Property Description and Location
The Snow Lake property is located in west-central Manitoba at 54°52’44” north latitude and 100°02’12” west longitude, within the community of Snow Lake. The town of Snow Lake is situated approximately 685 kilometres (km) north of Winnipeg, the provincial capital of Manitoba.
The Snow Lake mine property is comprised of two surveyed mineral leases (ML-61 & ML-323) and 43 unsurveyed mineral claims totalling 4,840 hectares. The mineral claims that are contiguous along the southern and eastern boundary of mineral lease ML-61 and a portion of the eastern boundary of mineral lease ML-323 have been historically referred to as the HudBay Option claims. The block of claims that are contiguous to the north of ML-323 has been historically referred to as the Squall Lake claims. Mineral Lease ML-61 contains the Snow Lake mine mineral deposit and ML-323 contains the No. 3 Zone and Birch zone mineral deposits.
The two mining leases have been legally surveyed and remain in good standing providing that the annual taxes are paid. The mineral leases are taxed at the rate of $8.00 per hectare each year and are subject to a 1.38% NSR, based on production, payable to W. Bruce Dunlop. Certain parts of the property are subject to a nets profits interest royalty payable on commencement of commercial production of 4% to a private individual, an additional 6% net profits interest royalty payable to Barrick Gold Inc. and a 30% NPI payable to Barrick Gold Inc.
The mineral claims require an annual assessment work requirement of $25 per hectare to keep them in good standing beyond their current expiry dates. In Manitoba, when the claim holder exceeds the minimum annual assessment expenditures for the mineral claims, surplus expenditures can be banked and utilized in future years to meet the annual assessment requirements.
Environmental reclamation on various portions of the Snow Lake property predates the cessation of operations at the mine in early 2005. However, Kinross Gold Corporation (“Kinross”) and High River Gold Mines Ltd. (“High River”) conducted further environmental reclamation on the property since the mine was placed on care and maintenance in advance of any decision regarding either a sale of the property to a third party or final closure and full reclamation of the mine site and property. The Snow Lake property is subject to a comprehensive closure plan submitted to the Manitoba government, in which the cost of mine closure is estimated at $1,867,000. This amount is currently held as a cash bond with the Manitoba government. In addition, Garson had also posted a cash bond of $3,900,000 that is held by Kinross.
A waste berm has been placed around the fenced-off area of the Dick zone crown pillar to inhibit access. Figure 4.6 shows a view, looking west, along the berm with the crown pillar of the Dick zone located on the right side of the photograph behind the fence.
The Province of Manitoba requires an Environment Act License to operate a mine. The original License for the Snow Lake Mine property was issued in 1995. A telephone discussion with the Manitoba Conservation, Environmental Act branch on February 19, 2010 indicated that the transfer of an existing EA Licence would be contingent upon a review of any environmental issues during previous operation of the mine. As well, given that the original Environmental Impact Statement was prepared in 1994-95, and that the EA process has become more rigorous, there may be a requirement to complete additional studies to satisfy the Ministry.
Golder reviewed annual reports for 2004, 2006, 2007 and 2008 provided to Manitoba Conservation to satisfy the reporting requirements of the EA License. The mine operation appeared to be in compliance with provincial monitoring and reporting requirements. Wardrop Consultants Ltd. (Wardrop) also reviewed annual reports for 2006 to 2008 and reported that provincial monitoring and reporting requirements were adhered to.
Accessibility, Climate, Local Resources, Infrastructure and Physiography
The Snow Lake property is accessible from Winnipeg, the provincial capital of Manitoba, via both paved and good quality dirt roads. Access within the property is via all weather private roads. The major population centres for the region are Flin Flon to the west-southwest of Snow Lake and Thompson to the northeast. The cities of Flin Flon and Thompson, with populations of over 6,000 and 14,400 inhabitants respectively (1996 census), are the supply centres for the region. Both communities also have daily air service to Winnipeg.
The Snow Lake property is located on the edge of the town of Snow Lake, which is the administrative, transportation, communication and supply centre for this area of northern Manitoba. Local businesses offer most goods and services required for mineral exploration and development. The town is also host to a thriving tourist industry which serves recreational hunters and fishermen.
The town is also home to the HudBay Minerals Inc. Chisel North mine. Consequently the area is able to furnish sufficient power, water and potential mining personnel to support a new operation. The region is also currently the focus of exploration activities for both gold and base metal mineralization by a number of companies.
The topography and physiography are typical of the pre-Cambrian shield in Manitoba, consisting of low rolling hills composed of bedrock outcroppings, development of thin soils, and vegetation cover that is dominated by a mixture of poplar, black spruce and balsam trees. The elevation of Snow Lake is 980 m above sea level with the relief in the area generally low and not exceeding 150 m.
The climate is generally cold, with the mean daily temperature being 0.6° Celsius (C). The average precipitation in Flin Flon is 463.1 mm, with 342.5 mm falling as rain and 122.8 mm falling as snow. The operating season is year round with the usual winter storms which are common in the northern portions of Canada and may close the roads or airports for a couple of days during the winter months.
In 1925, the land that now comprises the Snow Lake Mine property was initially staked. These claims were held by the original prospector until 1938 when they were vended into a newly incorporated company named Nor-Acme Gold Mines Limited (“Nor-Acme Gold”). In 1941, Nor-Acme Gold was able to option the claims to the Howe Sound Exploration Company Ltd. (“Howe Sound”) in exchange for a mining royalty. Over the next two years a large, low-grade gold deposit was delineated and, after a period of inactivity during the war, construction of the mine infrastructure began in August 1945.
In 1949, the mine was opened as the Nor-Acme mine and, from 1949 to 1958, produced approximately 5,394,000 tons at an average grade of 0.142 oz/ton for a total of 763,000 feed ounces of gold. The mine closed in 1958.
TVX Gold Inc. (“TVX”) and High River formed a joint venture on a 50:50 basis in 1994 and in November 1995 the mine was reopened as the New Britannia Mine. Between 1995 and January, 2005, when the mine was placed on care and maintenance, a total of 6,480,266 tons at an average grade of 0.132 oz/ton for a total of 858,075 feed ounces of gold were produced.
The last mineral resource estimate at the New Britannia mine was conducted as of December 31, 2004. Although not the subject of a NI 43-101 Technical Report, these resources were reported by both Kinross and High River in their 2004 and 2005 Annual Reports. In its 2005 Annual Report, High River stated the following “The New Britannia Mine is on care and maintenance as of January, 2005. No diluted mineral reserves were estimated for December 31, 2005 because the mineral resources were unable to be translated into an economic mine plan.”
In 1995 and 1996 the 3 Zone was mined as feed for the New Britannia mill and during this period, the 3 Zone produced 241,574 tons at a grade of 0.126 oz/ton gold for a total of 30,335 feed ounces. Production ceased at the 3 Zone in May, 1996 and no development or further exploration was conducted below the last mining level (450 level).
After 1996, the 3 Zone was allowed to flood and during 1998 and 1999 the 3 Zone adit was sealed and reclamation was conducted intermittently on the surrounding area until 2004 when it was completed.
From 1995 to 1997, various exploration programs of line cutting, ground geophysical surveys, and diamond drilling programs were conducted on other showings on ML-323. The majority of the exploration funding during this period was devoted to exploring the extent of the Birch zone located just to the northwest of the New Britannia tailings pond.
In early 1996, a small bulk sample was extracted from the upper portions of the Birch zone using open pit mining methods. The 1996 production from the Birch zone pit amounted to 31,353 tons grading 0.104 oz/ton gold for a total of 3,282 feed ounces.
All surface exploration programs covering mineral lease ML-323 were curtailed in 1998 and even with the partial recovery of metal prices in 2003 and 2004 exploration was never recommenced on ML-323 prior to the closure of New Britannia in early 2005.
Prior to the Company’s acquisition of the Snow Lake Mine property, a review was conducted on both the main mine and 3 zone mineral resources. Following the acquisition of the property, Alexis engaged Golder to review the estimated mineral resources presented in technical reports of October 2006 and May 2009 as well as the mine designs put forward by DMC Mining Services on the Main Mine. The combination of the estimated mineral resources in the Main Mine and 3 Zone provided the basis for which a NI 43-101 Technical Report was to be undertaken in 2010.