Mining Explorers 2009: Gold fever heats up in Yukon

Recession, what recession? That could have been the cry of some gold exploration companies in Yukon Territory in 2009. Thanks to several very impressive gold discoveries in 2008 at a time of unprecedented highs in gold prices, momentum lost in other sectors of Canadian mineral exploration seemed to hardly touch the gold-rich hills of this mining-friendly jurisdiction.

Some 63 companies started 2009 with planned exploration programs in Yukon, but before all was said and done, a horde of additional gold seekers poured into the territory, staking more than 8,000 new claims, especially in the area south of Dawson City near the confluence of the Yukon and White rivers.

Underworld Resources Ltd., a relatively young Vancouver, B.C.-based junior with experienced management and ties to New Zealand, discovered gold near the top of a forested mountain in the Golden Saddle zone of its White Gold Project in 2008. But it was news in late May 2009 from the first three drill holes of Underworld's 2009 exploration program that the junior had intersected more than 100 meters of gold mineralization averaging more than 3 grams per metric ton in the deposit that set off a staking rush not seen in the Klondike in more than a century.

By September, Underworld had completed 22,000 meters of drilling in 84 holes and its latest assay results from core samples showed hole WD09-64, a step-out penetration to the northeast of the initial discovery, averaged 3.13 grams per metric ton gold over 100.4 meters. Other results included hole WD09-69, which averaged 3.40 g/t gold over 76.90 meters, and hole WD09-70, with 3.51 g/t gold over 50.03 meters.

Underworld said the Golden Saddle deposit remained open to expansion to the east and north.

The junior also reported it significantly expanded its land position near White Gold, doubling its total land package to 2,907 quartz mining claims covering 589 square kilometers, or 227.4 square miles.

Looking for gold in all the right places

Significant 2008 gold discoveries in Yukon's Dawson Mining District to the east added fuel to fires feeding the gold fever sweeping the investment community. Explorers, such as Northern Freegold Resources Ltd. at its district-scale Freegold Mountain Project, ATAC Resources Ltd. at its gold find on the Rau Property and Northern Tiger Resources Inc. at its Sonora Gulch Project reported significant progress in 2009.

Northern Freegold reported an NI 43-101-compliant initial inferred gold resource for the Nucleus zone at Freegold Mountain of 1.08 million ounces in 67.57 million metric tons grading 0.50 g/t gold, with a 0.30 g/t gold cutoff this summer.

In addition to ongoing exploration on the 166-square-kilometer, or 41,019-acre, property, Northern Freegold doubled the size of its 158-claim Tad/Toro property in the Dawson Range by adding 152 new claims.

The junior said encouraging results at Freegold Mountain and the intense interest in gold properties in the Dawson Range and White District by Underworld Resources and other companies prompted the move.

Historical work indicates that Tad/Toro has the potential to host gold-copper-molybdenum mineralization similar to that of Western Copper Corp.'s Casino deposit to the northwest, which reportedly hosts 7.9 million ounces gold, 4.3 billion pounds copper and 475 million ounces molybdenum.

In September, ATAC Resources reported encouraging results of cyanide leach tests on samples of oxide gold mineralization from the Discovery/Tiger zone on its Rau gold property. Composites of coarse reject material from the oxide zone intersected in drill hole Rau-09-19 were re-assayed using a cyanide leach. In hole Rau-09-19, Atac intersected 24.07 grams per metric ton gold over 28.04 meters. By mid-September, Atac has completed 64 diamond drill holes on the property, of which 46 were drilled in 2009.

Northern Tiger Resources also discovered gold in 2008 in the Nightmusic zone of its Sonora Gulch gold-silver-copper property. The best drill intercept last year, hole SG-08-27, cut 26.6 meters grading 4.96 grams per metric ton gold, 11.9 g/t silver and 0.23 percent copper.

Though the junior completed geophysical work at most of its nine Dawson Range copper and gold properties, its primary focus in 2009 exploration was at Sonora Gulch, which lies to the southeast of the White Gold Project in the Dawson Range.

"It's a great address to be in," said Northern Tiger Resources President and CEO Greg Hayes during a tour of the property in August. "Between Underworld, Minto, Northern Freegold and us, there have been a lot of great drill results over the last year or so."

In addition to returning good gold and copper values, Nightmusic offered lower cost accessibility for exploration. The drilling targets, located about 1 kilometer, or six-tenths of one mile, away from camp, could be reached with all-terrain-vehicles, reducing the need for expensive helicopter support. Edmonton, Alberta-based Northern Tiger raised C$1 million for a modest 1,400-meter drill program in 2009 to follow up on the high-grade gold it found in 2008.

Newcomer Victoria Gold Corp. pursued a pre-feasibility study and drafting a comprehensive proposal for development of the Eagle Gold Project, formerly Eagle Zone, in northeast-central Yukon Territory.

The Toronto-based junior gained control of the project in its merger with Vancouver, B.C.-based StrataGold Corp. in June .

Eagle Gold appears to be a geological twin to the Fort Knox Mine near Fairbanks, Alaska, with an estimated NI 43-101-compliant indicated resource of 2.7 million ounces of gold in about 98.6 million metric tons grading 0.849 grams per metric ton gold.

Fort Knox is owned by Kinross Gold Corp., Victoria's largest shareholder with 28 percent of the junior's outstanding shares.

Victoria advanced StrataGold C$1 million in loans in May to conduct selective geotechnical drilling this summer to collect information for the pre-feasibility study and for the permitting process. StrataGold had already spent C$50 million on exploration and other work at Dublin Gulch, which also hosts the 95-million-pound Mar Tungsten deposit.

Local prospectors and incentives help

A key factor in the recent success of Yukon gold exploration is the work of Ryanwood Explorations Inc., a small prospecting firm based in Dawson City. Ryanwood, named for the husband-wife team of Sean Ryan and Cathy Wood, who own and operate the firm. Ryanwood is credited with discovery of the White Gold property currently being explored by Underworld Resources, where in less than two years, the junior has unofficially outlined more than 1 million ounces of gold in the Golden Saddle zone.

Ryanwood has optioned several other significant claim groups in central Yukon to explorers in recent months, including the Bonanza Creek claims where placer mining pulled millions of ounces of gold from the creek bed during the Klondike era.

Prospectors and juniors also took advantage of the Yukon government's successful mining incentives program. The government earmarked more than C$1 million in its fiscal 2008-2009 budget for programs aimed at supporting both hardrock and placer mining in the territory. About C$700,000 went to the Yukon Mining Incentives Program, which is designed to promote and enhance mineral prospecting, exploration and development activities in Yukon by providing a portion of the risk capital required to locate and explore mineral deposits. Some C$329,000 also was budgeted to assist placer miners.

Other gold explorers reporting progress in Yukon in 2009 include True North Mining Corp., a subsidiary of Golden Predator Royalty & Development Corp., Logan Resources, Tagish Lake Gold Corp., Copper Ridge Explorations Inc. and Yankee Hat Minerals.

Tagish Lake, focused on high-grade gold-silver deposits on its Skukum Mineral District located 80 kilometers, or 50 miles, southwest of Whitehorse, recently reported that a potential Chinese investor completed geotechnical surveys of the property and opted to terminate an amalgamation agreement with the junior.

Some explorers in Yukon, hampered by cash-tight capital markets, have also encountered problems with mineral assets in other jurisdictions. To cope, they have adopted a holding-pattern strategy in anticipation of improvements in the markets and being able to resolve their problems elsewhere.

Yukon-Nevada Gold Corp., for example, encountered regulatory and legal problems in bringing its Jerritt Canyon gold mine in Nevada into production. As the problems snowballed, the company has been forced to put its promising Ketza River gold project in southern Yukon Territory on a back burner in 2009.

Silver and copper attract admirers, too

Another bright spot in Yukon's 2009 exploration picture is the activity of silver and copper explorers, including Alexco Resource Corp. Alexco's ongoing exploration of the legendary Keno Hill silver district continued to deliver results with more silver mineralization intersected at its Bellekeno projects and development progress.

Copper's steadily rising prices in 2009 gave a boost to the ongoing exploration efforts of explorers including Capstone Mining Corp., Western Copper Corp. and BCGold Corp.

Capstone, operator of the Minto Mine, Yukon's only producing hardrock mine, had its drilling crews fan out from Minto's main deposit and succeeded in identifying at least one new high-grade deposit, Minto North.

Highlights of assays from the most recent drill holes at Minto North include hole 09SWC511, which intercepted 3.3 percent copper and 2.0 grams per metric ton gold over more than 22.4 meters (including 6.4 percent copper and 3.0 g/t gold over 7.2 meters); and hole 09SWC527, which intercepted 19.9 percent copper and 4.8 g/t gold over 2.0 meters (including 39.6 percent copper and 0.65 g/t gold over 1.0 meter).

Western Copper reported that a Quantec Titan 24 deep penetration geophysical survey at its Casino Project in central Yukon has identified several zones of potential mineralization outside of the historic mineralization limits.

Base metal explorers tread water

Exploration of base metals and uranium throughout the territory, however, languished in 2009, just as it did in many regions around the globe.

Hindered by depressed prices, Yukon explorers tracking giant zinc and lead deposits took the long-term view and drew on their stores of patience and their conviction that the prices will recover. However, explorers with sizable deposits and significant investments in Yukon focused on trying to advance their projects with the resources, whether meager, modest or ample, at their disposal. These companies include Selwyn Resources Ltd., Full Metal Minerals Corp., Largo Resources Corp. and Yukon Gold Corp.

In late August, Full Metal Minerals reported the start of exploration programs targeting high-grade zinc-lead-silver mineralization at three projects in Alaska and Yukon, including the Angie-Cat property south of Ross River in Yukon and the Nadaleen Project in the Mayo district of eastern Yukon.

Yukon Gold, for example, was unsuccessful in raising capital this year to continue exploration at the 7.85-million-metric-ton advanced-stage Marg copper-zinc-lead-silver deposit in the Tombstone Belt of northeast-central Yukon.

About C$15 million in the red, Yukon Gold told regulators in September that its losses created substantial doubt about its ability to continue as a going concern.

The Toronto-based junior said its ability to emerge from the exploration stage and conduct mining operations is dependent, in large part, upon raising additional equity financing, an endeavor in which it proved unsuccessful in 2009.

Yukon Gold also reported a change in top management and the sale of its Mount Hinton gold vein property in the Mayo mining district to the Hinton Syndicate for about C$125,000.

Douglas H. Oliver is the new president and CEO and Paul W. Pitman is its new vice president, corporate development and exploration.

Largo Resources conducted some very preliminary mine planning exercises for its Northern Dancer Project in southern Yukon in 2009.

The company posted updated mineral resource estimates in March for the tungsten- and molybdenum-rich property that included an estimate of measured mineral resources of 30.8 million metric tons grading 0.114 percent tungsten oxide and 0.030 molybdenum, indicated mineral resources of 192.6 million metric tons grading 0.100 percent WO3 and 0.029 percent moly, and inferred mineral resources of 201.2 million metric tons grading 0.089 percent WO3 and 0.024 percent moly.

The higher-grade zone at the Northern Dancer project is estimated to contain a measured and indicated resource of 60.3 million metric tons grading 0.137 percent WO3 and 0.045 percent moly (WO3 equiv 0.215 percent) and an inferred mineral resource of 5.4 million metric tons grading 0.134 percent WO3 and 0.047 percent moly (WO3 equiv 0.214 percent).

In August, the Toronto-based junior hired Inspectorate-PRA to carry out further phases of metallurgical testing. Largo also undertook a further program of optical sorting to confirm the previous results that indicated the technique to be successful in recovering 93 percent of the tungsten oxide while rejecting approximately 48 percent of the feed.