Junior ignites second Yukon gold rush

Who says lightning can't strike twice in the same place?

In just 32 days last summer, ATAC Resources Ltd. rocketed from near-oblivion to ignite what is rapidly becoming the second modern exploration rush to Yukon Territory in recent years.

Atac had explored a small area in the western portion of its Rackla Gold (formerly Rau) Project in east-central Yukon for several years. After making an impressive gold discovery in 2008, the company has drilled about 26,000 meters in 132 holes through 2010 in the Tiger Zone. As recently as Dec. 15, Atac reported strong drill results, hitting 32.64 meters averaging 8.91 grams per metric ton gold in the latest round.

Last summer, the junior ventured nearly 160 kilometers, or 100 miles, to the east and stumbled upon new gold showings at the other end of the property.

The new discoveries occurred just two weeks after Atac reported identifying the Ocelot target, another significant style of mineralization located on both sides of the Rau Trend in the west. Seven surface samples in the Ocelot target assayed up to 2,810 g/t silver, 80.55 percent lead, 40.55 percent zinc and 68.10 g/t indium.

Roughly the size of Long Island, N.Y. with 16,000 square kilometers and less than 10 percent of its surface area explored, the Rackla project is now known to host gold and other minerals in at least three different geological settings.

Creek ran blood red

Atac, which engages Archer Cathro & Associates (1981) Ltd. as its exploration contractor, acknowledges that the longtime Yukon consulting firm is playing an important role in its success at the Rackla project.

It was an Archer Cathro exploration geologist who followed up stream soil sediment samples showing elevated arsenic and gold levels and happened upon a dramatic surface showing in July.

"Some rocks on the banks caught my eye, so I chipped at them with my pick, and the stream literally ran red," said Archer Cathro President Bill Wengzynowski, describing the moment of discovery.

"For a second, I thought that I was bleeding," he quipped during a Yukon Geoscience Forum presentation in Whitehorse in November.

Wengzynowski had knocked loose a chunk of rock rich in orpiment and realgar, mineralization that tends to be "pomegranate red" in color, according to Atac CEO Graham Downs.

"In 2009, we did some silt sampling at the Sten claims (since renamed the Nadaleen Trend), and it was these samples that Bill was investigating," Downs told Mining News in a March 16 interview.

After the surface reconnaissance, Atac hustled to quickly import a drill rig to the area, and drilled just shy of 1,900 meters in nine holes in the mountainous terrain.

"We scrambled to get a couple of people there. We had no drill crews. We said, 'Just find a flat spot and drill,' " Downs recalled.

Within three weeks, Atac made four separate gold discoveries over an 8-square-kilometer area. Every hole drilled hit gold. Six holes hit the Osiris Showing, before the explorers stepped out 1 kilometer to the east and drilled a hole that hit the Conrad Showing. Another 400 meters farther east and they drilled the discovery hole for the Eaton Showing. The explorers also stepped some 900 meters to west of Osiris and drilled a hole that hit the Isis Showing.

"These were single holes over a very large distance, and we only built one drill pad," Downs said.

Atac reported the discovery of the four gold showings in mid-August just 32 days after Wengzynowski took his fateful hike up a stream on the Sten claims.

At Osiris, the junior reported 65.20 meters, averaging 4.65 grams per metric ton gold; at Conrad 21.13 meters at 8.03 g/t gold; at Eaton 9.64 meters at 3.36 g/t gold; and at Isis 17.00 meters at 0.92 g/t gold, along with several higher grade rock and soil samples.

More drilling in August and September produced results that confirmed the discoveries.

In October, the junior staked about 1,000 new claims encompassing 167 square kilometers, or nearly 65 square miles, to cover known pathfinder anomalies near the Osiris discovery. The new claims adjoin the eastern and northeastern edges of the company's existing claim block.

Discoveries spark another Yukon gold rush

News of the gold finds trickled out in late summer and soon touched off a wave of industry excitement not seen in the territory, arguably since the Klondike gold rush at the turn of the last century, or at least since the White Gold discovery in the Dawson Mining District to the west in 2008.

It's the rocks that set the latest discoveries apart.

Osiris and the other eastern showings are believed to be a part of a geological formation that mimics a gold-rich setting found in Nevada known as the "Carlin Trend." During the past 50 years, explorers have found numerous commercial gold deposits in the Carlin Trend, with the northern Carlin Trend area alone, yielding more than 96 million ounces of gold.

Carlin-type rocks were part of reefs that formed in the ocean millions of years ago where limestone broke off and tumbled forming debris flow breccias.

"This is the biggest gold sponge you could ever find, and they occur in massive structures. A lot of gold can go into these super sponges, and we've got 125 square kilometers (some 48 square miles) of this beach setting (on the Rackla property)," Downs said.

Downs said Atac's assessment of its latest discoveries as being Carlin-style mineralization was reinforced recently by the more than 100 industry professionals who stopped by the junior's exhibit at the 2011 Prospectors and Developers Association of Canada International Convention March 6-9.

"It felt good to have 100 or so people come by and not one of them argued or disputed that we had Carlin-type mineralization," Downs said. "They all said, 'Yep, you've got it.' "

Maurice Colpron, project geologist for the Yukon Geological Survey, said the Rackla Gold Belt is located at the northern edge of the Selwyn Basin between the regional-scale Dawson Thrust and Kathleen Lakes Fault.

"These are major fault structures that could have acted as conduits for bringing mineralization to the area, meaning there seems to be the proper plumbing system in the area" for these gold discoveries, said Colpron, who is preparing a bedrock map of the area for the Yukon Geological Survey.

The government geologist said recent staking activity in area around Atac's claims has resulted in the whole belt being staked.

"Atac had a quite a head-start there, and all of the ground around them has been staked," Colpron said March 20. "This area is just as busy as what was happening in the Dawson area last year."

Downs said he personally believes the Rackla Gold Belt is "a whole new gold district" because Atac found gold in the western quarter of the property and also gold showings some 100 kilometers, or 62 miles, away near its eastern edge.

The Nadaleen Trend appears to host the first Carlin-type mineralization found in Canada. This development seems to have captured the mining industry's imagination along with a steadily flow of working capital for Atac from investors. Most recently, the junior raised C$25 million in a private placement in February, bringing to about C$50 million the working capital available for the 2011 exploration campaign.

Atac is a widely held company. Its largest shareholder with a 10.2 percent ownership interest is Strategic Metals Ltd., a sister company that specializes in generating mining exploration projects. Atac's management also holds a 6.3 percent interest, while the balance of the junior's 100 million fully diluted capital shares are held by institutions and individuals.

With no majors among its significant shareholders, Atac may be poised to become the perfect takeover target, or not. Downs declined to even indicate whether any of the majors have approached the company.

"I'll let you use your imagination," he told Mining News.

Aggressive exploration on tap for 2011

For the 2011 field season, Atac has hired eight drills to complete an aggressive 40,000-meter drill program in 200 to 250 holes - 30,000 meters in the Nadaleen Trend and 10,000 meters in the Rau Trend. Budgeting C$20 million for the exploration campaign, the company engaged additional drills on a standby basis.

Atac is planning to build two additional air strips, one near the Tiger zone and another near Osiris likely on a natural bench in one of the valleys, to cut costs by flying equipment and supplies directly to the exploration sites from Whitehorse, rather than trying to ferry them across the mountains from a central location.

The junior also plans to complete an NI 43-101 resource estimated for the Tiger zone in the third quarter and is considering mining that deposit from the air, instead of building a access road.

"We're actually going to put some thought into it," Downs said. "We will step back and learn more before we make any big decisions. If we keep finding mineralization out at the Osiris area, what's going to happen? I don't know."

Good, but how good

Since finishing the 2010 field program last fall, Atac's exploration team has worked to understand the implications of the new Rackla discoveries.

One difference between Atac's discoveries and the Carlin Trend is that the prolific Nevada gold deposits are deep mineralization, while the Nadaleen Trend, at this point, appears to be near the surface.

But with less than 10 percent of the property explored, the junior believes it is too early to know much.

"One thing we've asked is what if we find something bigger," Down said.

"What if we find something in the middle?" he asked, referring to the vast unexplored area between the Tiger Zone and the Carlin-style discoveries.

Though no one knows if Atac will identify more significant mineral deposits on the huge property, Downs said the "smart money understands how rare" the Carlin-style mineralization is.

"We know it's good, but we just don't know how good it is," he added.