LYNN LAKE NICKEL MINE

INTRODUCTION

The Lynn Lake nickel mine was operated by Sherritt-Gordon from 1953 to 1976. During its 23 years of operation, the mine produced over 20 million tonnes of nickel-copper ore at a grade of 1.02% Ni and 0.54% Cu, making the Lynn Lake mine the third largest nickel producer in North America after only the Sudbury and Thompson mining camps. When the mine was closed in 1976, it was during a period of stagnant growth in the nickel market. The mine was not closed because the ore was mined out. An estimate of unmined mineralization includes 5.76 million tons of 0.80% nickel, and 0.32% copper, including a higher grade portion of 2.32 million tons grading 0.92% nickel, and 0.34% copper, within the ‘N’ and ‘O’ orebodies occurring between depths of 2,000 and 4,000 feet. The Company is uniquely positioned to employ new exploration technologies in an underexplored nickel mine setting.

HISTORY OF LYNN LAKE

The Lynn Lake orebody was discovered in 1941 by Austin McVeigh, who noted oxidization of mafic rocks while prospecting for gold in northern Manitoba. Initial samples yielded results of 1.5% nickel and 1% copper. McVeigh further established the presence of three anomalies in the area over the following years. Encouraged by these results, Sherritt Gordon commenced a drilling program over what was to become known as the Lynn Lake gabbro in 1945; the third hole of this program intersected 84 feet (25.6m) of ore grade nickel mineralization, and marked the beginning of the Lynn Lake nickel deposit.

With a new discovery in hand, Sherritt Gordon decided to literally move it’s operations from Sherridon, located over 250 km south of the discovery, to its newer project by freighting over 18,000 tons of material, including 50 houses, that would soon comprise the core of the town of Lynn Lake, establishing its sobriquet as “the town that moved.”

Sinking of the ‘A’ shaft began in 1947 and production from the ‘A’ mine started in 1953. In addition to the A mine, Sherritt developed and operated the Farley mine and the EL mine, before halting production in 1976. At its peak, Lynn Lake boasted a population of 3,500.

THE LYNN LAKE MINE

The Lynn Lake nickel mine focused its production efforts on three main operations known as the ‘A’ mine, the Farley mine, and the EL mine. These deposits occur within two adjacent mafic-ultramafic intrusive plugs situated in the Lynn Lake greenstone belt. The ore occurs in structurally controlled pipes of ultramafic and mafic cumulate rocks.

The ‘A’ mine was mined from 1953 to 1969, while high grade EL deposit came into production in 1954, and was mined until 1963. The Farley mine operated from 1961 until 1976, when nickel operations ceased in Lynn Lake.

Throughout their tenure, Sherritt Gordon delineated 11 discrete orebodies in the mine environment, not all of which were extracted.

EXPLORATION POTENTIAL

Underground development and exploration was accessed through the ‘A’, ‘EL’ and Farley shafts, which were all between surface and the 3,000 foot level. The ‘N’ and ‘O’ orebodies remain largely intact, with little development work over these areas. Moreover, underground exploration in the mine was primarily focused on—but not limited to—increasing existing reserves, leaving the mine largely open at depth.

Genetic models for the Lynn Lake orebodies invoke structural remobilization of ultramafic cumulate rocks hosting nickel-copper-rich sulphide from depth, forming pipe-like orebodies. It is expected that other such pipe-like bodies occur below the 3,000 foot level, where very little exploration drilling has been conducted. For instance, longitudinal sections of the ‘A’ mine reveal an abrupt halt to mineralization at the 2,000 foot level, with no satisfactory reason why similar orebodies would not continue to occur at depth. As reference, mining in Sudbury has reached below the 8,000 foot level, and deposits have been discovered in excess of this depth.

Historical drilling in the existing mine workings is also being assessed. Previous exploration in the mine focused primarily on developed levels, leaving large gaps in drilling, particularly below the ‘A’ mine orebodies; these areas represent excellent exploration targets above the 3,000 Level. The ‘N’ and ‘O’ orebodies contain an estimated 5.76 million tons of 0.80% nickel, and 0.32% copper, including a higher grade portion of 2.32 million tons grading 0.92% nickel, and 0.34% copper. Mineralization has also been found in the near surface environment: the ‘M’ deposit is a wholly undeveloped nickel deposit at surface. The information on this deposit is incomplete with only 17 drillholes intersecting it, including 7.01m of 0.6% nickel and 0.32% copper; more thorough exploration of this deposit could increase this deposit to an economic status and its occurrence at surface may facilitate such a development in a potential open-pit scenario.

Technologically, mineral exploration has improved substantially in the 30 years since operations at the Lynn Lake mine halted. Technology such as borehole electromagnetic surveys was not available during production at Lynn Lake. Today, such technologies are not only commonplace in most exploration, but are common in any modern mine environment in increasing and following existing ore reserves with high rates of success. Borehole electromagnetic surveys can be used to explore for new orebodies at depth, where the Lynn Lake gabbro has not been sufficiently explored.

Other technologies available today that were not available during the operation of the Lynn Lake mine include 3-dimensional geographic information systems (GIS) and mine modeling software which give us the ability to see, the areas in the mine with the maximum exploration potential.