There are good indications that large porphyry copper deposits may be found beyond the borders of the Pebble property held by Northern Dynasty Minerals Ltd. Quaterra Resources Inc. has cut a deal on Groundhog, one of the most promising of these prospects in this area of Southwest Alaska known for its world-class copper potential.
“The Groundhog project offers the potential to discover a major deposit in an established porphyry belt,” said Quaterra Chairman and CEO Tom Patton.
To get a better idea of this potential, Quaterra plans to carry out a US$1 million exploration on the property this year.
Reasonable terms
The 40,000 acres of state mining claims that make up the Groundhog property blanket the northern extension of a structural zone hosting a number of porphyry prospects, including the massive Pebble copper-gold-molybdenum deposits about three miles south of the Groundhog boundary.
Alaska Earth Sciences, an Anchorage-based geological consulting firm, discovered the Groundhog prospect and Kennecott Exploration Inc., a subsidiary of Rio Tinto, explored the property for about five years prior to pulling out of Alaska in 2014.
Following Kennecott’s departure, Alaska Earth Sciences formed a partnership with Kijik Corp., the Alaska Native village corporation for Nondalton, the nearest community to Groundhog.
This partnership, Chuchuna Mineral Company, set out to find a mining company to continue the exploration of the promising asset.
Quaterra Resources cut a deal with Chuchuna that provides the exploration company the option to earn a 90 percent interest in Chuchuna in exchange for US$5 million in exploration and US$3 million in cash payments over a five-year period.
This includes a minimum of US$1 million for exploration during the first year and at least US$500,000 in each of the next four years. Each year, Quaterra has the option to terminate the agreement and the US$3 million cash payment to Chuchuna is not due until the end of the option.
If Quaterra does complete the option, Chuchuna would hold a 10 percent joint venture interest in Groundhog and a 1.75 percent net smelter return royalty on the property. Quaterra would have the option to buy half of this NSR for US$25 million.
While Quaterra has explored in Alaska before, in recent years the company has focused on Yerrington, a large copper project in Nevada.
With copper prices on the rise and mining markets recovering, Quaterra President and COO Gerald Prosalendis said the explorer has been on the hunt “for exploration opportunities that come with large-scale potential, credible partners, community support, valuable data; and that can be acquired on reasonable terms.”
Quaterra leadership believes Groundhog and the deal it cut to acquire the Southwest Alaska copper project meets these criteria.
“With this deal, Quaterra has partnered with a local exploration team that has demonstrated previous exploration success, and with a village corporation that is grounded in the local community and has built strong relationships with its surrounding neighbors and governance authorities,” Patton said.
Chuchuna will be the operator of the project and will plan and execute exploration field programs as set out in a budget and work plan approved by Quaterra.
Confirming Kennecott exploration
Quaterra and Chuchuna will pick up where Kennecott left off, with a field program being planned for this summer.
While very little information on the discoveries made by Kennecott has been made public, the company told local residents in 2010 that it was using geophysics to identify deep mineralization at Groundhog.
Quaterra says the past work on the property has “identified a number of large, high-priority, magnetic and induced polarization targets.”
The company plans to confirm and expand upon these geophysical targets with a 2017 program that is expected to include mapping, sampling, further induced polarization surveys and drilling.
