South32 options second AK copper project

Freegold Ventures Ltd. March 5 reported that the potentially large porphyry copper-gold-silver-tungsten deposits it has been exploring on the Shorty Creek project in Interior Alaska has drawn the interest of Australia-based South32 Ltd.

Under an option agreement with Freegold Ventures, a South32 subsidiary has agreed to fund up to US$10 million of exploration over the next four years, including US$2 million this year.

This exploration spending keeps an option open for South32 to acquire 70 percent of a newly formed project company for US$30 million, less any money the Perth-based major invested in Shorty Creek exploration.

South32, a coal and base metals miner spun out of BHP Billiton in 2015, nabbed a foothold in Alaska when it cut an option deal to earn a 50 percent interest in Trilogy Metals Inc.'s Upper Kobuk Mineral Projects, a large land package that blankets most of the Ambler Mining District.

While South32 was a major producer with eight mines in Australia, Africa and South America, the deal with Trilogy was the miner's first venture north of the equator. With a 2018 deal to acquire Arizona Mining Inc. for $1.3 billion, the Perth-based miner bolstered its North American presence with a flagship silver-lead-zinc project in Arizona.

Now, with its deal for Shorty Creek, South32 has increased its Alaska presence and established that the major is willing to invest in early staged projects with big potential.

Discovering porphyry

When Freegold first acquired Shorty Creek in 2014, the Vancouver, British Columbia-based exploration company had a hunch this property about 75 miles (120 kilometers) northwest of Fairbanks, could be hiding one or more large deposits of porphyry copper-gold mineralization, an intuition that was affirmed with drilling carried out during an inaugural drill program in 2015.

One hole drilled that year, SC 15-03, cut 91 meters grading 0.55 percent copper, 0.14 grams per metric ton gold and 7.02 g/t silver at the Hill 1835 target at Shorty Creek.

This hole confirmed that a 750- by 1,000-meter magnetic high geophysical anomaly that coincides with copper, gold and molybdenum found in the soils on the surface represents porphyry mineralization hidden below.

This not only affirmed the potential of Hill 1835 but also raised the prospectivity of several other similar magnetic high targets identified across this roughly 39-square-mile (100 square kilometers) property that lies alongside the paved Elliot Highway.

Over the ensuing three years, Freegold has extended this porphyry mineralization at 1835 and confirmed the presence of similar mineralization at Hill 1710, an enormous magnetic high anomaly about 2,000 meters to the northwest.

Proving Hill 1835

Since confirming the porphyry potential at Shorty Creek in 2015, Freegold has proven that Hill 1835 hosts wide widths of copper-gold-silver mineralization.

Hole SC 16-01, drilled at Hill 1835 in 2016, cut 434.5 meters averaging 0.36 percent copper, 0.12 g/t gold and 7.46 g/t silver, or 0.57 percent copper-equivalent.

A second 2016 hole at Hill 1835, SC 16-02, cut 409.6 meters averaging 0.29 percent copper, 0.06 g/t gold and 5.66 g/t silver, or 0.41 percent copper-equivalent.

In addition to the copper, gold and silver, the 2016 drilling tapped significant tungsten.

• SC 16-01 cut 207 meters averaging 0.045 percent tungsten trioxide; and

• SC 16-02 cut 409.6 meters averaging 0.03 percent tungsten trioxide.

Tungsten is among the 35 minerals and metals the United States Geological Survey has deemed critical to the U.S.

While not as valuable as the copper and the gold in the emerging deposit, the tungsten grades at Hill 1835 could provide a significant by-product to the mix of metals that could be produced.

The 2017 and 2018 programs continued to cut broad widths of porphyry copper-gold-silver-tungsten mineralization at Hill 1835.

• SC 17-01 cut 360 meters averaging 0.24 percent copper, 0.07 g/t gold, 4.04 g/t silver and 0.03 percent tungsten trioxide; and

• SC 17-02 cut 408 meters averaging 0.27 percent copper, 0.05 g/t gold, 4.97 g/t silver and 0.05 percent tungsten trioxide.

• SC 18-01 – drilled to a depth of 555.2 meters and terminated in a significant fault zone – cut 442.2 meters of 0.24 percent copper, 0.09 g/t gold, 4.74 g/t silver and 0.02 percent tungsten trioxide from a depth of 113 meters; and

• SC 18-02 – drilled 175 meters southeast of 18-01 and to a depth of 610.85 meters – cut 442.4 meters of 0.22 percent copper, 0.13 g/t gold, 4.03 g/t silver and 0.02 percent tungsten trioxide from a depth of 92 meters.

The 12 holes drilled at Hill 1835 so far has outlined a 750- by 300-meter area of porphyry mineralization, which represents a small portion of the larger magnetic and geochemical anomaly found there.

Property-wide potential

Where one porphyry deposit is found, there are often others nearby. The strong magnetic and geochemical anomalies across Shorty Creek indicate Hill 1835 is not the only, and potentially not the largest, copper-gold-silver-tungsten porphyry on the property.

Hill 1710 is centered on a 6,000-meter-long magnetic anomaly that coincides with a large copper and molybdenum geochemical anomaly.

Four widely spaced holes drilled in 2016 tested 1,600 meters of this magnetic high. Each hole intersected porphyry style mineralization, with copper grades increasing to the northeast.

Follow-up rock sampling at Hill 1710 returned values between 0.11 to 0.39 percent copper in porphyry mineralization to the northeast of this drilling.

Hill 1890, another porphyry target, lies about 2,000 meters northeast of the drilling at Hill 1710 and is encompassed by the magnetic anomaly in this direction.

Steel Creek, another strong magnetic high anomaly about 2,000 meters northeast of Hill 1835, was initially tested with one hole in 2017 that encountered anomalous copper, along with a suite of minerals similar to that seen at Hill 1835.

Quarry is an interesting undrilled target about 5,000 meters east of Steel Creek and at the northeast end of separate 11,000-meter-long magnetic high feature. Samples of oxidized porphyritic rock with stockwork veining collected from Quarry contained as much as 500 parts per million copper.

These prospects provide plenty of targets for the US$10 million of exploration South32 currently plans to fund at Shorty Creek.

Under the option agreement, at least US$2 million will be invested per year in 2019 and 2020, and US$3 million annually over the following two years.

Freegold Ventures will operate the exploration program at Shorty Creek during the four-year option period and will provide annual reports and budgets to a technical committee formed by Freegold and South32 for the purpose of reviewing and approving each year's program.

–SHANE LASLEY