Providing coverage of Alaska and Northwest Canada's mineral industry
January 2009

Vol. 14, No. 4 Week of January 25, 2009

Mining News: Aggressive junior finds gold in Yukon

ATAC Resources tracks clues to precious metal deposit on Rau property in Keno Hill District at northern edge of Tintina Gold Belt

Rose Ragsdale

For Mining News

Yet another junior exploration company prospecting for precious and base metals in the mountains of central Yukon has come home with a shiny new prize.

ATAC Resources Ltd. struck gold last summer in the mineral-rich hills of the Tombstone Mountains.

In August ATAC reported a significant discovery on the Rau property in the Keno Hill District at the northern edge of the prolific Tintina Gold Province, a banana-shaped belt of mostly intrusion-related gold deposits that stretches more than 1,000 miles across Yukon and Alaska. The geological formation is home to numerous large gold deposits, including Donlin Creek, Fort Knox, Dublin Gulch, and Keno Hill.

ATAC said it encountered encouraging surface results, and visual evaluation of drill core confirmed by assays from core samples averaged 1.237 grams per metric ton gold across a thickness of 68.69 meters.

The sample intervals in hole Rau-08-02, which combined to total 68.69 meters, individually ranged from 1.00 to 2.23 meters in length. The grade of the individual samples ranged from 0.135 to 7.62 g/t gold, with most samples between 0.300 and 1.5 g/t. ATAC said the average grade of 1.237 g/t gold, which is reported for samples collected from Rau-08-02, was calculated in a weighted manner reflecting variations in sample lengths.

The Vancouver, B.C.-based junior quickly extended its drill program at Rau into the fall in hopes of completing more than 20 holes in the zone before the end of the exploration season.

By November, an interesting picture began to emerge of the mineralization. The main gold zone at Rau is one of a series of thick sulphide-rich horizons vertically stacked near the crest of a broad anticline, according to ATAC.

In all, the junior drilled some 3,423 meters in 18 holes in 2008. Highlights from the work include 46.42 meters averaging 2.92 g/t gold from hole Rau-08-16 and 65 meters grading 1.52 g/t gold from hole Rau-08-07.

“The results from the Rau gold property demonstrate that we are exploring a very large and complex system of mineralization,” said ATAC CEO Graham Downs, who describes Rau as “a major gold discovery.”

Downs told Mining News Jan. 17 that Rau is a brand new discovery with no historical exploration or paper trail dating back decades. “It’s a brand new discovery with lots of size potential, and the amount of mineralization and the length of mineralization is phenomenal,” he said.

Wrong gold anomaly

ATAC geologists, led by Downs, found the gold by following up on a 99th-percentile gold anomaly reported by the Yukon government in a reconnaissance-scale stream sediment survey.

The zone itself was first identified by grid soil sampling, which outlined a 600-meter-long by 100- to 300-meter-wide area of largely coincident, very strongly anomalous gold and arsenic values.

Ironically, the geochemical anomaly that led ATAC to the Rau discovery was not the one with significant gold mineralization, Downs said. “It looks like it was in the wrong drainage,” he said.

When ATAC conducted its own survey, the junior found the other gold anomalies in the area. “It was these that pointed the way to the discovery,” Downs said.

In an Aug. 6 statement that announced the discovery, ATAC said the zone is not conductive but it did show up as a second-order magnetic high on the helicopter-borne VTEM survey. Prospecting located limonite-rich float with occasional residual sulphides in the vicinity of the soil geochemical anomalies, but it has not found the zone in outcrop. In light of drill results, the discovery was very fortuitous because the area of mineralization is much larger than was suggested by surface work,” the junior added.

Three horizons of mineralization

The Rau gold discovery lies within a 6-kilometer-long anomalous trend that has been traced by soil geochemistry and helicopter-borne VTEM and magnetic surveys west-northwesterly from a high level, Late Cretaceous granitic stock.

ATAC geologists say the anomalous trend coincides generally with the axis of a large anticline. The mineralizing fluids appear to have migrated out from the pluton along the length of the gently east-southeasterly plunging fold. The gold occurs with sulphide minerals that wholly or partially replace dolomitized limestone near the crest of the anticline. The sulphide minerals are locally concentrated beneath a series of altered volcanoclastic beds, which may have acted as impermeable caps.

ATAC has identified three mineralized horizons, with the middle horizon producing the best assays. The main sulphide minerals are pyrite, arsenopyrite and pyrrhotite, while accessory minerals include bismuthinite, scheelite and sphalerite, the geologists said. The middle horizon, or discovery horizon, contains the majority of the significant gold intervals and has the highest concentrations of arsenopyrite, bismuthinite and scheelite. The thickest intersection on this horizon graded 1.71 g/t gold over 78.54 meters. Two holes (Rau-08-03 and -16) encountered strongly weathered wallrocks and mineralization which includes some limonite boxwork. Recovery in both of these holes was poor; therefore, the reported grades should not be relied upon. None of the five holes in the eastern part of the drill area reached the middle gold horizon.

ATAC said most of the significant assay intervals are clustered in a 300-meter-by-200-meter zone at the west end of the drill area. The highest-grade interval came from the most westerly hole (Rau-08-16). The mineralized horizon ranges from about 40 meters to 60 meters in thickness within this zone and is open along strike in both directions, the junior said.

Silver, zinc in deepest horizon

Ten of the first 11 holes drilled cut the mineralized strata. Rau-08-01 was drilled near a ridge crest at the southeast end of the soil anomaly. ATAC said it appears to have passed above the fold hinge, intersecting only weakly mineralized fractures in hanging wall stratigraphy.

The other 10 holes were drilled on two lines: one paralleling the fold axis along the presumed length of the zone and the other aligned perpendicular to the fold axis across the presumed width of the zone. The holes that are located along the length of the fold axis have successfully traced the mineralized zone for a distance of 350 meters.

The uppermost horizon typically comprises medium to coarse grain, disseminated pyrite often with quartz, pyrrhotite and lesser arsenopyrite. Gold values were generally low in this horizon, but a number of short gold-bearing intervals were obtained, including 8.13 g/t gold over 3.05 meters from hole Rau-08-11.

The deepest horizon consists of very coarse grain, massive pyrite with minor sphalerite. Only hole Rau-08-18 extended deep enough to reach this horizon and intersected 20.77 meters of massive pyrite, which averaged 0.13 g/t gold, 24.36 g/t silver and 1.12% zinc. This discovery was made in the last hole of the program and future drill holes will have to extend further to test it and other possible horizons that could lie deeper in the section, the junior said.

First discovery for Yukon veteran

Downs, who has been ATAC’s chief executive officer since 2006, said he came to Yukon as a young geologist on a grand adventure in 1995. When his Subaru broke down in Whitehorse, he asked the tow truck driver where he could get a job. Directed to longtime exploration consulting firm, Archer Cathro Ltd., Downs applied for a job and told the consultant’s hiring team that he was “the hardest-working person they would ever meet.”

“They said, ‘We’ll see,’ and told me to report to work at 6 a.m. the next morning. I sold my car to a kid on the street to buy work clothes, and I’ve been here ever since,” Downs recalled.

The geologist said he has spent 10 seasons in the field in Yukon and Rau is his first major discovery. Two other geologists, Matthew Dumala of Archer Cathro and Douglas Easton, a geology consultant, joined Downs in leading ATAC’s exploration team in 2008. The junior took 15 workers into the field and spent about $1.2 million.

ATAC is described as a “project generator,” a junior that confines itself to making grassroots mineral discoveries and identifying early-stage prospects. It then works to interest larger companies in undertaking development of the finds.

“We’re not like most other juniors. We’re good at finding things. We understand where we are in the food chain of exploration development,” he said.

ATAC’s goal, Downs explained, is to take the wealth of knowledge its principles, mostly Archer Cathro veterans, have accumulated and follow up on it.

Together, ATAC’s principles – four professional geologists – have 150 years of combined exploration experience in Yukon Territory, Downs said.

“To raise funds for exploration, you have to be in a public company. You want to take advantage of all this work that all these professionals have done over the years. It’s a natural progression,” he said.

More staking in Yukon

After ATAC made the gold discovery on the Rau property, it quickly staked seven to 10 more properties in the Yukon and is looking to stake a few more, wherever its geologists see more gold anomalies, Downs said.

ATAC already had 17 Yukon properties before the latest staking spree.

“Yukon is our backyard. It’s politically stable and we know the area is under-explored,” he said.

The junior is also compiling and evaluating data from the 2008 programs at Rau and other ATAC projects, and is considering ways to best advance the projects.

“In this market you want to take things slow. The discovery has generated a lot of interest, and we are waiting for the right opportunity, since we’re not under the gun to do anything,” he said.

Downs said ATAC is currently in discussion with interested parties and could option the Rau property to a new company, take on a partner to develop it or spin it out of the company. Whatever is decided will be intended to maximize the discovery’s value to the junior’s shareholders.

“We’re using this time to look at our other properties. We want to find another Rau,” he said.

Optioned properties

ATAC has nine other properties currently optioned, including the eastern half of the Rau claims, known as the Wau property. The junior entered into an option agreement with Yankee Hat Minerals Ltd. in April that entitles that junior to aggressively explore the claims for tungsten in 2008, while ATAC explored the western acreage for gold. Yankee Hat had the right to earn 51 percent interest in the Wau property, and an initial 50 percent interest in exchange for issuing nearly 6.7 million shares of its common stock to ATAC and spending $2 million on exploration over a three-year period. Following earn-in, Yankee Hat has the optional right to earn a further 1 percent interest in the property by making a $1 million cash payment by Dec. 31, 2011.

In the current economic downturn, Downs said he would not be surprised if some of ATAC’s optioned properties come back to the junior.

“We don’t know exactly what’s going to happen in 2009,” he added.

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