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

A gold mining group looking north from Nevada where it has been focused in recent years is seeing what many other explorers have noticed before them - the Tintina Gold Belt that stretches across Interior Alaska and Yukon Territory offers the handsome prospect of a major gold discovery.

But the difference for Golden Predator Royalty & Development Corp. is that it is prepared to back up its conclusions with the hard work and financial capital necessary to not only find the gold but bring it into production in short order.

That's the word from the Vancouver-based junior, which over the past year put together at least two deals - redevelopment of the Brewery Creek Mine near Dawson City and acquisition of several early-stage gold projects in Yukon, Alaska and British Columbia.

The company said the transactions are part of an aggressive property acquisition program in the Yukon and surrounding area that is focused on development of large, intrusive-related gold deposits within the prolific Tintina Trend, which hosts such mega-discoveries as Fort Knox and Donlin Creek.

"Elephant country doesn't adequately describe the Tintina Gold Trend. The discoveries coming out of it have been world class," said Golden Predator Chairman and CEO William M. Sheriff.

Golden Predator signed a letter of intent June 8 with Alexco Resource Corp., owner of the Brewery Creek Project, to acquire up to a 75 percent interest in the former gold mine. The move came one business day after the junior entered a similar agreement with Copper Ridge Explorations Inc. to purchase that company's interest in the Gold Dome (formerly Scheelite Dome) gold project, in central Yukon's Dawson Range, the Willoughby gold project in northern British Columbia and the Ogopogo gold project in eastern Alaska.

Consolation prize and potential jackpot

Brewery Creek, closed in 2002 by former owner Viceroy Resource Corp. because of low gold prices, is located 55 kilometers, or 34 miles, due east of Dawson City in northern Yukon. The mine produced about 278,484 ounces from seven near-surface oxide deposits along the Reserve Trend in an open-pit heap-leach operation.

The acquisition of the Brewery Creek Project presents Golden Predator with two immediate targets for potential resource development. Un-mined, near-surface oxide gold mineralization remains at the site, and a 2005 National Instrument 43-101 estimated resource calculated at 3.98 million metric tons grading 1.135 grams per metric ton gold (145,000 contained ounces) in the indicated category and 2.2 million metric tons grading 2.01 g/t gold (142,000 contained ounces) in the inferred category, using a cutoff grade of 0.5 g/t gold.

The 2005 report also noted that while the regional structural model for Brewery Creek offers potential for the discovery of higher grade sulphide deposits, the depth of drilling to date has been inadequate in testing this model.

"There's 300,000 ounces of gold left at Brewery Creek, which is more than was produced, and the entire effort was centered on near-surface oxide," Sheriff said.

The Brewery Creek Project covers claims initially staked in 1987. More than 175,000 meters of trenching and drilling was completed on the property with much of the exploration drilling completed to depths of only 50 meters or less and focused on defining the near-surface oxide potential.

About 85 percent of the mined-out mineralization was hosted by Cretaceous-aged quartz monzonite sills with stock-like bodies of biotite monzonite and syenite belonging to the Tombstone plutonic suite occurring in the south-central part of the project. This suite of coeval granitic rocks is known to be associated with gold mineralization at Dublin Gulch, Clear Creek, Gold Dome (Scheelite Dome) and the Marn skarn as well as at Brewery Creek.

A subsidiary of Novagold Resources targeted a deeper sulphide mineralization at Brewery Creek in earlier exploration and did an analogy to that company's 31million-ounce Donlin Creek Project in southwestern Alaska before its attention was diverted elsewhere.

Sheriff said his company is acquiring an enormous exploration database on Brewery Creek from Alexco and previous explorers.

"I view (Brewery Creek) as having a consolation prize in a half-million-ounce near-surface oxide resource and having the potential for a multimillion-ounce feeder zone at depth," Sheriff said. "And I view it as the third best project in the Yukon behind Underworld Resources and Northern Freegold Ltd."

The company plans to start drilling at Brewery Creek in late August or early September, he said.

Presence in Yukon

Through its newly created Yukon subsidiary, True North Mining Corp., Golden Predator intends to initiate phase 1 of a drilling program this field season once it receives all necessary permits to begin testing for these deeper and higher grade targets.

Sheriff, a geologist by training with more than 30 years experience in the mineral exploration and development business, was the driving force behind the founding of Golden Predator and another miner, EMC Metals Corp.

He will serve as chairman of True North Mining, while Art Ettlinger, a veteran geologist and mining engineer at Golden Predator with extensive international experience, including in Canada, has been appointed president. Ettlinger is moving to Whitehorse to run True North Mining's new office.

Sheriff said the company will focus on its Yukon properties and other prospects in the Tintina Trend and needs a presence in Whitehorse, where Yukon government offices are located.

"No other jurisdiction is as pro-mining as the Yukon," he observed.

Mike Burke, senior geologist with the Yukon Geological Survey, said it was nice to see Golden Predator pick up not only Brewery Creek but also Scheelite Dome. "These are properties that need somebody with some staying power," he said.

Complex deal with Alexco

Under terms of the letter of agreement with Alexco, Golden Predator can earn up to a 75 percent interest in 793 contiguous quartz mining claims and leases and certain related assets in three stages at Brewery Creek as well as a 50 percent interest in certain barite deposits on the property. To earn various levels of equity in the project, starting at 51 percent, Golden Predator must incur exploration spending on an annual schedule that could total C$6 million by 2014.

The junior made a firm commitment to spend at least C$1 million initially on exploration. The agreement calls for another C$3 million in spending over the next few years, and an option to acquire an additional 14 percent interest by spending C$1 million more (for a total minimum of C$5 million in expenditures) and completing a preliminary economic assessment by Dec. 31, 2013. Another C$1 million minimum in spending can earn Golden Predator an additional 10 percent equity (for a total of 75 percent interest in the project).

Alexco, which completed award-winning multiyear reclamation of the previous mining operation at Brewery Creek, will have a one-time right to buy back 10 percent interest in the project by paying 2.5 times all exploration and development spending incurred by Golden Predator that exceeds C$4 million.

The Brewery Creek Project also is subject to two underlying royalty agreements with third parties: a "sliding scale" royalty on the next 21,516 ounces of gold production.

Another opportunity in barite

Golden Predator also can earn 50 percent interest in known and future discoveries of deposits of barite at Brewery Creek with exploration and development spending specifically related to barite of at least C$1 million by Dec. 31, 2012, and with not less than C$3.5 million in exploration and development spending on the gold potential at Brewery Creek.

Barite, a yellow, white or colorless crystalline mineral, is the chief source of barium chemicals used in paint.

Other Tintina prospects

Golden Predator also plans to explore and develop other large intrusive-related gold deposits in the Tintina Gold Trend, starting with two of the properties it purchased from Copper Ridge.

True North Mining was formed to identify and develop gold deposits similar to those that have already been developed in the Tintina Gold Trend.

The wide geologic provenances of these large deposits attest to the prospectivity of this gold belt, further enhanced by a $900 gold price, the company said.

Golden Predator said the acquisition of Gold Dome, Willoughby and Ogopogo supports its goal of developing projects with sound geologic foundations, which will provide significant opportunities for expansion within the Tintina Trend.

Sheriff said the company is evaluating more opportunities in the region, and, subject to permitting, "we plan to have two active drilling projects in the Yukon this season."

"It's certainly a lot easier to develop a bigger resource out of an existing deposit than to go out and find a new deposit," he said.

At Gold Dome (formerly Scheelite Dome), gold mineralization occurs in veins, stockworks, replacement zones and skarn. Highlights of drilling conducted during the period 1998 to 2003 include 6.4 meters averaging 7.09 g/t gold, 1.7 meters averaging 24.4 g/t gold, 7.7 meters averaging 3.67 g/t gold; 4.6 meters averaging 3.66 g/t gold; and 5.9 meters averaging 2.46 g/t gold. Mineralization occurs within a 10-kilometer-, or 6-mile-long geochemical soil anomaly with a classic gold-arsenic-bismuth-antimony geochemical signature.

"Scheelite Dome has the largest (geochemical) anomaly in the Tintina Trend. We're trying to assemble a geological picture this year and will probably do our main drilling program next year," Sheriff said.

Ogopogo lies adjacent to and within similar geology to the Pogo gold mine in eastern Interior Alaska. Owned by Sumitomo Corp., Pogo is a flat-lying vein system that contains 3.6 million ounces in proven and probable reserves grading 0.47 ounces, or 13.3 grams, per standard ton gold. At Ogopogo three soil geochemical anomalies have been defined in gold as well as the key pathfinder elements - arsenic, bismuth and antimony.

Sheriff said his company is also considering building mills at Brewery Creek and Gold Dome.

B.C. property has promise

The Willoughby project is located within a well-mineralized trend in the Stewart-Iskut-Eskay Creek gold district in British Columbia. Highlights of historical drilling on the project include 11.7 meters grading 39.8 g/t gold in hole 94-15, 12.2 meters grading 10.8 g/t gold, including 3.0 meters grading 32.9 g/t gold in hole 94-27, 2.9 meters grading 398 g/t gold in hole 95-36, 5.9 meters grading 16.2 g/t gold in hole 95-51 and 13.0 meters grading 13.3 g/t gold, including 3.0 meters grading 31.1 g/t gold in hole 95-53.

The Willoughby project also is subject to two existing option agreements.

Deal provides for feasibility study

The letter of agreement also calls for Golden Predator to pick up interest in another gold project in Mexico from Copper Ridge under terms still being negotiated. As consideration for the assignment of the four projects, Golden Predator will pay Copper Ridge $750,000 in units at C50 cents per unit. The $750,000 will be allocated among the four projects. Each unit will consist of one share and one warrant, and each warrant will be exercisable for a period of two years at a price of C75 cents for the first six months and C90 cents for the remaining 18 months. The number of units is adjustable under certain circumstances.

In addition, should any of the properties become the subject of a positive bankable feasibility study before Dec. 31, 2011, then up to 500,000 shares will be payable to Copper Ridge, capped at C$1 million in value (Provisions are included for raising the cap as high as C$2.5 million under certain other conditions).

Copper Ridge also retained a 1 percent NSR on the Willoughby project and if secured, the Mexico project, and a 2 percent NSR on Ogopogo, which will be reduced to 1 percent in the event of a U.S. federal production royalty.

The agreement, when finalized, also will be subject to a number of other conditions, including regulatory approval, due diligence, the completion of a private placement by Copper Ridge.

Nevada work will continue

Golden Predator, meanwhile, is forging ahead in Nevada where it has been focused in recent years on becoming a mid-tier precious metals producer through the strategic use of its Taylor milling facility near Ely, Nev. and through a facilities-use agreement at the Springer Facility with its sister company, EMC Metals Corp. Golden Predator is moving forward on several of its gold and silver projects in 2009 with the mandate to identify one or more properties for near-term production of small-tonnage, high-grade ores.

Sheriff said the company aims to drill 80,000 feet, or about 24,600 meters, on targets in Nevada this year.

Golden Predator is partially self-financed through a passive royalty stream from a portfolio of properties that it anticipates will yield about US $1.2 million at current gold prices for 2009.