Miranda Gold Corp. and Gold Torrent Inc. have their sights set on opening a high-grade gold mine at the historic Willow Creek property in the Hatcher Pass region of Southcentral Alaska by the end of 2018.
Only about 75 miles north of Anchorage, this 8,700-acre property blankets a large portion of the Willow Creek mining district, including the pre-World War II Lucky Shot and War Baby mines. It is estimated that from 1918 until being shut down by the federal War Production Board in 1942, these two underground operations produced some 252,000 ounces of gold from ore averaging roughly 2.2 ounces (68 grams) of gold per ton.
All told, the various mines on the Willow Creek property produced roughly 500,000 ounces of gold from ore with an average grade north of 1 oz/t (31 g/t) prior to being closed during World War II.
Miranda, which secured a 20-year lease on the Willow Creek property in 2013, said the high-grade mesothermal gold found at Willow Creek is reminiscent of Mother Lode, a famous California vein system that was traced to depths of more than 1,200 meters and for some 100 miles along strike. Like its California Gold Rush contemporary, Miranda believe the rich gold veins at Willow Creek are likely to continue well beyond the historic workings, making the road accessible property the ideal place for an exploration company to produce an income from a relatively modest investment.
“The Lucky Shot Mine will put Miranda in a unique class of primary explorers with cash flow, while still adhering to its joint venture business model as a prospect generator,” explained Miranda CEO Joseph Hebert.
Instead of trying to develop Lucky Shot Mine on its own, Miranda brought in Gold Torrent, an Idaho-based company formed specifically to mine Lucky Shot and other late staged gold projects in North America that can be advanced into development fairly inexpensively.
Led by Daniel Kunz, a mine engineer that spent 17 years with Morrison Knudsen Mining and nine years as COO of Ivanhoe Mines, Gold Torrent’s board and management team is loaded with the expertise needed to develop a high-grade underground gold project.
"Miranda is fortunate to have an experienced team at Gold Torrent, as operator for the Lucky Shot Mine,” said Hebert.
To earn a 70 percent joint venture interest in the Willow Creek project, Gold Torrent has agreed to invest the first US$10 million needed to develop a mine at Luck Shot, according to the terms of the 2014 agreement.
Gold Torrent, which had already invested more than US$1 million readying Lucky Shot for development, recently raised US$13.25 million, more than enough for the Idaho-based mining company to earn its 70 percent interest in Willow Creek.
With the funding in place, the partners have established Alaska Gold Torrent, an Alaska limited liability company owned 70 percent by Gold Torrent and 30 percent by Miranda. The excess cash deposited by Gold Torrent will be repaid out of Miranda’s share of the cash-flow from the mine.
The funds invested by Gold Torrent so far went towards updating the resource around the historically mined areas at Lucky Shot mine and to investigate the viability of re-establishing a mine there.
Last year, the partners published an updated resource estimate for Lucky Shot that encompasses 206,500 metric tons of measured and indicated resources averaging 18.3 grams per metric ton (121,500 ounces) gold; and 59 thousand metric tons of inferred resource averaging 18.5 g/t (35,150 oz.) gold. These resources are found in the Coleman and Lucky Shot areas, both near historic mine workings.
Based on the initial resource, Gold Torrent commissioned a preliminary feasibility study that outlines a 200-metric-ton-per-day operation that would produce around 25,000 oz of gold per year once the mine is up to full production.
Gold Torrent plans to use a gravity system to recover the gold, a method that has historically liberated more than 85 percent of the gold, according to the company. The miner believes it can boost this recovery above 90 percent with modern recovery equipment and techniques.
This approach, akin to the recovery methods used by placer miners, does not utilize any chemicals. This method is relatively benign, simplifying the permitting process.
Gold Torrent foresees beginning limited production in about 18 months. The company’s forecast for gold production is around 10,000 oz in 2018; 16,000 oz in 2019; 25,000 oz in 2020; and 26,000 oz in 2021.
“With the financing and forecast start-up of the Lucky Shot project, Miranda will now advance its strategy of securing near-term cash flow to support its core business of exploration for world-class discovery in Colombia and elsewhere,” said Hebert.
Once cash is flowing in from Lucky Shot, the partners plan to investigate the larger gold potential across the Willow Creek property.
In addition to following the gold-rich veins in the immediate mine area, Alaska Gold Torrent is eyeing some of the other areas where drills have tapped high-grade gold.
The Murphy area, drilled by Full Metal Minerals in 2006 and 2007 extends the gold-rich veins 600 meters to the east historic workings. Out of five holes drilled there, cut 1.6 oz/t gold (55 g/t gold) about 300 meters below the surface.
The partners would also like to investigate a section of the Willow Creek property about 2,000 meters further east that hosted a number of pre-World War II mines, including Gold Bullion, which is reported to have produced 77,000 ounces of gold from ore that averaged 1.7 oz/t.
Sampling by Miranda in 2014 discovered three vein sub-crops that assayed 50.74 g/t , 17.05 g/t and 18.5 g/t gold.
Some believe the gold historically produced in this area was mined from an extension of the Lucky Shot vein system. If these dots can be connected, the veins at Willow Creek would extend more than 4,000 meters, providing a lot of potential ore for a new mine in this historic Southcentral Alaska mining district.
