TORONTO (miningweekly.com) – Greenland-focused explorer North American Nickel (NAN) is in negotiations with a subsidiary of Swedish Iron producer LKAB Minerals to acquire the strategically important Seqi port, on the south-west coast of Greenland, that would give it a strategic geographic advantage in the emerging mining region.

“It provides us with a port so that, if we find enough mineral minerals in the ground that would warrant an operation, we have already obtained a port reasonably,” NAN COO Neil Richardson told Mining Weekly Online on Wednesday.

As NAN worked towards building a resource model at its flagship Maniitsoq nickel/copper/cobalt/platinum group metals project, in south-west Greenland, the port deal could place the company in a better position to negotiate additional land acquisitions in the area to leverage important synergies related to controlling such significant infrastructure in the region.

There were several other potential projects located along the west coast of Greenland that could one day make use of the port to export ores and concentrates. Other junior explorers were also active in the region such as Greenland Resources, Greenland Minerals & Energy and Hudson Resources.

“The acquisition would allow the company to eventually relocate the operations base closer to the port. “The starting point for all our infrastructure is down in that direction,” Richardson highlighted.

The Seqi port was favourably located in the Niaquungunaq (Greenlandic) or Fiskefjord (Danish) fjord, near NAN’s southern property boundary. It was built by LKAB Minerals, a subsidiary of Minelco specifically to transport olivine – an olive-green, grey-green, or brown mineral occurring widely in basalt, peridotite and other basic igneous rocks – from their Seqinnersuusaaq or ‘Seqi’ mine.

The port could dock and load Panamax vessels up to 55 000 deadweight tonnes in size and was accessible year round owing to limited sea ice cover.

“The successful completion of this transaction would provide the company with the flexibility of a secure operational hub,” Richardson said, noting that the company was evaluating the potential direct cost benefits, a potential reduction in project time, cash-flow management and the risk surrounding the deep water all-year access for any future economic development of nickel sulphide deposits at the Maniitsoq project.

Richardson quickly dispelled the myth that doing business in Greenland would cost much more than other operations currently active in Canada’s far north, such as Glencore’s Raglan mine and Vale’s Voisey’s Bay mine. “While the expense is certainly higher, it is only a little premium to the costs of certain existing Northern Canadian operations,” he noted.

The nearest nickel processing facility was 2 000 km across the Western North Atlantic, at Vale’s Long Harbour processing plant (LHPP), in Newfoundland, which was designed to process concentrate into finished nickel and associated copper and cobalt products.

PROSPECTING CONTINUES
NAN had earlier this year awarded drill and camp contracts for the 2015 exploration season, scheduled to start this month. George Downing Estate Drilling of Hawkesbury, Ontario, had been awarded the diamond drilling contract and Xploration Services Greenland, of Nuuk, Greenland, had been awarded the logistics/camp contract.

The 2015 exploration campaign would focus on the Imiak Hill Complex and a new zone of mineralisation at P-053, where three highly conductive off-hole borehole electromagnetic anomalies were detected. Both areas would be followed-up with additional diamond drilling this year.

There was plenty of exploration upside to the Maniitsoq project. The property spanned over an area of 75 km by 15 km in the prospective Greenland Norite belt, hosting many base metals prospects and multiple exploration targets.

Only 25% of property had, thus far, been covered by helicopter-borne electromagnetic geophysical surveys and a large exploration programme was planned for this year that would see the company match all previous helicopter-borne surveying in a single season.

He said the company aimed to publish a maiden resource for the project within the next two to three years, in conjunction with a forecast rebound in the nickel price, which would spur investor interest in new development projects.

Richardson said the company was focused on finding a resource target at Maniitsoq of about ten-million tonnes, grading 2% to 2.5% nickel, including credit by-products, before it would consider taking the project to the next phase.

EXPLORATION REWARDED
The Ministry of Mineral Resources in March awarded NAN this year’s Prospector and Developer of the Year Award from the Greenland government for its active contribution in the country over the last four years since its licence was granted on August 15, 2011.

The licence area, the Maniitsoq Norite belt, had historically been a target for earlier investigations (1962 to 2000). NAN flew 6 718 line km of helicopter-borne SkyTEM/VTEM surveys between 2011 and 2013 covering about 891 km². The surveys focused mainly on the 75 km by 15 km of the Norite belt.

In the 2012 drill programme, nine holes were drilled for 1 551 m in three areas (Spotty Hill, Imiak Hill, Fossilik II). In the 2013 drill programme, NAN completed a further 25 holes totalling 4 266 m, where it encountered significant sulphides intersections at Imiak Hill, Mikissoq (previously Imiak North), Fossilik and additional disseminated mineralisation was intersected at Spotty Hill.

During its 2014 drill programme, the company completed 8 773 m of drilling over 39 diamond drill holes at the Imiak Hill Complex and 22 regional exploration targets of 3 725 m were drilled, focusing on 14 geophysical targets throughout the Maniitsoq property.

“The Greenland exploration award was a validation of our exploration work in upgrading the quality of information from historic data to current and more compliant geological evidence,” Richardson pointed out.

He added that Greenland was a politically stable and pro-mining environment with clear mining regulations in place. The company was currently busy with its ongoing community engagement programme, keeping residents abreast of developments.

Global warming was thawing Greenland’s Arctic sea lanes and global industry was eyeing minerals under this barren island a quarter the size of the US, with 57 000 residents. But locals were wrestling with the implications of taking advantage of opportunities for rich rewards at the risk of harming a pristine environment and a traditional society that was trying to make its own way in the world after centuries of European rule.