Mining News: Northern Freegold doubles resource base

2011 exploration confirms Freegold Mountain potential as gold-rich porphyry monster; 2012 drilling will target Revenue, Stoddart

Rose Ragsdale

For Mining News

As Northern Freegold Resources Ltd. heads into a fifth season of exploration on the Freegold Mountain Project in central Yukon Territory, a picture is slowly emerging of yet another large natural repository of precious and base metals in the prolific Tintina Gold Belt.

Not only does the district-scale property loom above still-producing placer gold creeks in the heart of a proven gold and copper mining belt in central Yukon, its sprawling 198 square kilometers (75 square miles) lie just 30 kilometers (19 miles) south of Capstone Mining Corp.’s Minto Mine, Yukon’s only current copper-gold-silver producer.

Surrounded by numerous smaller and lesser known gold and polymetallic deposits, Freegold Mountain is also located about 100 kilometers (62 miles) southeast of the White Gold Property of Underworld/Kinross Gold Corp. and some 80 kilometers (50 miles) southeast of the giant Casino copper-gold-molybdenum deposit, where Western Copper and Gold Corp. reported sizable copper-dominant reserves and resources in May 2011.

Though its grades, so far, are comparable to world-class porphyry mines, Freegold Mountain – unlike the Casino deposit where copper appears to be king – is living up to it name as a gold-rich discovery.

“What’s different is we have much more gold-dominant deposits,” said Northern Freegold Chairman John Burges. “The geological structure of the Casino and the Revenue deposits is similar, but Casino has 55 percent gold values, while we have higher gold values,”

At the Nucleus Deposit, Northern Freegold reported an NI 43-101-compliant resource estimate in 2010 and 2011, at a 0.4 g/t cut-off, of 90 million metric tons containing 1.1 million oz. gold, 1.1 million oz. silver and 67.8 million lbs. copper (0.7 g/t gold, 0.90 g/t silver and 0.06 percent copper), or 1.4 million oz. (0.89 g/t) gold-equivalent in indicated resources and 600,000 oz. gold, 1.4 million oz. silver and 62 million lbs. copper (0.47 g/t gold, 0.98 g/t silver and 0.06 percent copper), or 898,000 oz. (0.67 g/t) gold-equivalent in inferred resources.

Burges said the Nucleus deposit’s gold values average about 75 percent.

The Revenue Zone deposit, believed to be much larger and deeper, is a polymetallic mix also characterized by strong gold values, Burges said.

Northern Freegold reported its first resource estimate for the Revenue deposit in January, thereby more than doubling the project’s total resource base. At a 0.4 g/t cut-off, the resource totaled 101 million metric tons containing 1.12 million oz. gold, 10.2 million oz. silver, 286.9 million lbs. copper and 89.6 million lbs. molybdenum (0.34 g/t gold, 3.14 g/t silver, 0.13 percent copper, 0.04 percent molybdenum) , or 3.66 million oz. (1.08 g/t) gold-equivalent in inferred resources.

Both the Nucleus and Revenue deposits remain open in all directions and at depth, and additional drilling has the potential to significantly expand the resources.

“The (Revenue resource estimate) is important for us,” Burges told Mining News in an interview March 12. “For a first-time resource, we are pretty pleased with it. It’s double the tonnage that the company had. We went from 90 million (metric tons) to 190 million (metric tons), and we believe that the Freegold Mountain project will emerge as a leading gold-copper porphyry deposit.

Northern Freegold spent C$4 million on exploration at Freegold Mountain in 2011, drilling 27 holes covering 12,375 meters, which resulted in discovery costs that averaged about C$1 per ounce, Burges said.

The 2011 results reflected large drill-hole intercepts with many exceeding 300 meters of bulk-style mineralization.

“This is a large deposit with an 8-kilometer (5 miles) long geophysical anomaly and a geochemical anomaly that covers 6 kilometers (nearly 4 miles), he said.

The drilling was concentrated in the eastern half of the Revenue Zone, except for a single 750-meter step-out hole drilled on the western side of the deposit. The results from drill hole RVD11-033 showed similar mineralization but was not included in the resource estimate.

However, the long step-out gave the junior’s technical team a high-degree of confidence in planning the 2012 exploration program in which drilling will be concentrated on the western half of the Revenue Zone anomaly.

“We’ve made a road so we can get in on the west side this year,” Burges said. “We see this as the low-hanging fruit. We believe Revenue is a very big bulk tonnage open-pittable deposit. ”

Drilling the western side of the Revenue deposit also will help Northern Freegold better understand the Nucleus deposit, which is located about 3 kilometers west of Revenue.

“This is what’s really exciting our geologists and is exciting me,” said Burges, who left a Wall Street firm to take the helm at Northern Freegold last fall. “This is a classic volcanic intrusive, and there is lots of potential between to find other gold deposits.”

He said his exploration team tested this thesis last summer and identified 12 priority targets between the Revenue and Nucleus deposits.

“We plan to drill those targets out, and we hope to add a similar amount of ounces to the resources this year,” Burges said.

Aggressive 2012 program

The junior is also continuing metallurgical tests in preparation for conducting a preliminary economic assessment of the project to be completed in early 2013.

“We want to prove out the economic viability of recovering all of the key metals. We’ve got initial results back that are encouraging, and we expect to have the complete results by the end of May,” Burges said. “We don’t anticipate any issues, but we need more testing done on the copper and molybdenum in the deposit.”

He said Northern Freegold’s geologists say the core at Revenue “looks very clean, and they can see the molybdenum in the copper pyrite.” The Revenue deposit also contains some tungsten, but that metal sometimes can be difficult to recover.

“We will wait to see if (the tungsten) can be added to the resource estimate,” said Burges.

Since Northern Freegold assembled the property in 2006, the junior has identified more than 20 mineralized zones on Freegold Mountain, including the Tinta Deposit, a polymetallic vein system located near the eastern end of the 60-kilometer (37 miles) long property.

In 2009 Northern Freegold reported an NI 43-101-compliant resource for the Tinta deposit of 1.15 million metric tons of inferred resource with significant gold, silver, copper, lead and zinc values that equate to 190,000 oz. (5.14 g/t) gold-equivalent and good potential to increase in size and grade. The Tinta deposit remains open along strike and to depth.

In 2011, the junior shot a 44 line-kilometer Titan 24 geophysical survey targeting copper-gold porphyry mineralization up to 750 meters in depth over the Stoddart Zone near the center of the roughly rectangular mountainous property. The survey successfully identified 37 anomalies in this area, with 12 of those classified as first-priority targets that extend from the shallow subsurface to approximately 350 meters depth.

Previous surface sampling and drilling on Stoddart returned anomalous gold, silver, copper and molybdenum values in disseminated sulphide mineralization, indicating the potential for significant porphyry mineralization similar to that seen in the Revenue Zone.

Burges said the company also plans to explore Stoddart with a drilling program in 2012. The deposit is located about 6 kilometers (4 miles) east of the Revenue Zone deposit.

The Freegold Mountain property package is located on the Freegold Mountain Road, a government maintained gravel road that connects to the Klondike Highway, an all-weather paved highway, which connects to Whitehorse some 200 kilometers (124 miles) to the south, which is the major supply center for the Yukon. Power lines located along the Klondike Highway are currently 30 kilometers (19 miles) from the Freegold Project boundary. The nearby Carmacks Copper deposit will require a 12-kilometer (7.5 miles) long power line to connect it to the power grid along the Klondike Highway. Once in place, the power line would be within 7 kilometers (4.5 miles) of the Freegold Mountain project.

“We’re now the third-largest deposit in the Yukon, and we have good infrastructure,” Burges said. “The company is fortunate that the project sits on a government-maintained road. The exploration costs are considerably less that other projects in our peer group. We can truck in equipment, rigs and supplies, and we are in close proximity to the high-voltage line that runs to Minto to the north of us.”

Burges said the junior’s share price is trading at about 65 percent of its book value and at about one-quarter of the book values of its peer companies.

“We now have about $9 an ounce in the ground for gold and that compares very favorably with our peers,” he said.

The CEO said it was the scale of the Freegold Mountain project and the low valuation of the company that attracted him to the job of managing Northern Freegold.

“There is a lot of blue sky in the project, and it looks extremely cheap to me,” Burges said. We think we are sitting on a monster of a porphyry system and we’ve only drilled 5 percent of it.”