Greyhound glints with precious metals

One of the reasons that mining-friendly Nunavut is attracting considerable industry attention in 2010 is the ongoing exploration success of ventures like Aura Silver Resources Inc.'s Greyhound Project in the Kivalliq region of the territory, where relatively modest spending can deliver impressive results.

Aura Silver reported results in August and early September from surface sampling and drilling programs this summer that returned grades as high as 28.2 grams per metric ton gold and up to 5,380 g/t silver. The samples were taken as part of a brief mapping and sampling program in the western part of the Greyhound property.

The sampling southeast of Aura Lake enabled the company to extend the gold-rich occurrence previously identified in 2008 sampling for about 100 meters to the south. Most surprising was that three out of the four samples taken here contain high-grade gold (0.35 to 0.93 troy ounces per metric ton) and 20-69 g/t silver; the fourth sample contains 171 troy oz/t of silver with anomalous gold.

"These samples are of significant importance to the potential of Greyhound to host an ore deposit, particularly given that the property is hosted by strata that are very similar to those at Agnico-Eagle's Meadowbank gold mine," said Aura Silver President and CEO Robert Boaz.

Greyhound's proximity to Meadowbank is adding to its allure. The project lies just 40 kilometers, or 25 miles, north of Baker Lake and some 46 kilometers, or about 29 miles, south of the gold mine. Meadowbank, which produced first gold in February, contains proven and probable reserves of 3.7 million ounces of gold at an average grade of 3.5 g/t. An all-weather road to the mine from Baker Lake crosses the Greyhound property within 1 kilometer, or 0.62 mile, of the recent gold/silver zone discovery.

Aura Silver said its surface geology program included re-examining several prospects - both historic and those it previously identified - to determine more about the extent and geological relationships of various mineralized areas of Greyhound, a property comprised of 26 claims covering 25,333 hectares, or 62,573 acres. Many of the historic prospects to the west of Whitehills Lake were re-evaluated, as well as the silver prospect to the west of Aura Lake (West Aura) and the gold prospect at the southeast corner of Aura Lake (SE Aura).

The explorer also re-evaluated the potential for VMS mineralization in the area, based on additional mapping and existing drill results. Previously announced surface samples from north of Aura Lake contain up to 9.2 percent copper and 18.5 percent zinc, which have mineralogical and textural attributes similar to those from high-temperature VMS deposits. The 2010 drilling program demonstrated that these samples did not come from south of the occurrence but further mapping suggested an eastern source.

Aura Silver said this latter area was poorly prospected in prior field programs, but research of government files reveals a "high-grade copper-zinc" occurrence in that area.

"Our mapping reveals an extensive 2 km-long unit of highly altered sodium-depleted felsic volcanic rock in the area of this showing. This area has not been adequately examined by geophysical surveys but is clearly prospective for VMS occurrences," Boaz said.

Preliminary results from the first phase of Aura Silver's 2010 drill program, which was primarily oriented to test VTEM conductors with shallow 100- to 125-meter holes as part of exploration for volcanic massive sulphide mineralization, revealed that many of the targets in the Aura Lake area (west central part of the property) are graphitic shale. However, preliminary assay data for Hole G-10-04, drilled under the original discovery of gold-rich float material on the southeast shore of Aura Lake, includes an interval of more than 18 meters of anomalous gold (up to 3.6 g/t over 0.59 meters).

Early signs of VMS potential

The economic potential of the Greyhound property was originally identified by Aura Silver geologists in 1998, who noted that it bore distinct geological and geochemical similarities to other productive volcanogenic massive sulphide camps in northern Ontario as well as VMS system characteristics similar to Hackett River in Nunavut. Two samples collected from sulfide-bearing frost heave in 1998 assayed 1,632 g/t and 3,400 g/t silver.

Aura Silver initiated the Greyhound Project in 2006 when it acquired 10 claims covering about 10,450 hectares, or 26,000 acres. Since then, the company has quietly amassed additional claims while employing strategic programs of mapping, geophysics, prospecting and sampling to explore the property.

In 2008, Aura Silver chief geologist and company director James Franklin completed an extensive analysis of geochemical data collected in early exploration at Greyhound and suggested that the area contains many elements of a classic, but relatively unexplored, VMS district, as well as many aspects of a gold bearing district with similarities to the Meadowbank deposit.

A high precision VTEM helicopter borne electro-magnetic survey in October and November 2009 enabled Aura Silver to confirm drill targets for its 2010 drilling campaign.

Combining the evidence from the west and southeast Aura occurrences, company geologists say they now realize that the spatially related gold and silver showings are possibly also genetically related.

The possibility of a single gold-silver system enlarges both the economic prospectivity and metallurgical robustness of the Aura Lake precious metal targets.

Similar sulfide-rich material was discovered up to 500 meters to the north of the SE Aura occurrence (assays pending.) Furthermore, extensive silicification and quartz sulfide veining was noted during soil sampling up to 3 kilometers south of this prospect.

Here the system has intersected a strongly carbonatized, sulfidic and silicified iron formation, and the adjacent ultramafic rocks are intensely carbonatized and pyritized.

The Dingo showing, which is 5 kilometers, or 3 miles, north-northeast of the South Aura lake area, is an extensive (200 meters-plus) quartz-vein system spatially associated with the margin of the major sub-volcanic intrusion that underpins all of the west Greyhound property.

Although mineralization is sparse relative to that of Southeast and West Aura in this system, the junior said its samples demonstrate further the association of gold and silver. To assess the gold potential of the identified 4-kilometer, or 2.5-mile-long corridor, Aura Silver conducted a soil survey collecting till, soil and gossanous material for analysis. More assays are pending.

During the six month period that ended June 30, Aura Silver spent about C$725,000 on exploration at Greyhound, including C$644,754 on drilling, C$38,624 on drill permitting, C$13,449 on geology, C$16,741 on geophysical costs relating to interpretation of the VTEM survey and interpretation of geophysical data and $15,698 on geochemical analysis.

Clearer geological picture

The recent results led Aura Silver's geologists to go back and re-examine their geological model for the Aura Lake area, according to Franklin.

They now believe Greyhound exhibits potential for an extensive structurally-related gold-silver system. In addition to recent assay results, the theory is further supported by quartz-feldspar porphyry dykes, extensively carbonatized ultramafic rocks ("green carbonate") and intensively altered, sulfidic iron formation. All of these extend continuously from South Aura Lake for at least 3 kilometers, or nearly 2 miles, to the south.

"In addition, the newly discovered VMS target about 2 kilometers or 1.24 miles, east of Aura Lake requires follow-up geophysical work," Franklin said in the company's Sept. 7 statement. "The next phase of our program will focus on the 10-square-kilometer (3.86-square-mile) area that comprises the western 'core' of our Greyhound property."

Aura Silver also told investors in early September that it plans to test for deep mineralization by following up on the recent results with an induced polarization survey at Greyhound in September and October, along with additional soil sampling and prospecting in preparation for a 2011 drill program.

And investors appear to be intrigued.

Aura Silver said Sept. 10 that it essentially doubled the size of a brokered private placement it announced Aug. 9 to up to C$2 million and added another offering of up to C$1 million in flow-through units. The junior said proceeds from the sale of the FT units, which can only be used for Canadian exploration, will help fund fall 2010 and spring 2011 exploration at Greyhound, work designed to determine the actual extent of the gold corridor on the property.