The sparsely populated territory has gained a reputation as one of the most promising regions in Canada for exploration, with prospectors promoting discoveries ranging from gold to uranium. But getting the ore out of the ground is a different story entirely.
While climate change has made it easier to find mineral deposits in Nunavut, the task of mining is complicated by a lack of roads and other infrastructure, the still-crippling cold and the challenge of attracting and retaining an adventurous workforce.
Agnico-Eagle Mines, which owns the only working mine in Nunavut, recently booked a partial writedown on changes to the mine plan at Meadowbank, wh ile c ash costs at the gold mine have risen to more than $1,000 per ounce.
That happened just months after a fire destroyed the mine's kitchen, crippling staffing levels and slashing into 2011 gold output, illustrating how susceptible remote projects are to the even the smallest operational hiccups.
"It is a high-cost part of the world to operate in," said Agnico's chief executive, Sean Boyd. "There are risks in that part of the world, no doubt about it."
It's a risk Newmont Mining isn't willing to take. The world's No. 2 gold miner shelved its Hope Bay project in the northern territory and booked a $1.6 billion writedown after the economics of the project failed to meet its investment criteria.
The flurry of bad news could spell trouble for companies such as Sabina Gold and Silver, North Country Gold
and Kivalliq Energy, which are developing everything from precious metals projects to uranium deposits in Nunavut.
Analysts say the challenge is to prove that the benefits of their projects outweigh the potential risks of building a billion-dollar operation in a ruthless terrain.
"In these parts of the world you don't have railways, power lines and road access," said John Hayes, a mining analyst with BMO Capital Markets, "so call them barriers to entry to mining in the north - I think they're pretty real concerns."
Without access to hydro-electricity, projects in Canada's Far North are dependant on diesel fuel to generate power. Agnico uses up to 60 million liters of diesel gasoline a year at Meadowbank, making energy one of its biggest cost pressures.
That fuel, along with other supplies like 2,500 liters of ketchup and 200,000 eggs, are transported once a year by ship to a port at Rankin Inlet, then up the river to Baker Lake, where items are stored for year-round use.
All said, operating costs at the mine, located some 2,600 kilometers (1,600 miles) north of Toronto, have been far higher than originally expected. That, along with issues at the company's Goldex mine in Quebec, sent shares tumbling more than 48 percent in 2011.
Despite the challenges, Agnico is not backing away from mining in Canada's northern realms. The company is moving forward with its Meliadine project, also in Nunavut, though it is taking a more cautious approach.
"We went from a few tents to an 8,000 tonne a day operation at Meadowbank in three years," said Boyd. "We took ownership of Meliadine in 2010 and we are calling for production only in 2017, so seven years versus three years."
Opportunity Knocks
As desirable mining projects become harder to find, miners are increasingly turning to far-flung regions of the globe to meet rising demand from resource hungry China and India.
Uranium producer Cameco, with an eye on a huge nuclear expansion in Asia, said it will be exploring at its Turqavik-Aberdeen project in Nunavut in 2012. According to its website, little has been done on the project since 2008.
ArcelorMittal, which bought the Mary River iron ore deposit in 2011, has said it could start construction at the remote deposit on Baffin Island as early as this year.
"China and India are trying to
