UCORE RARE METALS INC.

Rising above Kendrick Bay in SoutheastAlaska, Ucore Rare Metals’ Bokan Mountainrare earth project is being hailed by marketexperts and policymakers alike as a right-sizeoperation, recovering the right rareearth elements in the right location. Page 3

A special supplement to Petroleum NewsWEEK OF

March 31, 2013

6 Pentagon calls for REE stockpile DoD suggests a $1.24B store of rare earth and other strategic minerals

11 Hit the frozen ground running A handful of mineral explorers take advantage of winter in Canada’s North

14 Hecla extends reach into Canada U.S. miner invests in B.C. silver projects, makes bid for Quebec gold miner

2NORTH OF 60 MINING PETROLEUM NEWS • WEEK OF MARCH 31, 2013

By SHANE LASLEYMining News

The right size operation, recovering theright rare earth elements in the right

location; this is how market experts andpolicymakers are describing Ucore RareMetals’ Bokan Mountain REE project inSoutheast Alaska.

In a March 9 article, “The Rare EarthSpace, ‘A Culling of the Herd, and theSurvivors’ (Part 1: North America),” pre-eminent technology metals expert JackLifton said Ucore and its Bokan Mountainproject has the right elements to survive“the Darwinian nature of the markets.”

“As I mentioned some time ago, theGoldilocks Principle will gain new credibil-ity in the REE space, as it’s the right-sizeproject with the right products, critical rareearths that will ultimately prevail. Ucore’sBokan is such a project,” Lifton wrote.

Aside from being just right in terms ofsize and its porridge of heavy rare earthssuch as dysprosium, terbium and yttrium,Lifton notes another big advantage for thefuture of Bokan Mountain.

“Ucore has yet another ace (in) the holewith the State of Alaska in their corner,”noted the co-founder of Technology MetalsResearch.

Broad supportLifton’s assertion that Ucore has state

backing is exemplified by SJR 8, an AlaskaSenate resolution that supports rare earthexploration and development in the 49thstate and Bokan Mountain, in particular.

“Several experts have said it is likelythat Alaska has one of the most significantrare-earth prospects in North America,”said Sen. Lesil McGuire, R-SouthAnchorage, sponsor of Senate JointResolution 8. “If we play our cards right,this could secure our future as the lead sup-plier of America’s rare earth mineralneeds.”

SJR 8 recognizes the deposits at BokanMountain as “rich in the heavy rare earthelements of europium, gadolinium, ter-bium, dysprosium, thulium, holmium,erbium, ytterbium, lutetium, and yttrium”and “the only known (heavy rare earths)deposits in the world that have deep water

access, accessible labor, and prospectivepower sources.”

“There are actually two opportunitiesdeveloping REEs offer for Alaskans. Oneis the value of the actual minerals and the

3NORTH OF 60 MINING

PETROLEUM NEWS • WEEK OF MARCH 31, 2013

North of 60 Mining News is a monthly supplement of the weeklynewspaper, Petroleum News. It will be published in the fourth orfifth week of every month.

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� A L A S K A

Ucore’s Bokan: Baby bear of REE projectsJust right in terms of size and porridge of heavy rare earths, the Southeast Alaska project passes the ‘Goldilocks Principle’ test

see BOKAN PROJECT page 4

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Based on 9,550 meters of drilling completed by Ucore Rare Metals, the Dotson Zone deposit at Bokan Mountain is estimated to host aninferred resource of 5.3 million metric tons averaging 0.65 percent total rare earth oxides, some 40 percent of which are the higher valueheavy rare earth oxides.

other is creating a whole new layer of theeconomy by refining those minerals here,”said Sen. McGuire.

This resolution, which the Senate passedto the House with a 20-0 vote on March 13,is being considered alongside its companionbill, House Joint Resolution 9. Rep. MiaCostello, R-Anchorage, sponsor of HJR 9,has signed on as a House sponsor of SJR 8.

In addition to lending its support to theexploration for and mining of rare earths,SJR 8 urges Alaska permitting agencies toexpedite consideration and issuance of per-mits required for the development of REEprojects in the state and urges “the UnitedStates Congress to support efforts of thestate to develop rare earth elements in thestate for the benefit of the economic andnational security of the United States.”

As state legislators demonstrate resolveto support Ucore from Juneau, Alaska’s del-egation inWashington D.C. have introduced legisla-

tion aimed at paving the way for construc-tion of a road to the Bokan Mountain proj-ect.

U.S. Sens. Lisa Murkowski, R-Alaska,and Mark Begich, D-Alaska, Jan. 30 intro-duced S.181, a bill that calls for buildingsome 75 miles (120 kilometers) of road thatconnects Bokan Mountain and HeatherdaleResources’ Niblack mine project to theroughly 2,500 miles of roads that connectmost of the communities on Prince of WalesIsland.

Murkowski noted that this bill wouldpermit development of a road that mini-mizes costs, while also minimizing theeffects on surface resources, preventingunnecessary surface disturbances and com-plying with all environmental laws and reg-ulations.

U.S. Rep. Don Young introduced a com-panion bill, HR 587, in the House.

“We’re highly encouraged by these two

initiatives to expedite the development ofthe Bokan project,” said McKenzie.“Alaska legislators have been exceptional-ly supportive of our development, whichpromises to bring skilled employment andnumerous ancillary economic benefits to anarea with tremendous potential. The billsadditionally acknowledge and complementUcore’s commitment to complying withexisting laws, fostering economic develop-ment in the region, and advancing produc-tion of materials designated as critical tonational security by the U.S. Congress.”

Bokan Mountain does not only enjoysupport from Juneau and Washington,D.C., but has garnered a similar level ofenthusiasm from the governments onPrince of Wales Island where the project islocated.

Prince of Wales Community AdvisoryCouncil, an organization representing 12communities on Prince of Wales Island,passed a resolution in support of building aroad that would connect the majority of theisland’s roughly 6,000 residents to the two

mine projects at the southern end of Princeof Wales.

Baby bear CAPEXUcore’s hand is further strengthened by

the baby bear-sized capital needed to builda mine and rare earth processing facility atBokan.

A preliminary economic assessmentreleased by Ucore in November, projectsthat it will cost US$221 million to get theSoutheast Alaska rare earth mine up andrunning. In addition to building the typicalmine infrastructure and facilities needed toproduce a concentrate, the upfront capitalexpenditure includes funds to build a sepa-ration plant capable of producing market-ready rare earth oxides and a contingency ofUS$25 million.

“Bokan’s unique features have generateda (capital expenditure) that is among theabsolute lowest in the industry, remarkablyincluding full downstream separation facili-ties that promise to render high purityoxides both economically and on-site. Inturn, the Bokan PEA has delivered highlyrobust (internal rate of return) and (net pres-ent value) calculations,” Ucore Presidentand CEO Jim McKenzie.

The PEA predicts a pre-tax NPV ofUS$577 million, at a 10 percent discountrate; an IRR of 43 percent; and a paybackperiod of 2.3 years.

“In the case of Ucore, their recent PEAdelivered some metrics that set its Bokanproperty apart from the crowd … not theleast of which is an almost absurdly low

projection of the CAPEX required to getinto production ($221 million) and a prod-uct mix and form stated to be valuableenough to generate close to US$100 millionper year in pre-tax profit (with a 43 percentIRR). That’s a bullish return on limitedinput capital,” Lifton observed.

The technology metals expert also point-ed out that the total cost of developing themine and processing facility at BokanMountain is less than the US$267 millionstate-owned Alaska Industrial Developmentand Export Agency spent to build andupgrade the 52-mile road and port facilitythat connects the Red Dog zinc mine inNorthwest Alaska to world markets.AIDEA is being paid back through annualfees paid by the owners of the mine.

Innovative engineeringThe projected low capital costs and high

return of investment for Bokan Mountain isas much about innovative engineering as itis about heavy rare earth-enriched rocks thatset it apart from most other REE projects.

“It’s a peralkaline granitic-type deposit,which is just about the extent of the geolo-gy you are going to get,” Ucore COO KenCollison quipped during his presentation toa geologist heavy crowd at the 2013Mineral Exploration Roundup.

Based on 9,550 meters of drilling com-pleted at Bokan, Ucore released an inaugu-ral resource estimate for the Dotson Zonedeposit in 2011. At a 0.4 percent total rareearth oxide cut-off grade, this 2,140-longdeposit hosts an inferred resource of 5.3million metric tons averaging 0.65 percentTREO. Some 40 percent of the rare earthsin the resource are the higher value heavyrare earth oxides.

Collison said the important geologicalaspect of the Dotson deposit, from an engi-neering standpoint, is that the REE mineral-ization is concentrated in a swarm of steeplydipping veins.

“The key thing is the waste rock inbetween the veins is absolutely barren,” themining engineer explained.

This stark contrast between REE-enriched veins and barren rock allows forthe use of an x-ray sorter to scan the materi-al as it heads up a conveyor and use a blastof high pressure air to reject REE-barrenrocks before they drop into the grinder,reducing the mill feed by 50 percent. Afterinitial grinding, half of the remaining mate-rial can be skimmed by magnetic separa-tion.

“So we are going to have 1,500 tons perday coming out of the mine, but we aregoing to have a 750-ton-per-day grindingcircuit and then the leaching circuit, whichis extensive, is only 375 tons per day,”explained Collison.

In addition to the immediate economic

4NORTH OF 60 MINING PETROLEUM NEWS • WEEK OF MARCH 31, 2013

continued from page 3

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see BOKAN PROJECT page 5

The sharp contrast between REE-enriched veins and barren rock at the Dotson zone of the Bokan Mountain project allows Ucore Rare Metalsto consider the use of an x-ray sorter to reject REE-barren rocks, which is expected to reduce the feed at the proposed mill by 50 percent.

5NORTH OF 60 MINING

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advantage of needing to build and power asmaller grinding circuit, the initial rejectionof barren granite provides environmentaland longer term economic benefits for theproject.

Collison said that at a certain point themine will consume 1,025 tons of tailingsper day to backfill the voids, or about 275tons per day more than the mine is produc-ing.

“So when this mine finishes, we will nothave any tailings on surface,” the mineengineer beamed.

Ucore has been working with Montana-based IntelliMet LLC to develop a state-of-the-art method for processing the rareearths, referred to in scientific circles assolid-phase extraction.

Considered to be a scientific leap beyondsolvent exchange extraction, the methodtraditionally used to separate REEs, solid-phase extraction utilizes nanotechnology.This less-complicated process is resulting ina smaller and more efficient facility fortransforming Bokan Mountain ore into rareearth oxides.

Though cutting edge, the SPE procedurefollows a much simpler flow-sheet than tra-ditional REE extraction methods.

In bench-scale tests, IntelliMet treated arepresentative sample of Bokan ore withnitric acid, generating a solution containingthe rare earths and other elements containedin the ore. Before precipitating the REEs outof solution, the Montana-based lab was ableto pull out more than 99 percent of the non-REE elements – including iron, uraniumand thorium.

Once these “nuisance” elements areremoved, the proposed SPE processingfacility will use three stages of subclass seg-regation to result in pure REE oxides pre-

cipitated out of the solution.The PEA anticipates the mill and state-

of-the-art processing facility to recover 81.6percent of the rare earths, averaging 2,250metric tons of rare earth oxides per year dur-ing the first five years of full production;including an annual output of 95 metric tonsof dysprosium oxide, 14 metric tons of ter-bium oxide, and 515 metric tons of yttriumoxide.

Target: 2016 productionLifton said the annual dysprosium out-

put would supply nearly half of the currentautomotive requirements in the UnitedStates and about 10 times the need of theU.S. Department of Defense.

In October, DoD entered into a contractwith Ucore to conduct a mineralogical andmetallurgical study aimed at determiningwhether a mine and processing facility atBokan Mountain could supply the U.S.Military with a domestic source of theheavy rare earths.

“Remarkably, the PEA supports a verystraight-forward mine development plan incombination with a near-term productionhorizon at Bokan,” said McKenzie. “What’smore, this affordable, high-return facilitywill generate product that the US criticallyrequires to sustain competitiveness in multi-ple high growth fields, including high tech,renewable energy, medical science anddefense systems.”

Ucore hopes the broad support, positiveeconomics and relatively simple develop-ment plan will result in a short runway toproduction at Bokan Mountain. With per-mitting and feasibility level studies begin-ning this year, the company plans to havedetailed engineering studies completed in2014 and a construction start by 2015. Ifthis schedule holds, Ucore has a target of2016 to begin providing the United Stateswith heavy rare earths from the SoutheastAlaska deposit.

“Every so often, a low cost, right-sizefacility with a resilient high-demand prod-uct presents itself in the mining sector.Bokan is such a facility,” toutedMcKenzie. �

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Ucore Rare Metals hopes the broad support, positive economics and relatively simple development plan will result in a short runway to pro-duction at its Bokan Mountain REE project. The company has a target of 2016 to begin providing the United States with heavy rare earthsfrom the project at the southern end of Prince of Wales Island.

By SHANE LASLEYMining News

About face; forward; march! The U.S.Department of Defense recently

issued this order in the field of rare earthelements.

The unique properties of REEs – a groupof 17 previously obscure metals thatinclude scandium, yttrium and the 15 lan-thanides – are key ingredients in a numberof military applications such as guided mis-siles, lasers, radar systems, night visionequipment and battlefield communications.

China is estimated to supply between 90and 95 percent of the world’s rare earthoxides, according to a September 2012report penned by Congressional ResearchService.

Though these Sino-mined elements arekey ingredients to much of the U.S.Military's advanced weapons systems,Pentagon officials have never consideredREEs rare enough to need a stockpile ofthem.

“I wouldn’t run out and buy a bunch ofrare earths,” DoD Industrial Policy DirectorBrett Lambert proclaimed during a defenseconference held in New York late in 2010.

Today, the Pentagon proposes to do justthat. In a 189-page report, the DoD recom-mends investing US$130 million to estab-lish near-term strategic stockpiles of sevenrare earth elements – dysprosium, terbium,yttrium, erbium, thulium, scandium and oneclassified REE.

All told, the defense agency found“insufficient supply to meet demand” for 23of 72 metals and minerals it studied and is

recommending thatUS$1.24 billion beearmarked to buildstrategic stores ofmaterials on the list.

According to DanMcGroarty – one ofthe few people out-side of the Pentagonand the U.S. HouseArmed ServicesCommittee to have seen the report – theDoD named 19 of the mined materials thatare in shortfall, the remaining four are clas-sified.

The list of non-rare earth materialsdeemed in short enough supply to warrantstockpiling include antimony, bismuth, gal-lium and tantalum.

McGroarty told Mining News thatChina is a common thread that binds all ofthe unclassified metals and minerals on thestockpile list.

“China is a top-tier supplier for all 19metals and minerals that they identified asbeing in shortfall,” the president ofAmerican Resources Policy Networkexplained.

About faceChina’s dominance as a supplier of

many of the metals of strategic importanceto the U.S. Military has been a concern formany policymakers on Capitol Hill.Pentagon’s previous laidback approach toensuring an adequate supply of rare earthsdrew sharp reproach from U.S. Sens. MarkBegich, D-Alaska, and Lisa Murkowski, R-Alaska, and Rep. Mike Coffman, R-Colo.

“Clearly, rare earth supply limitationspresent a serious vulnerability to our nation-al security. Yet early indications are theDoD has dismissed the severity of the situ-ation to date,” the lawmakers wrote in aJanuary 2011 letter to then U.S. Secretary ofDefense Robert Gates.

The senators urged the Pentagon to takeinventory of the U.S. military’s anticipatedREE demand and establish policies toensure an uninterrupted supply of these crit-ical materials.

In their letter to Gates, the trio wrote, “Inour view, it is a fundamental responsibilityof DoD industrial policy to have a compre-hensive understanding of the security of ourdefense supply chain, which requiresunderstanding detailed knowledge of thesources and types of components and mate-rials found in our weapon systems.”

The DoD Office of Industrial Policy ischarged with sustaining an environmentthat ensures the industrial base on which thePentagon depends is reliable, cost-effective,and sufficient to meet its requirements.

The Alaska and Colorado legislatorssaid the Pentagon should require itsweapons contractors “to provide a detailedaccounting of the various rare earth-con-taining components within their weaponssystem.” This information could then beused to create policies that would ascertainthat the military would have these vital min-erals on-hand.

The American Security Project, a bi-par-tisan think-tank focused on national securi-ty issues, also weighed in on the risks posedby the U.S. military’s dependence on Chinaas its primary supplier of rare earths.

In a February 2011 report titled, “RareEarth Metals and U.S. National Security,”the Washington D.C.-based research groupwrote, “Rare earth metals are essential forthe United States’ military and economicwell-being. Yet the U.S. has been particu-larly lax when it comes to securing the sup-ply of these metals.”

Emily Coppel, author of the report, said,“Rare earth metals present a weak link inour defense supply chain. These metals arecritical for national security, as they areessential for our most powerful weapons.The U.S. was once the world’s top produc-er and supplier of these metals, but nowChina controls over 90 percent of the rareearths market. This means the U.S. is nowcompletely reliant on China for the produc-tion of our most powerful weapons. Whilethe U.S. has taken some steps to reduce thisreliance on China, we have not doneenough.”

The Alaska and Colorado lawmakersrequested the DoD provide Congress with awritten report on its REE demand and “pro-pose real solutions on rare earth availabili-ty.”

“For example, one policy may be for theDoD to establish a limited stockpile of rareearth alloys that are in danger of supplyinterruption to ensure security of supply ofboth metals and magnets,” the policymak-ers suggested.

The Pentagon’s initial response to thecongressional request was a scant seven-page report in March 2012 that reflected itsposition that REE projects outside of China,such as MolyCorp’s Mountain Pass Mine inCalifornia, and other adjustments in theWestern rare earth markets should ensurethat there is no military or commercialshortage of these strategic elements in theUnited States.

“Over the past year, there have been anumber of positive developments withregard to both supply and demand withinthe rare earth materials markets,” thePentagon wrote in the belated report toCongress. “Reactions to market forces haveresulted in positive developments, such asprices decreasing by half from their peaklevels in July 2011, increased investmentand domestic supply of rare earth materials,corporate restructuring within the supplychain, and lower forecasts for non-Chineseconsumption. By 2015, the departmentbelieves this will help to stabilize overallmarkets and improve the availability of rareearth materials.”

Capitol Hill, however, did not share themilitary’s optimistic outlook.

“Although new mine production may beable to make up the difference for somelighter elements (there may be an excesssupply of the lighter elements such as ceri-um, lanthanum, and praseodymium), sever-al forecasts show that there will likely beshortfalls of other light rare earths and sev-eral heavier rare earth elements, such as,dysprosium, terbium, neodymium, europi-um and erbium,” according to the June2012 report penned by the CongressionalResearch Service. “This potential shortfallhas raised concerns in the U.S. Congress,”the report added.

Forward marchIn its “Strategic and Critical Materials

2013 Report on Stockpile Requirements,”the DoD has gone beyond the recommen-dations made by the Capitol Hill lawmakersto look at the supply risks of a bevy of met-

� U N I T E D S T A T E S

Pentagon orders an about-face on REEsDepartment of Defense reverses its public stance on rare earths, recommends building a US$130M stockpile of the strategic minerals

6NORTH OF 60 MINING

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By CURT FREEMANFor Mining News

In a year that has started off with morethan its share of mining industry gloom

and doom, this year’s Fraser Institute“Survey of Mining Companies,2012/2013” provided a bit of sunshine forAlaska. The annual survey of explorationand mining companies gauges the pros andcons of working in various political juris-dictions around the world. This year’sresults came from 742 mineral industrycompanies working in 96 jurisdictionsworldwide and represented cumulative2012 exploration expenditures of morethan US$6.2 billion.

The perception of Alaska from thecompanies working here last year was notfar different from 2011. However, Alaskaranked fifth under the “Policy/MineralPotential index with no land use policies inplace and assuming industry best prac-tices” category, down from its surprisingfirst-place position in 2011. Alaskareclaimed sixth place in “Mineral Potentialwith current land use policies in place”behind Greenland, Finland, Sweden,Nevada and Saskatchewan. Alaska alsoclimbed to No. 19 in 2012 from 25th placea year earlier in the Policy Potential Indexcategory, which measures all things relatedto regulatory policy.

All in all, we did pretty well with a sev-enth-place overall finish (versus No. 4 in2011) behind Yukon, Finland, Nevada,Sweden, Western Australia and Wyoming.Alaska received high marks for its sup-portive and proactive state government, itspublic-sector digital database and itsunequivocal identification of AlaskaNative land claims. As usual, there is somelingering uncertainty out there regardingthe consistency of administration and inter-pretation of existing regulations and onAlaska’s well-recognized access and infra-structure challenges. We also got ham-mered for the heavy hand that the U.S.federal government can play in Alaska’smining industry.

Western AlaskaFREEGOLD VENTURES LTD.

announced and updated NI43-101 compli-ant Mineral Resource estimate at itsVinasale gold project near McGrath.Indicated resources now stand at 3.41 mil-lion metric tons averaging 1.48 grams permetric ton gold for 162,000 ounces, andinferred resources are 53.25 million metrictons averaging 1.05 g/t gold for 1.799 mil-lion oz of gold utilizing a cutoff value of0.5 grams of gold per tonne. Of signifi-cance is the increase in grade in the indi-cated category and the potential to bothincrease the grade and tonnage within thatcategory. A total of 98 drill holes contain-

ing 11,284 gold assays have been complet-ed on the project within three areas: theCentral, Northeast and South Zones. Thehighest density of drilling has been com-pleted in the Central Zone where 53 drillholes totaling 12,352 meters were used inestimating the resource for the CentralZone. The company’s 2013 program isexpected to consist of additional drilling inthe Central Zone where it remains open tothe south, as well as potential resource def-inition in the North East Zone.

FIRE RIVER GOLD CORP. providedan update of activities over the last threemonths at it Nixon Fork mine nearMcGrath. The first production stope in theMystery Mine was started and continues todeliver high grade ore. Additional adjacentmineralization has increased the size of thezone, and the company expected to exceedboth the tonnage and grade forecasts forthis first production area. Recent produc-tion has come from two existing longholestopes. In addition, development drilling inthe 3100 zone is nearly finished andresumption of development work there isbeing scheduled for the near future. Designwork and planning for access to the 3550zone is underway. Following severalimprovements in the milling system, pro-duction has improved from 921 ounces ofgold produced in November 2012 to 2,032ounces of gold produced in January 2013.The recovery rate during the period variedfrom 71-73 percent. The company alsoannounced development drill results fromthe 3550 zone at the Crystal mine.Significant results include 6.36 metersgrading 7.86 g/t gold in drill hole N12U-108; 5.35 meters grading 53.98 g/t gold indrill hole N12U-123; 4.28 meters grading18.80 g/t gold in drill hole N12U-128;3.43 meters grading 21.10 g/t gold in drillhole N12U-130, including 1.10 metersgrading 48.00 g/t gold; and 3.35 metersgrading 57.17 g/t gold in drill hole N12U-114 including 1.93 meters grading 99.00g/t gold. Additional definition drilling inthe 3550 zone is continuing.

MILLROCK RESOURCES announcedthat funding partner KINROSS GOLDCORP. has dropped its option on theHumble project in southwest Alaska andthe Council project on the SewardPeninsula. Both projects are available foroption with new funding partners.

Interior AlaskaFREEGOLD VENTURES LTD.

announced resumption in February ofresource expansion drilling at its GoldenSummit project near Fairbanks. Drillingwill initially be targeted at the 6 millionounce Dolphin/Cleary Hill deposit whereinfill drilling will be conducted to upgradeinferred ounces to indicated ounces andexpansion drilling will be conducted todetermine the limits of mineralization.Mineralization remains open to west, eastand at depth and covers an area of at least300 meters by 1,500 meters. The programfor 2013 will include 20,000 to 25,000meters of diamond core drilling, metallur-gical testing and the initiation of aPreliminary Economic Assessment.

TERYL RESOURCES CORP.announced acquisition of a 50 percentworking interest in the Fish Creek goldproperty from Linux Gold Corp. LinuxGold will retain a 5 percent net royaltyinterest with a cap of US$2 million. Terylhas the right to purchase the 5 percent netroyalty interest for US$500,000 within oneyear of production. The Fish Creek proper-ty is located adjacent to KINROSS GOLDCORP.’S Gil gold project and nearby Fort

Knox gold mine. INTERNATIONAL TOWER HILL

MINES LTD. provided a corporate updateat its Livengood gold project. The compa-ny is focusing on completing all the engi-neering and analysis to support the com-pletion of its Feasibility Study and theenvironmental work needed to maintain itscurrent schedule. The company also indi-cated that the LivengoodFeasibility/Optimization Study is onschedule and on budget. This work includ-ed completion of mine design/productionschedule alternatives including equipmentspecifications and bids, completion of met-allurgical tests to optimize recovery, com-pletion of the milling process design cir-cuit has with on-going work on throughputoptimization. The mill will include an ini-tial gravity circuit followed by standardcarbon in leach recovery circuit.Equipment bids have been received andare being reviewed. The company alsoreported that environmental baseline infor-mation collection has entered its fifth year,establishing critical benchmarks for minepermitting needs.

BLUESTONE RESOURCES INC.announced receipt of a five-year explo-ration permit from the State of Alaska atits Shorty Creek gold project south ofLivengood. The company plans to conductconfirmation drilling and additional explo-ration drilling programs. An historical 20hole drill program produced drill interceptsof 70 meters grading 1.2 g/t gold, includ-

� C O L U M N

Alaska slips in 2012 Fraser rankingsIndustry leaders still ranked state among top 10 of 96 political jurisdictions around the world when it comes to mining investment

7NORTH OF 60 MINING

PETROLEUM NEWS • WEEK OF MARCH 31, 2013

TheauthorThe author

Curt Freeman,CPG #6901, is awell-known geol-ogist who lives inFairbanks. He pre-pared this column CURT FREEMANMarch 25. Freeman can be reached bymail at P.O. Box 80268, Fairbanks, AK99708. His work phone number atAvalon Development is (907) 457-5159and his fax is (907) 455-8069. His emailis avalon@alaska.net and his website iswww.avalonalaska.com.

see FREEMAN page 10

als and minerals critical to the U.S. Military.As a result, beyond the US$130 million

suggestion to accumulate a stash of heavyrare earth elements, the report details theneed to build a US$1.11 billion stockpile of13 non-REE metals and minerals.

“The question now, in a Washingtonwhere the government is funded frommonth to month, and strategic thinkers aresavants who see an hour into the next newscycle, is whether the U.S. government canmuster a sustained policy to reverse ourmetals dependency – before the shortfallsposited in the Pentagon’s hypothetical sce-narios become all too real,” McGroartywrote in a recent article for Real ClearWorld.

This is not only an about-face for the

Pentagon but is also a reversal of aWashington, D.C. trend of diminishing itsstockpile of minerals.

“Even experts in the industry are hard-pressed to recall when the U.S. governmentlast added to its metals and minerals inven-tory – and for good reason,” wroteMcGroarty. “Since the implosion of theSoviet Union in December 1991, the U.S.defense stockpile has been treated as a kindof raw materials garage-sale, with nearly allmetals marked for a phased sell-off – cali-brated so as not to unduly undercut currentmetal prices. Stockpile silver went to theU.S. Mint for the striking of silver dollars,an almost literal swords-into-plowsharesswap.”

While heartened by the Pentagon’sabout-face on the importance of having areliable supply of heavy rare earths, TheStrategic Materials Advisory Council – a

Washington, DC-based nonprofit groupcomprised of former U.S. government lead-ers and strategic materials experts – doesnot believe buying rare earths from China toplace in a U.S. stockpile goes far enough.

“The root cause of these material short-ages is our ongoing dependence on Chinesesuppliers,” said Strategic MaterialsAdvisory Council Executive Director JeffGreen. “While it is encouraging that DoDacknowledges these risks, we urge DoD tomove from theoretical studies to the onlyappropriate and permanent solution – thecreation and nurturing of a U.S-based rareearth supply chain.”

Close ranksThe Pentagon has already taken defini-

tive steps toward the creation and nurturingof a U.S.-based rare earth supply chain.

In October, the DoD entered into a con-tract with Ucore Rare Metals Inc. to con-duct a mineralogical and metallurgicalstudy on the heavy rare earths-rich BokanMountain project in Southeast Alaska.

The six-month program, managed by theU.S. Defense Logistics Agency, is investi-gating the possibility of developing BokanMountain into a mine and processing facili-ty that could supply the U.S. military with adomestic source of heavy rare earths.

While Bokan Mountain is rich in yttri-um, dysprosium, terbium and a suite ofother prized heavy rare earths, thePentagon’s interest in Ucore seems to be asmuch about the state-of-the-art extractiontechnology that Ucore is pioneering as it isabout the strategic metals stowed at itsSoutheast Alaska deposit.

Ucore has been working with Montana-based IntelliMet LLC to develop a methodfor processing the rare earths, referred to inscientific circles as solid-phase extraction.This avant-garde technique of turning con-centrates into individual rare earth oxides is

a key component to establishing a completeheavy rare earths supply chain on U.S. soil.

Under the agreement with the DefenseDepartment, Ucore will provide thePentagon with the most up-to-date data onthis nanotechnology research.

“The Department of Defense’s invest-ment in the Bokan deposit and Ucore’s pro-prietary SPE technology represents a signif-icant step toward recapturing the rare earthstechnological lead surrendered to Chinadecades ago,” said McKenzie. “What’smore, the DoD relationship adds a greatdeal of credibility to Ucore’s domestic sup-ply chain development, representing one ofthe largest purchasing capabilities amongstprospective customers worldwide.”

In addition to gaining an insider’s per-spective on the technology being developedby Ucore, the Pentagon made similarinvestments in Great Western MineralsGroup Ltd., a rare earth processor with sub-sidiaries in the United States and UnitedKingdom., and Thomas & Skinner Inc., anIndiana-based producer of high perform-ance magnetic materials.

DoD’s investment in Great Western is toconduct a supply chain assessment for high-purity yttrium oxide.

Thomas & Skinner was contracted tocarry out an assessment of “the requirementfor competitive domestic neodymium-iron-boron (neo) magnets, or their substitutes, tosupport defense supply-chain manufactur-ing capability.”

“China currently produces about 75 per-cent of the world’s neo magnets, not includ-ing other unlicensed production,” saidThomas & Skinner President and CEO VernDetlef. “The (Defense) Department’sinvestment into our research represents theideal type of partnership in a first steptoward re-establishing a competitive sup-ply of domestically produced neo mag-nets.” �

8NORTH OF 60 MINING

� C O L U M N

BLM manufactures another Alaska crisisThe bureau’s draft Eastern Interior Management Plan is an unnecessary disaster for the state and the nation; it should be scrapped

By J. P. TANGENFor Mining News

As a recent editorial in TheEconomist (March 16, 2013) notes,

“[America’s] debt is rising, its popula-tion is ageing …, its schools aremediocre …, its infrastructure is rickety,its regulations dense, its tax code byzan-tine, its immigration system harebrained- and it has fallen from first position inthe World Economic Forum’s competi-tiveness rankings to seventh in just fouryears.” Nowhere do the realities of thisnational misdirection hit closer to homethan in Alaska. Although we do notshare as much of the national sense ofdespair as our more densely populatedsister states do, we, in Alaska, are closerto our government than most Americans,and we suffer more from the proximity.

Alaska was founded on the strengthof its natural resources; the bounty of thelands and rivers and forests were keyprerequisites to statehood. The econom-ic potential these resources impliedwere, and to this day remain, ginormous.Two-thirds of the state, however, is stillunder the yoke of federal management,even after 50 years of theoretical eman-cipation.

We have sustained numerous blowsfrom our absentee masters, but still werise to challenge them again and again.Clearly, the most injurious of theseattacks has been on the state’s once-proud timber industry, which continues

to be kicked around by the courts of faroff Washington, D.C. Nonetheless, it isthe resident agents of the overlord whodo us the greatest harm because they arehere; they can see and touch the defi-ciencies of their so-called “planning”exercises, yet, like the overseers of old,there is no limit to the pernicious bur-dens they choose to demand Alaskansbear.

An illustration of this destructivebehavior is the now-pending EasternInterior Management Plan dealing withmore than one million acres (404,694hectares) of federal land betweenFairbanks and the Canadian borderbounded on the north by Fort Yukon andon the south by Northway. Historicallyspeaking, this has long been one of themost prospective areas in the state, dat-ing back to 1881, when the gold rush

was still in Alaska’s future.This land is, theoretically public

domain managed by the Bureau of LandManagement “in a manner which recog-nizes the nation’s need for domesticsources of minerals, food, timber, andfiber from the public lands, includingimplementation of the Mining andMinerals Policy Act of 1970 … as it per-tains to public lands.” Nonetheless,even as we speak, the Eastern InteriorField Office of the Bureau is circulatinga draft resource management plan thatwill heavy-handedly impose barriers andrestrictions on this vast area, not only forresource development, including locat-able minerals and hydrocarbons, but alsoon access – the sine qua non of resourcedevelopment.

Not too many years ago, the U.S.Department of the Interior was home tothe Bureau of Mines, which made itslife-work identifying and studyingprospective mineral terranes with thereasonable expectation that explorationwould follow, and if warranted, miningwould occur. Similarly, the U.S.Geological Survey engaged in mappingand describing the American landmass.Today, the Bureau of Mines is little morethan a distant memory for most people,and the mission of the USGS has beendiluted with the obligation to survey thebiota.

Unsurprisingly, therefore, the plan-ners of the BLM who are charged withdiscussing and accommodating the

resources on the public lands find them-selves not only ill-informed, but also ill-disposed to make inquiries of the agen-cies and resources within their depart-ment when promulgating their planningproposals.

The current draft of the EasternInterior Resource Management Plan vir-tually ignores the extensive mineralpotential of the bulk of the studied area.It implies that deposits do not existbecause they have not been discovered.It suggests that mining activities, if theydid take place would be reckless andoperate in ways that could never be per-mitted under existing law. It pretendsthat there have been no advances in geo-logical methodologies since statehood orbefore. It disregards logic and reason byadvancing irrational and impossible reg-ulatory requirements.

For many Alaskans who are happy toenjoy the benefits of a productive miningindustry but are willing to stand by whilethe overlord takes its toll, the develop-ments in the Eastern Interior will causelittle pause. However, every snap of thewhip diminishes us all. It is said that weget the government we deserve. Perhaps,in a cynical sense, we deserve to watchthe rights or our rights erode until thereis nothing left. On the other hand, everyvoice in America counts. If you areamong those who feel that this ill-con-ceived mismanagement of our publiclands justifies an objection, speak up.The comment deadline is April 11. �

continued from page 6

ABOUT FACE

Mining & thelaw

The author,J.P. Tangen hasbeen practicingmining law in J.P. TANGENAlaska since 1975. He can be reached atjpt@jptangen.com or visit his Web site atwww.jptangen.com. His opinions do notnecessarily reflect those of the publishersof Mining News and Petroleum News.

9NORTH OF 60 MINING

PETROLEUM NEWS • WEEK OF MARCH 31, 2013

© 2013 AT&T Intellectual Property. All rights reserved. AT&T, the AT&T logo and all other AT&T marks contained herein are trademarks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks contained herein are the property of their respective owners. This document is not an offer, commitment, representation or warranty by AT&T and is subject to change.

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ing 7.6 meters of 4.6 g/t gold, while subse-quent soil geochemistry provided a posi-tive correlation to the drill results, support-ing the possible presence of a under-explored intrusion related gold system.

CONTANGO ORE INC. announcedcompletion of a private placement to fundexploration at its Tetlin gold-copper-silverproject near Tok. The company will use theapproximately US$14.2 million in net pro-ceeds of the private placement to fund its2013 exploration program in Alaska.Assuming success on initial drill holes, thecompany has budgeted up to US$13 mil-lion on exploration and general corporatepurposes. The company plans to spendabout US$5 million in the first phase ofdrilling and, after reviewing initial results,allocating the remaining capital towardsthe prospects that offer the best potentialfor expanding its recently discovered Peakzone and upgrading and identifyingresources at one or more or its currentlyidentified exploration targets. The compa-ny plans to utilize two or three core drillingrigs in this effort as well as conduct addi-tional airborne geophysics, reconnaissanceexploration and environmental baselinestudies.

Alaska RangeWESTMOUNTAIN GOLD, INC.

announced a NI 43-101-compliantresource update at its Terra gold-silverproject in the Alaska Range. Using a cutoff of 5 g/t gold, the estimate includes indi-cated resource of 49,809 oz gold at 13.25g/t gold and 112,723 oz silver at 29.98 g/tsilver and inferred resource of 369,795 ozof gold at 15.63 g/t gold and 653,884 ozsilver at 27.63 g/t silver. Compared to pre-vious estimates, tonnage increased 100percent, inferred and indicated resource

increased by 150 percent and gold gradegrew by 25 percent. The company is plan-ning a 2013 field season with a budget ofUS$4.2 million that covers a larger scalebulk sample program with an improvedpilot mill, which has the ability to processup to 40 metric tons per day. In addition,the company will continue exploratorydrilling on the project. Just prior to thisannouncement, joint venture partnerCORVUS GOLD INC. agreed to sell all ofits interest in the Terra project, subject to aretained production royalty, for US$6.2million in cash over time and issuance of 1million shares of WestMountain. Corvuswill retain a sliding scale net smelter pro-duction royalty of 0.5 percent to 3 percenton precious metals and 2 percent on basemetals.

MILLROCK RESOURCES announcedthat a NI 43-101-compliant technicalreport on the Stellar project concluded thathistorical estimates of copper and goldpresent within the Zackly Main Skarn areaare not reliable, and that re-drilling will benecessary to confirm the mineralizationand/or allow a new industry-compliantresource estimate to be completed.

Southeast AlaskaHECLA MINING CO. announced year

end 2012 production results from theGreens Creek mine on Admiralty Island.The total cash cost per ounce of silverproduced for the year was $2.70 perounce versus negative $1.29 per ounce in2011. The average grade of ore minedduring the year was 11.13 oz per ton sil-ver, down slightly from the average gradeof 11.49 oz per ton in the year previous.For the year the mine produced 6,349,235oz silver, 55,496 oz gold, 21,074 tons leadand 64,249 tons zinc. The 100,000-ozdecrease in silver production year-over-year is due to lower silver ore grade andhigher mining costs, partially offset byhigher mill throughput and lower milling

costs. While not replacing reserves in2012, Greens Creek made significantprogress in growing the potential of the200 South and NWW zones. 200 Southhad some of the widest and highest gradeintercepts in recent history at the mine,including 50 feet grading 0.08 oz per tongold, 35.9 oz/t silver, 11.2 percent zincand 4.9 percent lead in hole GC3483, 19feet grading 0.49 oz/t gold, 65.8 oz/t sil-ver, 7 percent zinc and 3.5 percent lead inhole GC3490, and 39 feet grading 0.18oz/t gold, 29.7 oz/t silver, 9.1 percent zincand 3.5 percent lead in hole GC3457. Themine expects 2013 to be a year of infilldrilling in order to develop a mine planon 200 South and Southwest Bench.Exploration results from surface drillingat Killer Creek defined a 150-foot widezone of stockwork veins which comprisesintervals with silver up to 1.5 ounces perton and copper up to 5.4 percent. Thismineralization, combined with discoveryof zinc mineralization 1,500 feet away atthe mine contact, might represent theexposed roots of a new mineralized zone.Surface core drilling at Killer Creek dur-ing 2013 is expected to total 25,000 feet.

COEUR D’ALENE MINES CORP.announced 2012 fourth quarter and year-end results for its Kensington mine. Themined produced 28,717 ounces of gold inthe fourth quarter, more than double thefourth quarter production from 2011. Forthe year the mine produced 82,125 ouncesof gold. While cash operating costs forthe year were up 25 percent over year onyear to US$1,358 per ounce, cash operat-ing costs in the fourth quarter were down41 percent year on year to US$1,065 perounce and are expected to decline furtherin 2013. These cash cost declines fol-lowed the mine’s return to full productionin April 2013 after a planned shutdown inlate 2011 and early 2012 to complete sev-eral underground and surface infrastruc-ture projects and to establish increased

underground development footage. Totalcapital expenditures in 2012 were $37million. For the year, the mine processed394,780 tons of ore grading 0.22 oz/tgold. Recovery rates averaged 95.6 per-cent, a significant increase over thealready impressive 92.7 percent recoveryrate experienced in 2011. During 2012,the company spent US$7.1 million onexploration at the mine, completing143,796 feet of core drilling mostlydevoted to in-fill drilling of Block K andthe Raven veins. Additional drillingfocused on other targets such asKensington South, the Ann Trend, Elmiraand the historic Jualin mine. The compa-ny plans for an additional undergrounddrilling program in 2013 on Zone 10,Zone 50, Zone 30, Kensington South,Elmira vein, and Ann. Continued surfacedrilling is planned at Jualin and severalother targets on the property. The total2013 exploration program is expected tobe $8.6 million. Drilling results at theRaven vein, located approximately 2,000feet from the main underground workingsat Kensington, identified initial provenand probable reserves of 50,400 ouncescontained within 151,000 tons, at an aver-age gold grade of 0.33 oz/t gold, 51 per-cent higher than the overall averagereserve grade at Kensington. The mine’sproven and probable reserves at year-end2012 totaled 1.0 million ounces of goldcompared with 1.3 million ounces of goldin 2011. The mine is expected to produce108,000 to 114,000 ounces of gold in2013.

GRANDE PORTAGE RESOURCESLTD. and joint venture partnerQUATERRA RESOURCES INC.announced an updated NI 43-101resource estimate for their Herbert goldproject located near Juneau. Using a cut-off of 2 grams of gold per tonne, theupdated estimate contains an indicatedresource of 821,100 metric tons grading6.91 g/t gold for 182,400 ounces of goldin the Deep Trench and Main veins. TheDeep Trench and five veins that have hadlimited drill testing contain an additionalinferred resource of 51,600 metric tonsgrading 7.73 g/t gold for 12,800 ounces ofgold. The continuity and consistency ofgold mineralization identified by in-filldrilling suggest that exploration on theother veins has the potential to producesimilar results. The 2012 infill drillingcampaign converted 52.3 percent of themetric tons and 74.4 percent of theounces from the inferred to the indicatedresource category. The grade increased by42.2 percent compared to the previousresource estimate. At a cut off of 3.0 g/tgold, 56.0 percent of the metric tons and81.7 percent of the ounces were convertedto the indicated resource category, with anincrease in grade of 46.2 percent. Theprogram also delineated a higher gradeshoot within the Deep Trench vein. Theresource remains open in multiple direc-tions along the defined veins.

ARROWSTAR RESOURCES LTD.announced that it had filed its applicationfor a drilling permit on its Snettisham ironore prospect located near Juneau. Thedrilling permit covers a proposed 3,600meters of drilling consisting of 9 to 15holes ranging in depth from 200-500meters. Initial review has identified threehigh-magnetic intensity areas over a 750-meter distance with the largest area hav-ing a magnetic intensity greater than78,000 nanoTeslas over a surface area ofabout 750 meters by 750 meters. Thedrilling program is designed to determinethe extent of the mineralization at depth,the mineralogy and petrology, the contactrock and the magnitude of the mineraliza-tion. With this data, an industry-compliantresources estimate will be prepared.�

10NORTH OF 60 MINING PETROLEUM NEWS • WEEK OF MARCH 31, 2013

Fort KnoxFirst things firAt Fort Knox, our priorities are simple. Our people. Our community.Our environment.

Fairbanks Gold Mining Inc.A Kinross company

We invest in our people, so they are trained to do the best job possible.

We support our community with charitable donations, volunteer hours and local purchases.

We adhere to the toughest standards to protect water and air quality. These are our priorities.

Because at Fort Knox, it’s about putting first things first.

continued from page 7

FREEMAN

By ROSE RAGSDALEFor Mining News

There’s nothing like getting an earlystart, especially when it comes to

mining exploration in Canada’s Far North. Literally, there’s nothing like the 2013

program that Prosperity Goldfields Corp.kicked off in late February at its KiyukLake Project to the east in southernNunavut nor the 2013 field campaignlaunched about the same time by KaminakGold Corp. at the Coffee Gold Project inYukon Territory.

In a year when many mining companiesare having to scrape together enoughexploration funds to even mount a fieldprogram and study ways to stretch everypenny in their respective budgets, a signif-icant number of Canada’s producers andjuniors north of the 60th parallel are brav-ing frigid temperatures to begin explo-ration drilling while the region is still blan-keted in winter snow. Most of these savvyexplorers have advanced projects andchoose to capitalize on the eight- to 10-week period leading up to spring breakupto jumpstart annual exploration programswell in advance of the traditional summerfield season.

“Many exploration and mining compa-nies in Canada make the most of the win-ter season for their work,” ProsperityPresident and CEO Adrian Fleming toldMining News March 25. “It’s a bit likeskating on a frozen lake. You can’t do it insummer!

“So we do a lot of our most cost-effec-tive exploration in winter when the frozensurface and lakes allow easy access for allkinds of machines. Our airstrip is on thelake next to camp,” said Fleming of hisKiyuk Lake gold exploration project inNunavut.

“Once you have a meter thickness ofice you can land pretty well any kind ofairplane on a cleared runway. And that ismuch cheaper than using floatplanes. Alsoaccess using skidoo is a good way to getaround,” he explained.

Central, northern and eastern Canadatraditionally have two field seasons forexploration, winter and summer, driven bythe fact that many projects are only acces-sible by airplane, so you land on ice inwinter and on water in summer, accordingto Fleming.

“You stay away from your project dur-ing breakup and until the fall as the ice isforming,” he added.

Early work at NWT projects Still, relatively few companies elect to

begin work in the Far North as early asFebruary, unless they conduct year-roundoperations.

In Northwest Territories, three explo-rations projects currently have drillingunderway – the Gahcho Kué, NechalachoRare Earth Elements and CourageousLake projects, according to governmentofficials.

At the Gahcho Kué diamond project,geotechnical drilling related to plannedsurface infrastructure commenced inFebruary, and is expected to be completedbefore the end of April. A total of 33 sonicholes and 31 core holes will be drilled.

Gahcho Kué is owned by a 51-49 per-cent joint venture between De BeersCanada Inc. and Mountain ProvinceDiamonds Corp.

Core drilling of the first phase 15 prior-

ity geophysical targets at Gahcho Kué isexpected to begin before the end of March.A second core drill rig is being mobilizedto site and a first phase drilling program isexpected to be completed by the end ofApril. Based on the success of the first-phase drill program, up to a further 14 pri-ority geophysical targets may be drill test-ed, the companies have said.

At the Nechalacho project, Avalon RareMetals Inc. began a brief definitiondrilling program Feb. 5. The objective ofthe program is to complete additional in-fill drilling near the planned undergroundcrusher location, within stopes designed tobe mined in the first few years of mine life.

The program is anticipated to be com-pleted by mid-March, with an updatedresource estimate expected by mid-June.This program also will provide additionalsample material from the Basal Zone for

ongoing process optimization. Avalon isworking toward completing a feasibilitystudy for the program in the second quar-ter of 2013.

At Courageous Lake, Seabridge Goldhas begun core drilling the high-gradeWalsh Lake gold target. The C$3.1 millionwinter program is expected to complete 16holes totaling 7,400 meters with the aim ofgenerating an initial resource estimate forthe Walsh Lake deposit which was discov-ered in 2012.

Activity at big projectsIn Nunavut, two companies in addition

to Prosperity are drilling at the moment,according to government officials. One isSabina Gold & Silver Corp. on itsadvanced Back River gold project and theother is Xstrata Zinc Canada on its prom-ising Hackett River base metal (silver,

zinc, gold, copper, lead) project, both ofwhich are located in the Kitikmeot regionof western Nunavut.

Sabina Feb. 14 reported opening itsGoose Camp at Back River and preparingto begin drilling in late February. The jun-ior is planning to follow up its 2012 suc-cesses with a 45,000-meter program ofinfill, geotechnical and geo-mechanicaldrilling as well as exploration drilling ofhigh potential greenfield-type targets in2013. Sabina anticipated getting eightdrills up and running on the project by theend of March.

Sabina is focused on completing anongoing pre-feasibility study and support-ing a potential subsequent feasibilitystudy, while moving forward with permit-ting initiatives and plans to file a draft

� N O R T H E R N C A N A D A

Early birds take flight in Far NorthProjects in NWT, Nunavut and Yukon see exploration activity, but few explorers jump at chance to advance 2013 programs this winter

11NORTH OF 60 MININGPETROLEUM NEWS • WEEK OF MARCH 31, 2013

F l y i n g i s o u r p a s s i o n , S a f e t y i s o u r m i s s i o n

A New in Remote Site Access

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see EARLY BIRDS page 12

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Prosperity Goldfields moved personnel to its Kiyuk Lake exploration camp in southern Nunavut Feb. 27, in preparation for a 4,000-meterwinter drill program. Having the airstrip on the frozen lake adjacent to camp provides easy and cost-effective access to the project.

environmental impact statement by year’send. The junior also said it planned toupdate a resource calculation for BackRiver before March 31.

In 2012, Xstrata Zinc, the world’slargest zinc producer opened its explo-ration camp at Hackett River Feb. 20 anddrilled 203 holes totaling 51,548 metersduring a field program that last 219 daysuntil Sept. 25 that focused on extensions ofthe Main Zone, East Cleaver, Boot and JoDeposits along with testing new geophysi-cal and geochemical targets on the Hackettproperty. Geotechnical drilling alsooccurred in several areas where potentialinfrastructure or mine workings may belocated.

In addition, Xstrata’s 2012 campaignincluded two drill holes and field sam-pling/mapping work across the nearbyWishbone, Mahna Mahna, Hackett andClaim X properties.

For 2013, the major sought permissionlast fall from regulators to conduct anotherexploration campaign that includes a50,000-meter drill program with objec-tives similar to those sought during theprevious year.

Nunavut officials said Elgin MiningInc. (Lupin gold project, former goldmine) farther north in the Kitikmeot regionof Nunavut might be drilling at themoment, and Baffinland Iron Mines Corp.(Mary River iron ore project on BaffinIsland) and Agnico-Eagle Mines Ltd.(either at the Meadowbank gold mine orthe Meliadine gold project in the Kivalliq)also may be drilling in their respectiveNunavut camps. These three companieshave not publicly reported the start of 2013programs on their respective large,advanced projects, but officials say theymay have quietly begun drilling this win-ter.

Prosperity, however, is the only compa-ny seeking to capitalize on two prior suc-cessful exploration seasons by getting intothe field so early. The junior reported mov-ing personnel to Kiyuk Lake Feb. 27, inpreparation for a two-drill, 4,000-meterwinter drill program. Drilling was expect-ed to commence within a few days, andassay results from the first few holes areexpected in early April. Last year, the com-pany launched a 3,000-meter winter drillprogram March 21, at least three weekslater in the season.

“We believe that our aggressive explo-ration approach (in 2013) will expand thegold deposit at Rusty, and also establishadditional gold zones at targets that wereidentified by the summer 2012 explorationprogram,” Fleming explained.

Prosperity said it has several objectivesfor its winter program. Following encour-aging results from previous drilling, theinitial focus will be testing for extension ofmineralization at the Rusty Zone that in2011 and 2012 returned intercepts includ-ing 37.8 meters grading 4.18 grams permetric ton gold from surface and 61.5meters grading 3.34 g/t from 159 meters.

While drilling will continue to worktowards defining a resource at the Rustyzone, Prosperity also planned drilling for,in order of priority, the Bancroft andRasmussen showings, and Cobalt andAmundsen zones.

The Bancroft and Rasmussen showingsare new drill targets identified during thesummer of 2012. The Bancroft showingwas highlighted by detailed grid till sam-pling that outlined a well-defined gold-in-till dispersal ribbon extending in a south-west direction for 2,000 meters. Thissouthwest oriented dispersion is consistentwith the direction of ice flow and till trans-port. Drilling will focus at the northernlimit, or ‘head’ of the ribbon which isinterpreted to approximate the location ofthe bedrock source of the till anomaly.This location coincides with surface boul-der samples that range from below detec-tion limit and 6.7 g/t gold, and an undrilledchargeability anomaly. The gold values intill samples at the head of the dispersal rib-bon at Bancroft are of the same magnitudeas that found directly over the Rusty Zone.

The Rasmussen showing, also identi-fied during prospecting in 2012, is definedby gold mineralization in frost heavedboulders which are interpreted to haveundergone minimal glacial transport. Goldvalues in these boulders range from 0.1 to6.9 g/t gold.

New gold grain results from till sam-ples at the Cobalt Zone have defined a newdrill target. Drilling will test an area direct-ly up-ice of a till samples with a highlyanomalous number of pristine gold grains(762 of 943 grains) and several mineral-ized boulders with gold grades from belowdetection to 14 g/t gold. One of theplanned drill holes at Cobalt will test anundrilled chargeability anomaly. Drillingat the Amundsen Zone will test for anextension to surface and along strike of theknown gold mineralization (42.4 metersgrading 0.97 g/t gold) intersected duringdrilling in 2012.

Keeping up momentum at CoffeeIn the Yukon, Kaminak appears to be

the only explorer to mount a 2013 winterdrill program. The junior which currentlyhas plump pockets with C$16 million incash and no debt is continuing explorationof its Coffee Gold Project where it out-lined a highly encouraging maiden miner-al resource in 2012.

Two of the Yukon’s producers,Capstone Mining Corp., at its Minto high-grade copper-gold mine, and AlexcoResource Corp., at its Keno Hills silverproject, also may be conducting ongoingunderground drilling, according to Yukonofficials.

At Coffee, Kaminak announced thestart Feb. 26 of a C$11 million, 35,000meters phase-one exploration program for2013, just two months after releasing aninitial NI 43-101 inferred mineral resourceestimate of 3.236 million ounces grading1.56 g/t gold for the property.

Field crews had been mobilized toCoffee, which is located in the White Golddistrict of west-central Yukon, and drilling

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EARLY BIRDS

see EARLY BIRDS page 13

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Kaminak Gold Corp. Feb. 26 reported the start of a C$11 million, phase-one 35,000-meterexploration program for 2013 at its Coffee Gold Project in Yukon Territory. Here, a drill crewworks a rig on the Coffee project during Kaminak’s 2011 exploration program.

was to begin shortly. By comparison,Kaminak did not gear up for its 50,000-meter drilling program in 2012 until lateMarch.

“In less than three years, Kaminak hasdefined 3+ million ounces of shallow,high-grade gold at Coffee; an extensive,structurally controlled gold system whichremains open in all directions,” said EiraThomas, Kaminak’s newly appointedpresident and CEO. “Our work program in2013 is designed to expand upon anddefine preliminary economic parametersfor core resource areas at Supremo, Latteand Double Double, while at the sametime continuing with an aggressivedrilling campaign to identify additionalresources over the broader, 100 percent-owned Coffee district, where less than 20percent of the prospective geology hasbeen systematically tested to date.”

Thomas, who formerly was presidentand CEO of Stornoway Diamond Corp.,also said, “The majority of the inferredresources identified to date (at Coffee) arenear-surface oxide or transitional facies,with initial metallurgical testwork provingpositive for high gold recoveries in oxidematerial using standard leaching tech-niques. In addition to the ambitiousdrilling and resource campaigns that areplanned for 2013, Kaminak intends to ini-tiate early-stage engineering studies andconduct detailed metallurgical testwork insupport of a preliminary economic assess-ment.”

Kaminak’s strategy will continue tofocus on targeting shallow, high-gradeoxide and transitional mineralization,which comprises about 90 percent ofCoffee’s existing 3.2 million-ounceinferred resource. To date, all depositsshow good lateral continuity across morethan 8 kilometers of total strike length, andremain open in all directions. Initial goldheap leach column tests undertaken onselect samples of oxide facies materialfrom Supremo, Latte and Double Doublein 2012 were highly encouraging andresulted in 90 percent recoveries over 80days, including 83 percent recoveries over15 days. A comprehensive metallurgicalprogram has been initiated for 2013 thatwill expand upon this work to test a broad-er range of samples collected from acrossall mineralized zones and to depth withinthe oxide, transitional and sulphide pro-files.

Kaminak will conduct explorationdrilling through the third quarter 2013 thatwill be incorporated into an updated min-eral resource estimate and then applied toa preliminary economic assessment. Inaddition to the updated resource estimate,metallurgical and geotechnical data willbe collected during the year to contributeto mining and processing optimizationstudies. Soil sampling will continue to bethe primary exploration tool for identify-ing mineralized structures at Coffee. Thusfar, it has contributed to a drilling successrate of close to 90 percent. Several kilo-meters of priority gold-in-soil anomaliesremain to be tested on the property, and inphase one, drilling will be focused withinthe two-kilometer by two-kilometer coreresource area testing anomalies associatedwith Supremo’s T1, T6 and T8 structures,Latte North, Double Double South,Arabica and Mocha. Kaminak is alsoplanning to collect a further 10,000 soilsamples from across the property in 2013with the goal of improving regional cover-age and identifying additional priority tar-gets for drill testing. Less than 15 percentof the 150,000-acre Coffee property hasbeen systematically sampled for gold insoils. �

13NORTH OF 60 MININGPETROLEUM NEWS • WEEK OF MARCH 31, 2013

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A drill rig snuggles into the hillside at the Rusty Zone on the Kiyuk Lake gold project where Prosperity Goldfields Corp. encountered prom-ising drill results in 2011 and 2012 that returned intercepts of 37.8 meters grading 4.18 grams per metric ton gold from surface and 61.5meters grading 3.34 g/t from 159 meters.

By SHANE LASLEYMining News

The 6.4 million ounces of low-cost sil-ver recovered from the Greens Creek

Mine in Southeast Alaska during 2012 isfunding growth aspirations at Hecla MiningCo., including a foray into Canada’s miningsector.

“This past year, with the Lucky Fridaydown, Greens Creek generated strong silverproduction and cash flow to allow recordcapital investments that are expected togenerate not only higher silver productionin 2013, but expected organic growth wellinto the future,” said Hecla President andCEO Phillips S. Baker, Jr.

This growth starts with the first silverproduction from the Lucky Friday Minesince the Idaho operation was put out ofcommission for safety and operationalupgrades at the end of 2011.

With Lucky Friday on track to con-tribute some two million ozs of silver in2013 and Greens Creek output to remain onpar with 2012, Hecla is looking at produc-ing between eight million and nine millionoz of the white metal in 2013 and 10 millionozs in 2014. This growth is expected to con-tinue as Hecla brings online its growth proj-ects in Colorado and Mexico.

“We are on a path to produce 15 millionoz of silver (per year), and we expect to dothat by 2017,” Baker said during the BMOGlobal Metals & Mining Conference heldFeb. 27.

As Hecla’s exploration- and develop-ment-stage projects advance toward pro-duction, the company is eyeing candidates

to deepen its pipeline of precious metalsassets.

“We have a focus on looking at thingsthat are in North America – U.S. andCanada in particular,” Baker explained.

Keeping to this strategy, Hecla hasinvested in two juniors with silver-rich proj-ects in northern British Columbia and looksto have made a successful bid to buy out athird company with an producing gold minein Quebec.

Golden AurizonA week after informing investors attend-

ing the BMO conference of Hecla’s inten-tion to focus on U.S. and Canada projects,the Idaho miner said it made a C$796 mil-lion bid for Aurizon Mines Ltd., a 130,000-ounce-per-year gold producer focused onthe Abitibi region of northwestern Quebec.

“Hecla and Aurizon together create aunique precious metals company with threelong-life, high-grade, low-cost mines in

some of the best mining jurisdictions in theworld,” Baker explained.

Hecla, though, was not the only suitorhoping to buy out Aurizon. Alamos GoldInc., a Toronto-based miner that holds a 16percent stake in Aurizon, already had anunsolicited offer on the table to buy out theQuebec gold producer.

Aurizon’s board of directors, which pre-ferred the offer made by Hecla, adopted apoison pill and steep break-fee payable toHecla that ultimately dissuaded Alamosfrom pursuing its hostile bid; clearing theway for the Hecla-Aurizon merger.

“Alamos firmly believes that shares inthe company resulting from the combina-tion of Alamos and Aurizon would be farmore valuable than shares in the heavilyindebted company resulting from the com-bination of Hecla and Aurizon,” Alamossaid upon pulling its offer. “Unfortunately,however, the unusual break-fee that theAurizon board has agreed to give Heclameans that, for Alamos, the cost of acquir-ing Aurizon is now simply too high.”

Under terms of the offer made by Hecla,the Idaho-based miner will acquire all of theoutstanding common shares of Aurizon atC$4.75 each. Each Aurizon shareholderwill have the option to take C$4.75 in cashor 0.9953 of a Hecla share for each Aurizonshare held, subject in each case to pro-rationbased on a maximum cash consideration ofC$513,631,193 and a maximum number ofHecla shares issued of 57 million. Aurizonhas 164.55 million shares outstanding.

Hecla, which had US$191 million incash at the end of 2012, plus an undrawnrevolving credit of US$150 million, willneed to borrow funds to complete the buy-out. Hecla said it received a US$500 mil-lion commitment from The Bank of NovaScotia that includes a US$200 millionamortizing term loan with a three-yearmaturity, US$200 million revolving line ofcredit and a US$100 million loan thatwould mature shortly after the close of thetransaction.

Aurizon ended 2012 with C$204.2 mil-lion in cash and cash equivalents. In its2012 year-end report, the company forecastgold production at Casa Berardi, its opera-tion in Quebec, will produce roughly125,000-130,000 ozs of gold in 2013 at anaverage cash of US$810 per ounce.

� A L A S K A

Hecla eyes Canada’s golden Aurizon Strong silver production at Greens Creek helps fund investments in silver-rich B.C. projects, merger with Quebec gold producer

14NORTH OF 60 MINING

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Aurizon Mines’ Casa Beradi operation in the Abitibi region of northwestern Quebec is anticipated to produce roughly 125,000-130,000ounces of gold in 2013. The anticipated merger with the Canadian gold producer would shift Hecla Mining’s metals profile from predomi-nately silver to generating as much revenue from gold as it does silver.

The merger will shift Hecla’s metals pro-file from predominately silver to generatingas much revenue from gold as it does silver.Based on Bloomberg’s estimated averagemetal prices for 2013, 39 percent of thisyear’s pro-forma revenues of the mergedcompany would come from gold, 38 per-cent from silver and 23 percent from zinc-lead.

Though silver has been Hecla’s primarymetal, Greens Creek produces roughly50,000 ozs of gold per year as a by-product,including 55,496 oz of gold recovered fromthe volcanogenic massive sulfide deposit in2012.

This gold, along with the 64,249 tons ofzinc and 21,074 tons of lead recovered atGreens Creek, helped keep the mine’s silverproduction costs low.

“For the full year, the company pro-duced 6.4 million ozs of silver at a cash costof US$2.70 per ounce, still among the low-est costs and highest margins of the majorprimary silver producers,” Baker said.

The C$1.8 billion precious metal com-pany resulting from the Hecla-Aurizonmerger would have three operating mineswith reserves of 150 million ozs of silverand 2.2 million ozs of gold in reserves.

“These three properties have in commonstrong exploration potential on very largeand contiguous land positions as well aslocations near communities that are sup-portive to mining. In addition, all three uti-lize similar mining methods enabling Heclato leverage the knowledge and experiencefrom each mine across the organization,”Baker explains.

Historic Dolly VardenAt the western end of Canada and on the

far side of Hecla’s growth pipeline, theIdaho miner has invested in two juniorcompanies exploring silver-rich deposits innorthwestern British Columbia.

In September, Hecla spent C$3.2 millionto buy 20 million shares, or a 19.9 percentstake, of Dolly Varden, a junior explorerfocused on the development of the historicDolly Varden Silver Mines property locatedabout 30 kilometers (19 miles) southeast ofStewart, B.C.

“Hecla is pleased to be able to make astrategic investment in Dolly Varden to par-ticipate in the re-emergence of a historic sil-ver district with outstanding explorationand development potential,” Baker said.

Dolly Varden’s land package is in a geo-logic setting with world-class projects suchas the past-producing Eskay Creek Mine,which is a similar deposit type to Hecla’sGreens Creek Mine.

The Dolly Varden property hosts twohistorical mines – Dolly Varden, which pro-duced 1.5 million oz at an average grade of35.7 ozs per ton in the early 1920s and theTorbrit mine which produced 18.5 millionozs of silver at an average recovered gradeof 13.58 oz per ton during the 1950s. Twoother deposits, North Star and Wolf, havebeen defined and have development buthave not seen any production. All told,these four deposits have a historic resourceof 14.5 million oz.

Dolly Varden is working towardsupgrading these resources to NI 43-101compliance and expanding them to a target-ed 40 million to 50 million oz.

In order to maintain its ownership, Heclahas agreed to participate in a C$15 millionfinancing (83,333,333 shares at C18 centsper share) offered by Dolly Varden inFebruary.

Dolly Varden, which plans to carry outthe financing in multiple closings, complet-ed an initial C$1.65 million tranche onMarch 20. The 10.31 million shares sold donot include the shares Hecla has agreed to

purchase to retain its 19.9 percent stake inDolly Varden.

Immediately following the closing of thefirst tranche, Dolly Varden announced it hascut a deal to acquire Musketeer, a group ofclaims surrounded by the Dolly Vardenproperty. Torbrit, Wolf, North Star andDolly Varden abut the northern and south-ern boundaries of the Musketeer and arepriority targets for exploration in 2013.

Pending the successful completion of theentire financing, the Vancouver, B.C.-basedjunior plans to spend up to C$12-million atthe Dolly Varden silver project in 2013.

15NORTH OF 60 MININGPETROLEUM NEWS • WEEK OF MARCH 31, 2013

continued from page 14

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Above: Hecla Mining purchased a 19.8 per-cent equity interest in Brixton Metals Corp., ajunior focused on exploring the Thorn projectin northwestern British Columbia. A 26-holedrill program carried out Thorn in 2012focused on the Oban breccia zone cut gradesas high as 95 meters averaging 628.3 gramsper metric ton silver, 1.71 g/t gold, 3.31 per-cent lead and 2.39 percent zinc and 0.12 per-cent copper.

At right: The 6.4 million ounces of low-cost silver recovered from the Greens CreekMine in Southeast Alaska during 2012 is fund-ing growth aspirations at Hecla Mining Co.,including a foray into Canada’s mining sector.

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In addition to continued exploration anddefinition drilling, repairing the road toDolly Varden and establishing year-roundoperations at the historical silver miningproperty are on the docket for 2013.

A stake in ThornIn late February, Hecla also forked over

C$2.6 million to purchase a 19.8 percentownership interest in Brixton Metals Corp.,a junior focused on exploring the preciousmetals-enriched Thorn project located 50kilometers (31 miles) northwest of the past-producing Golden Bear Mine within theSutlahine River area of the Atlin MiningDistrict.

Like its deal with Dolly Varden, Heclahas the right to maintain its nearly 20 per-cent interest in Brixton by participating infuture financing of the junior. In addition,Hecla has the right to appoint one represen-tative to the board of directors of Brixton,and will be providing technical assistance tothe exploration company.

“Hecla’s endorsement through thisstrategic investment is a huge vote of confi-dence for Brixton and speaks volumes to thepotential of the Thorn project,” said BrixtonMetals Chairman and CEO GaryThompson.

Brixton applied a portion of the proceedsfrom the financing to completing the acqui-sition of 100 percent interest in the Thornproject from Kiska Metals Corp., the bal-ance of the funds are earmarked for contin-ued exploration at Thorn during the upcom-ing field season.

Brixton has found substantial near-sur-face, high-grade mineralization at the large-ly untested Oban Breccia Zone, which islocated in the heart of a six-kilometer (3.8miles) mineralized corridor on the Thornproperty.

A 26-hole drill program carried out byBrixton in 2012 focused on the Oban brec-cia zone, where hole THN11-60, which cut95 meters averaging 628.3 grams per metricton silver, 1.71 g/t gold, 3.31 percent leadand 2.39 percent zinc and 0.12 percent cop-per. Surface samples have returned gradesas high as 6,149 g/t silver.

The best intercept of the 2012 programcame in hole THN12-84, which cut 123meters averaging 190.7 g/t silver, 1.19 g/tgold, 3.25 percent zinc and 1.74 percentlead.

“Exploration results at the Thorn proper-ty show several different styles of preciousmetal mineralization that highlight thepotential for a substantive discovery,” saidBaker. “We’re excited to be an integral partof their plans with our investment andbelieve Brixton has a strong managementteam in place to build shareholder value.Hecla also brings a wealth of knowledgegained from more than 120 years of miningand exploration experience, and this expert-ise will benefit the Brixton team.”

As part of its investment, Hecla will havea representative on the Brixton board ofdirectors.

In addition to gaining a sizable stake inDolly Varden and Brixton, Hecla paidC$2.52 million earlier in 2012 to buy a 15percent interest in Canamex ResourceCorp., a junior exploring the Bruner proper-ty, a high-grade gold project in centralNevada.

Hecla said its equity position in the trioof Vancouver-based companies is for invest-ment purposes, and the Idaho-based minercurrently does not have any present inten-tion to acquire ownership of the explorers.

“Clearly at some point, we hope that itis something we would want to own. Inthe meantime we will be supportive andhelp these guys move these thingsalong,” Baker expounded. �

continued from page 15

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Hecla Mining’s Greens Creek silver mine in Southeast Alaska produces roughly 50,000 ounces-per-year gold as a by-product, including 55,496oz gold recovered from the volcanogenic massive sulfide deposit in 2012.

By ROSE RAGSDALEFor Mining News

The huge Selwyn lead-zinc project ineastern Yukon Territory is one of the

latest on a growing list of resource devel-opments attracting mega-investmentsfrom Chinese companies to Canada.

Selwyn, perhaps the largest undevel-oped zinc-lead deposit in the world, islocated in the heart of the Yukon’s miner-al-rich Selwyn Basin. After an aggressivemulti-year exploration program, juniorminer Selwyn Resources Ltd. attracted aC$100 million investment in June 2010from Yunnan Chihong Zinc &Germanium Co. Ltd., a fully integratedmining and smelting company based insouthern China.

Chihong, working through itsCanadian subsidiary Chihong CanadaMining Inc., formed a 50-50 partnershipwith Selwyn Resources and established ajoint venture to develop the Selwyn proj-ect through completion of a bankable fea-sibility study.

Nearly three years later, SelwynResources is preparing to sell its remain-ing 50 percent interest in the project toChihong for C$50 million in cash. Themove will put Chihong in the driver’s seatfor future development of the SelwynProject, and make it the second Chinesecompany to gain control of a major mineproject in the Yukon in recent years.

Yukon officials have actively encour-aged Chinese investment in the territory’smining industry in the past decade withgood results.

In July 2008 JinduichengMolybdenum Group Co. Ltd. andNorthwest Nonferrous InternationalInvestment Company Ltd. purchased allof the public shares of Yukon Zinc Corp.,owner of the high-grade polymetallicWolverine underground mine located insoutheastern Yukon. Wolverine beganproduction of zinc-silver-copper-lead-gold concentrates in 2012.

Among other Yukon deals, HunanNonferrous Metals Corp. purchased a siz-able stake of Vancouver, B.C.-basedNorth American Tungsten Corp. Ltd.,which operates the Cantung tungstenmine southwestern NorthwesternTerritories in 2008. N.A. Tungsten is alsodeveloping the Mactung Project, whichhosts one of the world’s largest undevel-oped high-grade tungsten skarn depositsin MacMillan Pass on the Yukon-Northwest Territories border.

Yukon Territory EconomicDevelopment Minister Currie Dixon, forexample, visited Beijing and Hong Kongon a trade tour in January to help promoteAsian investment in the territory’s miner-al resource projects.

“With tremendous economic growth inAsia, there is increasing demand for natu-ral resources, which makes it a logicaltrading partner for Yukon. Asia offers apotential source of investment as well asa promising market for our naturalresources,” Dixon said in announcing thetrip.

Chinese investment in CanadaThe interest by Chinese investors in

Yukon projects is part of a more wide-spread trend in Canada.

Foreign direct investment from Chinahit an all-time high in 2012, with most ofthat money going to purchases of

Canadian natural resource companies andprojects, according to economists track-ing the trend.

An estimated C$25 billion poured intoCanada from China in 2012, of which thepurchase of Nexen Energy by Chinesestate-owned CNOOC accounted forC$15.1 billion. And money from theAsian country is likely to keep pouringinto Canadian resource projects, accord-ing to Guy Saint-Jacques, Canada’sambassador to China.

While the Chinese have already stakedout a significant share of Canada’s energysector, observers say the Asian country’scompanies – both state-owned and pri-vate sector – are just getting started whenit comes to investing in Canada’s miningand forestry industries.

Saint-Jacques told an Alberta audiencein February that Canadian mining exports

� Y U K O N T E R R I T O R Y

Selwyn sells stake in zinc-lead project Chinese company agrees to purchase junior’s remaining 50 percent ownership interest in giant undeveloped deposit for C$50 million

17NORTH OF 60 MININGPETROLEUM NEWS • WEEK OF MARCH 31, 2013

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Workers traverse the banks of a stream in the Selwyn Basin where one of the world’s largestundeveloped zinc-lead projects is located.

Mining Companies

Kinross Fort Knox/Fairbanks Gold Mining Inc.Fairbanks, AK 99707Contact: Anna Atchison, Manager, Community and Government RelationsPhone: (907) 490-2218 Fax: (907) 490-2290E-mail: anna.atchison@kinross.comWebsite: www.kinross.comLocated 25 miles northeast of Fairbanks, Fort Knox isAlaska’s largest producing gold mine; during 2011,Fort Knox achieved 5 million ounces of gold pro-duced, a modern record in Alaska mining.

Usibelli Coal MineFairbanks, AK 99701Contact: Bill Brophy, VP Customer RelationsPhone: (907) 452-2625Fax: (907) 451-6543Email: info@usibelli.comWebsite: www.usibelli.comOther OfficePO Box 1000Healy, AK 99743Phone: (907) 683-2226Usibelli Coal Mine is headquartered in Healy, Alaskaand has 700 million tons of coal reserves. UCM pro-duces an average of 2 million tons of sub-bituminouscoal each year.

Service, Supply & Equipment

Alaska Air Cargo • Horizon Air CargoP.O. Box 68900 SEAFZSeattle, WA 98168Contact: Joe Sprague, Vice President of CargoPhone: (206) 392-2705 or 800-2ALASKA

Fax: (206) 392-2641E-mail: joe.sprague@alaskaair.comWebsite: www.alaskacargo.comAward winning cargo services to more places, moreoften, with more lift to, from, and within the stateof Alaska.

Alaska Analytical Laboratory1956 Richardson HighwayNorth Pole, AK 99705Phone: (907) 488-1266 • Fax: (907) 488-077E-mail: jlovejoy@mappatestlab.comEnvironmental analytical soil testing for GRO, DRO,RRO, and UTEX. Field screening and phase 1 and 2site assessments also available.

Alaska Earth SciencesAnchorage, AK 99515Contact: Bill Ellis, Rob Retherford, ownersPhone: (907) 522-4664 • Fax: (907) 349-3557E-mail: wellis@alaskaearthsciences.comA full service exploration group that applies earthsciences for the mining and petroleum industries pro-viding prospect generation, evaluation and valua-tion, exploration concepts, project management,geographic information systems and data manage-ment. We also provide camp support and logistics,geologic, geochemical and geophysical surveys.

Alaska Frontier ConstructorsP.O. Box 224889Anchorage, AK 99522-4889Contact: John Ellsworth or Chris LedgerwoodPhone: (907) 562-5303Fax: (907) 562-5309E-mail: afcinfo@ak.netWebsite: akfrontier.comAlaskan heavy civil construction company specializing

in Arctic and remote site development with theexperience, equipment and personnel to safely andefficiently complete your project.

Alaska Steel Co.1200 W. DowlingAnchorage, AK 99518Contact: Joe Pavlas, outside sales managerPhone: (907) 561-1188Toll free: (800) 770-0969 (AK only)Fax: (907) 561-2935E-mail: j.pavlas@alaskasteel.com Fairbanks Office:2800 South CushmanContact: Dan Socha, branch mgr.Phone: (907) 456-2719 • Fax: (907) 451-0449Kenai Office:205 Trading Bay Rd.Contact: Will Bolz, branch mgr.Phone: (907) 283-3880 • Fax: (907) 283-3759Rebar Division1200 W. DowlingAnchorage, AK 99518Contact: Mike Galyon, rebar mgr.Phone: (907) 561-1188 • Fax: (907) 562-7518Full-line steel, aluminum, and rebar distributor.Complete processing capabilities, statewide service.Specializing in low temperature steel and wear plate.

Arctic FoundationsAnchorage, AK 99518-1667Contact: Ed YarmakPhone: (907) 562-2741 • Fax: (907) 562-0153Email: info@arcticfoundations.comWebsite: www.arcticfoundations.comSoil stabilization – frozen barrier and frozen coredams to control hazardous waste and water move-

Companies involved in Alaska andnorthwestern Canada’s mining industry

D I R E C T O R Y

The Red Dog mine in northwest Alaska.

19NORTH OF 60 MININGPETROLEUM NEWS • WEEK OF MARCH 31, 2013

ment. Foundations – maintain permafrost for durablehigh capacity foundations.

Austin Powder CompanyP.O. Box 8236Ketchikan, AK 99901Contact: Tony Barajas, Alaska managerPhone: (907) 225-8236 • Fax: (907) 225-8237E-mail: tony.barajas@austinpowder.comWeb site: www.austinpowder.comIn business since 1833, Austin Powder providesstatewide prepackaged and onsite manufacturedexplosives and drilling supplies with a commitmentto safety and unmatched customer service.

Calista Corp.301 Calista Court, Suite AAnchorage, AK 99518Phone: (907) 279-5516 • Fax: (907) 272-5060Web site: www.calistacorp.com

Construction Machinery Industrial, LLC5400 Homer DriveAnchorage, AK 99518Contact: Robert Fairbanks, Sales ManagerPhone: (907) 563-3822Fax: (907) 563-1381Email: r.fairbanks@cmiak.comWebsite: www.cmiak.com

ERA Helicopter6160 Carl Brady DriveAnchorage, AK 99502Contact: David Sell, Business Development AlaskaPhone: (907) 550-8607Fax: (907) 550-8608E-mail: dsell@erahelicopters.comWebsite: www.erahelicopters.comHelicopter charters, flight-seeing tours, aerial pho-tography, oil and gas support, mineral exploration,construction, seismic remote site work, internal andexternal load, heli-hiking and sled-dog adventures.

GCI Industrial TelecomAnchorage:11260 Old Seward Highway Ste. 105Anchorage, AK 99515Phone: (907) 868-0400Fax: (907) 868-9528Toll free: (877) 411-1484Web site: www.GCI-IndustrialTelecom.comRick Hansen, DirectorRichard.Hansen@gci.comMark Johnson, Business Development ManagerMark.Johnson@gci.comDeadhorse:Aurora Hotel #205Deadhorse, Alaska 99734Phone: (907) 771-1090Mike Stanford, Senior Manager North SlopeMike.Stanford@gci.comHouston, Texas:8588 Katy Freeway, Suite 226Houston, Texas 77024Phone: (713) 589-4456Hillary McIntosh, Account RepresentativeHillary.Mcintosh@gci.comGCI Industrial Telecom provides innovative solutionsto the most complex communication issues facingindustrial clientele. We deliver competitive services,reputable expertise and safely operate under themost severe working conditions for the oil, gas andnatural resource industries. GCI-your best choice forfull life cycle, expert, proven, industrial communica-tions.

Global Equipment Services Inc. 3820 Schact St. Fairbanks, AK 99701Contact: Jeff Dahl, General ManagerPhone (425) 531-1854Email: jdahl@gesequipment.comWebsite: www.GESequipment.comGlobal Equipment Services Inc. purchases, sells andrents high quality heavy equipment worldwide witha strong emphasis on high quality work readyCaterpillar Track type tractors.

HDR Alaska Inc. 2525 C St., Ste 305Anchorage, AK 99503Contact: Jaci Mellott, Marketing CoordinatorPhone: (907) 644-2091Fax: (907) 644-2022Email: Jaci.Mellott@hdrinc.comWebsite: www.hdrinc.comHDR Alaska provides engineering, environmental,planning, and consultation services for mining andmineral exploration clients. Services include: biologicalstudies; cultural resources; project permitting; NEPA;stakeholder outreach; agency consultation; and envi-ronmental, civil, transportation, energy, and heavystructural engineering.

Jackovich Industrial & Construction SupplyFairbanks, AK 99707Contact: Buz Jackovich

Phone: (907) 456-4414 • Fax: (907) 452-4846Anchorage officePhone: (907) 277-1406 • Fax: (907) 258-170024- hour emergency service. With 30 years of experi-ence, we’re experts on arctic conditions and extremeweather.

Judy Patrick Photography511 W. 41st Ave, Suite 101Anchorage, AK 99503Contact: Judy PatrickPhone: (907) 258-4704Fax: (907) 258-4706E-mail: jpp@mtaonline.netWebsite: www.judypatrickphotography.comCreative images for the resource development indus-try.

Keller Williams Commercial101 West Benson, Ste. 503Contact: Stewart Smith, Associate BrokerAnchorage, AK 99503Phone: (907) 865-6505Cell: (907) 727-8686Email: stewart@stusell.comContact: Ryan Mae Lucas, AssociateCell: (907) 360-7135Email: ryan@stusell.comWebsite: www.stusell.com;www.AKMiningClaims.comMining Claims to buy, sell, or lease, call the Alaskaprofessionals. We provide real estate brokerage serv-ice to the mining industry, with over 35 years of com-mercial experience. Call for a list of our featuredproperties.

Last Frontier Air Ventures39901 N. Glenn Hwy. Sutton, AK 99674Contact: Dave King, ownerPhone: (907) 745-5701Fax: (907) 745-5711E-mail: helicopter@LFAV.comAnchorage Base (907) 272-8300Web site: www.LFAV.comHelicopter support statewide for mineral exploration,survey research and development, slung cargo,video/film projects, telecom support, tours, crewtransport, heli skiing. Short and long term contracts.

LyndenAlaska Marine Lines • Alaska Railbelt MarineAlaska West Express • Lynden Air CargoLynden Air Freight • Lynden InternationalLynden Logistics • Lynden TransportAnchorage, AK 99502Contact: Jeanine St. JohnPhone: (907) 245-1544 • Fax: (907) 245-1744Email: custsvc@lynden.comThe combined scope of the Lynden companiesincludes truckload and less-than-truckload highwayconnections, scheduled barges, intermodal bulkchemical hauls, scheduled and chartered air

freighters, domestic and international air forwardingand international sea forwarding services.

Northern Air Cargo3900 W. International Airport Rd. Anchorage, AK 99502Contact: Mark Liland, acct. mgr. Anch./Prudhoe BayPhone: (907) 249-5149 • Fax: (907) 249-5194Email: mliland@nac.aero • Website: www.nac.aeroServing the aviation needs of rural Alaska for almost50 years, NAC is the states largest all cargo carriermoving nearly 100 million pounds of cargo on sched-uled flights to 17 of Alaska’s busiest airports. NAC’sfleet of DC-6, B-727, and ATR-42 aircraft are availablefor charters to remote sites and flag stops to 44 addi-tional communities.

Pacific Rim Geological ConsultingFairbanks, AK 99708Contact: Thomas Bundtzen, presidentPhone: (907) 458-8951Fax: (907) 458-8511Email: bundtzen@mosquitonet.comGeologic mapping, metallic minerals exploration andindustrial minerals analysis or assessment.

Pebble Partnership3201 C St., Suite 604Anchorage, AK 99503Phone: 907-339-2600www.pebblepartnership.com

PND Engineers Inc.1506 W. 36th Ave. Anchorage, AK 99503Phone: (907) 561-1011Fax: (907) 563-4220Website: www.pndengineers.comFull-service engineering firm providing civil, structur-al, and geotechnical engineering, including miningsupport, resource development, permitting, marineand coastal engineering, transportation engineering,hydrology, site remediation, and project manage-ment.

TTT Environmental LLC 4201 “B” St.Anchorage, AK 99503Contact: Tom Tompkins, general managerPhone: 907-770-9041 • Fax: 907-770-9046Email: info@tttenviro.comWebsite: www.tttenviro.comAlaska’s preferred source for instrument rentals,sales, service and supplies. We supply equipment forair monitoring, water sampling, field screening, PPEand more.

Taiga Ventures2700 S. CushmanFairbanks, AK 99701Mike Tolbert - presidentPhone: 907-452-6631 • Fax: 907-451-8632Other offices:Airport Business Park2000 W. International Airport Rd, #D-2Anchorage, AK 99502Phone: 907-245-3123Email: mike@taigaventures.comWeb site: www.taigaventures.comRemote site logistics firm specializing in turnkeyportable shelter camps – all seasons.

Total Safety U.S. Inc.209 E. 51st Ave.Anchorage, AK 99503Contact: Tyler Zollinger, District Manager.Phone: (907) 743-9871Fax: (907) 743-9872E-mail: tyler.zollinger@totalsafety.comWebsite: www.totalsafety.comA full service safety company specializing in RemoteMedical Services, H2S Services, Industrial Hygiene,and Safety Consultants. Total Safety provides Service,Rental, or Sales of Safe Breathing Air, Gas Detection,and Technical Safety Equipment.

URS Corp.700 G Street, Suite 500Anchorage, AK 99501Contact: Joe Hegna, Alaska Vice President/AlaskaOperations ManagerPhone: (907) 562-3366 • Fax: (907) 562-1297E-mail: joe_hegna@urscorp.comWebsite: www.urscorp.comProvide engineering, construction and technical serv-ices with capabilities to support all stages of projectlife cycle. We offer a full range of program manage-ment; planning, design and engineering; construc-tion and construction management; operations andmaintenance; and decommissioning and closure serv-ices.

Advertiser IndexAlaska Airlines Cargo . . . . . . . . . . . . . . . . . . . . . . . 14Alaska Analytical Laboratory. . . . . . . . . . . . . . . . . . 8Alaska DreamsAlaska Earth Sciences . . . . . . . . . . . . . . . . . . . . . . . 22Alaska Frontier Constructors . . . . . . . . . . . . . . . . . 15Alaska Steel Co.Arctic FoundationsAustin Powder Co. . . . . . . . . . . . . . . . . . . . . . . . . . 21Calista Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Constantine Metal ResourcesConstruction Machinery . . . . . . . . . . . . . . . . . . . . . 24Fairbanks Gold Mining/Fort Knox Gold Mine. . . 10GCI Industrial Telecom . . . . . . . . . . . . . . . . . . . . . . . 4General Refining Corp.Global Equipment Services . . . . . . . . . . . . . . . . . . 22Greer Tank Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Jackovich Industrial & Construction Supply. . . . . 23Judy Patrick Photography . . . . . . . . . . . . . . . . . . . . 5Keller Williams Commercial . . . . . . . . . . . . . . . . . . . 6Last Frontier Air Ventures. . . . . . . . . . . . . . . . . . . . . 7Lynden. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Nature Conservancy, The . . . . . . . . . . . . . . . . . . . . 20Northern Air CargoPacific Rim Geological Consulting . . . . . . . . . . . . . . 4Pebble Partnership . . . . . . . . . . . . . . . . . . . . . . . . . 13PND Engineers Inc.Salt+Light CreativeSourdough Express Inc.Taiga Ventures/PacWest Drilling Supply . . . . . . . 12Total SafetyURS Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Usibelli Coal Mine . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

to China already eclipse Canada’s entireexports to Germany.

“As exploration activity and mineralproduction are intrinsically linked, theCanadian mining industry could see adramatic expansion in the years to come,”said MAC President and CEO PierreGratton. “While some volatility is antici-pated, the larger determinant in capitaliz-ing on the opportunities before us is toensure the industry has access to the rightinvestment and regulatory environmentsit needs to support development.”

In looking to 2013, the MAC reportstressed that despite challenges, theCanadian mining industry’s economicprospects are strong. “Regardless of con-cerns over the growth rates of China andother emerging markets, it is widely heldthat growth, even if at a moderatelyreduced pace, is likely to remain strongover the long term,” Gratton said.

Deal reflects market realitySelwyn Resources March 4 reported

entering into an asset and share purchaseagreement with Chihong Canada MiningLtd. and Selwyn Chihong Mining Ltd.,

the joint venture entity, to sell theSelwyn’s remaining interest in the proj-ect.

Selwyn President and CEO HarlanMeade, Ph.D., said the decision to sell thecompany’s 50 percent stake in the project“reflects the realization of the large capi-tal requirements that will be needed toadvance the Selwyn Project to productionand the associated risks to Selwyn share-holders, including but not limited to, thepotential for significant dilution of share-holders’ equity in the Selwyn Project.”

“At a time of reduced industry interestin undeveloped mineral deposits, Selwynis satisfied that the timing of this transac-tion and the purchase price negotiated arein the best interests of the shareholders,”Meade added.

After completion of the transaction,Selwyn Resources will have no furtherinterest in the Selwyn project, and the JVagreement will be terminated.

Completion of the transaction is sub-ject to certain conditions, includingSelwyn shareholder approval, approval ofthe board of directors of Yunnan Chihongand certain Chinese governmentalapprovals. Chihong Canada has enteredinto support and voting agreements withcertain significant shareholders ofSelwyn. Such shareholders hold, in

aggregate, about 41 percent of Selwyn’soutstanding common shares.

If all conditions to closing are satis-fied, including the receipt of Selwynshareholder approval and the necessaryregulatory approvals, it is anticipated thatthe transaction will be completed by earlyJune.

Chihong advances cash depositChihong Canada provided a deposit of

C$5 million cash as an advance of thepurchase price. A second deposit of C$5million cash will be paid on or aboutApril 9, provided Selwyn is not in defaultof any of its obligations and covenantsrequired to be performed under the pur-chase agreement. Chihong Canada willpay the remaining C$40 million of thepurchase price at closing of the transac-tion.

If the transaction does not close, thedeposits must be refunded to ChihongCanada, except where the failure to closethe transaction is the result of the failureof Chihong Canada to comply with theterms of the purchase agreement, orobtain its necessary parent and Chinesegovernmental approvals for the transac-tion. The refund of the deposits, if neces-sary and if not promptly paid in cash, will

be carried out by Chihong Canada con-verting the outstanding deposit amountinto a corresponding increase in its inter-est in the joint venture. If the entire C$10million of deposit funds are converted,Chihong Canada’s interest in the jointventure would increase to 60 percent, andSelwyn’s interest would decrease to 40percent.

The completion of the transaction issubject to certain conditions, includingthe following:

Approval of the transaction by at least66 2/3 percent of the votes cast by Selwynshareholders at an annual and specialmeeting of shareholders expected to beheld in late April 2013;

Approval of the board of directors ofYunnan Chihong Zinc & Germanium Co.,Ltd. (parent company of ChihongCanada) and certain Chinese governmen-tal approvals;

Holders of no more than 10 percent ofthe issued and outstanding Selwyn com-mon shares having exercised dissentrights in respect of the transaction;

Approval of the TSX VentureExchange; and

The fulfillment or waiver of certaincustomary closing conditions set out inthe purchase agreement.

Covenants, representations,warranties and indemnities

Selwyn and Chihong Canada alsoagreed to certain customary covenantsrelating to obtaining the approval of req-uisite regulatory authorities and the share-holders of Selwyn. Under the purchaseagreement, Selwyn will not solicit alter-native proposals, and Chihong Canadahas 10 business days to match any alter-native proposals that constitute a “superi-or proposal” under the terms of the pur-chase agreement. Chihong Canada is alsoentitled to a C$2.5 million terminationpayment in the event that Selwyn acceptsa superior proposal, makes a “change inrecommendation” with respect to thetransaction, breaches a representation orwarranty or commits a breach of the pur-chase agreement. Any superior proposalmust provide for the repayment toChihong Canada of the deposit funds andthe payment to Chihong Canada of thetermination payment payable under thepurchase agreement.

The purchase agreement also containslimited representations and warrantiesrelating to the company, the company’sjoint venture interest and ChihongCanada. For a period of 12 months aftercompletion of the transaction, Selwyn hasagreed to indemnify Chihong Canadaagainst all losses suffered by ChihongCanada due to any warranties or repre-sentations made by Selwyn under the pur-chase agreement being untrue or due to abreach by Selwyn of any term, agreementor covenant in the purchase agreement.

Selwyn said it plans to apply the netproceeds from the sale of its interest inthe joint venture, after repayment of debt,toward restarting the ScoZinc Mine inNova Scotia and for general corporatepurposes. The completion of projectfinancing and the achieving of productionat the ScoZinc Mine will fulfill Selwyn’slonger term objective of becoming a pro-ducing mining company over the interme-diate term. Selwyn said the sale of itsinterest in the Selwyn project is seen asthe reasonable best alternative for achiev-ing this goal and addressing current obli-gations to creditors.

Liquidity and capital resourcesIn April 2012 Selwyn entered into a

C$10 million debt facility with Waterton

20 NORTH OF 60 MINING

PETROLEUM NEWS • WEEK OF MARCH 31, 2013

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Corporate Partners

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Calista CorporationCarlile Transportation Systems, Inc. CIRIClark James Mishler Photography CONAM Construction Company Denali National Park Wilderness Centers, Ltd. Fairweather, LLCFlint Hills ResourcesJenner & BlockKachemak Bay Wilderness Lodge

Commercial salmon fishing near Prince of Wales Island in Alaska’s Tongass National Forest. Annually, healthy salmon runs contribute one billion dollars to the economy of Southeast Alaska.

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continued from page 17

SELWYN ZINC

see SELWYN ZINC page 23

By ROSE RAGSDALEFor Mining News

URU Metals Ltd., a base metals anduranium explorer with interests in

Africa and South America, is making abold foray into Canada in 2013 to investi-gate the potential of the Nueltin Lake gold-uranium project held by Cameco Corp.,one of the world’s largest uranium produc-ers.

URU has signed an option withCameco to earn a majority interest in theproject, which is located in the Kivalliqregion of southern Nunavut about 10 kilo-meters (six miles) north of the Manitobaborder.

The Nueltin Lake granite terrane strad-dles the Nunavut-Manitoba border and lieswithin the Southern Hearne Domain of theWestern Churchill Province. GeologicalSurvey of Canada geologists exploring thearea report two anomalous occurrences ofprimary uranium, thorium and rare earthelements in the Nueltin Lake area are asso-ciated with an aplite dyke (56.8 parts permillion uranium and 770 ppm thorium)and a pegmatitic seam (610 ppm uranium,8,839 ppm thorium and 86,153 ppm rareearth elements) within the Nueltin graniticsuite. Parallel-trending trace element pat-terns indicate that the anomalies most like-ly represent late-stage, highly fractionatedmelts from the Nueltin granite.

The Nueltin Lake project consists of 34mineral claims and 1 mineral lease cover-ing a combined area of about 27,279hectares (67,406 acres) that hosts theSandybeach gold-uranium zone, a bedrockgold-uranium discovery made by Camecoin 2008 where the explorer encountered

previously unknown mineralization atdepths less than 100 meters from surfacein drill core with assay grades up to 8.95g/t gold over 5.95 meters, 3.27 g/t goldover 7.25 meters, and 0.23 percent U3O8over 1.25 meters.

Cameco’s 15-hole, 1,553-meter dia-mond drill program, the first and only drillcampaign ever conducted on the project,was designed to test for the presence of thebedrock source associated with three clus-ters of multiple gold-uranium mineralizedboulders located over a 1.5-kilometer by0.5-kilometer area that were discovered inthe 1970s. Intermittent prospecting by var-ious project operators between 1984 and2008 encountered several high-grade poly-metallic (uranium, gold, molybdenum,copper, tungsten, cobalt, and nickel) boul-ders believed to be proximal to theirbedrock source, the most significant assay-ing up to 13.68 percent U3O8 and 2,080g/t gold.

Mineralization was intersected byCameco in three of the 11 drill holes col-lared to test geophysical targets in thevicinity of the boulder clusters. The miner-alization that was encountered remainsopen in both directions along strike and atdepth and has never been followed-up by

any subsequent drilling program. Mineralization at the Nueltin Lake

project appears to be imaged by theinduced polarization geophysical tech-nique. The Sandybeach area on the projectcontains several IP anomalies that remainuntested by drilling. The IP anomaliesdirectly associated with the three mineral-ized drill holes extend several hundredmeters along strike and have not yet beentested by drilling.

URU said it is eagerly anticipating thecommencement of its first drilling pro-gram this summer to follow-up Cameco’s

discovery. The Nueltin Lake project is located on

lands that are currently subject to a landtreaty negotiation between theGovernment of Canada and the SayisiDene and Northlands Denesuline FirstNations that, if successfully completed,would give the First Nations ownership ofsurface and mineral rights on the project. Ifthe land claim is successful, URU said itand Cameco would likely have to negoti-ate cooperative agreements with the First

21NORTH OF 60 MININGPETROLEUM NEWS • WEEK OF MARCH 31, 2013

� N U N A V U T

Junior takes on Cameco uranium-gold findHighly prospective Nueltin Lake project gives small explorer toehold in grassroots effort to define and expand on new discovery

see NUELTIN LAKE page 22

“Nueltin Lake represents a rareopportunity to become involved on

the ground floor of a newpolymetallic mineral discovery,where the high technical and

financial risks associated withmaking a discovery on a

grassroots project have alreadybeen satisfied. We get to go to

work defining the ultimate size ofthe potential resource.”

—Roger Lemaitre, CEO, URU Metals Ltd.

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Nations under which the rights of all par-ties, including the mineral rights ofCameco and URU on the project, would berespected.

Option agreementUnder the terms of the option agree-

ment, URU must spend C$2.5 million onexploration over the next three years(C$550,000 in 2013, C$1 million in 2014and C$1 million in 2015) to earn a 51 per-cent stake in the project. On completion ofthis first option, URU can spend a furtherC$8 million on exploration over a four-year period to earn an additional 19 per-cent interest in the project.

On successful completion of bothoptions, the junior would have earned a 70percent interest in the project by spendingC$10.5 million on exploration over sevenyears. URU will be the project operatorover the option earn-in period.

After URU completes its earn-inrequirement under the option agreement,the parties agreed to enter into a standardjoint venture agreement, the form of which

has already been agreed to and appendedto the option agreement.

Upon satisfaction of the requirement tospend C$550,000 by Dec. 31, 2013, URUwill have the right to terminate the optionagreement at any time by providing 30days written notice to Cameco.

Until URU exercises the first option,title over the project will remain inCameco’s name. Upon exercise of the firstoption and if completed, the second option,title as tenant-in-common would be trans-ferred to URU 51 percent and 70 percent,respectively.

Under the joint venture, should Camecoretain a 20 percent interest in the project,they will have the right, but not the obliga-tion, to market the company’s share of ura-nium product from the project. ShouldURU retain at least a 50 percent interest inthe project, the company will have theright, but not the obligation, to marketCameco’s share of all mineral productsexcept uranium derived from the project.

Should a mineral discovery be made onthe project, a bankable feasibility study becompleted, and a decision to mineapproved, the joint venture, and if Camecoretains a 20 per cent interest in the project,Cameco, will have a one-time option topurchase 100 percent of any uranium pro-duced in yellowcake concentrate formfrom the joint venture property at thegreater of 90 percent of the monthly aver-age of the daily Ux Consulting CompanyBroker Average Price in which the concen-trate is produced, or the monthly averagedaily Ux Consulting Broker Average Priceshould that price be lower than US$35.00per pound U3O8.

The project is also subject to an existingcombined 3 percent net smelter royaltypayable to two geologists who initially

brought the project to Cameco’s attention.The NSR does have buy-out provisionsexercisable at the sole option of the jointventure.

Win-win opportunity“We are delighted to be able to

announce our option over the Nueltin Lakegold-uranium project, which is an excitingnew project for the company, located in agreat mining jurisdiction,” URU MetalsCEO Roger Lemaitre said in February.

“Nueltin Lake represents a rare oppor-tunity to become involved on the groundfloor of a new polymetallic mineral dis-covery, where the high technical and finan-cial risks associated with making a discov-ery on a grassroots project have alreadybeen satisfied. We get to go to work defin-ing the ultimate size of the potentialresource,” explained Lemaitre, whobecame familiar with the project when heran Cameco’s global exploration opera-tions before leaving to help found URUMetals in 2008.

“What interested me about the project isit has a fairly lengthy, but limited explo-ration history,” he said.

After Cameco made the Sandybeachuranium-gold discovery at Nueltin Lake in2008, the company decided to cut back onexploration in 2009 during the globalrecession.

“They couldn’t do everything theywanted. Since 2009, the project has satidle. Last year, Cameco decided theywould like to find a partner for the project.Since I was intimately familiar with theproject, we decided we would like tobecome Cameco’s partner,” said Lemaitreduring a recent interview.

LeMaitre said the most interesting thingabout the property for URU is that the min-eralization encountered so far is prettymuch open in every direction for severalhundred meters. It also fits the junior’sstrategy of identifying, investing anddeveloping the next generation of accre-tive mineral project opportunities.

“So it’s a pretty rare opportunity for ajunior company like (us) to get into basi-cally a brand new discovery at this earlystage, where hopefully the definitions andeconomies of the mineralization will growas we drill more holes,” he observed.

Because Cameco is most interested inhaving someone work on the property, themajor is not asking URU for any signifi-

22NORTH OF 60 MINING

PETROLEUM NEWS • WEEK OF MARCH 31, 2013

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NUELTIN LAKE

see NUELTIN LAKE page 23

“Nueltin Lake represents a rareopportunity to become involved on

the ground floor of a newpolymetallic mineral discovery,where the high technical and

financial risks associated withmaking a discovery on a

grassroots project have alreadybeen satisfied. We get to go to

work defining the ultimate size ofthe potential resource.”

—Roger Lemaitre, CEO, URU Metals Ltd.

cant compensation for the option.“We don’t have any cash changing

hands and no shares changing hands, sowe can fund the program out of our cashreserves right now, which is fantastic forus,” Lemaitre enthused. “One of the sweet-eners for Cameco is that they have theright to market any uranium found on theproperty, and that works out for us becausewe’re not a uranium marketing agency.Also, they are all about increasing theirproduction, their doubling strategy, so oncompletion of a bankable feasibility studyand subject to the joint venture agreement,Cameco has got the option to purchase 100percent of the uranium produced, provid-

ing us with an end user for the uranium. “So it is a great opportunity for them to

augment their production with very littlerisk and a great opportunity for us to get anexploration property at a very reasonableprice,” Lemaitre added. �

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continued from page 22

NUELTIN LAKE

Global Value, L.P. from which it hasdrawn down the full C$10 millionavailable under the Waterton Facility.After making the second C$1.5 millionprincipal repayment to Waterton onJan. 2, the company has been takingsteps to preserve a level of cash flowsufficient to maintain current opera-tions. As previously disclosed, withoutsecuring additional financing, the com-pany would not have sufficient work-ing capital to fund operations.

In late December and early January,Selwyn negotiated a term sheet with apotential lender for a bridge financingfacility and was working towards clos-ing. The funds from the bridge facilitywould have been used to extinguish theWaterton Facility and would have pro-vided additional working capital. Therepayment terms of the bridge facilitywould have provided the company withan extended time period for repayment,and thus increased financial flexibility.After extensive due diligence and thecompletion of full loan documentation,the potential lender advised Selwynthat it no longer wished to complete thetransaction.

The company said its liquidity posi-tion has deteriorated as a result of vari-ous factors, including an inability tosecure additional sources of financingto fund its future obligations under theJV agreement or for the restart of itsScoZinc Mine in Nova Scotia, and itsobligation to make payments under theWaterton Facility.

Selwyn said that absent the transac-tion, and in light of current equity mar-ket conditions, it is unlikely that thecompany would be able to raise thefunds necessary to maintain operationsand achieve its objectives, and as aresult, there has been significant doubtcast on the company’s ability to contin-ue as a going concern. In addition,absent the transaction, Selwyn alsowould need to raise funds to meet anyrequired commitments to complete thepre-development program objectivesunder the terms of the JV agreement. Afailure to raise such funds would resultin a dilution of its 50 percent interest inthe joint venture.

Current status of Selwyn ProjectOn Nov. 19 Selwyn announced that

the joint venture’s management com-mittee had confirmed a plan and budget

for the completion of a feasibility studybased on the revised 3,500-metric-tons-per-day mining and milling plan.

The company expects work on thefeasibility study will be completed byearly April, with finalization of thestudy expected in May.

Earlier, Selwyn had providedinvestors with guidance on the mainparameters of the planned mine, milland infrastructure development. Thekey remaining activities are finalizationof the mine design and productionschedule, which was to be undertakenby the joint venture staff working withTetra Tech mine group based in Denver;and secondly, completion of the finalphase of metallurgical test work that isfocused on evaluation of opportunitiesto reduce energy requirements of thefine grinding in the re-grind circuit andimprovements in lead recovery. Withcompletion of these sectors, surfacefacilities will be finalized and the jointventure company had planned to file aproject report with the YukonEnvironmental and SocioeconomicAssessment Board and commence theenvironmental assessment process forthe project and project infrastructure.

A geotechnical report was complet-ed that indicates more favorable groundconditions than had previously beendetermined in the initial proposed min-ing areas. AMEC reviewed geotechni-cal drill-hole data for the XY Centraland Don deposits and evaluated groundconditions in recently re-opened under-ground development that was complet-ed in 1981 (at XY Central deposit) byprevious operators. With this new infor-mation, the increase in stope spans wasconfirmed, and the mining plan hasbeen modified and the production planformalized.

As of March 4, there remained aboutC$2.97 million of cash in the JVaccount into which Chihong Canadacontributed C$100 million when thejoint venture was established. Uponcompletion of the remaining JV expen-ditures, Chihong Canada will haveearned a 50 percent interest in the jointventure. The company expects that,under the terms of the JV agreement,Selwyn will be required to contributeadditional funds to the joint venture inorder to complete the pre-developmentprogram objectives. The company alsoexpects that, in the interim period untilthe transaction is completed, it will beable to use the deposit funds to satisfyits required contributions toward pre-development program objectives. �

continued from page 20

SELWYN ZINCThe Nueltin Lake project is locatedon lands that are currently subject

to a land treaty negotiationbetween the Government of

Canada and the Sayisi Dene andNorthlands Denesuline FirstNations that, if successfully

completed, would give the FirstNations ownership of surface and

mineral rights on the project.

24NORTH OF 60 MINING

PETROLEUM NEWS • WEEK OF MARCH 31, 2013

Fairbanks Branch Manager

Operations Manager

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