Nalunaq gold mine is a past-producing underground mine located in South Greenland. Having produced approximately 350 thousand ounces of gold between 2004 and 2009 it has demonstrated a low-cost production potential from past operations.

Overview

The mine opened in 2004 following the discovery of visible gold in an outcropping quartz vein 12 years earlier. The mine operated until 2013, when it closed as a result of falling gold prices, financial difficulties and a lack of exploration. This led to the site being partially decommissioned in 2014 and the widespread view that the deposit was exhausted. AEX challenged that view and intends to capitalise on proven mining and processing methods in its plans to bring the historical mine back into production. The asset has significant pre-existing infrastructure and development left in place by the previous operators, which are expected to limit the costs and time associated with the development of the asset.

The mine lies within Exploitation licence 2003/05 which is 100% owned by AEX Gold Inc. through its Greenlandic subsidiary Nalunaq A/S and is valid until April 2033.

Nalunaq hosts 2020 Inferred Resources of 251 koz in 422,770 tonnes at a grade of 18.5 g/t Au4. In addition, AEX has identified a near-mine Exploration Target of between 2.5 and 10 million tonnes at between 2.4 and 6.0 grams of gold per tonne, or between 200 thousand ounces and 2.0 million ounces of gold4. Drilling since 2017 has increased the known extent of the gold mineralised structure at Nalunaq and AEX believes there is potential for additional resources that are not represented in the Inferred Mineral Resource or Exploration Target detailed above.


Zone
ClassificationTonnes (t)Grade (g/t Au)Contained Gold (oz)
Remaining StopesInferred26,69020.817,890
Mine AreaInferred396,08018.3233,080
Total Inferred422,77018.5250,970
Notes:
  1. Remaining Stopes reported at a cut off of 6.0g/t Au
  2. Mine Area reported at a cut-off grade of 6.0g/t Au
  3. Diluted to 1.2m true thickness at 0.0g/t Au
  4. Gold price of US$1,500
  5. Total refining, transportation and royalties costs of US$57
  6. Total operating costs of US$254/t.
  7. All figures are rounded to reflect the relative accuracy of the estimate
  8. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability
  9. 100% of the Mineral Resource is attributable to Nalunaq A/S

Location

20 07 22 Website Licence Map Nalunaq & Tartoq

The Nalunaq gold mine is located 30 km northeast of Nanortalik, Greenland’s 10th largest town with a population of approximately 1,350. The site benefits from access to ice-free deep-water fjords and is served by Narsarsuaq international airport 100 km to the north, with connections to Copenhagen and Reykjavik.

History

Gold was first reported in the area in 1986 when it was discovered in alluvial settings. However, it is thought that the Vikings, who once had settlements throughout South Greenland, were also aware of gold here. Alluvial gold occurrences led to exploration being focused in the Kirkspirdalen Valley within an exploration licence granted to NunaOil A/S, eventually leading to the discovery of a quartz-gold vein at Nalunaq in 1992. Further exploration confirmed the presence of a coherent mineralised quartz vein hosting high grade, sometimes bonanza grade, gold. This became known as the Main Vein.

Following surface exploration and the development of exploration drives and raises on the mineralised structure, Crew Gold commenced mining at Nalunaq in 2004 using longhole open stoping methods. They did not carry out any mineral processing on site but instead shipped broken ore to existing processing plants, firstly in Spain and then in Newfoundland. Between these two plants, 352,307 oz of gold (10,957 kg) were produced from 654,755 t of milled ore in the period from 2004 to 2009 when the mine was sold, indicating a recovered gold grade of 16.7 g/t.

Following their acquisition of the project, Angel Mining constructed an underground direct-leach processing plant with the intention that only gold doré would leave the mine (tailings and waste rock were stored underground in mined-out areas). The target production was 24,000 oz (746 kg) of gold per year, but this was never achieved. Angel Mining produced a total of 14,823 oz (461 kg) of gold between 2011 and 2013, largely from remnant material, stockpiles and minor amounts of new development. Financial difficulties forced the cessation of operations in 2013 and implementation of the mine closure plan which was completed in 2014. Nalunaq A/S, a wholly owned subsidiary of AEX Gold Inc. acquired the project in 2015 and have carried out exploration each year since.

Surface diamond drilling to date totals 38,370 m in 214 drillholes, with an additional 5,572 m in 237 underground drillholes. Continuous chip sampling was undertaken during underground exploration and development; there are 2,041 samples taken from exploration adits and raises, and 5,755 samples taken during operation. In 1999, channel sampling was undertaken on the exposed Main Vein at 1 m intervals between elevations of 468 to 775 m. AEX carried out chip sampling of the Main Vein on the North and West faces of Nalunaq mountain between 2015 – 2017, confirming a western strike extension of more than 1 km.

Geology and Mineralisation

Geology

The Nalunaq gold mine lies within the ‘Psammite Zone’ in South Greenland that hosts the so called Nanortalik Gold Belt, defined by numerous gold occurrences over more than 150 km. This zone is part of the Ketilidian Mobile Belt which evolved between 1,850 Ma to 1,725 Ma during subduction of an oceanic plate under the southern margin of the Archaean North Atlantic Craton.

The geology of Nalunaq Mountain is dominated by a package of fine- to medium-grained tholeiitic basalt flows and locally coarser, sub-concordant doleritic sills, metamorphosed to amphibolite facies. This package is part of the Nanortalik Nappe and has been thrust over metasediments to the north, and later intruded by granites and aplite dykes.

Mineralisation

Visible gold in Main Vein from drillcore AEX1804.

High-grade gold mineralisation is hosted predominantly in a single quartz vein that averages 0.7 m wide – the ‘Main Vein’ – which is within a 0.05 – 2 m wide shear structure that can be traced for several km along strike, with an average dip of 38 degrees to the southeast. Mineralisation is a classic example of the ‘orogenic type’ – gold distribution within the vein is highly erratic, gold is coarse, and grades can be extreme (up to 5,240 g/t over 0.8 m underground). These factors make for challenging estimation of Resources and Reserves, but are highly beneficial for processing, and the high-grade nature means that fewer tonnes of rock need to be mined, with economic and environmental benefits.

Gold mostly occurs in the native form with particles ranging from a few microns up to 8 mm in size. Coarse visible gold is common in high-grade areas and such material may contain the majority of gold in the coarse (>100 μm) fraction. Locally, gold is found in maldonite (a gold-bismuth alloy) and may also be associated with arsenopyrite and lollingite.

Previous operators defined three main areas of mineralisation, namely the South, Target and Mountain Blocks. Small-scale post-mineralisation faulting has disrupted the MV. The largest fault is the Pegmatite Fault which separates the South and Target Blocks and has a vertical offset of around 80 m. Previous operators also recognised the Clay and Your Faults that cause offsets of a few metres in the Target Block. AEX has interpreted several new faults at the peripheries of the mining blocks that may have resulted in the vein being lost during previous mining.

Nalunaq Mineralisation Figure 2

 “Drill for structure, drift for grade”

The high variability of gold grades in high-nugget deposits such as Nalunaq means accurate estimation of grade from drilling data alone is challenging. Historic operators of the Nalunaq project defined Mineral Resources based predominantly on underground channel sampling from development drives, and drilling was only used as a guide to confirm the presence and thickness of Main Vein. A comparison of all past surface drilling in mined areas with block model grades (estimated from underground channel samples which reconcile with production) suggests that surface drilling typically under-calls gold grade. This phenomenon is not unique to Nalunaq, and AEX emphasises that whilst drilling is useful for identifying the mineralised structure, it is not a reliable indicator of grade. Ultimately, underground exploration development will be required in order to estimate grade and Mineral Resources above the Inferred category.

Drilling Vs Block Graph

Main vein intercepts in surface drilling were compared to the nearest block in the official 2016 SRK block model1 (both datasets diluted to 1.5 m mining width) in mined areas. Grades are plotted on the above scatter plot. Points below the trend line show that drilling has historically under-called mined grade. Red dashed lines show 5 g/t Au cut-off (the mining lower cut-off). Note log scale.

Mining and Processing

Historic production at Nalunaq Gold Mine was achieved via longhole open stoping methods. Strike drives spaced every 10 m vertically were developed along the Main Vein. Stopes were designed at 15 m along strike separated by 1.5 m wide pillars to provide overall hanging wall stability. A conventional raise was driven between the strike drives to confirm grade continuity along dip and to provide a positive opening in which to slash the production longholes. Drilling was completed up dip with breakthroughs checked in the top strike drive to ensure accuracy. This method has been validated by AEX’s technical advisors.

Schematic diagram of the long hole stoping method

Future development will leverage the existing 6 km of ramp system and 14 km of underground drifts to access the Inferred Resource. Significant and extensive metallurgical testwork exists on Nalunaq ore dating back to 1998. The ore is highly amenable to gravity recovery (85% GRG) and gravity tailings leaching with Au recoveries above 95%.

Mineral Resource Estimate

SRK ES produced an updated Mineral Resource estimate for the Nalunaq project in 20204 (Table 1). The compiled Mineral Resource statement is split between Inferred Mineral Resources in the area surrounding the current mine layout (the ‘Mine Area’), and Inferred Mineral Resources for in-situ remnant material within the mine that could practically and safely be mined as part of a larger exploration or mining operation.

Table 1: Nalunaq 2020 Diluted Mineral Resource

ZoneClassificationTonnes (t)Grade (g/t Au)Contained Gold (oz)
Remaining StopesInferred26,69020.817,890
Mine AreaInferred396,08018.3233,080
Total Inferred422,77018.5250,970
Notes:
  1. Remaining Stopes reported at a cut off of 6.0g/t Au
  2. Mine Area reported at a cut-off grade of 6.0g/t Au
  3. Diluted to 1.2m true thickness at 0.0g/t Au
  4. Gold price of US$1,500
  5. Total refining, transportation and royalties costs of US$57
  6. Total operating costs of US$254/t.
  7. All figures are rounded to reflect the relative accuracy of the estimate
  8. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability
  9. 100% of the Mineral Resource is attributable to Nalunaq A/S

Due to the high variability of gold grades, underground development on the vein will be required in order to estimate Resources and Reserves above the Inferred category. This method of establishing Reserves is historically proven at Nalunaq and similar deposits globally, and leads to the mantra ‘Drill for structure, Drift for grade’.

Exploration Potential

Nalunaq is an advanced exploration project with a significant near mine Exploration Target. Continuity of the mineralised structure has been confirmed up-dip and along strike by surface sampling on the north, west and southwest faces of the mountain, with the latter two areas producing grades of 32 g/t and 23 g/t in grab samples from AEX’s 2015 and 2016 fieldwork respectively1. This has outlined an Exploration Target of approximately 1,000 m along strike and 800 m up-dip from the former mine. Furthermore, historic drilling and drilling by AEX between 2017 – 2019 indicates down-dip continuity below the South Block, and AEX believes there is potential for additional resources that are not represented in the Inferred Mineral Resource or Exploration Target detailed above. Significantly, the Main Vein is open at depth and towards the northeast, where it remains untested by drilling. The host package of metavolcanic rocks extends in a belt to the northeast for more than 10 km. This area is covered by AEX’s Vagar licence and remains untested by drilling.

1 An Independent Technical Report on the Nalunaq Gold Project, South Greenland; SRK Exploration Services Ltd., 2016

2 Kvæner (2002). Nalunaq Gold Project Feasibility Study. Prepared for Nalunaq I/S. Internal report, prepared by KVAERNER Engineering & Construction UK Ltd for Nalunaq I/S, 743 pp,​

3April 2012 Audit of Nalunaq Gold Plant by SGS Minerals Services UK Ltd.

A Competent Person’s Report on the Assets of AEX Gold, South Greenland; SRK Exploration Services Ltd., 2020