Mining Explorers 2013: Explorers scale back programs in 2013

Asubstantial amount of exploration activity continued apace in Yukon Territory this season despite the truncated budgets that forced most mining companies to juggle their projects and priorities.

Some exploration companies found creative ways to raise capital, turning out their pockets to return to Yukon in 2013 to explore for Carlin-style gold mineralization in the east-central region of the territory, for more gold-bearing structures in the White Gold and Klondike districts to the west and for other styles and types of mineralization elsewhere in the territory.

Hampered by the prolonged capital drought, many explorers eagerly augmented their modest exploration budgets with mining incentives provided by the Government of Yukon. The Yukon Mining Incentives Program awarded a record C$1.1 million in 2013 to some 80 prospecting and exploration ventures throughout the territory.

Mining and mineral exploration activity was still subdued, compared to comparable activities in recent years.

Yukon officials have estimated mineral exploration investment for 2013 at about C$40 million in, or roughly half of the C$80 million-plus spent in 2012.

"There is not a single new project in Yukon this year," said Patrick Sack, a geologist with the Yukon Geological Survey.

"In the last rush, everyone did a backwards approach. They staked as big a property as they could, and now they are looking at what they have and picking and choosing where to explore," Sack observed.

About a quarter million mining claims have been staked in Yukon Territory, including some 200,000 staked since 2009 when discovery of the 1.1-million-ounce-plus Golden Saddle deposit in the White Gold district ignited a modern staking rush that extended into 2010 and 2011 after the subsequent discovery of Carlin-style gold at ATAC Resources Ltd.'s Rackla Gold Project. The recent stampede kicked up a lot more dust than the previous one, in which about 58,000 claims were staked in the Finlayson District in southeastern Yukon in the 1990s.

Still nearly 90 percent of mineral exploration claims in the Yukon remain up for grabs.

Sack said many companies that rushed to the Yukon in recent years spent recent months renegotiating option agreements, while others released their options. Some properties quickly changed hands, with large and small companies snatching up hot prospects.

Gold Fields Ltd., for example, acquired the Oro property, which is prospective for Carlin-style mineralization, from Colorado Resources Ltd., a junior now focused on promising copper-gold claims in northwestern British Columbia.

Likewise, Pacific Ridge Exploration Ltd. grabbed the King Solomon Property, when another junior relinquished its option and returned the claims to prospector Shawn Ryan.

Ongoing mining challenges

Of the territory's three operating mines, only Capstone Mining Co.'s high-grade Minto copper-gold mine is forging ahead with construction of a new underground adit aimed at reaching mineral-rich ore in Area 2A and Area 118, while continuing extensive open-pit operations above ground.

The territory's other two mines, Alexco Resource Corp.'s Bellekeno and Yukon Zinc Corp.'s Wolverine, are braking in response to dropping silver prices and disappointing production rates, respectively. Alexco reported that it will shut down Bellekeno for the winter months, beginning in September in hopes of waiting out slumping silver prices.

Yukon Zinc effectively reduced its operations at the silver-rich volcanogenic massive sulphide mine to 60 percent output during the first half of July. Rather than exploration, Yukon Zinc remains focused on safely maintaining production, while maximizing head grades in the mine and concentrate recovery and quality in the mill.

Quiet times at Eagle Gold

At the Eagle Gold Project, Victoria Gold Corp. secured a quartz mining license in September that will enable the company to begin construction of a C$430 million heap leach gold mine on the property. Yukon regulators also are expected to issue a water license, which would give the green light for production, in 2014.

While awaiting these permits, Victoria focused in recent months on finding sources of capital to assist in bringing the 260,000-ounce-per-year operation into production by 2016. The Eagle project has proven and probable gold reserves totaling 2.3 million ounces, or 92 million metric tons grading 0.78 grams per metric ton.

Victoria is also investigating the possibility of undertaking placer mining on the property to quickly generated revenue. While awaiting an improvement in the capital markets, the company spent between C$3 million and C$4 million this season on detailed engineering based on results of a bankable feasibility study completed in 2012.

The company, meanwhile, put on hold exploration drilling near the Eagle deposit, including in the promising Potato Hills Trend that could host "another Eagle deposit or two," Victoria President and CEO John McConnell said.

"One of the most difficult things to do is to take your foot off the gas, and that's what we've done in the past four months," McConnell said. Part of throttling back that momentum was the layoff of about 30 percent of the company's project team.

The company, however, planned a C$1 million late-season program of extensive prospecting and sampling on the vast Category B claims it recently gained the right to explore from the Nacho Nyak Dun, the local First Nation. The Category B lands, located to the west and south of the Dublin Gulch property, have not been explored in 30-40 years, McConnell said.

Hunt for Carlin-style gold

Explorers seeking Carlin-style gold in east-central Yukon this season include Cantex Mine Development Corp., which bought Atac's old exploration camp near the Rackla Project air strip; privately held Goldstrike Resources Inc., which is drilling this year at its Plateau North and South projects and Goldfields on the Oro Property.

Yukon officials say Barrick Gold Corp. and Newmont Mining Corp. also have made their presence known, though little has been reported about their activities in the area this year.

In early October, Cantex reported identifying eight areas with weakly to strongly anomalous gold, arsenic and antimony; nine areas, with weakly to moderately anomalous gold and arsenic; and 16 areas with anomalous arsenic and antimony within its North Rackla claim block from results of its 2013 exploration program. One area hosted a 300-meter-long line of soil-talus samples that were strongly anomalous in gold, arsenic and antimony, which is characteristic of Carlin-type gold mineralization.

At Anthill Resources Ltd.'s Einarson Project, a program of stream sediment sampling, prospecting, silt sampling and a little grid work was to be followed by 5,000 meters of drilling, including 10 holes in the vicinity of the 2012 Venus discovery of 38 meters of 9.6 g/t gold in near-surface mineralization and up to 13 holes in the Mars Trend. In addition Anthill planned a 20,000-plus soil sample survey to follow up on drill results at Venus and Mars.

The Einarson Property, located a stone's throw from the Yukon-Northwest Territories border, covers about 1,100 square kilometers due east of Atac's better known Rackla project. Anthill optioned the property from longtime Yukon prospector Ron Berdahl, who discovered Einarson while exploring the area and finding Carlin-style pathfinder minerals such as realgar, orpiment and zebra dolostone in the area.

Berdahl, and his son, exploration geologist Scott Berdahl, operate the family's mineral prospecting and exploration business, 18526 Yukon Inc. Most of the claims that the Berdahls staked in the area have been optioned to Anthill, which now holds a 30 percent interest in the Einarson property along with an option to acquire up to a 100 percent interest. However, the Berdahls held on to a small area south of Einarson near the Mars Trend known as the Orwell Property where they recently identified Carlin-stype pathfinder mineralization, including realgar.

Jeff Cary, a geologist who has worked on Carlin Trend projects in Nevada for most of his career prior to relocating to Yukon Territory in 2010, said one of the most compelling parts of the whole exploration story in East Yukon is the sheer size of the area that is showing signs of Carlin-style mineralization.

"You could fit the whole North Carlin Trend (in Nevada), which had 100 million ounces of gold when it was all mined, between the F-2 Target (at Einarson) and the Venus Trend," Cary said.

At the Rackla project, Atac followed up on geochemical sampling that sought pathfinder elements in a series of carbonate horizons in the Nadaleen Trend, the eastern-most part of the 1,700-square-kilometer (656 square miles) property. Atac reported in August that drilling confirmed the Sunrise Zone, discovered in October 2012, and the Osiris zones coalesce into a larger, near-surface gold zone. Drilling to the east and west has extended the strike length of Sunrise to 200 meters and to a depth of 250 meters from surface. Sunrise is also located upslope of a strong gold-in-soil geochemical anomaly that had not been previously drill-tested.

Other work in the C$6 million-plus 2013 exploration program included regional exploration testing priority targets in the Anubis area about 10 kilometers (six miles) west of Osiris; follow-up exploration with geochemistry surveys, prospecting or hand pitting at nine Tier 1 anomalies identified in 2012; and a program of detailed soil sampling and prospecting, geochemical sampling and significant test pitting over 100 kilometers (62 miles) in the Nadaleen Trend.

Noting that Carlin-style mineralization is very erratic, Atac President Rob Carne said his exploration team took time in 2013 during the current down capital markets to really understand the fairly complex system of Carlin-style mineralization on the property. Whether it's the 10-kilometer (6.2 miles) long anomaly to the west dubbed Anubis or the equally exciting Pyramid and Pharoah discoveries, there remains an abundance of anomalies and new targets to investigate on the Rackla property.

"We are two-thirds of the way through a resource definition for the property," he added.

Progress at Coffee

Kaminak Gold Corp. pursued a program of extensive drilling in 2013 at the Coffee Gold Project in west-central Yukon.

The junior said identified shallow, predominately oxidized gold-bearing structures within the Supremo-Latte-Double Double area, which is host to a majority of the 3.2-million-ounce NI 43-101 inferred mineral resource estimated in late 2012 for Coffee that consists of 64 million metric tons averaging 1.56 grams per metric ton gold at a base case cut-off of 0.5 g/t gold for oxide and transitional material and a 1 g/t gold cut-off for sulphide mineralization.

Drill results from Supremo T1-T7, Connector and Latte zones from drill campaigns extended the known zones of mineralization along strike, across strike and to depth.

2013 drilling at Coffee was ongoing in early August and had surpassed 40,000 meters while remaining on schedule and within a phase 1 budget of C$11 million. In addition to the drill program, which will be incorporated into an updated resource estimate later this year, collection of metallurgical, geotechnical, hydrogeological and environmental data was ongoing to support a preliminary economic assessment set to begin in early 2014. Also, Kaminak completed an extensive soil sampling campaign with 5,026 samples collected to identify future drill targets. Kaminak noted that it is fully financed to complete 2013 objectives and launch a 2014 exploration program.

"While we have yet to define the limits of this extensive, structurally controlled, hydrothermal gold system, where an inferred NI 43-101 resource of 3.2 million ounces was established in 2012, drilling this year has so far demonstrated good continuity and connectivity between the deposits," said Kaminak President and CEO Eira Thomas.

She observed that Coffee is still an early-stage exploration project that is already demonstrating district-scale potential, given that only 20 percent of the property has been explored.

"Part of our goals in 2014 will be to get out and test the rest of the ridge and spur anomalies on the property that are equally compelling," she said.

The junior, meanwhile, is positioning Coffee for possible early development of its high-grade areas in a scalable project that can be built over time. Because a large percentage of mineralization uncovered so far on the property is oxide and transitional material, the company is cheered by the prospect of constructing a heap leach mine.

Early metallurgical tests show that the fine-grained gold mineralization at Coffee is amenable to heap leaching with 90.4 percent gold recovery over 80 days and 83.2 percent recovered in the first 15 days.

Several juniors carried out smaller exploration programs on properties across the White Gold and Klondike districts 2013, aided significantly by low-cost soil sampling and induced polarization survey tools and techniques developed by well-known prospector Shawn Ryan and GroundTruth Exploration Ltd.

Comstock Metals Ltd., Pacific Ridge Exploration Ltd. and Taku Gold Corp. and Metals Creek Resources Corp. were among the select few who used these tools to help chase targets across central Yukon properties this field season.

One tool, a diminutive drilling unit mounted on tracks called the Geoprobe delivers soil-bedrock interface samples as accurate as those obtained from trenching, at a fraction of the cost and without the need for costly reclamation. Operated by a three-person crew, the 2.5-inch diameter drill can reliably collect 25-30 samples per day.

Silver and iron projects

YGS geologist Sack said that in addition to gold projects, Yukon attracted a sprinkling of other types of exploration programs during the 2013 field season.

Silver Range Resources Ltd., for example, continued to explore its Keg Property located near Faro and about 20 kilometers (12.4 miles) from the territory's electrical grid. In 2012, Silver Range released a NI 43-101-compliant-inferred resource estimate for the Keg Deposit that outlined bulk tonnage silver-polymetallic mineralization containing 38.7 million ounces of silver, 675 million pounds of zinc, 228 million pounds of lead, and 131 million pounds of copper.

A new magnetite mining operation in Whitehorse, meanwhile, could become the first-ever iron mine in Yukon. The mineralization would come from tailings left from years of copper and then gold production at the Whitehorse Copper Mine.

Prophecy Platinum spent C$7 million-plus on an exploration program at its Wellgreen polymetallic property in southwestern Yukon Territory that was principally focused on drilling and resource determination followed by PEA work programs.

The company identified a significant, newly interpreted area of mineralization towards the eastern end of the deposit that included 353 meters of continuous mineralization grading 2.62 grams per metric ton platinum-equivalent, comprised of 0.93 platinum + palladium + gold, 0.31 percent nickel and 0.33 percent copper.

Re-logging and analysis of previously unreleased drill core assays also identified a broad mineralized area in the Far East Zone, which is believed to extend the main Wellgreen deposit to the north.

Eagle Industrial Minerals Corp. intends to process 12,000 tpd for six to seven months during the snow-free season, producing 250,000-350,000 metric tons per year magnetite over six to seven years and employing up to 20 people. The venture will involve processing the tailings to produce enough magnetite ore to fill an oceangoing barge every month.