God’s Lake and KI First Nation in escalating impasse


26 March 2012

Vancouver –

The Ontario government’s move to ban mining and mineral exploration on a large swath of northern Ontario looks to have done little to diffuse tensions between the Kitchenuhmaykoosib Inninuwug (KI) First Nation and junior explorer God’s Lake Resources (GLR-C).

On March 2, the Ministry of Northern Development and Mines quietly announced a moratorium on prospecting and mining on 23,181 sq. km of KI-related lands 580 km north of Thunder Bay in response to the KI’s demands that exploration work stop there. The ban, however, did not cover the 35 sq. km of claims held by God’s Lake.

Unsatisfied with the scope of the moratorium, and annoyed that the government apparently did not consult with them before making the decision, the KI went ahead with a protest outside the Prospectors and Developers Association of Canada convention in Toronto on March 6 while KI Chief Donny Morris travelled to the claim block in question.

Known as Sherman Lake, the project area hosts infrastructure from a short-lived gold mine that went into production in 1938, and according to the KI the area is also home to First Nation burial grounds.

The KI have objected to any disturbance of the grounds, but God’s Lake seems determined to go ahead with a 3,000-metre drill program at the project following preliminary work in 2011. In a March 1 press release God’s Lake stated that it is “canvassing security companies to ensure the smooth completion of the drill program,” though company president and CEO Eduard Ludwig did not respond to a request for clarification.

The same issues arose last year, but despite back and forth between the two camps, they remained unresolved. In an October 2011 press release the company noted that the KI had refused to engage in productive dialogue, stating “KI chose to stonewall, rather than to communicate back on burial site locations, or allow consultation . . . in the absence of any genuine reply from KI, our company made the decision to proceed with work.”

That work involved preliminary exploration on two gold veins in the area. The company limited work to 16 leased claims that it secured in 2009 for 300,000 shares valued at 10¢, though last year it added 184 claims to its holdings for $76,300.

Vein 1 is hosted by sheared diorite with numerous parallel zones of silicification and sulphide mineralization, with the vein averaging 1 metre in width and traced on surface through old pits, trenches and drill holes for 150 metres.

Drilling by Inco in the late 1980s returned 1 metre grading 4.9 grams gold per tonne and 2 metres averaging 4 grams gold, along with numerous 1- to 2-metre widths grading up to 2 grams gold.

Vein 2 was the focus of the Sachigo River mine, which produced 52,560 oz. gold between 1938 and 1942. While prospecting around the vein, God’s Lake discovered a new vein 100 metres to the southwest, with a composite grab sample returning 79.87 grams gold. Sampling in the region also identified five drill targets between 200 metres and 300 metres southeast of the old mine workings.

It is not clear whether God’s Lake will perform any work at Sherman Lake, with Chief Donny Morris on-site at the project preparing for the company’s arrival, and challenging Ontario Minister of Northern Development and Mines Rick Bartolucci to sit down and start negotiations.

It would not be the first time the KI blocked a mineral exploration company. Chief Morris and five others were arrested and sent to jail in 2008 for blocking Platinex (PTX-V) from exploring in the region. The dispute ended with the Ontario government paying Platinex $5 million to relinquish its claims in the area.

As of Sept. 30 God’s Lake had 8.7 million shares outstanding and $127,000 in cash.

At presstime shares of the thinly traded company could be had for $1 apiece.