The Nalunaq deposit is a shear-zone hosted, high-grade gold mineralization. The occurrence has gold-bearing outcroppings exposed along more than 2,000 meters on the side of the mountain. The entire length of the exposed structure has been sampled, and the results supports to the presence of a large gold-bearing system. The gold is irregularly distributed within the planar structure, but easy to recognize where occurring.

The most pronounced structures at Nalunaq are zones of intense deformation with evidence of ductile shearing surrounded by brittle margins. The Main Vein is hosted in a narrow ductile shear zone with a remarkably constant orientation. The regular sheet has an average strike of 45-50° and an average dip of 36º SE. On the local scale the structure undulates somewhat, and dips measured in the face of the adits vary between 22 and 45°.

The presence of quartz veins is the single most important component of the gold mineralization and quartz occurs principally as sheeted veins with stripes and bands of included calc-silicates. The quartz veins vary in width from 0.05 meter to 1.8 meters and form a relatively continuous structure. In the adits, the quartz vein often displays pinch and swell structure and there is clear evidence of both compressive and dilational post-mineralization deformation within the mineralized structure.

The mineralized quartz vein is almost universally associated with a pronounced calc-silicate alteration zone, of 0.2 to 0.5 m width, on one or both sides of the quartz vein. When very high gold grades are encountered in the quartz vein, the alteration zone may also sporadically carry significant amounts of gold, but is normally poorly mineralized.

Systematic sampling of the underground exposures of the vein has shown that gold grade is subject to a high nugget effect. Despite this, a grade-zonation is clearly identifiable with high-grade segments running approximately E-W throughout the mine area. The reason for this regularity is not clear. Preliminary interpretations suggest that highest-grade sections occur when the structure is crossing medium-grained metadolerite sills or is located very near the metadolerite/metapillow basalt contact. Lower grade segments all seem to be hosted in finer-grained metapillow basalt

As generic type, the Nalunaq gold mineralization is a mesothermal vein-type gold deposit, hosted in amphibolite-facies metabasic rocks. The gold is associated with sheeted quartz veins, hosted in a large-scale shear structure, which appears to relate to regional thrusts. However, possibly due to extensive post-mineralization deformation, there is no simple relationship between gold grade and thickness of the quartz.

Work to date
A total of 90 drill holes (15,000 meters) and more than 3,600 meters of underground adits and raises have been completed within mineralized structure, as well as over 1,000 meters of access drifts and waste development. In addition, surface sampling has been conducted over 2,000 meters of exposed outcrops, with substantial portions channel sampled at 1-meter intervals. As a result of underground work performed to date, 53,600 tonnes of ore containing over 25,000 ounces of gold have been stockpiled. This material will provide the operation with early cash flow and will significantly reduce capital costs.

2002 Work Program
During the 2002 season about 872 m of underground development, including 577 m of drifting and sub-drifting and 295 m of raising, was completed. The objective was to expand on the measured and indicated resources while at the same time prepare for mining operations. The underground work was carried out as a continuation of existing drifts on the 300-Level (extensions of both the Target East and the South West drifts) and the driving of an exploration decline from the 300-Level in the South Block towards lower levels; These drifts along strike in mineralized structure were designed to demonstrate mineralization in areas where previous drilling had provided encouraging, yet inconclusive results with respect to grade. The results of sampling in the new development are still pending, but will form the basis for a new resource calculation. In addition, development of four new raises on the 300-Level were completed, which take the number of raises to a total of 23. The raises are located at 80 meters intervals to provide a 2-dimensional sampling of the mineralized plane, as a basis for reliable resource evaluations.

Additional test mining was conducted on 450-Level which included a 72 m long subdrift on the 460-Level, with three 15 m long slot raises that resulted in the extraction of four new test stopes with an average width of 1.3 m and separated by three 1.5 m pillars. Test mining has now been conducted in three different settings on level 350, 400 and 450. Two mining methods, long hole and raise mining, have been tested successfully, and allowed the recommendation of the long hole method as a mean of providing mining widths between 1.0 and 1.4 meters mining width in the Nalunaq deposit.

In this years program 521 channel samples, and 5 test-hole samples were collected and sent to Xral Laboratories, Ontario, Canada for analysis. When the results of this work are available they will be incorporated into a resource update calculation.

A local contractor carried out upgrading of the access road from the fjord to the camp in August. The upgrade will allow transport of ore materials with 30-tonne dumpers to the coast and facilitate delivery of supplies and mining equipment. The 9 km road has been equipped with culverts and bridges to allow for enhanced drainage during snow melting and other weather extremes. It is anticipated the road will allow traffic throughout the year.