November/December 2002 • Northern Exposure • Opal Miners Celebrate Native Deal • Golden Pearl Anxiety Fades, Questions Linger • News & Updates • In This Issue

In Canada's remote north, a small company has staked its fortunes on the promise of green.
By Morgan Beard · Editor-in-Chief

Pieces of the quartz-tourmaline vein are marked with a code designating where they were found; the locations are plotted on a map for further study.

It's late August in Canada's Yukon Territory, and the perpetual wind on Regal Ridge pushes the temperature down near the freezing mark. Ignoring the spectacular view, Bernard Gaboury is crouched in a shallow trench doing what he loves best: digging in the dirt.

"Here's one," he says, pulling out a small green crystal. And another. And another. Five minutes later, he's got a small pile of emerald rough sitting on a nearby rock.

The crystals don't look like much — they're cracked and weathered from uncounted millennia of freezing and thawing on the mountainside — but they may represent the next step in the evolution of commercial gem mining.

Traditionally the realm of the pick, the strong leg, and the lucky eye, gemstone exploration is slowly being infiltrated by computers and high-tech analytical techniques that promise to turn the gamble of gem mining into a science. Gaboury is the president of True North Inc., a small Canadian company that was founded on the premise that a small, nimble public company can make a profit mining colored gemstones. Most of the company's head honchos are geologists with a professional background in metal exploration and mining. While some of the same principles apply to gemstones, there are still a lot of unanswered questions.

The deposit is accessible only by helicopter — there are no roads in or out.

"What really poses a problem is there's been no systematic effort over time that would provide us with the basis [for predicting where emeralds will form]," says Andrew Smith, True North CEO. "Emeralds are here. Why are they here? We shrug our shoulders and start tearing the ridge apart."

It's a nice problem to have, he adds, because in metal exploration it's usually the opposite — lots of theories, but not a lot of product. Smith's background is in high-grade gold mining, and he sees many similarities to gemstones.

"In gold, there's the nugget effect," he explains. "You put the drill down in one place and get [a pocket of gold], and put it down three inches away and get nothing. Emerald mining is the nugget effect on wheels, and the solution is the same — bulk sampling is the way to go."

But bulk sampling, which involves processing ore from different parts of the deposit to see what it can produce, is the easy part. Pinpointing the best place to dig is a bit trickier.

That's where Gaboury comes in. In addition to overseeing the bulk sampling operation, he and some members of his team have been surveying the ridge, in the process taking soil samples and looking for loose emerald-bearing rock. Everything is carefully marked with a numerical code that tells exactly where it was found.

True North President Bernie Gadboury searches for emeralds as CEO Andy Smith looks on.

At the end of the mining season, the samples will be sent to the University of British Columbia for geochemical analysis. The analysis will reveal tiny traces of elements in the soil that will give True North a better picture of where to look for emeralds.

High levels of beryllium — which here means around 20 parts per million — indicate that there could be beryl in the soil. In order to make emerald, the beryl has to be infused with chromium, but geologically the two form in very different environments. So if a trace element analysis shows high levels of beryllium near high levels of chromium, that's a good place to start digging. Other "pathfinder" minerals commonly found near emerald are tungsten and copper, although their role in emerald formation isn't well understood.

From doing the bulk sampling, True North has learned that the emeralds generally occur in a quartz-tourmaline vein, which in turn is usually found in rock that's rich in jarosite. The loose emerald-bearing rocks found on the side of the ridge are generally pieces of the quartz vein that have weathered off, and those are valuable clues, too.

Whenever the survey team finds a loose rock with emerald, its position is marked with surveyors' tape. The coordinates of those rocks are plotted on a computerized map of the ridge, along with the geochemical data from the soil samples.

Back at the fishing lodge where mine visitors stay, Gaboury brings up the map on his laptop. "In this case," he says, pointing to a tightly-clustered group of green dots that represent the loose emerald-bearing rocks, "I was surprised to find that we had vein traces down the slope." Most of the veins they had discovered previously ran parallel to the top of the ridge, and so the loose pieces were spread out like a fan downslope from where the vein was exposed on the surface. In this case, however, the emeralds were found close together, suggesting that right above that grouping was a vein that ran perpendicular to the ridge.

"The proof of the pudding came in the excavation, and lo and behold, we found a vein there," says Gaboury. That vein was the Southwest Zone, the most productive area discovered to date and the focus of their current bulk sampling efforts. "It's nice when the magic works."

And there's plenty more work to be done. "There's a population down here that can't possibly be from [the same] vein," says Gaboury, pointing to another cluster of green dots downslope of the Southwest Zone. This grouping is spread out like a fan, and it's separated from the Southwest Zone by a wide, empty gap, indicating that those emeralds are from a new vein that parallels the top of the ridge. That's just one of the areas that still needs to be investigated in detail.

A group gathers to examine a trench in the Southwest Zone, the most productive area yet.

Still Digging
In base metal mining terms, the project is still in its infancy.

The deposit was first discovered (according to geologist Bill Wengzynowski's field notes) on August 24, 1998, at 2:30 p.m. on a rainy Tuesday afternoon. He was exploring the region for Expatriate Resources, a Canadian company that specializes in copper and zinc mining. He spotted a patch of green. Hoping it was malachite — which would indicate the presence of copper — he stopped to take a closer look. It turned out to be emerald.

Wengzynowski spent two hours picking the crystals off the surface, collecting about a kilo of samples. At that point it was too late in the season to return and do more, but Expatriate had the material examined by some gemologists and mineralogists, who confirmed that they were on to something. In the summer of 1999 they did more exploration, but spent only a couple of weeks in the area collecting samples and learning more about the site.

Although the initial results were promising, Expatriate decided not to take on the project themselves. "We're known as a base metal company," said President Harlan Meade in an interview in August 1999. "We'll get no value for our shareholders if we mix emeralds in with our other assets. The base metal assets at this time would dwarf the precious stone assets."

Rock and dirt are poured into the top of the crushing plant, which rinses away the dirt and reduces the rock to a more manageable size.

Around that time, Gaboury saw Expatriate Resources' booth at a Canadian mining trade show and promptly turned green with envy. Although Gaboury made his living as a geologist, he was also a gem cutter, and had been wishing for a gemstone project to sink his teeth into. When he found out that Regal Ridge was available, he got together with some business associates and formed True North.

By the time the negotiations were finished and the paperwork done, it was June 2001. Then came the fun part: setting up.

This is Canada's far north, right across the U.S. border with Alaska, where the moose outnumber the humans and the majority of the territory's 31,000 inhabitants live in the capital, Whitehorse. To get to the mine site by land, you have to drive a couple hundred miles over mostly dirt roads — and that's just the public highway. After that, True North had to borrow an access road from a now-abandoned mining project, which got them to within 12 miles of Regal Ridge.

"Really, the main objective [for the summer of 2001] was to get some mechanized equipment [into the site]," says Smith. "Part of getting the [bulk-sampling] permits was getting permission to walk an excavator in over an environmentally-sensitive valley."

That they were able to get permits so quickly is a sign of just how anxious the Yukon government is to see the emerald mine succeed. Although it maintains high environmental standards, the local government is sympathetic to mining — after all, the Yukon was built on a gold rush at the end of the 19th century. And another source of income for the cash-strapped region is always welcome.

Workers pick through the crushed rock, looking for emerald crystals.

There may be just a touch of gemstone envy, too, as they cast a wistful eye at the now-famous diamond mines of the neighboring Northwest Territories. "The Yukon and Northwest Territories have a sibling rivalry that has definitely helped us in the permitting process," says Smith. "It is best described as good will, but the premier, hoping for a similar economic impact as the one experienced through the development of the diamond industry in the Northwest Territories, took a personal interest in our project."

By the time that the excavator was walked in and the basic camp operations set up, it was near the end of August 2001. The company had approximately two weeks to take samples and survey the area before closing up camp for the winter, but they were impressed by what they found.

"During the course of that summer, activities [away from the area that Expatriate originally discovered] led to the discovery of Area 51, and the BG-1 Zone," Gaboury recalls. "It was an exciting find, because it represented a bedrock source of beautiful colored material in a location almost 200 meters [660 feet] further east than anything that had been found to date."

In early 2002, they negotiated a new agreement with Expatriate to buy the full rights to Regal Ridge, expanding on the 50 percent option they agreed on the year before. The total price for the mine? $1.4 million Canadian (US$886,000), plus another Cn$200,000 (US$127,000) in True North stock.

The commitment made, in April the company began moving in heavy equipment over ice roads. "The operation we moved in here to do was ambitious," says Smith, "but within a couple of weeks the game plan went out the window because of the discoveries we made. At the end of 2001, what was obviously lacking was that the stones were small. Our belief was that was entirely the result of frost shattering. Our objective for 2002 was to get underground. Based on that, [we expected to be] working exclusively in one area and exclusively underground."

But after the discovery of the Southwest Zone — and the realization that going underground was going to require more preparation and better equipment than they thought — plans changed. Instead of an underground operation, they were looking at more surface work, with a focus on moving lots of rock. As Smith puts it, "We figure we should have had a bigger bulldozer."

By that time, though, it was too late. Getting permission to walk in the excavator was a one-time-only deal: Any future equipment had to come in over the winter ice so as not to tear up the slow-growing native flora. They were stuck doing bulk sampling with the equipment they had. It still worked, but the process was slower.

Now that they finally have a summer of exploring the ridge under their belt, True North has a much better picture of what's out there. What they've found is a "robust mineralization," as Smith puts it, which means that they're getting emeralds over a wide area of the surface, almost a square kilometer (0.4 square mile), and the emeralds are consistently of a good color. Despite the issues with frost shattering, they've cut faceted stones up to half a carat, and some cabochons larger than that.

As yet unanswered, however, is the big question: What will they find when they go underground?
To get an idea, they've done some drilling and taken about 1,400 feet of core samples. "We were still getting veins near the bottom of the 600-foot hole we drilled," says Gaboury. "We also found schist, which indicates the potential for other veins down there."

Mine workers live in this base camp, located at the foot of this ridge.

However, there are no guarantees. It's possible that they won't find any emeralds at all below the frost zone, or that the emeralds they do find will have inclusions, or be fractured by tectonic activity in ages past.

Assuming that the emeralds are there, True North still has to face the issue that's tripped up every other publicly-traded company that's gotten involved in gem mining: marketing. The colored stone industry is built around personal relationships and trust, and outsiders ignore the established way of doing things at their peril.

True North's plan is to capitalize on the Canadian location to market the emeralds, targeting the Canadian jewelry market in general and the local tourist industry in particular.

"True North hopes to become a wholesaler of cut goods," says Will Rohtert, who is acting as a gemological and marketing consultant for the project. "We're marketing it as a Canadian product, using Canadian diamonds as a business template. It doesn't really compete with established emerald channels; it's not going to displace or impinge on anyone's business."

It's a business model that investors are finding especially appealing, and so far the project has generated a lot of buzz. On September 23, True North filed for an initial public stock offering on the Toronto Stock Exchange's (TSX) Venture Exchange. If approved, stocks will begin trading in November.

A cut and polished Yukon emerald, photo courtesy Diamori Ltd.

"It was initially not our intention to go public," says Smith. "We actually were pushed by brokerage houses who were aware of the interest [from investors], especially in Whitehorse. When we sat down to make the decision whether to commit to that process," it was still so early in the exploration that they weren't sure what kind of results they would get. "It's a difficult thing to deal with, but at the time [we decided that] if we get people willing to put money into the company, we should go ahead and do it."

There, too, True North got a boost from the diamond mines. "People are aware of the diamond strike emerging in Canada the last 10 years. While we do not promise results comparable to the diamond story," the investors don't want to miss a potential winner.

Pleased with their results so far, True North is looking forward next year's mining season. "The biggest challenge is planning, making sure the plan we've got is airtight, and getting out of the blocks next year," says Smith. "In March we'll mobilize, and we've got one chance to pick the right array of equipment. That's a lesson from this year: plans may change, the deposit may change. We need to make sure we've got everything ready for the end of May next year."

Development plans for 2003 include building an airstrip — which would allow them to fly cargo in and out, whereas now the ridge is accessible only by helicopter — and a better base camp for the workers to live in. The season will be devoted to more exploration and sampling, although as they recover the material, they'll cut and sell it to raise more money for the operation. In that way, True North hopes to ramp up over the next few years to a full-scale mining operation. In a best-case scenario, Smith adds, Yukon emeralds will start appearing the jewelry stores in late 2004.

But their aspirations don't stop with Regal Ridge; the folks at True North hope that they can apply the techniques they're developing to other deposits, and perhaps even inspire others to do the same.

"The dogma has been that there are no viable colored gemstone deposits here in Canada," says Smith. "True North is trying to prove that wrong. We hope if we can shine a light on the colored gemstone potential of Canada, there'll be other junior companies to pick up and continue what we've started."