THE COURT FIGHT OVER, EXPLORATION SET TO RESUME ON MARY MARCH PROPERTY

There must have been times during the past dozen years when some of the principals involved in the fight over the minerals rights to the Mary March property in central Newfoundland wondered if the land was cursed because of what had happened to its namesake. Demasduit, one of the last of the Beothucks, was captured by white settlers on frozen Red Indian Lake in March 1819. She watched as the settlers shot and killed her husband. Mary March, as the settlers called her, was sent to Twillingate and then to St. John’s where the Governor ordered her returned to her people. However, that never happened and the young woman died of tuberculosis within two years of being captured. Within a decade likely all of the Beothuk people had died or been killed. Nearly 200 years later, a M’igmaw Indian by the name of Mattie Mitchell discovered near Red Indian Lake what turned out to be one of the highest grade base metals deposits in the world. The town that grew up around the mine was named Buchans, in honour of the British navy man who tried to reunite Demasduit with her people, Capt. David Buchan. The Mary March property, which was identified in the late 1990s as having significant mineral potential, is just 18 kilometers from the former Buchans mine. Its history is also contentious. Shortly after a couple of high grade discovery holes were drilled, a fight broke out between prominent Newfoundland prospector and co-discoverer of the Voisey’s Bay nickel deposit, Al Chislett, and Canstar Resources, a junior mining company that had picked up the rights to 50 per cent of the property from one of the original property holders, Phelps Dodge. After more than a decade of litigation, including several stops in the courts, the ownership was finally settled late last year, allowing Canstar and the other 50 per cent owner, Xstrata Canada Corporation, to finally resume exploration. Canstar, under the leadership of chairman Harry Hodge, is anxious to get started.

The only holdup is Xstrata, which must decide with the next few weeks whether it will share the exploration costs to maintain it’s 50 per cent interest, or sit it out and let its ownership position become diluted. Xstrata’s decision may be complicated by the fact the company is the object of a $36 billion takeover bid by international commodities trader Glencore. Representatives of Canstar and Xstrata met late last month to discuss Canstar’s proposed budget and exploration plans for the property. “The meeting went well,” said Barry Greene, Canstar’s new exploration manager, who was hired about a month after the legal wrangling finally ended. “It was basically a management committee meeting.” Greene said when Canstar signed the initial deal with Phelps Dodge to acquire a 50 per cent interest in the property, it included a letter of intent to spend $1.5 million exploring Mary March. Because of the prolonged court fight, exploration was effectively frozen, so it took Canstar some time to complete the committed amount of expenditures. “Once Canstar notified them (Xstrata) that we had spent the remainder of the money, then a formal joint venture had to be formed,” Greene said. “This meeting that we held August 27 was the first formal joint venture meeting between Canstar and Xstrata.” There was a lot of catching up to do. The initial deal on Mary March was done between Phelps Dodge and Noranda. Both companies got taken over by bigger companies, Phelps Dodge by Freeport McMoran, which sold its interest in the property to Canstar, and Noranda by Xstrata.

“So there was a whole bunch of new parties involved and the property was in litigation for so long that nobody was really up to speed on this property,” Greene admitted. “It was in the courts for 11 years, so it took a long time for everybody to wrap their heads around all this. Finally all that got done and the J-V documents got signed up. This was our first meeting, so work programs and budgets were proposed and now decisions will be made in short order on that.” Greene said the property has a kind of mystique resulting from being fought over for so long. People think it must be highly prospective for the parties to have spent so much money and time trying to acquire it. “Of course we’re pretty hopeful that there is something substantial there, but obviously we’ve got to get drilling on it to determine what is there,” Greene said. The details of a fall drill program will be decided in the next couple of weeks. “Now that the JV is in place there are strict timelines that have to be followed, it can’t be dragged out indefinitely,” Greene explained. “It will be this fall and our expectation is that we will have one good round of drilling in before Christmas and based on the results of that, please God, round two will be in January. I fully expect there will be (additional drilling) because this property is so prospective. There are a quite a number of areas to look even beyond the area that Phelps Dodge made the discovery.

There’s a big mineralized system there and there’s quite a lot of room where no drilling has taken place. So I’m pretty sure there’s going to be additional drilling even beyond this first round.” Greene said he doesn’t know whether the takeover bid by GlenCorp will slow Xstrata’s decision making on the project. In any case, Canstar is ready to roll with money in the kitty from a $1 million financing back in January. Greene said he has spent the past year getting up to speed on the geology of Mary March. The former long-time vice president of Celtic Minerals has a lot of familiarity with the geology of central Newfoundland, having lived in the region for years and overseen exploration at a number of properties. “I’ve spent a lot of time down in that country, all around Red Indian Lake really, from Buchans to the south side of the lake, Tulk’s Belt and all that country I’ve worked on and off for the last 24 years,” Greene acknowledged. His first geology job was in the area. Greene was hired out of university by BP Resources Canada and assigned to the company’s Buchans office where he worked with Geoff Thurlow, one of the acknowledged experts on Buchans type geology. Greene lives less than an hour’s drive from Mary March.

“The property is so well located,” he argued. “The Buchans highway passes right through the property and all the drilling will be taking place within 500 metres of the road. You couldn’t get any better access. This is the most accessible property I’ve ever been involved with… You can pretty well drive to the drill.” That means helicopters won’t be needed to transport workers and equipment to the drill sites making for cheaper exploration costs. And if Canstar is lucky enough to find a commercial deposit, development costs will be lower too, with power lines already running through the area. Greene’s big hope, of course, is that Mary March is another Buchans, which yielded 16.2 million tonnes averaging 14.5 per cent zinc, 7.56 per cent lead, 1.33 per cent copper, 126 grams per tonne silver and 1.37 grams per tonne gold over a 56 year mine life. The discovery holes on Mary March back in 1999-2000 had high grade base and precious metals. “There was actually a couple of high grade intersections by Phelps Dodge,” Greene said. “The better hole in terms of thickness was hole number seven. It hit over nine metres of massive sulphides, Buchans type numbers.” And while there have been other discoveries in the region, Greene pointed out, nobody has found another Buchans yet. The Mary March discovery holes have a lot of Buchans type signatures, Greene added, which is one of the reasons there was such an extensive battle for the mineral rights. “This is probably the best shot at finding another one,” Greene said. He agreed that Canstar’s chairman, Harry Hodge, now in his late 70s, deserves full marks for sticking with the project, despite the decade of legal costs. “He’s pretty convinced that something is going to come out of this,” said Greene, adding that as a geologist, who knows that most exploration plays never lead to a mine, he is optimistic too.