Led by a petroleum engineer with a 25-year history in the oil and gas industry, Contango ORE Inc., known as Core, may be the most unconventional mineral exploration company working in Alaska.
Yet, while most of the company’s more orthodox colleagues were unable to raise the venture capital needed to mount significant exploration campaigns during 2013, the Houston, Texas-based junior topped its coffers with a US$14.2 million private placement that closed in March.
Core President and CEO Brad Juneau attributes the successful fundraising in a market largely unwilling to take a risk on minerals exploration to the merits of Tetlin, an emerging high-tenor gold-copper-silver project about six miles (10 kilometers) southeast of the crossroads town of Tok, Alaska.
“I just think the project makes a lot of sense,” said Juneau.
At 13.1 grams-per-metric-ton gold, 21 g/t silver and 0.482 percent copper over 64.8 meters, results from the first hole of the 2013 season continues to illustrate the reasons why this grassroots project attracts funding.
The primary objective of the roughly US$10-million exploration program carried out at Peak in 2013 is to establish a maiden resource at Peak, a unique zone of high-grade gold and copper mineralization located in the northeastern part of the property.
“The idea is to try to find a limit to Peak because we certainly feel like we did not find the limit last summer,” Juneau said.
The company is also continuing to investigate several of the other similar-looking prospects identified across the 765,000-acre (309,500 hectares) land package, including wildcat holes into several of the most promising leads.
Distinctive propertyThe discovery of the Peak zone has been a systematic geological exercise that started when Juneau’s privately held exploration firm, Juneau Exploration L.P., leased a 675-000-acre land package from the Tetlin Village Council, an Alaska Native Village, in 2008.
Instead of black gold, the Texas oilman turned up a large region rife with precious and base metals prospects.
To gain a better understanding of the gold-copper-silver potential of the Tetlin property, Juneau tapped the mineral exploration expertise of Avalon Development Corp., a Fairbanks-based geological consulting firm.
After two seasons of geochemical and geophysical programs that identified a number of promising targets across the expansive Tetlin property, Core opted to focus its initial drilling at Chief Danny, a nine-square-mile (23 square kilometers) prospect area that encompasses the Peak zone, with an 11-hole maiden drill program in 2011.
TET1105, the discovery hole, cut 3.7 meters averaging 3.1 grams per metric ton gold, 300.2 g/t silver and 0.26 percent copper. TET1107 – drilled about 100 meters to the north – cut 6.4 meters grading 7.4 g/t gold, 4.9 g/t silver and 0.15 percent copper.
Encouraged by the results from the maiden drill program, Core revisited the Discovery zone in 2012.
Not finding the mineralization it was seeking at Discovery, Core drilled a “wildcat” hole at a geochemical-geophysical target some 500 meters to the northeast. This fifth hole of the 2012 program, TET1216, cut multiples zones of gold-copper-silver mineralization over the initial 114 meters, including: 25.8 meters averaging 7.83 g/t gold, 23.5 g/t silver and 0.05 percent copper; 6.7 meters averaging 3.5 g/t gold, 15.8 g/t silver and 0.54 percent copper; 13.7 meters averaging 2.77 g/t gold, 1.4 g/t silver and 0.05 percent copper; and 32.6 meters averaging 3.74 g/t gold, 2.6 g/t silver and 0.11 percent copper.
The grades and thicknesses improved over the next two holes drilled into the newly discovered Peak zone: TET1217 cut 49.1 meters averaging 11.22 g/t gold, 21.6 g/t silver and 0.09 percent copper, from a depth of 7.9 meters; and TET1218 cut 58.5 meters averaging 14.45 g/t gold, 9.1 g/t silver and 0.24 percent copper.
Although copper mineralization was encountered throughout the Peak zone, particularly high-grade intercepts were encountered in the southeastern portion of the currently defined zone. Highlights of this drilling include 36.6 meters averaging 0.31 g/t gold 71.6 g/t silver and 1.11 percent copper from a depth of 118.9 meters in hole TET1238; and two thick copper-rich zones intercepted in hole TET1260 – 32.6 meters averaging 0.06 g/t gold, 28.7 g/t silver and 1.34 percent copper from a depth of 116.4 meters
The mineralization tapped at Peak is as distinctive as the company that discovered it. In addition to gold, copper and silver; cobalt is occasionally present in the schist-hosted mineralization at Peak.
Like intrusive-related gold deposits found in the Tintina Gold Belt, the gold found at Peak has a strong correlation with bismuth but the mineralization found there also shares characteristics porphyry copper deposits. “It is kind of a hybrid beast right now – it is writing its own model as we speak,” Avalon Development President Curt Freeman told Mining News early in 2013.
After completing a careful and detailed analysis of the mineralization, the Tetlin geological team determined that the Peak zone is gold-enriched skarn.
Systematic drillingAlthough questions remained about the style of mineralization at Peak at the end of 2012, the geological team had identified some characteristics that helped them target the 2013 drill program. One of the clearest indicators is that the gold-copper-silver mineralization drilled in 2012 coincides with a zone that has both a high magnetic and high conductivity response.
Using this information, Contango Ore and Avalon Development established a systematic grid-based drill program aimed at establishing a maiden resource at Peak.
By September, this combination of methodical infill and step-out drilling continued to confirm and expand upon the high-grade gold-copper-silver mineralization at Peak and put to rest any questions about the mineralization found there.
Highlights from the first 34 holes include:
TET13062 cut 64.8 meters averaging 13.1 g/t gold, 21 g/t silver and 0.48 percent copper;
TET13063 cut 40.5 meters averaging 16.6 g/t gold, 36.1 g/t silver and 0.73 percent copper;
TET13077 cut 26.6 meters averaging 0.02 g/t gold, 34.6 g/t silver and 1.11 percent copper;
TET13082 cut 87.6 meters averaging 4.03 g/t gold, 19.3 g/t silver and 0.30 percent copper;
TET13085 cut 45 meters averaging 2.74 g/t gold, 69.5 g/t silver and 1.40 percent copper;
TET13088 cut 138 meters averaging 3.62 g/t gold, 11.4 g/t silver and 0.11 percent copper; and
TET13094 cut 23.7 meters averaging 0.42 g/t gold, 106.6 g/t silver and 0.72 percent copper.
“The preliminary results of our 2013 exploration program at our Tetlin project continue to meet our expectations in terms of gold, silver, and copper grade as well as thickness,” said Juneau.
By mid-September the drilling at Peak zone had traced a 500-meter-long dumbbell-shaped zone of skarn mineralization, with the southeast end being more copper-rich and the northwest side showing the higher gold values.
Speaking about a promising expansion area at the northwest end of the deposit, Freeman explained, “We tagged that this summer and added a lot of holes in an area where early in the season we would have thought we had no possibility of adding to the resource.”
Once Core receives all the assay results from 2013 drilling, the company will have a maiden resource calculated for the Peak zone and will begin considering the potential of developing a pre-feasibility level study for the deposit.
“Our goal is to identify sufficient mineral resources by the end of 2013 to justify initial reviews of economic and engineering parameters on the project,” said Juneau.
To get a start, the company had baseline water quality sampling, cultural resource assessments, acid rock drainage and preliminary metallurgical testing completed at Peak during the 2013 field season.
Beyond PeakWhile expanding and establishing an inaugural resource at Peak, Core is investigating other zones with a similar geophysical and geochemical signature.
“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,” Freeman explained.
Four 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 explains.
By mid-September, three of these prospects located within about two miles (3.2 kilometers) of Peak had been drill tested, though assays results were not available at the time of this report.
Weather-permitting, the company also plans to drill Tors, a promising target about five miles (eight kilometers) east of Peak. Tors was first identified with geochemical work completed in 2010 and has been further defined by a geophysical survey flown early in the 2013 program.
A number of other similar targets have been identified across the Tetlin property but will need to wait for future exploration programs.
To help generate the next set of targets, Core has budgeted US$750,000 for airborne geophysics and US$500,000 for additional reconnaissance exploration, including soil and rock sampling.
Much of this early-stage exploration was carried out across the 40,200 acres of mining claims extending west from the leased Tetlin claims. These claims were selected based on proximity to known mineral occurrence, access to existing infrastructure, and a geological hunch based on the exploration results of its exploration so far.
Further afield, Contango Ore allotted US$500,000 to see if it can apply what it has learned at Tetlin to other regions of Alaska’s Eastern Interior, an area that has been scanned for porphyry copper and intrusive-related gold deposits but never for Peak-style gold-enriched skarn mineralization.