If another US$4 million investment by Royal Gold Inc. is any indication, drilling so far this season at the Tetlin gold property in Interior Alaska is a success.
In January, Royal Gold and Contango Ore Inc. finalized an agreement that affords the Denver-based royalty company an opportunity to earn as much as a 40 percent joint venture interest in Contango’s Tetlin project by investing up to US$30 million on the unique and promising gold properties near the crossroads town of Tok.
“We are excited that Royal Gold has agreed to join our effort to expand upon the promising exploration work we have initiated on the Tetlin lease and neighboring claims covering over 750,000 acres,” Contango Ore President and CEO Brad Juneau said at the time.
This success includes the discovery of the Peak zone, a skarn deposit that currently boasts indicated resources of 6 million metric tons averaging 3.46 grams-per-metric-ton gold, 11 g/t silver and 0.25 percent copper for 783,115 gold-equivalent ounces; and an inferred resource of 3.9 million metric tons averaging 2.07 g/t gold, 14.28 g/t silver, 0.23 percent copper for 332,969 gold-equivalent ounces.
“The exploration success CORE has achieved to date is encouraging, and we look forward to providing the resources to continue developing the project in a methodical and success-based manner,” Royal Gold President and CEO Tony Jensen said in January.
The resources provided by Royal Gold included an initial US$5 million deposited in the bank account of Peak Gold, a limited liability joint venture formed to fund an initial 7,500-meter drilling program primarily focused on some of the previously undrilled targets that Contango has identified across the expansive land package.
Seeking other Peaks
Though it would be easy to grow the Peak zone gold-silver-copper resource with more drilling, Royal Gold seems more interested in investigating some of the blue-sky potential the greater Tetlin property has to offer.
Avalon Development Corp., the Fairbanks-based geological consulting firm Contango Ore has hired to carry out exploration at Tetlin since 2009, identified a number other zones across the property with geophysical and geochemical signatures similar to those that led to the discovery of the Peak deposit.
Until the discovery of Peak, Avalon and Contango were unsure what style of mineralization was responsible for the high content of copper, gold and other minerals found in the soil. By the end of 2012, however, geologists had nailed down some characteristics that helped expand the Peak zone and what to look for when seeking other similar deposits at Tetlin.
One of the clearest indicators is that the copper-gold mineralization intersected during drilling coincides with a zone that has both a high magnetic and high conductivity response – the lower the geophysical response, the lower the values of gold and copper.
“The Peak zone stands out as one of those really highly conductive and magnetic zones, and if you look around nearby, there are a dozen other places that you should go look because they have a similar geophysical signature,” Avalon President Curt Freeman explained.
Some of these geophysical-geochemical targets are located within the larger Chief Danny area and in close proximity to the Peak zone that they resemble.
“In June 2013, we acquired new airborne data, and based on interpretation of these data, along with existing reconnaissance data, core data, and other data sources, we have identified several exploration leads both inside and outside the Chief Danny area, as well as a deeper target underneath the Peak zone,” Contango Ore explained at the time.
The first phase of 2015 exploration tested four of these outlying targets – Saddle, North Saddle, Saddle Skarn and Tors – and the expansion target identified below Peak.
The three Saddle zones are located within the Chief Danny prospect, a 13-square-mile area that also encompasses the Peak deposit.
Located less than two miles northwest of Peak, the Saddle area was one of the first targets tested when drilling began at Tetlin in 2011. These holes tapped anomalous mineralization. The initial phase of this year’s work, benefits from a clearer understanding of the deposit types being sought and more robust geophysical data.
Tors, located about five miles east of Peak, was one of the more promising geophysical-geochemical targets identified outside of the Chief Danny prospect area.
In reporting results from the early exploration this season, the Peak Gold JV offered few details.
“While the joint venture has not received all assays back from the phase 1 drilling, initial findings are encouraging,” Juneau said recently.
Mark Isto, executive director of project evaluation for Royal Gold, observed that it may be early 2016 before significant details from work will be available.
Results from the first phase of drilling at Tetlin, however, were prospective enough for Royal Gold to invest the additional US$4 million in a 6,000-meter drill program.
Contango Ore said this second phase “will further explore and delineate the potential of new areas that were targeted in phase 1.”
Isto told Mining News that the second phase of 2015 work at Tetlin is now underway.
With a total US$9 million invested this year, Royal Gold has earned an initial eight percent interest in the Peak Gold. The royalty company can increase its stake in the JV to the full 40 percent by investing the remaining US$21 million by October 2018.
