The Suquash Coal project is located within the Port Hardy/Port McNeill Area, Nanaimo Mining Division, Northern Vancouver Island, British Columbia.
The TSX Venture Exchange has accepted for filing an option agreement dated May 16, 2008, between Electra Gold Ltd. and Hanam Canada Marketing Corp. whereby the company will acquire the rights to obtain coal licences covering the Suquash coal field. The considerations for the acquisition are: $8,800 cash on execution of agreement; and three million shares of the company on the following schedule -- 500,000 shares on issue of a mine exploration permit for a decline, and the support in writing of the Fort Rupert Band Council, 500,000 shares by April 30, 2009, one million shares on completion of an acceptable National Instrument 43-101 report documenting in situ reserves of at least five million tonnes of 11,000 BTU coal, and one million shares on the extraction and sale of a 10,000-tonne bulk sample with 50,000 tonnes developed.
The company intends to drive a decline to reach near the former mine workings about 50 meters below grade. The purpose of the decline is to mine a bulk sample for testing at a local cement plant. In order to locate the decline in the most cost effective way, three or four test diamond drill holes are proposed in the vicinity of the proposed decline and the former number 2 shaft of the Suquash mine.
The mine is of great historical interest because it was first operated by the Kwakiutl First Nation and is by far the first mine in British Columbia. To begin engaging with the Kwakiutl, Electra has met with the Chief and Council in Fort Rupert. At this introductory meeting, the Chief and Council indicated that they will support an exploratory diamond drill program. Electra's goal in the consultation process is to ultimately achieve a Project agreement that provides, among other items, both economic and social benefits to the Kwakiutl First Nation by working together and following consultation protocols as we move through the exploration phase.
Subsequently a Notice of Work has been filed with the Ministry of Energy, Mines and Petroleum Resources to conduct an exploratory diamond drill program as described in this report. Upon completion of the drilling Electra would then apply for driving an exploration decline to extract a bulk sample for testing by the company and by potential customers.
A major source of information has been the numerous historical assessment reports on the area within the B.C. Government Ministry of Mines Minfile database. These reports are readily available from Ministry reports dating back to 1934 on work conducted for various companies up to 1986. Prior information is contained in the Annual Reports of the Minister of Mines 1909-1921. In addition, Electra has obtained past mining data from the BC Archives and records of Kwakiutl historical interests in the area. We also have an underground coal mine engineering feasibility report by Hope Engineering in 1953.
A further source of information was the report "Suquash Coal Mine Restart" by Helmut G. Burke, P.Eng.. Mr. Burke, a chemical engineer, has extensive experience in the coal industry in British Columbia. He has prepared a market evaluation and preliminary mine economic feasibility report.
The mine is 25 km east of Port Hardy by the Island Highway 19 and 3.3 km of Suquash Main logging road. This road joins the highway immediately east of the Mount Waddington Regional District's 7-Mile Landfill. The property has been cleared as shown in Figure 2. Coal from the number 1 surface seam is scattered along the beach and is easily visible in the cliff and along the creek.
The company and property will be subject to Mine Permit regulations of British Columbia Ministry of Energy, Mines and Petroleum Resources. A permit will be required for any proposed drilling and bulk sample.
The Suquash coal mine and license area is within the Kwakiutl First NationTraditional Territory and area of interest. The company has acknowledged the legal requirements for consultation and accommodation of First Nation Rights, Title and Interest. The Kwakiutl First Nation has developed standard agreements for other projects in their traditional territory that can be used as a template for this project. Suquash Coal seeks long term agreements to ensure that Kwakiutl people benefit from the potential mine and are compensated for the negative impacts of the mine on their communities, land, and traditional way of life. Aboriginal management of mining revenues is intended to contribute to a sustainable community, direct community benefits, revenues for community projects, and support for traditional skills and lifestyles.