Near Whitehorse, it's all 'Skukum'

For geologist T. Greg Hawkins, the question at Mount Skukum/Skukum Creek isn't where to find the gold and silver that nature sequestered in this steep-sided valley. Rather, it's how to attract investment capital to extract the soft yellow and bright gray metals from deposits he knows span the Wheaton River on the valley floor.

"The secret of these types of operations is to get into production as soon as possible," said Hawkins, who is chairman of Tagish Lake Gold Corp., owner of 987 full or fractional quartz claims covering more than 178 square kilometers near Skukum Creek.

After completing $5 million of exploration work, Tagish Lake has conservatively estimated that three zones contain a total of 1.2 million tonnes of ore, grading on average 8.0 grams per tonne of gold and 153 grams per tonne of silver, according to Hawkins. He says the grade achieved in underground drilling was about 10 percent higher than expected, and one of the deposits, Goddell, could yield 1 million ounces of gold on its own.

"My favorite exploration target is called Charleston," Hawkins said. The 1902 mining lease on it expired in 2002 for nonpayment of taxes, and it contains an estimated 205 grams per tonne of gold and 6,000 grams per tonne of silver, he added.

How did Tagish Lake, a modest-sized junior, come to possess such a promising mine project?

Hawkins views it as the best kind of serendipity. Formerly owned by two companies in a joint venture, Skukum Project came to a standstill in the 1990s when the two partners stopped talking to each other, Hawkins said.

"We took over one company and brought the other one to the table," he explained, during a tour of the mine operation Sept. 22. "Last year, we bought all the other interests."

Tagish Lake has a database on the Skukum deposits collected in $16 million of exploration by a previous owner, AGIP. In addition, previous owners spent C$6 million to C$7 million on underground development at the Rainbow deposit and another C$7 million at Goddell, plus at least C$1 million to build haul roads to all of the deposits, Hawkins said.

Prospectors actually discovered gold-bearing quartz stibnite veins in the Wheaton River areas in the early 1890s and since have uncovered numerous deposits in the area. In 1981, exploration activity peaked in the Wheaton River District, and then owner AGIP succeeded in mining 2.4 million grams of gold between 1986 and 1988.

The area is only 80 kilometers southwest of Whitehorse and 47 kilometers from Yukon's power grid. Year-round access is available today by all-weather road, and the project has C$8 million worth of existing assets, including a 300 tonne-per-day mill, ancillary buildings and underground development.

Tagish Lake, which has completed much of the work required for a feasibility study in the past four years, would like to conduct a five-year demonstration project showing how the area's deposits can be mined profitably at relatively low cost of about C$64 a tonne in a narrow-vein, underground mining operation.

Hawkins estimates his company is 30 months and about C$30 million from production. It will take C$3.5 million to reach a production decision, another C$25 million to develop the mine and C$5 million in working capital, he says.

"These kinds of deposits can be mined for 100 years. We're here for the long haul," he explained. "Everybody wants to hear about millions of ounces of reserves. But it's too expensive to develop reserves in advance. I don't doubt they are here, but I can't say where. That's what interests us as geologists."