The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
McEwen-led gold company investigates Interior property; Tri-Valley seeks partner to help explore Shorty Creek porphyry potential
Tri-Valley Corp., a California-based oil explorer, has cut an exploration-purchase deal with US Gold Corp. on the Richardson gold property, one of Tri-Valley's two mineral exploration properties in Interior Alaska.
The agreement, penned July 1, provides US Gold with an option to acquire 60 percent interest in the 55-square-mile Richardson property once the Toronto-based company completes US$5 million in exploration and pays Select Resources Corp., Inc., Tri-Valley's mineral subsidiary, US$500,000 in cash.
As part of requirements to vest its option to purchase a 60 percent stake in the gold prospect, US Gold must sink at least 9,144 meters of core holes into the gold property over the four-year term of the exploration agreement. The Toronto-based precious metals company can opt-out after completing an initial US$2.2 million in exploration, including a minimum of 4,572 meters of drilling.
Under the leadership of chairman and CEO Rob McEwen, Toronto-based US Gold explores for gold and silver in the Americas and is advancing its El Gallo Project in Mexico and its Gold Bar Project in Nevada towards production. US Gold said it has a strong treasury with some C$100 million in cash and gold and silver bullion.
"US Gold is a premier gold exploration and development company with significant financial resources and extensive minerals management experience, ranging from exploration stage projects through mine development and production. We are very pleased to be working with a company of this stature to further explore Richardson's potential for the mutual benefit of our respective shareholders," said Tri-Valley President and CEO Maston Cunningham.
Exploration under way
As the ink was drying on the Richardson pact, US Gold was mobilizing crews to begin its initial investigation of the gold property, which is located about 70 miles (115 kilometers) southeast of Fairbanks.
"The definitive agreement with US Gold was executed on schedule, and exploratory field work on the Richardson site began on July 5," said Cunningham.
An NI 43-101 report completed by Avalon Development Corp. in April has identified several areas of potential intrusive-related gold mineralization across the 46-square-mile (119-square kilometer) property.
Some 118,640 ounces of placer gold and 2,357 oz of lode gold have been mined in the Richardson District since 1905.
The lode gold was recovered from the Democrat prospect at the southern end of the property. Though Democrat was discovered in 1913 and a mill was set up there in 1921, very little gold is believed to have been recovered during this historical period. All of the gold attributed to the lode discovery was recovered from bulk sample programs conducted by Tri-Valley in 1989 and 1998.
After pouring over the results of around US$5.4 million worth of exploration carried out since Tri-Valley acquired Richardson in 1987, Avalon Development concluded the property hosts at least three distinctly different styles of intrusive-related gold mineralization.
In its technical report, Avalon does not recommend focusing on the known lode occurrence at Richardson. Instead, the Fairbanks-based geological firm proposes a property-wide reconnaissance program that includes gaining a better understanding of six additional prospective areas: Hilltop, Gold Run, Northwest Camp Pit, Junction, First Chance and Buckeye/Bald Knob. The company also suggests flying a radiometric survey over the entire property.
The Tri-Valley CEO said, "As part of the report, Avalon has recommended additional rock and soil sampling, mapping, and reconnaissance-scale prospecting to further identify the most prospective areas to be evaluated by drilling."
Avalon advises targeting the most prospective targets of the initial investigation with 1,525 meters of core drilling. Total estimated cost of these programs is US$1.55 million.
Shorty Creek partner
With exploration underway at Richardson, Tri-Valley hopes to strike a deal on Shorty Creek, a copper-gold prospect adjacent to International Tower Hill Mines Ltd.'s Livengood property locate about 70 miles (110 kilometers) northwest of Fairbanks.
"The partnership with US Gold represents an important milestone for Tri-Valley that moves us forward on our goal to monetize one of our two mineral assets in Alaska. Several potential partners remain interested in our Shorty Creek mineral assets and data reviews on that property are continuing," said Cunningham.
It was previously thought that mineralization at Shorty Creek was intrusive-related, similar to Livengood, but after studying the property for a technical report completed in 2010, Avalon now believes the property could be covering a large porphyry copper-gold-molybdenum mineralized system.
"While the interpretations of this report represent a departure from previous thinking about the Shorty Creek project area, this is the first time a single study has been able to incorporate all of the available data," Avalon wrote in the report. "Previous investigators focused on individual parts of the larger system, but did not recognize these parts as being integral pieces of a larger porphyry copper-gold-molybdenum system."
Tri-Valley was excited to know Shorty Creek might be home to a porphyry mineralized system, which are often larger and more valuable than their intrusive-related counterparts.
"If our overall deposit model is correct, and if post-mineral structural deformation has not significantly deformed the actual footprint of the alteration/mineralization, the Shorty Creek Project porphyry system covers an area about eight miles in diameter," said Avalon Development President Curtis Freeman.
Tri-Valley has not indicated what companies are showing an interest in Shorty Creek, but in light of the properties porphyry potential the company hopes to attract a major producer to the prospect.
"This (Shorty Creek) we believe would be a better opportunity for a major or mid-tier gold or copper producer. And we believe ultimately about US$10-US$15 million of investment would be required for new exploration and to determine the total potential on this prospect," Tri-Valley CFO John Durbin told investors at the 2011 Global Hunter Securities Conference on July 18.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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