Which US presidential candidate does gold prefer?
Gold loves chaos and should be hitting new highs, especially with inflation coming down and with it, two rate cuts likely before year’s end.
A potent combination of rising gold prices and favorable geology has reignited gold exploration in British Columbia, attracting some of the industry’s biggest mining companies and sparking renewed interest in the province’s oldest mining camps.
“You can bet that anywhere in the province that has gold, that is where the money is being spent,’’ said Tom Schroeter, President and CEO of Fjordland Explorations Inc. (TSX: V.FEX, Stock Forum), which is among the beneficiaries having recently optioned one of its central B.C. properties to South African giant Gold Fields Ltd. (NYSE: GFI, Stock Forum).
Spending on exploration in B.C. is expected be “north of $400 million” this year, an increase from $322 million in 2010, according to Gavin Dirom, chief executive officer of the Association for Mineral Exploration in British Columbia.
He said 75% of the amounts being spent will go towards projects that include gold as one of the exploration targets. ($416 million spent in 2007 is the record for B.C. so far).
A former regional geologist with the B.C. government, Schroeter said the renewed interest in gold is a province-wide phenomenon and is attracting a number of major companies, including Newmont Mining Corp. (NYSE: NEM, Stock Forum), which he said is back looking in B.C. after an absence of nearly 25 years.
This has resulted in increased staking activity in many of the major gold mining camps across the province and also in some previously unexplored areas.
For example, following a hiatus of 40 years, production is about to resume in what is still the province’s largest gold producing region, the Bridge River/Bralorne camp in southwestern B.C. (about 100 kilometres north of Lillooet).
Bralorne Gold Mines Ltd. (TSX: V.BPM, Stock Forum) has been stockpiling material from gap areas located between the former Bralorne and King mines in preparation for startup, after securing the necessary permits.
“With the price of gold the way it is going, we think that we are in good condition,’’ said Johnathon Smith, a spokesman for Bralorne Gold Mines, which is looking at an initial production rate of 11,540 ounces annually (100 tonnes per day) at cash cost of between US$450 per ounce.
British Columbia is best known for its iconic base metal mines such as Highland Valley, Sullivan and Gibraltar.
But since the mid 1800s, mining operations in the province have produced 38.6 million ounces of gold, mostly from mainly underground vein-type deposits such as the ones that sustained Bridge River/Bralorne camp, until the combined Bralorne and Pioneer mines shut down in 1971.
Of that amount about four million ounces was produced by the Bralorne and Pioneer mines, which amalgamated in 1959 to become the primary gold producer in B.C. (combined output of 7.2 million tonnes, yielding, on average, 17.9 grams per tonne gold and 3.9 grams per tonne silver).
Historic B.C. gold production also includes about 3.8 million ounces from the Cariboo gold belt in south-central B.C. where Gold Fields Ltd. is now actively looking for gold under option agreements with Fjordland and Cariboo Rose Resources Ltd. (TSX: V.CRB, Stock Forum) on the Woodjam property.
Gold Fields can earn a 70 per cent stake in portions of Woodjam, which is located about 45 kilometres east of Williams Lake. It can earn that interest by spending $35 million on exploration and producing a feasibility study for the South East zone.
Eskay Creek, Skeena Mining Division.
Not surprisingly staking has picked up around Eskay Creek, British Columbia’s second largest mining camp, and the site of what used to be one of the world’s richest gold deposits. After 13 years of production, Eskay Creek was mined out and shut down in June 2008. “Because of its history, the whole area remains staked,’’ said Schroeter. Junior companies have reactivated exploration within a 50 to 100 kilometre radius of the mine.
In northwestern B.C., about 100 kilometres west of Iskut, Copper Fox Metals Inc. (TSX: V.CUU, Stock Forum) is working on an updated resource estimate for its Schaft Creek project which is thought to contain about 7.9 million ounces of gold in a porphyry deposit. Once the update has been released, likely in April, the company will look at the feasibility of building a mine at the site.
Meanwhile, in north-central B.C. where the Kemess South mine is coming to the end of its lifespan, operator Northgate Minerals Corp. (TSX: T.NGX, Stock Forum) and (AMEX: NXG, Stock Forum) is hoping to start another new mine nearby. The company wants to put the Kemess North mine into production as an underground operation, a move that would provide an economic boost to the region, which is located 430 kilometres northwest of Prince George.
“They hope to get it up and running as early as 2014,’’ said Schroeter.
About 150 kilometres northwest of Prince George, Thompson Creek Metals Inc. (TSX: T.TCM, Stock Forum) and (NYSE: TC, Stock Forum) is working to put the Mt. Milligan project into production. With startup scheduled for 2013, the project is expected to produce about 81 million pounds of copper and 194,500 ounces of gold over a lifespan of 22 years.
Further south on the Nechako Plateau, southwest of Prince George, staking activity is being driven by recent drilling results from Richfield Ventures Corp.’s (TSX: V.RVC, Stock Forum) Blackwater-Davidson Project.
On March 2, 2011, Richfield released a 43-101-compliant resource estimate for the Blackwater project. Using a cut-off of 0.40 grams per tonne, the property is estimated to host an indicated resource of 1.83 million ounces gold, plus an additional 2.34 million ounces in the inferred category.
Richfield President Peter Bernier has described Blackwater as “one of the most important new discoveries in Canada.’’ He said the company would continue the exploration effort both on its wholly-owned southern portion of the property and on ground that is held 25% by Silver Quest Resources Ltd. (TSX: V.SQI, Stock Forum). Richfield is planning to complete 30,000 metres of drilling this year.
Meanwhile, recent drilling results have prompted staking activity in southeastern British Columbia in the vicinity of the inconic Sullivan lead-zinc mine near Creston, B.C. In December Eagle Plains Resources Ld. (TSX: V.EPL, Stock Forum) and Providence Resources Corp. (TSX: V.PV, Stock Forum) reported the discovery of gold-bearing massive sulphide mineralization in drilling results on the Iron Range project.
Highlights from drilling on the Iron Range project, which is located about 70 kilometres southwest of Sullivan included 14 metres of 5.1 grams gold, 1.86% lead, 2.1% zinc, and 75.3 grams silver per tonne.
Eagle Plains and Providence are testing stratigraphic intervals that are known to host the Sullivan deposit. After almost a century of active production, Sullivan closed in 2001, but not before producing over $40 billion worth of metals in its lifetime.
Other juniors who have staked ground in the area include Fjordland Exploration, Hughes Group andElectra Gold Ltd. (TSX: V.ELT, Stock Forum). “Gold is something that is brand new for the Sullivan area,’’ said Electra President Joe Shearer.
Fjordland Exploration has emerged as the largest mineral tenure holder in southeastern B.C., with just under 90,000 hectares. “Now most of southeastern B.C. has been totally claimed,’’ Schroeter said. He added that Fjordland is working to establish an exploration program for the region.
