The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
WestMountain Gold resumes operation of pilot mill, while expanding resource and improving infrastructure at Alaska project in 2013
At two metric tons per hour, the mill at WestMountain Gold Inc.'s Terra project is the smallest of the hardrock gold operations in Alaska. But with feedstock exceeding one ounce of gold per metric ton, the electrum recovered from this pilot plant will likely help finance ongoing drilling of the high-grade veins for which the project is known and a much larger deposit believed to be lurking nearby.
After completing the set-up of this pilot plant, WestMountain fed 23 metric tons of material through the mill at the end of the 2012 mining season. This sample of two vein-systems, Ben and Fish Creek, produced 75 ounces of gold and 23 ounces of silver.
"People are amazed when they find out that this location has high-grade gold that's literally on top of the ground due to a receding glacier," said WestMountain Gold President and CEO Greg Schifrin. "And the fact that we're an actual working site that's currently bringing out gold and silver is attracting attention, too."
With a head grade of roughly 5.5 ounces of gold and 10 ounces of silver per metric ton, the gravity circuit recovered about 60 percent of the gold and 15 percent of the silver contained in the test material processed in 2012. Upgrades being made to the mill in 2013 are aimed at improving the recovery.
With the pilot plant established and tested, WestMountain Gold returned to Terra in April to begin a busy season that includes optimizing the gravity circuit, upgrading the site infrastructure, expanding the resource, exploration, scoping and construction of an underground mining portal and feeding more high-grade ore through the mill.
"We are planning an aggressive 2013 field season that covers a larger scale bulk sample program with our revamped pilot mill, which has the ability to process up to 40 metric tons per day. In addition, we will continue our exploratory drilling at Terra in an effort to unlock further value," explained Schifrin.
Improving infrastructure
The April arrival of two D7 Caterpillar bulldozers hailed the start of the 2013 field season at Terra. These earthmoving machines are an intricate part of WestMountain's plans for the gold project situated in the majestic mountains of the Alaska Range some 125 miles (200 kilometers) northwest of Anchorage.
To improve the efficiency of delivering the equipment and supplies needed at the remote and rugged Alaska site, the dozers were put to work expanding the airstrip at Terra to a size capable of landing a C-130 aircraft. The equipment is also being tasked with establishing road access from the camp to the Ben and Fish Creek veins, alleviating much of the expense of helicopter support for exploring and mining the high-grade gold at these sites.
Other infrastructure projects on the docket include opening a portal to continue accessing the high-grade veins at Ben and enclosing the mill. These upgrades will provide protection from the Alaska elements, which will extend the work season at Terra.
"This infrastructure expansion should result in an increase in gold production during the 2013 season. The construction at Terra will provide the foundation for the company to move forward with resource development and gold recovery," Schifrin said.
Expanding the high-grade
While prospectors have been poking around Terra for a century, Kennecott exploration is credited with the discovery of high-grade veins there in 1997. With gold prices languishing below US$300 per ounce at the end of the 20th Century, Kennecott relinquished the property, transferring five claims that blanketed the outcropping gold veins to company geologist, Ben Porterfield.
With gold prices trending upward in 2004, AngloGold Ashanti Exploration Inc. cut a deal with Porterfield to acquire his claims at Terra and staked additional lands surrounding the property. When Anglo pulled out of Alaska in 2006, the property was transferred to International Tower Hill Mines Ltd. and then was spun out, with the rest of Tower Hill's non-Livengood properties, into Corvus Gold Inc., which, in turn, optioned the property to WestMountain late in 2010.
The exploration carried out prior to WestMountain's arrival outlined an inferred resource of 428,000 metric tons averaging 12.2 g/t (168,000 ounces) gold and 23.11 g/t (318,000 ounces silver), at a cut-off of 5 g/t gold - for a total resource of 419,604 ounces of gold at 15.3 g/t.
With the goal of expanding this resource, WestMountain completed eight holes for 1,749 meters during the 2011 and 2012 seasons. This drilling extended the strike length of the Ben Vein by 200 meters and cut high-grade intervals that correlate with projected strikes and dips of parallel high-grade veins.
As a result, WestMountain managed to swell the high-grade gold resource at Terra by 150 percent.
According to a technical report published in February, Terra, at a 5 g/t cut-off, has an indicated resource of 49,809 ounces of gold at 13.25 g/t and 112,723 ounces of silver at 29.98 g/t; and an inferred resource of 369,795 ounces of gold at 15.63 g/t and 653,884 ounces of silver at 27.63 g/t.
Geologic modeling of the drill-tested portion of Ben vein shows the high-grade vein is open-ended to the north and at depth.
"The results from our technical report underscore the vast potential of our Terra Project, which we believe will yield more than 1 million ounces of gold over the life of the mine," said Schifrin.
To continue the expansion of the Ben resource and test other high-grade veins cropping out of the mountains at Terra, WestMountain has roughly 3,000 meters of drilling planned for the 2013 season.
"Our drilling program at Terra has returned increasingly positive results, and we're optimistic about prospects for steadily increasing our resource base through continued drilling activities. At the same time, we expect to steadily increase gold and silver production at our pilot gold mill,"
Elephant hunting
Outcropping veins have been discovered in four other zones - EH, SD, Fish and Ice - along a five-mile (eight kilometers) region of the Terra property. The Ice vein, located some 2.5 miles (four kilometers) south of the Ben resource is of particular interest.
Tower Hill tested the Ice zone with three holes drilled in 2007.
Highlights include:
TR-07-29 cut 0.67 meters averaging 6.76 g/t gold from 23.33 meters and 2.42 meters averaging 9.53 g/t gold from a depth of 132.75 meters; and
TR-07-30 cut 5.05 meters averaging 3.96 g/t gold from a depth of 10.65 meters and 1.6 meters averaging 3.68 g/t gold from a depth of 140.82 meters.
While the high-grade veins are the focus of the current drilling, WestMountain has geologists hunting an elephant that may be lurking on the property.
Soil sampling carried out roughly a mile (1.5 kilometers) southeast of Ben Vein has identified a gold anomaly in an area known as Camp Creek. A traverse of soil samples taken at 30-meter spacing returned values averaging 401 parts-per-billion gold with a high of 3.19 g/t gold over a 460-meter-long surface exposure.
Elevated lead, molybdenum and bismuth values in rock samples collected from this area suggest that a bulk-tonnage porphyry system may be lying in wait.
New deal pending
According to the original earn-in agreement, signed between subsidiaries of WestMountain and Corvus in 2010, Corvus receives 49 percent of the gold recovered at Terra until West Mountain earns an 80 percent interest in the project; plus a 0.5 percent to 5 percent sliding scale net smelter return royalty on all precious metal production and a 1 percent NSR royalty on all base metal production.
To earn an initial 51 percent interest in Terra, WestMountain must spend US$6 million on exploration and development on the project by the end of 2013. The company can then increase its stake to 80 percent by spending an addition US$3.05 million on the project by the end of 2014.
In February, the Terra partners signed an agreement that would alleviate WestMountain of its obligation to hand over half the gold ,while providing Corvus with an infusion of cash to continue exploration and potentially develop its North Bullfrog gold project in Nevada.
Under terms of the proposed transaction, WestMountain could acquire 100 percent interest in Terra by paying Corvus US$6 million in cash and issuing 750,000 shares of restricted common stock.
"Corvus believes the proposed transaction with our partner, WestMountain, is a true win-win deal, where Corvus uses the monetization of its non-core asset to advance its Nevada production plan and WestMountain can gain greater flexibility in the development of the Terra asset," Corvus CEO Jeff Pontius said upon signing a letter of intent in February. "This proposed deal not only provides 2013 development capital to Corvus for the North Bullfrog project, but also reduces shareholder dilution and provides long-term upside leverage with a well-structured royalty positions on both precious and base metals."
Though the agreement was originally scheduled to be finalized in April, at the time of this report the transaction had not been completed.
If finalized, Corvus would retain a sliding scale NSR royalty of 0.5-3 percent on precious metals (3 percent above a US$1,500 gold price) and a flat 2 percent NSR royalty on all base metals.
This would allow WestMountain to keep a larger portion of Terra's near-term gold production, while giving Corvus an increased royalty on copper and other base metals if exploration does turn up a viable porphyry deposit.
Also as part of the transaction, WestMountain will complete its vesting requirements with International Tower Hill Mines Ltd. with a payment of C$150,000 in cash and 250,000 shares of West Mountain common stock.
"Our previous agreement called for Corvus to receive 49 percent of production during the earn-in period and up to a 5 percent royalty thereafter," Schifrin said. "Our new agreement eliminates the 49 percent production payout and reduces the royalty to a maximum of 3 percent - a solid value proposition for our stockholders given our belief that the project is expected to yield greater than 1 million ounces of gold over the life of the mine."
If the buy-out deal falls through, WestMountain remains on-track to earn an 80 percent stake in Terra by the end of 2014.
Through November 2012, WestMountain had invested US$4.8 million on exploration and development at Terra, which leaves US$1.2 million in spending required for the company to earn a controlling interest in the high-grade gold project and roughly US$4.25 million in expenditures to increase that stake to 80 percent.
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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