Slave Lake Zinc: It’s Role In Revitalizing Development In The Northwest Territories

The Northwest Territories was built and supported by mining. It all began when a prospector named Johnny Baker staked mineral claims on a property 5 kilometres north of what today is the city of Yellowknife, and discovered gold on the property in 1935. As a result of this discovery, Consolidated Mining and Smelting Company of Canada, better known today as Cominco, staked a property just south of Yellowknife. 

In 1935 – 1936 Consolidated Mining discovered many gold-bearing veins, and this formed the basis for the Con Mine. The mine entered into production in 1938 as the first gold mine in the Northwest Territories. It produced over 5 million ounces of gold until ceasing operations in 2003 and after reaching a depth of 6,000 feet. 

Due to mining, many workers arrived in the north, and settled in the area. This resulted in the formation of the town of Yellowknife, which became the hub that serviced the region’s mining and exploration activity. 

In 1944, the discovery of a huge gold-bearing shear zone at the Baker Creek Valley, 5 kilometres north of Yellowknife, led to the development of the Giant Mine by Falconbridge subsidiary Giant Yellowknife Mines. This mine entered into production in 1948 and produced over 7 million ounces of gold over its lifetime until being shut down in 2004. 

Five decades of mining created serious environmental threats as a result of storing 271,000 tonnes of highly toxic arsenic trioxide dust in 15 underground chambers. These methods of storing residual debris from mining operations predated legislation that is now in place to prevent such issues. 

The Government and the property’s current owner, mining giant Newmont, have been conducting remediation on the mine site and surrounding area in an effort to prevent an environmental catastrophe. The environmental impacts also drew the ire of local First Nations groups – and this has shaped subsequent relationships between mining companies and the government.

The Discovery of Diamonds in the North

Fortunately for NWT, diamonds were discovered in the Lac de Gras region, 500 kilometres west of Yellowknife, which led to the creation of the iconic Diavik and Ekati diamond mines. The Canadian diamond mining industry has grown significantly from its beginnings in 1992, to become the world’s 3rd largest rough diamond producer. In 2019, Canadian diamond production accounted for 13.5% by volume and 12.5% by value of worldwide production, with Canadian diamond exports valued at $2.19 billion. 

The prolific Diavik and Ekati mines account for the vast majority of Canadian diamond production, with both having matured and transitioned from largely depleted open pits to underground mining. Rio Tinto, the operator of the Diavik Mine, is planning to close the mine in 2025, and Ekati is searching for new kimberlites in an effort to avoid closing their mine. 

Mine closures could have a dire impact on the NWT economy in terms of job losses and social disruptions, as the region’s economic growth over the past 30 years was largely driven in support of the diamond industry. The royalties from the mines helped improve living conditions in the northern first nations communities, and also enabled improvements to the region’s infrastructure. 

The current fundamentals for the diamond industry have diminished, as younger generations do not care as much for diamonds as their forebears. As well, the influx of highly advanced synthetic diamonds are difficult to distinguish from real diamonds – and they have flooded the market and are much cheaper in price.

The Critical Minerals Opportunity

As foreboding as the situation appears for the diamond industry and the NWT economy, there may be a light at the end of the tunnel; the global demand for lithium, zinc, copper, cobalt and other ”battery metals” that are needed for manufacturing of electric vehicles (EVs), the batteries to power them, renewable energy, and other industries that are emerging to help fight climate change. These necessary minerals are in short supply.

Geopolitical realities, such as the Russian invasion of Ukraine, China’s increasing belligerence and saber rattling, and supply chain disruptions caused by the global pandemic have prompted western nations to look closer to home for their strategically important raw materials. 

The European Union and many countries are establishing critical materials lists that promote local or strategically aligned sources of important minerals, such as lithium, zinc, copper, cobalt and other minerals considered crucial to national security. This has resulted in a rush by exploration companies to find new domestic mineral deposits and mines. This bodes well for NWT, a vast expanse, with a very likely abundance of much needed metals and minerals. There have been a number of recent developments that suggest that this has begun. 

Two Major Developments Revitalizing the Base Metals Sector with Zinc Projects

Slave Lake Zinc Corp. (CSE: SLZ) is focused on developing its O’Connor Lake lead/zinc project, located in the South Slave region of the Northwest Territories (NWT), approximately 185 kilometres southeast of Yellowknife and 150 kilometres east of Hay River. The massive 76.25 square kilometre property includes the historic O’Connor Lake zinc, lead, copper and precious mineral deposits, which were explored prior to 1952. 

The company’s management team has been involved in the O’Connor Lake project since 2018, and have developed strong working relationships with the region’s First Nations communities. As such, they are seen as a trusted partner on the path towards creating economic growth in the region. While this can require plenty of patience, it ensures that exploration activities can accelerate. Exploration companies that haven’t solidified their relationships with local indigenous groups and stakeholders beforehand, often find obstructions in place and progress jeopardized.

With the blessing of all levels of government as well as the stake holders of the land, Slave Lake Zinc successfully negotiated a regional land settlement withdrawal agreement with the Federal Government of Canada. This enabled land that was previously protected from development under agreements with the Northwest Territory Metis Nation and other Indigenous groups representing the stake holders of the South Slave region, to revert back to the Crown. The process took over two years to complete, but the company was then able to stake additional property claims around the O’Connor Lake property, which expanded their holdings to approximately 76.25 square kilometres.

Land withdrawals originated in the 1990’s, when the Government of Canada commenced land claim negotiations with Indigenous communities and governments. They were used as a tool to protect land from development. No new mining or new oil and gas rights can be issued while a land withdrawal is in place. To free up the land, Slave Lake successfully worked with the Northwest Territory Metis Nation and other Indigenous groups representing the stake holders of the South Slave region to identify properties of potential interest. 

Successfully negotiating a regional land settlement withdrawal agreement with the Canadian Federal Government has given Slave Lake and its peer Osisko Metals (TSXV: OM) a competitive advantage over other companies that may have an interest in acquiring potential exploration properties in the area. Slave Lake was able to stake a large land position, as illustrated by the map above.

The mineral tenure map meanwhile shows staked claims and leases in the region. The thatched areas would require a land reclamation agreement – and the darker thatched areas are Federal conservation lands not available for development. Should either Slave Lake or Osisko wish to stake more land, that process would now be much easier to complete.

The Pine Point Zinc Mine

Slave Lake will benefit from the activities of Osisko Metals (TSXV: OM), the only other company that has successfully negotiated the land withdrawal process. Osisko plans to reopen the past-producing Pine Point zinc mine, located 148 kilometres west of the O’Connor Lake property. Between 1964 and 1987, the mine produced 58 million tonnes of ore, with grades of 7% zinc and 4% lead. 

Previously one of Canada’s largest mines, rehabilitation of the Pine Point mine will help create a railhead infrastructure complementing the 18-megawatt Taltson hydroelectric plant that supplies low-cost power to regional communities, including Fort Resolution, which is 60 kilometres south of the O’Connor Lake property. The railhead will connect to the main railway line in the town of Hay River. This enables the shipping of concentrates and raw materials south to Edmonton, Alberta, where they continue onwards to market. 

To accelerate the re-opening plan, on February 22, 2023, Osisko announced that it is relinquishing its majority ownership in the Pine Point Project through a joint venture agreement with Appian Natural Resources Fund, in order to secure a $100 million investment in the property. The funding is expected to cover all costs, including final definition drilling and additional exploration drilling, feasibility, environmental assessment and permitting, including Indigenous engagements, to advance the project to a construction decision. 

Slave Lake’s Zinc’s O’Connor Lake Zinc Project

The underlying geology of the South Slave region is called the Taltson Magmatic Zone (TMZ). These types of magmatic zones can be found in different parts of the world and often host significant producing deposits of various essential minerals, including zinc. What makes the O’Connor Lake property compelling is that it hosts zinc-lead-silver mineralization contained in an extensive vein fault system of hydrothermal origin. 

Historical data suggests that the O’Connor Lake deposit and the underlying TMZ region are highly prospective for a number of critical minerals. But, it has been largely underexplored. Slave Lake Zinc will benefit from modern exploration methods and technologies in their efforts to build upon the historic work on the property.

Previous geophysical surveys completed by the company identified a continuous mineralized trend over 1,100 meters in length and extending 700 meters southeast from the headframe area. Early indications are that the entire O’Connor Lake property appears to cover hydrothermal mineralized zones. 

In 2022, a 900-line km airborne gradient magnetic and VLF electromagnetic survey of the property was completed. Initial interpretation results appear to correlate with earlier ground geophysical survey anomalies delineated around the Head Frame in 2019. This provides confidence that the remainder of the corridor surveyed has the potential to host similar mineralized structures.

The recent survey also revealed previously unknown structures that are present nearby and parallel to the main 1952 known mineralized zone. The new parallel structures are underwater and are now priority drill targets. Slave Lake Zinc is still continuing to interpret the latest survey data, which will be integrated into the property’s database. 

O’Connor Lake’s Historical Database

Slave Lake Zinc recently acquired a significant historical database of its O’Connor Lake project. This covers pre-1952 information on the property. The company’s technical team and geological consultants have been analyzing the historical data by applying a modern exploration interpretation, and merging it into Slave Lake’s own comprehensive database. The combined information will be used to formulate its 2023 exploration strategy, which will include detailed geophysical surveys, geologic mapping and sampling, prospecting, and the prioritizing of drill targets.

In a significant development, on February 14, 2023, Slave Lake announced that data analyzed from the recently acquired historical database revealed occurrences of coarse-grained pegmatites on the O’Connor Lake property. While the company was aware of the pegmatites from the work of Dr. Prusti and government geologists, management was not previously permitted to discuss this information without the historical data to support it.

The pegmatites occur primarily as dykes, but also occur as masses in complex multiple-phased intrusive granitic environments. No exploration has occurred on these pegmatites, but there is the potential to host lithium-bearing spodumene mineralization, the critical indicator mineral for lithium potential. 

The pegmatites suggest the host rocks in the O’Connor Lake area are similar to the granitic intrusive complex in the Hearne Channel-Beaulieu River area located on the northern side of Great Slave Lake. These are currently being aggressively explored by Li-FT Power Ltd. (CSE: LIFT). This revelation adds another element to Slave Lake and diversifies the company’s battery metals focus.

2023’s Prospecting and Development Program

Once the historical data is assimilated and correlated with the company’s database, Slave Lake Zinc will prepare for a major follow up prospecting and development program in 2023. The firm is to employ modern exploration techniques to follow up on the vein structures that were delineated prior to 1952, with only simplistic drilling, trench sampling, and underground methods. 

Due to its massive land position, Slave Lake Zinc will undertake a systematic approach to expanding and delineating the mineralized zones. Geophysical data supports the notion that there are many potentially interconnected mineralized vein systems, and that the O’Connor Lake property might be one massive deposit.

The Path to Economic Prosperity

The influx of recent exploration activity is creating some renewed confidence in the future of NWT’s economic growth. The reopening of the Pine Point Mine will create many jobs and help boost the local economy, while providing the NWT government much needed royalty revenues..

Slave Lake Zinc has a massive land position to explore. The sheer size of the property will require years of exploration activity, with the potential of hosting multiple deposits that could eventually support mining. The discovery of pegmatites could unlock the lithium potential of the Slave Lake region on both sides of the lake. 

New discoveries of lithium, zinc and other critical minerals could attract a wave of exploration companies seeking new deposits. This could position the region to become a potentially reliable source of the battery metals that the North American EV and battery industries are clamoring for. 

In the mining industry, success tends to breed success. As the old adage goes, the best place to explore for a new mine is near an existing mine. The potential demise of the NWT diamond industry is prompting the government to support exploration initiatives across a variety of metals, in order to develop a broader and diversified economy. 

All this activity, with some success, could go a long way to securing a sustainable economic future for the Northwest Territories and its inhabitants.

FULL DISCLOSURE: Slave Lake Zinc is a client of Canacom Group, the parent company of The Deep Dive. The author has been compensated to cover Slave Lake Zinc on The Deep Dive, with The Deep Dive having full editorial control. Not a recommendation to buy or sell. We may buy or sell securities in the company at any time. Always do additional research and consult a professional before purchasing a security.

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