Mining News: Wildcat hole hits high-grade gold-copper

Texas-based explorer discovers thick zones topping 14 g/t gold, 1 percent copper at Tetlin in Alaska’s Eastern Interior

Shane Lasley

Mining News

Lacking the fanfare emblematic of an explorer hot on the trail of a high tenor gold-copper-silver deposit, Contango Ore Inc. recently posted results from its Tetlin project that include a 58.5-meter intercept averaging 14.45 grams per metric ton gold, 0.24 percent copper and 9.1 g/t silver.

While this interval from hole TET1218 underscores the potential of this previously undrilled prospect, it is not alone. Some 20 holes sunk into the newly discovered Peak zone tapped broad intercepts of high-grade gold and copper mineralization at the Interior Alaska project.

“The preliminary results of our 2012 exploration program at our Tetlin lease site exceeded our expectations in terms of gold and copper grade as well as thickness,” said Contango Ore President and CEO Brad Juneau.

Despite these better-than-expected results from the hole drilled a short 12 miles (19 kilometers) southeast of the crossroads town of Tok, the exploration company known as Core is continuing its practice of tempering investor expectations.

“While we have found outstanding rocks in terms of grade-thickness, we do not believe we have yet identified a commercial resource,” Juneau advised.

The cautionary statement from Core’s newly appointed CEO is somewhat more persuasive than those previously made by chairman, founder and former CEO Kenneth Peak.

Upon announcing financing that funded the 2012 exploration program at Tetlin, Peak advised, “I have personally invested US$4 million in the company’s US$8.8 million offering and am obviously enthused about our potential for success but also fully cognizant of the speculative nature of this investment and the likelihood that this entire investment may well be a ‘dry hole.’ ”

For medical reasons, Peak relinquished his executive positions with the Houston, Texas-based junior, handing the reins of the Alaska-focused exploration company to Juneau.

Juneau, through his privately held Juneau Exploration, was instrumental in securing and negotiating the lease of the Interior Alaska copper-gold project with the Tetlin Village Council, an Alaska Native Village in Alaska’s Eastern Interior, in 2008.

“I am glad that Brad Juneau, the founder and originator of our exploration activities in Alaska, has agreed to become our president and chief executive officer,” Peak commented on the appointment. “Brad has a successful track record of finding resources and the results of our successful 2012 exploration program in Alaska suggest the company has identified a potentially significant gold-copper occurrence in an area with no previous significant exploration activities.”

Wildcat hole taps Peak

This program followed up on clues provided by exploration orchestrated by Avalon over the previous three seasons, including a maiden 11-hole drill program carried out at a porphyry prospect known as Chief Danny in 2011.

Geophysical and geochemical surveys at Chief Danny revealed two interesting areas separated by an east-west trending fault – a zoned hydrothermal system consisting of a gold-copper-iron-enriched core covering six square miles (15.5 square kilometers) to the south of the rift and a three-square-mile (7.8 square kilometers) arsenic-gold zone to the north.

The best holes drilled at Chief Danny in 2011 sampled a portion of the southern anomaly now referred to as the Discovery zone.

TET1105, the discovery hole, cut 3.7 meters averaging 3.1 grams per metric ton gold, 300.2 g/t silver and 0.26 percent copper. TET1107 – drilled about 100 meters north of hole 5 – cut 6.4 meters grading 7.4 g/t gold, 4.9 g/t silver and 0.15 percent copper.

TET1110 – drilled more than 1,000 meters north of the discovery hole – cut 9.8 meters grading 1.18 g/t gold, 3.1 g/t silver and 0.04 percent copper.

Encouraged by the results from the maiden drill program, Core revisited Chief Danny in 2012.

The explorer started the program by following up on the encouraging results from 2011 drilling at the Discovery zone.

Not finding the mineralization it was seeking in the Discovery zone, Core drilled a “wildcat” hole some 500 meters to the northeast. This fifth hole of the 2012 program, TET1216, cut thick zones of gold-copper-silver mineralization. Highlights include:

•25.8 meters averaging 7.83 g/t gold, 23.5 g/t silver and 0.05 percent copper, from a depth of 20 meters;

•6.7 meters averaging 3.50 g/t gold, 15.8 g/t silver and 0.54 percent copper, from a depth of 53.3 meters;

•13.7 meters averaging 2.77 g/t gold, 1.4 g/t silver and 0.05 percent copper, from a depth of 64.6 meters; and

•32.6 meters averaging 3.74 g/t gold, 2.6 g/t silver and 0.11 percent copper, from a depth of 81.4 meters.

The grades and thicknesses improved over the next two holes drilled into the newly discovered Peak zone: TET1217 cut 49.1 meters averaging 11.22 g/t gold, 21.6 g/t silver and 0.09 percent copper, from a depth of 7.9 meters; and TET1218 cut 58.5 meters averaging 14.45 g/t gold, 9.1 g/t silver and 0.24 percent copper.

Some US$3.6 million was originally budgeted for exploration at this porphyry target but as Core dialed in on thick zones of high-grade gold-copper mineralization, the junior allocated a larger portion of its budget and resources to this prospect. As a result, TET1236, drilled 125 meters west of hole 18, cut strikingly similar mineralization. From a depth of 155.5 meters, hole 36 cut 48.8 meters averaging 14.72 g/t gold, 10.1 g/t silver and 0.24 percent copper.

While copper mineralization was encountered throughout the Peak zone, particularly high-grade intercepts were encountered in the southeastern portion of the currently defined zone. Highlights of this drilling include 36.6 meters averaging 0.31 g/t gold 71.6 g/t silver and 1.11 percent copper from a depth of 118.9 meters in hole TET1238; and two thick copper-rich zones intercepted in hole TET1260 – 32.6 meters averaging 0.06 g/t gold, 28.7 g/t silver and 1.34 percent copper from a depth of 116.4 meters, drilled at the southeastern extent of the currently defined Peak zone and 59.1 meters averaging 0.02 g/t gold, 8.8 g/t silver and 0.37 g/t copper, from a depth of 116.4 meters.

More time

Core originally planned to drill four of these prospects in 2012 but, due to the high-grade copper-gold intercepts discovered at the Peak zone, Triple Z was the only one of these outlying prospects to be targeted by core drilling.

Triple Z, located some 20 miles (32 kilometers) north of Chief Danny, is the only prospect across the Tetlin land package with historical drilling. Unfortunately, the results of the porphyry copper exploration completed by Cities Services Minerals Corp. in the early 1970s were never published.

Though the historical exploration may only provide limited clues to the potential of Triple Z, soil and rock sampling by Core yielded values as high as 9.07 g/t gold as well as anomalous copper, arsenic and bismuth.

Supported by airborne magnetic survey data, these geochemical clues encouraged the explorer to drill 2,015 meters at Triple Z in 2012. Results from these six holes are pending.

Unlike the geochemical clues that piqued Core’s interest at many of the other leads at Tetlin, it was a distinct geophysical anomaly that prompted Contango to investigate Taixtsalda, a prospect about 26 miles (42 kilometers) southeast of Chief Danny.

Geophysical programs conducted in the 1970s and 2011 have outlined a distinctively round area of magnetic and resistivity highs indicative of a porphyry copper system.

This geophysical anomaly along with coincident copper-gold anomalies discovered during a soil sampling program carried out in May revealed promising drill targets.

MM, like the Chief Danny prospect some three miles (five kilometers) to the northeast, was discovered through pan concentrate sampling. One pan sample collected in 2009 topped 1 g/t gold and follow-up panning in 2010 discovered gold concentrates exceeding 0.1 g/t gold in several of the drainages in the MM prospect area.

A magnetic airborne survey conducted last year revealed a strong magnetic low at MM and refined the drill area for the upcoming 900-meter core drill program. To further refine these targets, the company plans to conduct early season top of bedrock auger drilling.

The original lease hammered out by Juneau and the Tetlin Village Council in 2008 provided Core a 10-year window to investigate these prospects spread out across the 675,000 acres of lands under the agreement, at which point the Texas-based explorer would have an option to renew the most prospective half of the property for another 10 years.

In order to focus on expanding the Peak zone, Core and the Alaska Native group renegotiated these terms, releasing the Texas-based explorer from the obligation to return half of the leased lands in 2018.

“We want to acknowledge the high level of cooperation afforded us by the Tetlin Village Council, as well the significant contribution made by our labor force from Tetlin and Avalon Development,” Juneau said.

Taking the lessons learned over the past four years, Core is shifting its focus from wildcat drilling to outlining an economically viable high tenor gold-copper-silver deposit in eastern Alaska.

“Our challenge now is to determine the extent of the newly discovered Peak zone-Chief Danny areas, and to try to locate additional mineralized zones with similar mineralization,” Juneau explained. “We are currently working on a geophysical model that ties the known drilling results to all available surface samples and geophysical data, in an effort to improve the success rate of our drilling program. Our goal is to identify sufficient mineral resources by the end of 2013 to justify initial reviews of economic and engineering parameters on the Chief Danny prospect.”