Corvus Gold Inc., a Vancouver B.C.-based junior company being formed to explore International Tower Hill Ltd.’s early stage properties, will initially hold four projects in Alaska and the North Bullfrog project in Nevada.
Under the terms of the proposed transaction, Tower Hill will retain all assets relating to the Livengood gold project in Alaska and about C$41 million in working capital. Corvus will get the five properties and about C$3 million in cash.
The spin-out proposal to be presented to shareholders at a special meeting in July would result in each Tower Hill shareholder receiving one new Tower Hill common share and one-half of a Corvus common share in exchange for each Tower Hill common share held.
“The management and board of directors of ITH believe that the proposed spin-out is an excellent opportunity for shareholders to fully maximize the value of their holdings,” said Tower Hill President and CEO Jeff Pontius.
Pontius will retain his position as president and CEO of Tower Hill, and also will serve as CEO and chairman of Corvus. Russell Myers, currently vice president of exploration for Tower Hill, will become the new company’s president. Additional directors and senior management of Corvus are expected to be appointed in the near future.
The five gold and copper-gold properties are currently held by Tower Hill subsidiary Raven Gold Alaska, and once the new publically-traded company is formed the assets will move into Corvus, which is Latin for Raven.
“The prospectus for Corvus Gold will include Terra, Chisna, LMS, West Pogo and North Bullfrog,” Myers told Mining News.
Corvus’ Alaska projects have more than C$8 million in partner-funded exploration slated for 2010, giving the junior a jump on its objective of becoming a nonoperator gold producer with significant carried interests and royalty exposure. Corvus also plans to expand its portfolio by seeking out and acquiring new prospects.
Big budget at ChisnaThe exploration work at the 163,460-acre, or 661.5-square-kilometer, Chisna project is targeting large copper-gold porphyry systems in the Wrangellia Terrane of eastern Interior Alaska.
Ocean Park Ventures Corp. has committed to spending US$6.2 million in exploration at Chisna in 2010 as part of its option to earn a 51 percent stake in the copper-gold prospect by contributing a total of US$20 million in exploration expenditures, making staged payments and issuing shares over five years. Ocean Park can increase its stake to 70 percent by producing a bankable feasibility study that delineates a mining project on the Chisna property with annual production of at least 300,000 gold-equivalent ounces. Raven, and then Corvus, will be the operator of the joint venture for the first two years.
The 2010 exploration at the porphyry copper-gold prospect began with an airborne geophysical survey that was completed in mid-June. Raven will follow up with a ground induced polarization survey and drill program expected to start in early July.
The first two targets of this year’s drill program will be the 2,000-acre Ahtell alkaline porphyry copper-gold system and the large 10,000-acre POW system.
Earlier this year, Raven augmented its 87,940 acres, or 356 square kilometers, of State of Alaska claims at Chisna by acquiring 75,520 acres, or about 306 square kilometers, of additional prospective lands surrounding the Ahtell discovery from Ahtna Native Corp. The agreement with the Alaska Native regional corporation for eastern Alaska includes an exclusive right to explore and an option to lease the property.
Myers said now that Raven has an agreement with Ahtna, the company can finish the exploration work on the Ahtell discovery made by Tower Hill.
“We will do a 3-D IP survey; that, plus the geochemical and geology, will be used to target the first drill holes at Ahtell. Then we will go up and drill a couple of holes on the POW property,” he said.
A number of other targets have been defined that will be followed up on within this 40-mile-, or 65-kilometer-, long belt of gold and copper mineralization. The company also is considering drilling some of these other targets depending on the results of the induced polarization surveys currently under way.
“As soon as the guys finish at Ahtell, then we will move over and start doing IP on other potential targets,” Myers said.
Production potential at TerraThe Terra project is centered on a 5-mile-, or 8-kilometer-, long trend of high-grade gold vein occurrences which have returned numerous surface rock samples and drill intersection in excess of 50 g/t gold.
This property, located in the southwestern part of the Alaska Range, has been optioned to Nevada-based American Mining Corp., a privately held mining company that can earn an initial 51 percent interest in Terra by spending U$6 million on exploration over three years, including $1 million in 2010, and making cash payments of US$300,000 and issuing 750,000 common shares over the same three-year period.
Corvus also will receive a sliding scale net smelter royalty of between 0.5 percent and 5 percent, depending upon the gold price, on all precious metal production from the property and a 1 percent NSR royalty on all base metal production. The royalty to Corvus is in addition to the current royalty payable to the underlying lessor.
Drilling by Tower Hill in 2006 and 2007 defined an estimated inferred resource of 428,000 metric tons averaging 12.20 g/t gold, or 168,000 contained ounces, and 23.11 g/t silver, or 318,000 contained ounces, at a cutoff of 5.0 g/t gold. In addition to the Ben’s Vein, which hosts the resource, drilling at two other vein structures confirm the potential for significant resource additions on the property.
According to Tower Hill, the gold at Terra occurs as coarse native gold and can be recovered by simple gravity methods, facilitating potentially rapid development of a small mining project.
American Mining is reportedly planning to conduct a bulk sample of the Ben’s Vein in August, utilizing a small crusher and gravity separator. However, Mining News was unable to verify the report by press time.
Pogo-style projectsThe two other Alaska properties going into the Corvus prospectus, West Pogo and LMS, have been joint ventured to First Star Resources Inc. Both properties lie in the vicinity of Sumitomo Metal Mining Co. Ltd.’s Pogo Gold Mine, a high-grade underground producer east of Fairbanks. West Pogo lies 2.8 miles, or 4.5 kilometers, west of Pogo, and is situated along its western property boundary. LMS can be found about 25 miles, or 40 kilometers, to the north.
First Star President and CEO Bill Wishart said, “Acquisition of this gold project marks the return of First Star to its mining roots. Our intention is to form a gold exploration and development company around these projects. In the coming weeks, we will be building our technical staff and preparing for an active season of drilling.”
LMS is believed to be an intrusion-related vein system, with similarities to the gold deposit at Pogo. The property shows potential as both a high-grade, Pogo-style target and as a lower grade bulk-tonnage prospect.
“At LMS there is some phenomenally high-grade mineralization, and we just haven’t quite figured how the structures work that control it … at the Camp zone inside of the schists there are these, what I think were originally cherty sediments, and those cherty sediments get broken up in developed breccias that carry the lower grade, bulk-tonnage mineralization,” Myers explained.
“At LMS we have some pretty good structural ideas, but we (International Tower Hill) discovered Livengood. If it hadn’t been for Livengood we would have been working LMS the whole time,” he added.
Under the terms of the agreement, First Star has the ability to earn an initial 55 percent interest, and a second option to earn the remaining 45 percent interest. To earn the initial 55 percent interest, the Vancouver, B.C.-based junior must pay Raven/Corvus US$280,000 and spend US$3.5 million on exploration of the property. To acquire the remaining 55 percent, First Star must fund the project through to an advanced exploration stage by spending an additional US$3 million by the end of 2015, or by producing a NI 43-101-compliant inferred resource of 2 million ounces of gold using a 0.3 g/t cutoff grade, whichever costs less. A net smelter returns royalty of 3 percent or 4 percent on gold-silver and 1 percent on all other products will be payable to Corvus, which can be reduced by 1 percent by paying Corvus US$3 million.
The West Pogo prospect represents a high-grade intrusion-related vein system gold target. The West Pogo claim block consists of 96 State of Alaska mining claims covering about 4,670 acres.
Myers said exploration by Tower Hill has encountered Pogo-style mineralization as well as other high-grade gold without the geochemical signatures of the ore being mined by its neighbor.
First Star has the ability to earn a 100 percent interest in West Pogo. To earn the initial 55 percent the Vancouver B.C.-based junior must pay US$250,000 and expend US$2.8 million on exploration. To acquire the remaining 45 percent interest, the company must fund the project through to an advanced exploration stage by spending an additional US$2 million by the end of 2015, or by producing a NI43-101 compliant inferred resource of one million ounces of gold using a 0.3 g/t cutoff grade. The property also has a royalty agreement with terms identical to that at LMS.
First Star intends to conduct a drilling program on both the LMS and WP gold prospects in 2010.
The way forwardCorvus intends to hold sole ownership of its North Bullfrog gold project, which is located about 9 miles, or 14 kilometers, north of Barrick Gold Corp.’s multimillion-ounce Bullfrog gold mine in Nevada.
North Bullfrog hosts an indicated resource of 2.02Mt grading of 0.88 g/t gold and 0.45 g/t silver and an inferred resource of 0.95 Mt grading 0.78 g/t gold and 0.36 g/t silver, both at a cutoff grade of 0.5 g/t gold.
Corvus currently plans to spend about C$1 million to complete 10,000 meters of drilling in the fall.
“We are trying to develop another low-grade, at-surface, heap-leachable resource,” Myers explained.
The future Corvus president said the company will be actively searching for new promising properties to add to the company’s portfolio.
“The way forward for Corvus is finding good prospects, joint venturing them or discovering them ourselves. And we are very actively evaluating projects in Alaska, Nevada and other places to see if we can find the right upscale potential,” Myers said.
“I like geology,” he added. “The most fun for me is taking something, making sense of it and turning it into something that looks like you could turn into a mine.”