North of 60 Mining News - The mining newspaper for Alaska and Canada's North

DAWSON CITY, Yukon - Atop a wooded peak in this land of mountains and deep valleys near the confluence of the White and Yukon rivers, a New Zealand-based miner is hard at work exploring for gold.

Underworld Resources Inc., a junior organized in 2007, has come to the Far North in hopes of making a commercial discovery at the White Gold and Black Fox Gold properties in west central Yukon Territory, about 95-123 kilometers, or 59-76 miles, by air south of Dawson City.

Organized with an initial public offering in March 2007, Underworld is the brainchild of seasoned mining veterans, including two who are very familiar with Yukon prospects. Full Metal Minerals President and CEO Michael Williams is Underworld's chairman and Robert McLeod, Full Metal's vice president of exploration, sits on the junior's board of directors.

Adrian Fleming, former exploration manager of Placer Dome in the South Pacific, serves as president and CEO, while Jason Cunliffe, former South American exploration manager for Hochschild Mining, is vice president of exploration.

Fleming has 35 years experience discovering, advancing and develop gold mines in New Guinea, Australia, Suriname and northern Canada.

Underworld holds an option to earn a 100 percent interest in the projects from Yukon prospector Shawn Ryan, who identified and staked the claims several years ago.

Underworld secured the option agreement on the White Gold and Black Fox properties in May 2007 and completed a program of geological mapping, a 20-line kilometer IP survey, 570 meters of mechanical trenching and prospecting and sampling.

The program confirmed previous exploration. Soil geochemistry showed gold values up to 9,020 parts per billion, and samples from the trenching enabled the company to identify drill targets.

Potential for large gold deposit

The White Gold and Black Fox Projects comprise a total of 18,344 acres, or nearly 75 square kilometers. The White Gold property consists of 199 50-acre claim blocks and is up to 9.6 kilometers, or 6 miles, long and 5.6 kilometers, or 3.5 miles, wide. The north end of the property is directly opposite the mouth of the White River. Its long, western border abuts the eastern edge of the Yukon River. The Black Fox property, 28 kilometers, or nearly 17.4 miles, southeast of the White Gold property, consists of 52 50-acre claim blocks sits at the apex of five creeks where placer gold has been found, according to Underworld spokesman Hamish Greig.

Underworld is following a trail that first surfaced in the 1880s with a mysterious report of a possible fabulous source of hardrock gold in the area. Both properties are located on the Yukon side of the Tintina Gold Belt, a rich expanse of mineralization that sweeps across the terrain in a great arc from the western region of Alaska through the Interior to southeastern corner of Yukon. To date, the Tintina belt has produced some 30 million ounces of alluvial gold and is estimated to contain at least 37 million ounces in hard rock gold resources, including deposits at Kinross' Fort Knox and Teck Cominco and Sumitomo's Pogo gold mines and Barrick Gold and NovaGold's Donlin Creek Project.

On the White Gold property, four styles of mineralization have been identified: vein-hosted, disseminated pyrite, black silica-sulphide and silicification.

The Golden Saddle zone has disseminated sulphides and quartz stringers within silicified sandstone schist.

Other zones of the White Gold property include the Ryan Showing, which has five quartz veins a half meter to 2.5 meters wide that can be traced 150 meters along strike and where visible gold has been observed.

At the Black Fox Gold property, Underworld planned up to 600 meters of core drilling this summer.

Recent gold discovery

In July, Underworld reported a significant gold discovery at the Golden Saddle Prospect on the White Gold property. In hole WD-004, drillers intersected 4.03 grams per metric ton gold over 19.58 meters, from 12.99 meters, including 9.43 g/t gold over 5.76 meters.

In hole WD-005, they also intersected 4.58 g/t gold over 16.61 meters, from 14.74 meters, including 11.62 g/t gold over 5.13 meters and including 19.14 g/t gold over 2.65 meters.

Underworld said these initial discovery holes at Golden Saddle encountered a shallow dipping quartz breccia vein associated with a thrust fault.

The assays are from priority samples of quartz breccia containing visible gold from the upper part of each hole. Both holes were drilled from the same setup with WD-04 at minus 45 degrees and WD-05 at minus 65 degrees. These holes, for which partial results were available, plus holes WD-09 and WD-10 were all drilled to test a soil geochemistry anomaly, which identified the Golden Saddle target and is characterized by gold in soil values exceeding 80 parts per billion over a strike length of 2.2 kilometers, or 1.4 miles, the junior added.

"We think the sixth hole, which had problems and had to be abandoned at 122 meters, would have cut the mineralized zone if it had drilled deeper," Fleming said Aug. 25.

"In order to define a mineral deposit you have to have data in three dimensions which comes from drilling. Prior to our drilling, the only grades we had were from sampling at the surface. These samples from outcrop and from trenching give you some idea of surface grades but do not predict what is at depth."

Three weeks ago, Underworld reported that the Golden Saddle zone extends along strike and down-dip for 180 meters. With its initial round of core drilling of 1,243 meters in 13 holes completed, the junior said assay results from holes WD-09 intersected 4.20 g/t Au over 16.03 meters, from 62.00 meters, including 6.08 g/t Au over 10.06 meters, and hole WD-13 intersected 5.74 g/t Au over 21.58 meters, from 63.65 meters, including 7.86 g/t Au over 14.38 meters.

More exploration planned

"Underworld's objective at White Gold and Black Fox is to define sufficient mineralization to develop a gold mine," Fleming told Mining News. "Defining mineralization, firstly resources and then reserves, requires many drill holes, perhaps hundreds. Our first phase of drilling, which was very successful, was 13 holes."

Underworld has launched an expanded program of mechanical trenching to further refine the extent and surface expression of the Golden Saddle discovery, and will drill 15 more holes by the end of September, Fleming said.

"Given success with this second phase of drilling, we will in 2009 be continuing with drilling and other exploration work to define a deposit sufficiently large to warrant a mine development," he said.

More assay results are pending. Drill samples from the project were shipped to Alaska Assay Laboratories in Fairbanks for analysis.