Modern prospecting digs decent payday

DAWSON CITY, Yukon Territory - Underworld Resources Inc., like a growing number of juniors, owes its chance to make a huge mineral discovery in Yukon to a couple of modern-day prospectors, Shawn Ryan and Cathy Wood.

But Ryan and his wife and partner, Wood, are a far cry from stereotypical prospectors. No grizzled, elderly loners, these two are quiet parents in their 30s.

Ryan is an energetic entrepreneur with a boyish grin and a rapid-fire style of conversing. He began tramping up and down the steep hills of western Yukon 11 years ago, when he heard he could make C$1,000 a day picking mushrooms. He and Wood did that for eight years, while prospecting on the side.

These days he is a full-time prospector, but he does his best work at a desktop computer.

Wood is a geologist who manages Ryanwood Exploration Inc., the couple's prospecting firm, which has grown with the recent rise in metals prices by bringing to the attention of various mining companies potential hardrock mineral projects.

"The days of walking into the bush, picking up a rock and walking out with something are over," Ryan said.

But the Yukon Territory is only 4 percent staked and even in the Dawson area where 20 million ounces of placer gold have been produced, discoveries are still being made, he said.

Using computerized Yukon government maps and other publicly available mining data along with geotechnical data that his employees collect, Ryan has patiently pieced together the region's geological puzzles, scouting out indications of various potential deposits.

"Advancements in computer technology in the last 10 years allowed me to sit in Dawson playing with geotechnical data, and I figured out all this stuff," the prospector said in a recent interview. "I can look at 30,000 sample points in a minute on my computer."

Prospecting with a high-tech twist

Perhaps even more impressive is the effective system for physical prospecting that Ryan has developed, using modern devices such as GPS units and palm pilots with customized software that allow users to quickly enter geotechnical data, including quality, color, depth, location and orientation of samples.

"Our primary tool is the regional soil sample," he said.

For example, Ryan has collected some 40,000 soil samples south of Dawson, samples from which the anomalies on the White Gold and Black Fox Gold properties "stuck out like a sore thumb," according to Underworld President and CEO Adrian Fleming.

This summer, Ryanwood has employed 14 workers in two crews, nearly three times its work force of five in 2006.

Directing his employees to fan out over the hills throughout the 100-day mining season, Ryan supplies them with augers to collect samples 2-3 feet into the earth to get better indications of mineralization, and transports them to exploration sites by helicopter at a cost of C$1,000 an hour.

The company will collect some 14,000 soil samples in 25 to 35 projects this summer, ranging from one day to two months in duration, though rainy weather is slowing the work, Ryan said Aug. 25. Last year, Ryanwood collected 18,000 soil samples.

"In four days, we'll cover 70 kilometers, and that includes ridges and creek draws, taking samples," Ryan said.

A project-making machine

He knows the Yukon countryside and the season so well, in fact, that the prospector can invariably steer his people away from bear encounters by simply having them avoid certain areas on certain days, said Michael Burke, a Yukon Geological Survey geologist.

While the summer season is busy, Ryan said his prospecting business is really year-round. Some 60-70 percent of the work is done before the field season: laying out grids; staking more claims, if needed; reviewing assessment reports; digitizing data; and working up a game plan for the next field season.

"All of this must be completed by May 1 when I hire my crews and train the new guys, if they need training," he said.

This "grassroots" approach to prospecting is producing results.

Ryanwood has optioned 26 Yukon projects to junior exploration companies, including nearly 4 million acres (more than 1.17 million hectares) of mineral claims near the Minto and Carmacks (Williams Creek) copper-gold deposits in west-central Yukon to BCGold Corp. in 2006, and the U Claims Uranium Project, which is 90 mineral claims covering 4,647 acres (1,881 hectares) 170 kilometers south of Dawson to International KRL Resources Corp. that same year.

"At three years, I have to sell a project," Ryan said. "At that point, I've invested C$50,000 to C$60,000 in it and any more time in it, and there is a low probability of getting my money out of it. So you dress it up until it has lots of blue sky.

"I sell my data, I don't sell projects. I keep the net smelter royalty small so I don't scare off the majors. I sell to a junior for shares, and they sell to the major," he explained. "If I like the junior, then I'll sell them two or three projects."

Intrigued by 1880s notation

In the case of the White Gold and Black Fox Gold properties, Ryan started with an enigmatic reference, recorded in government records in the late 1800s that one William Ogilvie sold a rock for C$20,000 that was found near the confluence of the White and Yukon rivers.

Early prospectors recorded further indications of gold showings in the area in 1914, but no one had been able to pinpoint a substantial deposit, Ryan said.

Recent exploration on the White property included work by Teck Corp., which in 1998 located and explored the Teacher showing on the western end of the property, but let the claims go two years later.

Ryan, aided by a generous mining incentives program for prospectors run by the Yukon government, picked up the claims and optioned them to Madalena Ventures, a British Columbia-based junior, who worked with Ryan to conduct an extensive soil sampling program. The junior gave up the property a couple of years later.

Meanwhile, the Yukon government commissioned a magnetic and radiometric airborne survey in 2001, which showed a large magnetic feature that caught Ryan's interest. Studying the survey and other data he had collected, the prospector put together enough clues to physically track the location.

Tenacity, GPS led to discovery

In 2003, an excited Ryan telephoned Burke with startling news.

"Jesus, Burke, I think I found it!" Ryan exclaimed, referring to the source of the C$20,000 rock.

Burke joined the eager prospector on a quick return trip to a heavily wooded hillside towering above the mouth of the White River.

"Without GPS, I don't think I could have found it again," recalled Ryan, who had located two significant quartz veins on the White Gold property.

"We went in there in late September. Mike and I both started digging. Turns out he was standing on one vein (now called the Mike Vein), and I was standing on another (now known as Ryans Showing)," he said.

In addition to visible gold, Ryan said the key to the discovery was the size of the system of mineralization, which has the potential to be quite large

As for the little-explored Black Fox Gold property, Ryan said it was located on a peak right beside an old road between several creeks where placer deposits have been found. "That's why I say this is still virgin country," he observed.

It was Cathy Wood who approached Underworld about the properties.

My wife researches the companies' managements and handles most of the negotiations, Ryan said.

In March 2007, Ryanwood granted to Underworld Resources the right to acquire 100 percent interest of the White Gold and Black Fox Gold properties in exchange for a combination of cash, common stock and exploration spending over five years, worth more than several million dollars, as well as a small net smelter royalty.

As for the White Gold property's potential in light of Underworld's Golden Saddle discovery in July, Ryan said it was a "sleeper."

"It could be a company maker for (Underworld)," he added.