With its sights set on gold, Contango ORE Inc. is conducting an aggressive exploration campaign on its Tetlin property in Interior Alaska during the 2012 field season.
The Houston, Texas-based explorer, known as CORE, raised US$8.8 million in March to fund an estimated US$6.75 million exploration program this year – the bulk of which will be spent on a second-year drill program at the Tetlin gold-copper project about 12 miles (19 kilometers) southeast of the crossroads town of Tok.
CORE is an Alaska-focused mineral spinout from Contango Oil & Gas Co., an exploration and production company with petroleum resources primarily in the shallow waters of the Gulf of Mexico. Kenneth Peak, in his role as founder and president of Contango Oil & Gas, is atypically frank about the pitfalls of investing in an exploration company – a candidness he has continued in his role as chairman and CEO of CORE.
“I have personally invested US$4 million in the company’s US$8.8 million offering and am obviously enthused about our potential for success but also fully cognizant of the speculative nature of this investment and the likelihood that this entire investment may well be a ‘dry hole,’” Peak said of the March financing.
Chief gold-copper target
Though an investment in Contango ORE may turn out to be a dry hole, eight out of 11 of the drill holes completed during the explorer’s inaugural drill campaign at Tetlin in 2011 were not.
The 2,456-meter drill program centered on a gold-copper porphyry prospect known as “Chief Danny,” which is comprised of two zones – Chief Danny South and a fault-offset zone to the north referred to as “Saddle.”
Since pan concentrate sediment sampling led to the discovery of Chief Danny in 2009, CORE has carried out various geochemical and geophysical surveys on the prospect, culminating in last year’s drill program.
The explorer said geochemical work; trenching; ground induced polarization survey; and airborne geophysics have outlined a zoned hydrothermal system consisting of a gold-copper-iron-enriched core covering 6 square miles (about 16 square kilometers) at Chief Danny South and a fault-offset arsenic-gold zone to the north covering 3 square miles (8 square kilometers) at the Saddle zone to the north.
The best holes of the 2011 drill program at Tetlin were tapped into Chief Danny South.
Drilled at the southern end of the prospect, hole TET1105 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 north of hole 5 – cut 6.4 meters grading 7.4 g/t gold, 4.9 g/t silver and 0.15 percent copper. TET1110 – drilled about 1,300 meters further north – cut 9.8 meters grading 1.18 g/t gold, 3.1 g/t silver and 0.04 percent copper.
Three holes drilled on the north side of the fault, in the Saddle zone, returned weak mineralization. Three holes testing peripheral targets to the east and northwest of Chief Danny South did not tap promising mineralization.
Encouraged by the results of the first round of drilling, CORE has budgeted US$3.6 million to drill some 6,100 meters at the Chief Danny during the 2012 exploration season. The balance of the Tetlin exploration budget, US$2.75 million, will be spent on investigating six prospects the company and its predecessor, Juneau Exploration L.P., have identified over the past three exploration seasons.
Many leads
In addition to Chief Danny, Contango ORE has revealed five promising leads across the 693,560-acre (280,680 hectares) Tetlin project – four of which the company plans to drill this year.
“We will have two exploration rigs drilling with one rig focused on our Chief Danny prospect (20-30 core holes planned), and one rig dedicated to drilling another approximately 20 core holes to mature four of our six leads to either the prospect stage or condemnation,” explains Peak.
Around five of the exploratory holes will test MM, a gold target some 5 kilometers (3 miles) southwest of Chief Danny South.
Like Chief Danny, pan concentrate sampling lead to the discovery of MM in 2009. CORE said follow-up sampling carried out in 2010 turned up samples exceeding 0.1 g/t gold in several of the drainages in the area. The magnetic airborne survey conducted last year revealed a strong magnetic low at MM and refined the drill area for the upcoming 900-meter core drill program. To further refine these targets, the company plans to conduct early season top of bedrock auger drilling.
Located some 14 miles (23 kilometers) south of Chief Danny, Copper Hill is another promising copper-gold lead CORE plans to drill in 2012.
Pan concentrates in two of the streams on the north side of Copper Hill returned assays of more than 23 g/t gold and another stream draining to the south turned up 4.9 g/t gold. Rock and soil sampling have shown that copper and gold mineralization is most prevalent along an east-west trending thrust fault that runs along the highland area dividing the gold-enriched drainages. Coincident magnetic and resistivity highs have confirmed the target area for the 600 meters of drilling planned for Copper Hill in 2012. Unlike many of the other prospects at Tetlin, it was geophysics that prompted CORE to investigate Taixtsalda, a promising lead about 7 miles (11 kilometers) northeast of Copper Hill. Geophysical programs conducted in the 1970s and 2011 have outlined a distinctively round area of magnetic and resistivity highs indicative of a porphyry copper system. CORE is planning around 600 meters of drilling at here in 2012.
Located about 20 miles (32 kilometers) northeast of Chief Danny, Triple Z is the only prospect with historical drilling. Unfortunately the results of the porphyry copper exploration completed by Cities Services Minerals Corp. in the early 1970s were never published.
Though the historical exploration may only provide limited clues to the potential of Triple Z, soil and rock sampling by CORE has yielded values as high as 9.07 g/t gold as well as anomalous copper, arsenic and bismuth. Supported by airborne magnetic survey data, these geochemical clues have encouraged CORE to drill some 900 meters at Triple Z in 2012.
As Texas-based explorer drills these gold and copper prospects at Tetlin it will continue seek new leads and develop additional drill targets across the expansive project as well as continue to evaluate six Alaska rare earth element projects it has in its portfolio.
“It would be truly exciting if CORE owned gold or REEs – we sadly do not – we are an exploration company … i.e. a pure and simple speculation,” according to an early presentation posted on the Contango ORE website. “In a speculation, one should be prepared – indeed expect – both financially and mentally, to lose it all.”
Peak, with a substantial amount of his own money sunk into the Alaska venture, is speculating that CORE will someday own some of the gold and rare earths it seeks.
