New district slowly yields its secrets

For the dozens of companies that rushed to stake claims in the Nechako Plateau of central British Columbia three years ago, the area now known as the Blackwater Gold District is shaping up to be a better-than-average bet.

But a series of bold acquisitions by New Gold Inc. in 2011 has placed the mid-tier gold producer solidly in the driver's seat in one of Canada's largest modern gold exploration plays. Located about 160 kilometers (99 miles) south-west of Prince George in central British Columbia, the Blackwater Project area has been actively explored since the discovery of anomalous concentrations of silver, lead, and zinc in silt samples taken from streams draining the Mt. Davidson area in 1973 by Granges Inc. Historic work includes soil geochemistry, geophysics and reverse circulation and diamond drilling.

Richfield Ventures Corp. initiated its Blackwater Gold Project after recognizing the bulk gold potential of the area. Richfield optioned the Davidson and Dave claims in March 2009 from Silver Quest Resources Ltd. and the Rozek family, respectively. Six months later, the junior ignited a staking rush on the Nechako Plateau when it reported a drill intersection of 207 meters of 1.06 grams per metric ton gold and 5 g/t silver. Throughout 2010 and into 2011, Richfield continued to announce similar long intersections of better than 1 g/t gold and expanded the deposit considerably.

New Gold sweeps in

In March 2011 Richfield reported an initial mineral resource estimate for the Blackwater project, of about 4 million ounces based on 25,263 meters of drilling in 77 holes. At little over a month later, New Gold entered the picture, offering to acquire Richfield in a deal valued at C$550 million. Six months after that, New Gold grabbed a larger portion of the Blackwater Gold Camp by acquiring Silver Quest Resources for C$131 million and Geo Minerals Ltd. for C$14.5 million. In the process, New Gold also gained ownership of Silver Quest's Capoose Property, located 25 kilometers (16 miles) southwest of Blackwater.

In 2012, New Gold has continued very aggressive exploration of the 1,000-square-kilometer (386 square miles) land package it now controls at Blackwater, launching a remarkable 18 rigs in a C$50 million program targeting 250,000 meters of drilling for the year. In September the company updated its mineral resource for the Blackwater Gold Deposit - the second update this year - in conjunction with releasing a preliminary economic assessment that envisions a 500,000-ounce-per-year mining operation for the project as early as 2017.

The current resource estimate for Blackwater, based on drilling through May 12, at a cut-off grade of 0.30 g/t gold-equivalent, is 267.2 million metric tons grading 0.88 g/t gold and 4.3 g/t silver (indicated), for 7.52 million ounces of gold and 36.9 million ounces of silver, and 121 million metric tons grading 0.69 g/t gold and 7.3 g/t silver (inferred), for 2.66 million ounces of gold and 28.3 million ounces of silver.

The Blackwater deposit is still open in all directions and at depth.

"Our drilling is remarkably aggressive this year ... we're going to drill about 250 kilometers of drilling," New Gold Executive Chairman Randall Oliphant told an audience at the Bank of America Merrill Lynch 18th Annual Canada Mining Conference Sept. 7. "I read somewhere that this could be the most extensive drilling program going on in mining right now, but we're both trying to upgrade our resource and also expand the size of it," he added.

Oliphant said New Gold will update the mineral resource at Blackwater, which "is emerging as the flagship" of the company, again by year's end to reflect results of nearly 150,000 meters of drilling since May.

Busy exploration district

Owners of properties that surround Blackwater, meanwhile, are working to advance their respective projects through exploration, joint ventures and/or options. This crowd of mostly juniors includes at least one major, Kinross Gold Corp., which controls the 107.5-square-kilometer (41.5 square miles) Knewstubb Property directly east of the Natalkuz Lake-Knewstubb Lake system and about 10 kilometers (six miles) northeast of the Blackwater project.

Juniors reporting exploration plans or significant progress in 2012 include Amarc Resources Ltd, Copper Creek Gold Corp. and Stina Resources Ltd., Driven Capital Corp., Parlane Resource Corp., RJK Explorations Ltd. and StoneShield Capital Ltd. and Seaborne Minerals Inc., and Troymet Exploration Corp.

Exploring Galileo

In June, Amarc Resources reported the start of mapping and sampling over five extensive, sulphide mineralized systems defined in 2011 by induced polarization ground geophysical surveys at its 990-square-kilometer (382 square miles) Galileo Project located about 16 kilometers (10 miles) west of Blackwater. Amarc said intended to prioritize the targets for drilling.

The junior also said it had received results of 4,000 line kilometers of helicopter-borne magnetic and electromagnetic geophysical surveys flown in 2011 over its expanded claim position in the Blackwater region that identified further deposit-scale targets for ground follow-up. In addition Amarc recently completed 600 line kilometers of helicopter-borne, magnetic geophysical surveys over new mineral claims that it has added to the Galileo land package, from which a number of encouraging deposit-scale targets have been identified for field evaluation in 2012.

Drilling Bandit

Copper Creek Gold Oct. 3 reported completing a 15-hole, 1,400-meter percussion drilling program over part of a 2-kilometer-by-5-kilometer (1 mile by 3 miles) copper, gold and molybdenum anomaly identified in 2011 on its Bandit copper-silver-gold-molybdenum property adjacent to the Blackwater project.

Stina Resources funded the C$250,000-C$275,000 exploration program on the Bandit property under an 2012 option agreement in which the junior must incur C$2 million in exploration spending over a four-year period and issue 400,000 common shares to Copper Creek over a three-year period to earn a 60 percent interest in the property.

Copper Creek is the designated operator of the project this exploration season.

"To date, drilling has provided preliminary information needed to form an understanding of the basic geology of the property as well as to gain an understanding of this mineralizing system. This information will allow us to more effectively target other untested zones in future exploration programs," said Kristian Whitehead, vice president, exploration for Copper Creek.

Sleuthing Blackwater East

In September, Driven Capital posted preliminary results from the geophysical program conducted this summer on its optioned Blackwater East project.

Thirty line kilometers of ground induced-polarization and magnetic surveying was completed over the southeastern portion of the property, an area identified as prospective from previously completed soil geochemical surveying and prospecting which was integrated with public domain regional geological mapping and airborne magnetics.

Several well-defined IP anomalies trend northerly and northwesterly and occur adjacent to a major regional lineament believed to be a fault structure.

The main north-south anomaly, which has been traced for over 1,800 meters, appears to be located near the western boundary of a felsic volcanic sequence which shows variable sericitic alteration along with local zones of phyllic (quartz-sericite-pyrite) alteration.

Additionally, this area is underlain by a deep magnetic feature about two kilometers (1.24 miles) in diameter, which may represent a buried intrusive that could be the source of the alteration fluids and anomalous zinc, lead, silver, gold and copper values identified by the company's soil sampling in 2011.

The coincidence of anomalous metals in soils, major fault structures, felsic volcanic host rocks, IP chargeability zones possibly indicative of sulphides, and low resistivity zones possibly indicative of clay alteration all located adjacent to an interpreted intrusive body are considered indications of the possible occurrence of intrusive-related gold and/or base metal mineralization. Driven said it intends to test these areas with a first-phase drill program, the permit for which has been awarded by the B.C. Ministry of Mines.

Drilling Big Bear

Parlane Resource Corp. Oct. 9 said it will begin a drill program at its 14,366-hectare (35,498 acres) Big Bear property on the Nechako Plateau. Big Bear is situated between two mineralized systems: New Gold's Blackwater and Capoose properties. Field work during 2011 and 2012 identified five target areas that will be drill-tested this fall. The drill sites are easily accessed by a dense logging road network, and it is anticipated that the planned 2,000 meters of core drilling will be completed before the end of November. The Big Bear property is located in the Omineca Mining Division in central British Columbia, about 100 kilometers (62 miles) south of Vanderhoof, B.C.

Hunting in northeast, west

In September RJK Explorations Ltd. resumed drilling at its high-grade silver discovery on the Blackwater Northeast property adjacent to the Blackwater Gold deposit to the east. The junior's silver discovery in June was a high-grade intersection of 3.3 meters averaging 2,710 g/t silver (10.8 feet of 79.04 ounces per ton silver) with true widths unknown.

Since then, the results of detailed ground magnetic surveying, drill-hole interpretation and MMI soils suggest a northwesterly striking, steeply to vertically dipping contact between the felsic volcanics and sediments. The MMI soil sampling also indicates a weak silver anomaly in deep overburden along this contact over a tested strike length of about 600 meters.

The latest drilling will consist of a series of angled holes starting from the discovery hole to test this contact.

At its Blackwater West property, RJK Explorations said about 18.5 kilometers (11.5 miles) of phase-domain induced polarization surveying and MMI soil sampling was recently completed over four grids. Interpretation by the company's consulting geophysicist indicates that there is a significant volume of potential sulphide mineralization on all four grids, particularly on Grid 4 located at the southern part of the property.

On Grid 4, a resistive and chargeable corridor that contains a 350 meter-wide north-south by 600 meter-long open ended anomaly has been outlined. MMI soil sampling results also indicate a zinc, silver and erratic gold anomaly here. It is believed that the geophysical anomaly located on Grid 4 may be an extension of the mineralization located on the 3Ts Property, located 3 kilometers (2 miles) to the south where Independence Gold Corp. has reported an inferred resource of 394,383 ounces gold and more than 9.89 million ounces silver.

All of the anomalies on Blackwater West are open to expansion by further geophysical work, and RJK said it anticipates drill testing these highly potential areas following the completion of drilling on Blackwater Northeast.

Tracing metals at Geldenhoof

StoneShield Capital Corp. reported exploration plans in June for the 2,613-hectare (6,457 acres) Geldenhoof property that it optioned from Seaborne Minerals Inc. in January 2011. The property is comprised of two mineral claims located 4 kilometers (2.5 miles) east of the Blackwater project.

StoneShield geologists recommended a two-phase exploration program at Geldenhoof, with phase 1 following up work on the anomalous zones of silver, zinc, copper and gold discovered by the company in 2011 soil sampling on the western half of the property. The prominent northwest trending fabric within the soil geochemistry is compelling in that it corresponds to the margin of a two-square-kilometer (0.77 square mile) magnetic high (likely a buried intrusive body) and suggests a strong structural control to mineralization in the area. Follow-up exploration will include geologic prospecting, rock sampling and stream sediment sampling by a team of two geologists.

Phase 2 would consist of an induced polarization survey to establish drill targets to test for precious and base metal mineralization at depth.

StoneShield said it is using the adjacent Blackwater discovery as an exploration model for its tenures and is very encouraged by its preliminary findings. The geology at Geldenhoof is similar to that found in the Blackwater area. Mesozoic to Cenozoic volcanic host-rocks are locally brecciated and silicified and contain bodies of rhyolite of possible intrusive origin.

Searching the "Key"

Troymet Oct. 4 said it contracted Northspan Explorations Ltd.to conduct reverse circulation drill testing of gold targets on its 8,854-hectare (21,878 acres) Key gold project located immediately adjacent to the Blackwater gold deposit.

Drilling was scheduled to begin on Oct. 10 and Troymet planned to drill about 1,200 meters to test 12 target areas.

In 2011, Troymet identified a large hydrothermal system with high sulphide content and locally anomalous silver, gold, zinc and copper values at Good News Lake, and along the Good News Lake and East Faults.

The junior said this large and deeply rooted plumbing system extends over several kilometers and is intimately associated with the majority of the target areas selected for drill testing.

Its large size together with the large number of associated target areas indicates significant discovery potential in this part of the Key project.

Hungry for answers

New Gold has indicated that its appetite for growth in the Blackwater district is as strong as ever.

Oliphant told investors in September that New Gold's geologists have yet to unravel the geological mysteries of the Blackwater deposit.

"It's not a well understood area. … We have the Capoose property that's 25 kilometers away. That's already 800,000 ounces of gold and 56 million ounces of silver. These deposits never seem to statistically happen in isolation, where you have a 10-million-ounce deposit, and nothing else around, whether it's a 2- or 4-million or 5-million-ounce deposit as well," he said.

"So what we've done is we've worked to try and increase our land position, and we're now up to about 1,000 square kilometers, because frankly the geologists don't know what the source was of all this gold. We want to control everything in the area from the perspective of dealing with First Nations, of having complete flexibility of where we put tailing stands, waste, dumps, not having to lay that on other people's ground, Oliphant added.