Kodiak’s 83,459 acre (33,775 hectare) Caribou Lake Ni-Cu-Co-PGE property is located immediately north of Great Slave Lake, 90 kilometres southeast of Yellowknife. The property is 100% controlled, and has direct deep water access to the Mackenzie Highway and the intercontinental railhead at Hay River. The nearest nickel smelter is Sherritt International Corporation’s Metals Refinery, 1100 kilometres to the south at Fort Saskatchewan, Alberta.

Kodiak staked the Caribou Lake property in 2004, and conducted reconnaissance prospecting along the Caribou Lake intrusion, a layered body of mafic to ultramafic rocks with a surface exposure of 12 kilometres north-south by up to 6 kilometres east-west.

Initial prospecting led to the discovery of a high-grade grab sample assaying 19.6% Cu, 0.24% Ni and 0.03% Co, and a mineralized horizon in the gabbro that contained primary net-textured nickel and copper sulphides over a strike length of nine kilometres. A specimen of gabbro taken from a blast pit near the south end of the property assayed 0.61% Ni, 0.97% Cu, and 0.07% Co. Systematic lithogeochemical sampling confirmed the continuity of a wide band of anomalous Ni-Cu-Co-PGE in magnesium-rich rocks along the length of the intrusion.

Kodiak also confirmed the presence of high-grade niccolite in several showings, which yielded high-grade grab samples containing up to 38.02% nickel. Subsequent work showed that the niccolite has been hydrothermally introduced along vertical northeasttrending fractures in younger granite dykes, and it is believed to indicate the existence of a primary magmatic nickel source at depth.

In early 2006, Kodiak flew a 2300 line-kilometre VTEM and magnetic survey over the length of the Caribou Lake intrusion. The survey was flown with a line spacing of 60 metres and a sensor elevation of 30 metres, yielding exceptionally high quality data. Fourteen major and 72 secondary VTEM conductors were identified along a ninekilometre conductive trend.

Based on encouraging geophysical results, Kodiak embarked on a program of shallow reconnaissance drilling, to map the intrusion and test the first-order conductive anomalies to a depth of about 180 metres. Between February and September, 2006, Kodiak drilled 50 holes with a total length of 7,345 metres. Significant intersections of massive, semimassive, net-textured and disseminated sulphides were encountered in 33 of the 50 drill holes, including 0.78 metres of massive sulphide grading 1.02% Ni, 1.38% Cu and 0.13% Co in CL-06-01, 53.50 metres of semi-massive, net-textured and disseminated sulphide averaging 0.12% Ni and 0.16% Cu in hole CL-06-16, and 69.71 metres averaging 0.21% combined Ni-Cu in hole CL-06-39.

With the Phase I drilling complete, Kodiak conducted a detailed analysis of all surface, geophysical and drill data, in preparation for a second phase of drilling to test deeper targets along the base of the intrusion for their economic potential.

Based on petrographic and field studies, nickel specialist Dr. Walter Peredery, P. Geo., subdivided the Caribou Lake intrusion into an Upper Layered Series of coarse-grained anorthositic gabbro, overlying Middle and Lower Layered Series rocks which are predominantly ultramafic. The layered series rocks are enclosed by Marginal Series rocks which consist of fine- to medium-grained olivine gabbros. Middle Layered Series rocks are iron-dominant, while the Lower Series rocks are magnesium-rich. Drill cores show evidence of multiple phases of intrusion, with fine grained marginal gabbro followed by pyroxenite-peridotite, then coarse to very coarse grained anorthositic gabbro and pyroxenite. All of the rocks are magnetic, and thus distinguishable from non-magnetic footwall rocks that include greywacke, mafic volcanic rocks, and granite. Drill intersections correlate well with three-dimensional magnetic models of the subsurface, confirming the overall geometry of the intrusion.

Fine-grained pentlandite, an important nickel mineral, was identified in 15 samples taken from the marginal olivine gabbro, and ultramafic rocks of the Middle Layered Series. The presence of pentlandite grains in sulphides in the upper and marginal parts of the intrusion is considered to be evidence of a nickel-rich system. Lower Layered Series rocks, consisting of peridotite and olivine pyroxenite, are believed to be the most prospective host for economic concentrations of nickel, copper, and cobalt. Petrography has shown that these rocks are olivine-rich, have a low primary magnetite content (2%), and contain magnesium-rich orthopyroxene and clinopyroxene interstitial to the olivine crystals. The presence of orthopyroxene is regarded as significant because it indicates possible contamination of the magma. Addition of silica and sulphur to the system causes the formation of orthopyroxene, and simultaneous scavenging of nickel from early-formed olivine to form a heavy nickel-sulphide liquid, which in sufficient quantities can settle in pools along the base of the intrusion. Lower Layered Series rocks are poorly exposed on surface, but have been intersected in deep drill holes east of Caribou Lake over an interval of more than 550 metres.

Microprobe analyses have shown that olivine grains from the marginal gabbro, and from magnetite peridotite and pyroxenite of the Middle Layered Series, are strongly depleted in nickel. These results indicate that the system of nickel extraction from olivine into sulphides at Caribou Lake has been very efficient, and compares favourably with nickel depletion seen in olivines from Noril’sk and Voisey’s Bay. The pentlandite grains mentioned above confirm that extraction of nickel into the sulphide fraction has taken place.

The microprobe analyses also show that the nickel content of olivine increases downward in the intrusion, along with magnesium. Platinum group elements also increase downward. The highest concentrations of magnesium-rich olivine, nickel and PGE are expected to occur at the base of the intrusion, where significant concentrations of sulphides are considered likely to have pooled in structurally low areas due to gravitational settling. It is these structural traps which are the targets of Kodiak’s Phase II program.

Normalizing assay values from samples with disseminated and net-textured mineralization to 100% sulphide allows comparison of sulphides between layers within an intrusion, as well as between deposits. A sample of rock from the Lower Series, recalculated in terms of massive sulphide, returned normalized values of 3.5% Cu, 5.6% Ni, 0.9% Co, 2.5 g/t Pt and 3.5 g/t Pd. These values indicate that massive sulphide associated with the disseminated sulphides discovered at Caribou Lake would likely have grades similar to those seen in economic nickel deposits. Kodiak’s Phase II drill program at Caribou Lake commenced in late January, 2007, and by August 5, a total of 7,757 m of drilling had been completed in 14 diamond drill holes. Net-textured and disseminated sulphides have continued to be intersected in many of the holes, with grades similar to the Phase I drilling, and pentlandite granules continue to make up a significant part of the sulphide fraction. Results from the first six drill holes were released on June 4. Coarse and fine-grained magmatic sulphides were intersected in two holes CL-07-05 and CL-07-06 drilled nearly 1 km apart along strike, near the centre of a large gravity anomaly in the northern part of the intrusion. The sulphides occur in coarse to very coarse grained gabbro and pyroxenite. Mineralographic analysis of very coarse grained gabbro from hole CL-07-05 showed that pentlandite granules comprise up to 5% of the total sulphide content, with pentlandite exolution lamellae making up an additional 1 to 5% of the sulphide fraction. The sample was described by Dr. Walter Peredery, P. Geo., who noted that the sulphides in hole CL-07-05 are similar to those previously described from other parts of the intrusion, except that the pentlandite is much coarser grained.

Interstitial mineralization was observed over wide intervals in drill holes CL-07-01, CL-07-02, CL-07-03, CL-07-04 and CL-07-14. Hole CL-07-03, for example, intersected 587 metres of 1 to 10% sulphides with anomalous nickel and copper. Significant sulphides intersected in Hole CL-07-05 and CL-07-14 (located 130 metres west-southwest of CL-07-05) confirmed the continuity of sulphide mineralization between drill holes. Even though these drill holes did not contain economic concentrations of nickel, clouds of disseminated sulphides like these frequently form haloes or lateral extensions around massive sulphide bodies.

These results continue to demonstrate that a large nickel and copper bearing sulphide system is present in the Caribou Lake mafic complex, which has the potential to host a significant nickel and copper ore body. Geologic and drill data are being compiled and interpreted in preparation for the next phase of exploration at Caribou.