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Vol. 15, No. 30 Week of July 25, 2010
Providing coverage of Alaska and Northwest Canada's mineral industry

Mining News: Explorers return to former gold diggings

High prices spark miners’ interest in known deposits, old mine sites and previously explored claims with signs of yellow metal

Rose Ragsdale

For Mining News

Though most of the gold fever sweeping northern Canada these days is focused on Yukon Territory’s White Gold district to the west and near Agnico-Eagle Mines Ltd.’s new Meadowbank Mine to the east in Nunavut, a growing number of explorers are trekking to the territory in between.

Mining companies are returning to the Northwest Territories as gold prices set records, including a recent high of US$1,260 per ounce. But most of these explorers are targeting known deposits or previously identified mineralization rather than searching out new discoveries.

“The price of gold has brought people back, especially in the Yellowknife area,” said Ryan Silke, land access analyst for the Nwt & Nunavut Chamber of Mines in Yellowknife. “It’s proven territory for gold exploration. It’s been picked at, over and over again.”

Most of the gold exploration programs under way in Northwest Territories this year are on properties with known mineralization, a lot of which was discovered in the 1960s, ’70s and ’80s,” Silke told Mining News. “People are poking around, re-identifying resources.”

Advances in mining exploration and development technology during the past 20-30 years also give explorers tools to detect mineralization missed earlier.

“It’s a new era for gold technology. There are new methods of mining and new recovery techniques,” Silke said.

The chamber analyst said this re-examination of old ground is part of a cyclical trend that has happened before. Old deposits get another look when the price of a commodity “is on the upswing in the markets,” he observed. “Hopefully, they can make good progress during this period.”

Silke said the territory’s regulators are currently reviewing for permitting at least two projects with potential gold production – Tyhee Development Corp.’s Yellowknife Gold Project and Fortune Minerals Ltd.’s Nico gold-bismuth-cobalt-copper-nickel project, and one or both of them could begin gold production within the next two-three years.

“There isn’t a lot of grassroots exploration going on. The cheapest thing to do is go back and look at old deposits. The regulatory system here is too uncertain for looking at new territory,” Silke said.

The one possible exception may be iron oxide copper gold ore deposits, which typically host valuable concentrations of copper, gold and uranium ores in large quantities. The tremendous size, relatively simple metallurgy and high grade of these deposits can produce extremely profitable mines.

“A lot of companies are looking around for IOCG deposits, and at North Nonacho Lake, one company has identified something,” Silke said.

Territory’s next gold mine?

Tyhee Development Corp. is conducting the largest exploration and development program currently under way in Northwest Territories It is the largest property holder in the historic Yellowknife Gold camp with 6,625 hectares, or 15,481 acres, about 90 kilometers, or 56 miles, north of Yellowknife, NWT.

Gold was discovered near Yellowknife in the late 1800s, but miners did not rush to the area in great numbers until the 1930s.

Since then, the area has seen spurts of gold exploration and production, culminating with substantial output from historic operations, including the Discovery, Con, Giant and Colomac mines.

Tyhee’s Yellowknife Gold Project consists of the Ormsby, Nicholas Lake, Bruce and recently added Clan and Goodwin Vad zones. At Ormsby and Nicholas Lake, Tyhee is considering open pit mines. It is currently working on a feasibility study and a developer’s assessment report. A NI 43-101-compliant preliminary assessment report was completed in the third quarter of 2008 that demonstrated robust economics based on 2007 resource calculations.

Production estimates from the PA consider a 3,000 metric-ton-per-day operation with production of 165,000 ounces of gold per year. 

Tyhee reported a delay in the feasibility study July 7, saying it needed time to consider other options identified in preliminary planning. The company did not disclose details, but said options that have not previously been considered could have material impact on development of the project. The review, which is expected to take a few weeks, is expected to improve the project’s economics.

Tyhee also noted that six diamond drill holes have been completed at the Clan Lake deposit this summer. Results are pending.

Fortune Minerals Ltd. is another junior with gold mineralization that may soon commence production. Fortune owns the Nico deposit 160 kilometers, or 96 miles, northwest of Yellowknife within the 39,000-square-kilometer, or 15,100 square-mile, Tlicho First Nation territory near the community of Whati in southern Northwest Territories. It is currently is undergoing an environmental assessment to permit a mine and concentrator. The Nico orebody is best known for its cobalt and bismuth mineralization, but it also contains significant quantities of copper, nickel and 31 million metric tons averaging 0.91 g/t (907,000 ounces) gold. Nico is being developed as open pit and underground mining operation.

Substantial gold at Damoti Lake

Merc International Minerals Inc. is focused on the high-grade, near-surface Damoti Lake gold deposit on Tlicho land, near the community of Wekweeti 200 kilometers, or 124 miles, north of Yellowknife.

The Damoti Lake property encompasses 4,391 hectares, or 10,846 acres, of land in six mining leases and five mining claims.  Merc holds a 100 percent interest in the lease that hosts the deposit, and an 80 percent interest in the remainder; all of the leases are subject to a 2 percent net smelter return royalty.

Merc is working to outline 6 to 10 million metric tons grading 9-15 g/t gold along strike, in parallel structures and at depth, and advance the project towards a 3-million-ounce gold resource, making it comparable to other northern Canadian iron formation hosted gold mines/deposits.

Merc purchased the property in September 2008 from Anaconda Mining Inc. for C$250,000 and 1.25 million Merc common shares.

Merc July 6 reported results on seven additional drill holes from a recently completed 10,000- to 12,000-meter winter drill program for 2010 at the Damoti Lake Gold Project. The holes were collared within the eastern limb of the Red Mountain syncline, located 125 meters west of the Horseshoe syncline and its associated high-grade gold mineralization. Drilling highlights include hole D10-416B, which returned 16.12 g/t gold over 8.0 meters, including 60.25 g/t gold over 1.5 meters and 8.50 g/t gold over 4.0 meters, including 18.12 g/t gold over 1.5 meters; hole D10-418, which returned 7.93 g/t gold over 3.00 meters, including 12.40 g/t gold over 1.80 meters, and 2.60 g/t gold over 16.25 meters, including 6.84 g/t gold over 4.25 meters, and 17.90 g/t gold over 1.25 meters. Drill hole D10-416B intersected extensive mineralization extending from near-surface, returning a composite grade of 1.64 g/t gold over 151.40 meters. These intersections represent the best widths and grades ever reported for Red Mountain.

Drilling at Red Mountain was designed to test the continuity of new mineralization discovered by Merc in 2009 and to expand these vertically stacked zones to the north and south. 

“Given the success in this new northern area of the Red Mountain syncline, Merc now awaits with great interest the results of additional holes that were drilled further north along the same structure,” said Merc President and CEO Michael Byron. 

Since initiating its first drilling program at Damoti Lake in July 2009, Merc said it has repeatedly intersected both high-grade gold mineralization and broader zones of significant values, all within the near-surface environment on the property. In June, the junior reported results from sectional drilling at the BIF Island Zone on the Damoti Lake property that it said confirmed a strong core of gold mineralization that conforms to the general plunge of the fold structure in the deposit. 

Exploration at Courageous Lake

Drilling is again under way at Seabridge Gold Inc.’s Courageous Lake gold project in Northwest Territories.

The Courageous Lake project consists of 27,263 hectares, or 67,366 acres, covering 53 kilometers, or 33 miles, of a greenstone belt that includes the 2-kilometer, or 1.24-mile, long FAT deposit which has estimated measured, indicated and inferred gold resources, at a 0.83 g/t cutoff, of 6.3 million metric tons averaging 2.92 g/t (591 ounces per ton), 53Mt averaging 2.14 g/t (3,648 oz/t), and 93.7Mt averaging 1.98 g/t (5,966 oz/t), respectively.

Seabridge hold a 100 percent interest in the project, subject to a 2 percent NSR on certain portions of the property. Geology of the Courageous Lake Project is characterized by a series of north to northwest trending Archean metavolcanic and metasedimentary rocks that form a portion of the Slave Structural Province. These rocks are within the Yellowknife Supergroup, locally referred to as the Courageous Lake Greenstone Belt.

Seabridge said the main objective of its 2010 drill program is to upgrade a substantial portion of the existing inferred resource to the measured and indicated resource categories. The 2010 program also includes environmental and permitting work, metallurgical research and geotechnical drilling.

“The FAT deposit at Courageous Lake has been modeled as a large, single pit operation with a gold grade in the range of 2 g/t, which is higher than a number of other prominent, undeveloped open-pit deposits in Canada,” said Seabridge President and CEO Rudi Fronk.

Gold was first discovered in the Courageous Lake area in 1936. Between 1976 and 2006, several mining companies explored the property and identified significant gold resources.

“We suspended on-site work at Courageous Lake in 2006 because the gold price was too low to make FAT economic, and we had just discovered the huge Mitchell deposit at KSM (in northern British Columbia). As a result, we now get very little credit for what could be a very robust project at a gold price exceeding $1,000 per ounce. We therefore intend to do the work required to update our 2008 preliminary assessment by early 2011 and complete a preliminary feasibility study in early 2012 to qualify resources as reserves,” he added.

In March 2008, independent consultants concluded that an open-pit mining operation, with on-site processing, was the most suitable development scenario for the Courageous Lake Project. A base case scenario was developed proposing a 25,000-metric-ton-per-day operation (9.125Mt per year throughput) resulting in a projected 11.6 year mine life with average estimated annual production of 500,500 ounces of gold at estimated average cash operating costs of US$435 per ounce recovered. The base case scenario used measured, indicated and inferred resources in the mine plan.

At a gold price of US$690 per ounce, the base case cumulative pre-tax net cash flow over the life of the project was estimated at US$500 million. At a gold price of US$800 per ounce, the cumulative pre-tax net cash flow over the life of the project was estimated at US$1.13 billion and at US$1,000 gold pre-tax cumulative net cash flow was estimated at US$2.27 billion.

Seabridge said its 2010 program, which began in June, will include environmental and permitting work, engineering and metallurgical consulting and geotechnical, environmental and definition drilling. About 18,000 meters of diamond drilling is planned in 40 holes, which will target about one-half of the inferred resource.

Gordon Lake exploration

Other early-stage gold projects are getting attention this summer.

Triple Dragon Resources Inc. received encouraging initial exploration of its Murray Property in south-central Northwest Territories. The Murray property encompasses about 1,005 hectares, or 2,480 acres, located 6 kilometers, or 4 miles, north-northwest of the former producing Camlaren Gold Mine. The property is about 80 kilometers, or 50 miles, northeast of Yellowknife and within a few kilometers of the winter road to the Diavik and Ekati diamond mines.

Gold was first discovered at the Murray property in the 1930s. To date at least seven areas with significant gold mineralization have been identified. The showings discovered are predominately turbidite-hosted quartz vein deposits. Geologically similar deposits within the Bendigo District of Australia have together produced more than 12 million ounces of gold. The grades of these types of deposits are high and typically vary from 5 g/t to more than 30 g/t gold.

In the summer of 2008, Triple Dragon conducted geological mapping and sampling at the Murray Property. In total, 198 rock samples were collected from the property and analyzed. The most promising result was from a quartz vein sample that assayed 5.48 ounces per ton gold over 0.25 meters.

Triple Dragon is also exploring the May Property, where gold values exist in a vein beneath Gordon Lake. Eleven diamond drill holes totaling 1,309 feet were drilled by Echo Bay Mines Ltd. to test this vein in 1981. Four drill holes intersected a quartz vein containing visible gold over a strike length of 65 feet and to a depth of 90 feet below the surface of Gordon Lake. Additional drilling was recommended to test the vein; which is open to the south and at depth.

The May mineral lease covers a small island in Gordon Lake, 77 kilometers, or about 48 miles, northeast of Yellowknife, and 5 kilometers, or 3 miles, south-southwest of the Camlaren mine.

In October, Triple Dragon optioned two more mineral claims in the Gordon Lake area known as the Burnt Island Property, which encompass the historic Burnt Island Gold Mine and several other gold showings located on the island. The Burnt Island property, about 230 acres, or 94 hectares, is located 8 kilometers, or 5 miles, north-northeast of the Camlaren Property. The property is believed to be similar to Camlaren and lies less than 2 kilometers east of the winter road to the huge Diavik and Ekati diamond mines. Another historic gold producer, Burnt Island saw limited, sporadic development and production, between 1942 and the mid-1980s.

Triple Dragon also held the Camlaren Property, including the past producing Camlaren gold mine, as well as other gold showings until this spring. Gold production began at the Camlaren Mine in 1963 when more than 11,000 tons of ore was trucked to the Discovery Mine, located 40 kilometers, or 25 miles, to the northwest. Noranda Mines Ltd. contracted the Mining Corporation of Canada Ltd. to erect a temporary milling plant on the property in 1980. A mine was developed to a depth of 1,000 feet (300 meters) and operated from 1980 to 1981. During these two periods, the mine reportedly produced a total of more than 35,000 ounces of gold at an average grade of 0.57 oz/ton gold (19.54 g/t) and more than 5,000 ounces of silver at an unreported grade.

Triple Dragon sold the Camlaren property in May to Cats Eye Capital Corp., a small Vancouver-based junior.

Zimtu Capital Corp. is currently evaluating the old Camlaren mine, according to the NWT & Nunavut Chamber’s June 2010 newsletter.

Strategic gold acquisition

Trivello Energy Corp. acquired the historic Tom Gold Mine and related claims in February from Zimtu Capital Corp. and 877384 Alberta Ltd. for total consideration of C$100,000 in cash, and 2 million of its newly issued common shares.

The Tom Gold Mine Project includes five mineral claims totaling 650 acres, or 263 hectares, situated about 10 kilometers, or 7 miles, northeast of Yellowknife and is accessible year round via an all-weather road. 

The Tom Mine Property has been worked since the early 1940s in tandem with bringing the Ptarmigan Mine, located about 1.5 kilometers, or 1 mile, to the south, into production. Over the years, it has produced more than 6,000 ounces of gold.

“The Tom Gold Mine’s historical production, and the vendor’s credibility in the sector, gave us added comfort that the Tom Gold Mine opportunity was the right opportunity for our gold strategy,” said Trivello President Arndt Roehlig. “Given the volatility still present in the global economy, and suppressed natural gas prices, it was determined that expanding our resource holdings into the gold sector was a prudent course of action for our company. Moving forward, we will expand our gold strategy and continue to review all options to maximize value from our natural gas assets.” 

Surface gold at Bullmoose

NT Mining Corp. is another junior tracing new possibilities in old deposits. In June, the company said there may be as much as 15,000 tons of gold ore in existing surface piles at the Bullmoose Mine site located 53 miles, or 88 kilometers, east-southeast of Yellowknife. The mine property consists of one mineral lease of 395 acres, or 160 hectares, and 4 mineral claims of 4,771 acres, or about 1,932 hectares.

Based on engineering reports and several exploration trips between 2008 and 2009, NT Mining said it has increased revenue estimates for the mine based on revised value estimates of ore found in surface piles by crews in the past 2 years and higher gold prices. When a previous milling operation at Bullmoose ceased, the operator left behind about 45,000 tons of mined gold-bearing ore, one-third of which is stored on the surface where it can easily be accessed for production, the junior said. The remainder was stored below ground.

The Nevada-based company estimates the 30,000 tons below ground has an average ore grade of at least 0.24 ounces per ton.

NT Mining said it plans to re-activate the mine upon completion of necessary financing and start operations at Bullmoose this summer. 

Historical reports show a potential reserve of 1 million ounces of gold (Ross Grunwald P.Eng., 1984) is possible on the mineral lease. With the expanded area of four additional mining claims acquired in 2007, NT Mining said that upon completion of an expanded drilling program over the new claims, and on existing known vein structures, a potential of 3 million ounces of gold reserve is possible at Bullmoose.

IOCG deposit at Nonacho

REC Minerals Corp. July 7 said it completed an initial exploration and drill program at its North Nonacho Property, which is comprised of two mining claims covering 60 units in the vicinity of Nonacho Lake, Northwest Territories. The company has an option to acquire up to a 100 percent interest in the property. The exploration program, which cost about C$100,000, included ground evaluation, hand stripping and surface chip sampling in areas of high total magnetic anomalies identified from a high resolution airborne geophysical survey completed over the property in 2008. 

In addition to surface exploration, four short BQ-type holes (48-millimeter-diameter holes) were drilled to test targeted favorable areas using a JKT 48 Winkie-type portable drill and coring system.

Based upon fieldwork completed on areas of exposed outcrop on the property, REC said a number of anomalously high magnetic areas were found to host encouraging iron, manganese, and copper oxide and sulphide mineralization. Sixty chip samples were gathered over the showing area in order to evaluate the extent and consistency of the observed mineralization. In addition, two drill holes, which tested this target area, recovered core intersections exhibiting similar types of mineralization.

The exposed mineralization appears to be open in at least two directions into overburden covered areas. 

REC believes that the observed mineralization is consistent in terms of style and setting to that of iron oxide copper gold deposition.

REC Chairman, President and CEO Kabir Ahmed said the junior hopes the initial exploration and drill program at the North Nonacho Property will lead to the discovery of potentially significant copper and precious metal mineralization.

Depending on the geochemical analytical results of the program, REC said it may conduct a follow-up program of ground induced polarization (IP) surveys and diamond drilling of the mineralized showings and other favorable high magnetic anomalies on the property. 



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