT diamond production fell by a whopping $900 million. As a result, global diamond sales tracked by the Kimberley Process showed that the value of Canada’s diamond production fell to fifth place from third globally.
Interestingly, Nunavut, a gold and iron producer, saw an almost mirror image of effects. While they dealt with similar increased COVID costs and challenges, their sales in fact grew under robust gold and iron markets. As a result, mineral production there surpassed $2 billion for the first time in that territory’s history (see chart).
On the exploration side, NRCan statistics show that all of northern Canada experienced a decline in investment. This was for a number of reasons. First perhaps was the lack of any COVID financial relief provided by government as it excluded publicly traded companies. Second, it took time for mineral tenure relief to be provided (thanks to government, it eventually was); and third it took time to develop COVID protection procedures. With short exploration seasons in the north, the time spent sorting this all out led to several companies deferring their programs.
That all said, what a difference a year can make!
Diamond markets have now returned to pre-pandemic levels, if not the strongest in 10 years, according to independent diamond analyst Paul Zimnisky.
The Ekati mine is operating again at a steady state under new ownership, Arctic Canadian Diamond Company. A recent presentation by their president and CEO, Rory Moore, unveiled the company has a current life of mine plan to reach 2029. However, they revealed a new and exciting plan to develop new underwater crawler miner technology that could see them mining for decades to come.
Rio Tinto’s Diavik diamond mine has now purchased the 40 per cent interest previously held by Dominion Diamonds, and now owns 100 per cent of the mine and its sales – and reclamation responsibilities – and they are continuing on their planned path to closure in 2025. However, they are still exploring, so fingers crossed.
The De Beers – Mountain Province (51 to 49 per cent) owned Gahcho Kué diamond mine continues its open pit mining, with plans to mine their multiple pipes until 2030. There may be opportunities to supplement that production from the nearby Kennady North Project by injecting the Kelvin and Faraday kimberlites owned by Mountain Province, however there are no plans in place at this time. MPV will initiate much larger exploration plans in 2022.
On the exploration side, Natural Resources Canada is projecting a turnaround across the country, as well as in three territories in 2021 (see chart). Much of this is due to experience gained with COVID, and fuelled by strong markets, including gold, diamonds, and a host of “critical minerals”.
The concept and definition of “critical minerals” is gelling as the U.S., Europe, Australia, Canada, and others are developing lists of mineral commodities that have important uses but no viable substitutes, yet face potential disruption in supply, and are therefore critical to their countries’ economic and national security and work to combat climate change. Canada’s list contains 31 critical minerals; the U.S. has 50 with work to consider more.
We currently have four mining projects advancing in the NWT and all of them also happen to host critical minerals.
Cheetah Resources has begun mining at their Nechalacho rare earth element project, making it the first REE mine in Canada. Using sorting technology, they mined a significant tonnage without using water, and without creating traditional tailings, using innovative X-ray sorting technology. They also used a First Nation mining company for the first time in the NWT’s history. Their ore is being processed in Saskatoon, where they are also constructing their own processing facility. Sales to a Norwegian firm have shown the product meets customer specifications.
NorZinc continues to advance development of the Prairie Creek zinc-silver-lead mine in the mountains of the western NWT. The site already benefits from significant previous investment in mine infrastructure, but will require construction of a 170-kilometre all-season road. Initial work is planned for this winter. All-weather road access would also allow use of LNG for power in this remote region.
Osisko Metals has been drilling and evaluating their Pine Point zinc-lead property, former site of a 25-year producer which closed in 1988. The site is serviced by perhaps the best infrastructure in the NWT, with hydropower, roads, and rail that was developed for the original mine. With the addition of in-pit sorting, and better markets today, Osisko believes the mine has potential be a top 10 global producer. The project has now triggered and entered the environmental review process.
Fortune Minerals NICO project is a vertically integrated cobalt-gold-bismuth-copper project, comprising of a mine and mill in the NWT that would produce and ship a bulk concentrate to a refinery that Fortune plans to construct in southern Canada. The project is looking even better now with the very recent opening of the Tlicho Highway, an all-weather link to southern Canada that will allow Fortune to construct their own 50-kilometre link to their mine site for shipping product year-round. The deposit hosts more than 10 per cent of global bismuth reserves.
60 North Gold has equipment in place now to resume gold production from their small MON mine, in the Yellowknife greenstone belt, near the previous producing high-grade Discovery gold mine.
In the wings, exploration is robust in the Indin Lake greenstone belt where Nighthawk Resources is planning a significant 100,000-metre drill program on their large gold property, which also hosts the former Colomac gold mine. In the Yellowknife greenstone belt, Gold Terra Resources continues an aggressive drill program, and recently announced a deal to purchase 100 per cent of the assets and tenure comprising the past-producing high-grade Con gold mine.
A number of other juniors including Rover Metals, Arctic Star, GGL Resources, Golden Planet, Silver Range Resources, North Arrow Minerals, Slave Lake Zinc, Olivut Resources, Seabridge, and StrategX are exploring for critical metals, diamonds, and gold.
We aren’t taking all of this increased investment for granted though, and our Chamber of Mines continues to identify actions that all levels of governments can take to help support and to strengthen the north’s number-one industry, and to the benefit of northerners.
