Third Pogo area property optioned by partners

The partnership between Vancouver, British Columbia, junior Rimfire Minerals and global mining giant AngloGold (U.S.A.) Exploration continues to grow, as the two companies announced in late June their third property option agreement for a prospect near the Pogo area.

Now optioned by AngloGold, the Beverly claim group is on the eastern boundary of the Pogo project in the upper Goodpaster River Valley in Interior Alaska, a high-grade gold deposit being developed by Teck Cominco and Sumitomo Metal Mining Co.

"From a geological standpoint, it's a very key piece of ground," David Caulfield, president of Rimfire Minerals, told Mining News on July 6. "It's on a straight line with the Pogo trend and the Liese zones, which are trending north-northwest and south-southeast."

The Beverly claim block consists of 202 state mining claims, some of which have recently been staked by Rimfire. Past exploration work on the property has been limited to reconnaissance-scale prospecting, mapping, airborne geophysics and soil sampling, the company said in its June 22 press release announcing the new agreement with AngloGold.

Rimfire's previous work identified a one kilometer by one kilometer area of anomalous gold and pathfinder element soil geochemistry, detected by elevated levels of gold in silt samples and float boulders that assayed 2.4 grams per ton of rock.

"We found some very high silts, more than 1,000 parts per billion (gold) in the creeks and rock samples with more than two grams," Caulfield said. "It's got all the right earmarks of what to look for in that area."

AngloGold plans to conduct initial ground work this summer, taking a first pass on the property, Caulfield said. "Anglo takes a real slow, methodical approach. That's the nice thing about working with a major; they have deeper pockets and don't do things at the whim of the markets."

Joint venture terms

Under terms of the agreement, AngloGold may earn a 50 percent interest in the Beverly claims by spending $1 million and paying Rimfire $200,000 in staged cash payments over four years. AngloGold may increase its interest to 70 percent by incurring an additional $600,000 in exploration expenditures, all in U.S. dollars. AngloGold also agrees to make cash payments totaling C$75,000 at certain exploration milestones as required by an underlying purchase agreement.

Upon vesting its interest of 70 percent, AngloGold can earn an additional 5 percent interest by carrying a loan for Rimfire's share of exploration expenses and funding all expenses incurred under the joint venture through to commercial production. The loaned amounts will be paid out of Rimfire's proportionate share of production proceeds.

This makes the third similar partnership between the two companies for ground in the Pogo area. AngloGold has also optioned from Rimfire its ER and the Eagle properties, to the west and southwest of the Pogo claim block. AngloGold announced earlier this year plans to drill on both of those properties this summer, part of the company's $2 million budgeted for exploration in Alaska for 2004.

Land position grows

Both AngloGold and Rimfire, together and independently, have staked additional ground surrounding the Pogo claim block in recent years. In addition to the three properties optioned to AngloGold, Rimfire holds four wholly owned claim groups on the Pogo trend, the company said in its press release. Rimfire's land holdings in the area total 78 square miles.

"We firmly believe the Goodpaster district will develop into one of the premier gold exploration districts in North America now that the Pogo mine is under construction," said Mark Baknes, Rimfire's vice president of exploration, in the company's press release. "AngloGold continues to aggressively expand its presence in the district, and together with Rimfire, jointly controls some of the most favorable ground in the area. Rimfire is pleased to continue its partnership with AngloGold in the pursuit of significant gold discoveries in the Pogo District."

AngloGold has also staked a considerably larger position in the Pogo area, more than 61,000 hectares, according to Jeff Pontius, the company's North America exploration manager. That translates to 150,000 acres, or 235 square miles.

Anglo's 2004 plans

In past presentations to the mining and exploration industry, Pontius has said that the company's focused exploration programs in Alaska have "produced encouraging results with potential for new AngloGold greenfields' discoveries."

The company is expanding its regional targeting effort in Alaska, and its land holdings cover seven target areas, three of which are joint ventures. The company drilled a total of 4,020 meters or more than 13,000 feet in 2003, and plans to drill more than 19,000 feet this year on its Pogo area properties and at a prospect at Livengood, about 50 miles north of Fairbanks.

An extensive follow-up program is planned for the ER Project, one of the three joint ventures with Rimfire. AngloGold has already drilled six initial holes in that property prior to this summer, three of which contained visible gold-bearing veins in the Pogo style setting, Pontius said.

It's a large gold-arsenic-bismuth soil anomaly, roughly two kilometers by a half-kilometer in size, on the claim block that now includes about 16.5 square miles of state ground.

Pontius said the company plans an "aggressive soil sampling and drilling program" this summer at the Eagle property, a 24.6 square mile claim block several miles southwest of Pogo.

"Initial prospecting and soil sampling discovered large structurally controlled gold-arsenic-bismuth anomaly" that is roughly three kilometers by a half-kilometer in size, he said in past industry presentations. This year's planned drilling will be the first at Eagle.

In its exploration applications approved by the Alaska Department of Natural Resources, AngloGold requested permission to drill up to 30 core holes on each of the ER and Eagle properties.