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

With a marketing campaign seemingly designed to send investors and their money running, Contango ORE Inc., also known as Core, may be the most unconventional mineral exploration company working in Alaska.

A presentation posted on the company's website in 2011 provides a sense of the explorer's unabashed frankness: "It would be truly exciting if Core owned gold or REEs (rare earth elements) - we sadly do not - we are an exploration company … i.e. a pure and simple speculation. In a speculation, one should be prepared - indeed expect - both financially and mentally, to lose it all."

Yet, while most of the company's more orthodox colleagues are lacking the venture capital needed to mount a significant exploration campaign, the Houston, Texas-based junior raised US$14.2 million in a private placement financing that closed in March.

"They tell me it was a tough market this year," Core President and CEO Brad Juneau told Mining News.

Juneau attributes Core's successful fundraising in a tough market to the merits of Tetlin, an emerging high-tenor gold-copper-silver project about six miles (10 kilometers) southeast of the crossroads town of Tok.

"I just think the project makes a lot of sense," said Juneau.

While a drill intercept of 58.5 meters averaging 14.45 grams of gold per metric ton, 9.1 g/t silver and 0.24 percent copper within 12 miles (20 kilometers) of the Alaska Highway makes sense, the style of mineralization discovered at Tetlin is as distinctive as the company exploring it.

Unique company

Juneau, a petroleum engineer with a 25-year history in the oil and gas industry, was not being coy about his familiarity with the mineral markets.

His privately held exploration firm, Juneau Exploration L.P., has spent the greater part of the past 15 years seeking out oil and gas prospects for Contango Oil & Gas Co., an exploration and production company with petroleum resources primarily in the shallow waters of the Gulf of Mexico.

Juneau got his first taste of minerals exploration when he decided to expand his company's horizons to Alaska in 2008 - leasing a large land package from the Tetlin Village Council, an Alaska Native Village in Alaska's Eastern Interior.

Instead of black gold, the Texas oilman turned up a largely overlooked yellow gold prospect at Tetlin.

To gain a better understanding of the gold-copper potential of the Tetlin property, Juneau tapped the mineral exploration expertise of Avalon Development Corp., a Fairbanks-based geological consulting firm. Juneau is quick to attribute the success of the technical program at Tetlin to Avalon and its president, Curt Freeman, who continues to design and execute the exploration programs at the project.

When Avalon confirmed Tetlin's promise with an initial round of reconnaissance exploration, Juneau leased the large land package from the Tetlin Village Council, an Alaska Native Village in Alaska's Eastern Interior, marking the early days of what was to become Contango ORE.

"We went up there looking for any kind of minerals and since we are oil and gas people that was our first thought," Core co-founder and former President and CEO Kenneth Peak reflected during a 2011 interview with Mining News.

The company also tied up a number of rare earth properties across the state, but has since culled that down to two of the better REE prospects in Southeast Alaska.

When Peak was diagnosed with a brain tumor in 2012, Juneau assumed more responsibilities at Core.

"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 December 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."

Peak died in April. To continue the success he spoke of before his untimely passing, Core has budgeted US$9-US$13 million for exploration at Tetlin in 2013. This program aims to establish a maiden resource an exciting gold-copper-silver discovery that bears the name of the late co-founder, and investigate several of the other similar-looking prospects across the 726,600-acre (294,000 hectares) property.

"We will have two or three exploration rigs drilling about 60-85 core holes on our Tetlin lease this summer as well as complete additional airborne geophysics, reconnaissance exploration and environmental studies," Juneau said.

Juneau told Mining News that Peak was a tenacious supporter of the Tetlin project right up to his untimely passing in April and a major contributor to each financing carried out by Core.

"If it weren't for Ken's courage and investment we almost certainly would have never discovered the Peak zone," he said.

A US$5 million initial phase of the 2013 program that began in May includes geophysical surveys, additional drilling at the Peak zone and initial drilling at three other prospects. Upon reviewing the phase 1 results, Core will decide how best to allocate its efforts for the remainder of the season.

Using oil & gas nomenclature, Juneau explained, "We are going to drill our wildcat wells in phase 1 and drill our appraisal wells in phase 2."

Distinctive property

To the tune of some US$3.6 million, the largest portion of Core's 2013 drilling will focus on establishing an inaugural resource at Peak, a unique zone of high-grade gold and copper mineralization located in the northeastern part of the 1,135-square-mile (2,940 hectares) Tetlin property.

"The idea is to try to find a limit to Peak because we certainly feel like we did not find the limit last summer," Juneau said.

Peak is one of five prospective zones situated within a nine-square-mile (23 square kilometers) area of Tetlin known as Chief Danny.

The best intercepts of a maiden 11-hole drill program carried out at Chief Danny in 2011 were cut in an area at the southern end of the prospect dubbed 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 to the north - cut 6.4 meters grading 7.4 g/t gold, 4.9 g/t silver and 0.15 percent copper.

Encouraged by the results from the maiden drill program, Core revisited the Discovery zone in 2012.

Not finding the mineralization it was seeking at Discovery, Core drilled a "wildcat" hole at a geochemical-geophysical target some 500 meters to the northeast. This fifth hole of the 2012 program, TET1216, cut multiples zones of gold-copper-silver mineralization over the initial 114 meters, 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 3.5 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.

On the back of this discovery, Core redirected the focus of the 2012 drilling on 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.

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.

Particularly high-grade copper mineralization was encountered at the southeastern extent of the 2012 drilling at the Peak zone. TET1238 cut 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; and TET1260 cut two thick copper-rich zones - 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, 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.

The 24 holes (5,400 meters) completed at Peak during 2012 traced a 500-meter-long zone of mineralization that seems to be writing a new chapter in the chronicles of economic geology.

Freeman said the gold-dominated mineralization at Peak is schist-hosted and has relatively high sulfide content. In addition to gold, copper and silver - cobalt sometimes shows up in the assays.

"There are only one or two places in the world that have that sort of combination, and they are all higher-temperature systems," explained Avalon Development President Curt Freeman.

Like intrusive-related gold deposits found in the Tintina Gold Belt, the gold found at Peak zone has a strong correlation with bismuth. The deposit also demonstrates some similarities to porphyry copper deposits.

"It is kind of a hybrid beast right now - it is writing its own model as we speak," said Freeman.

Avalon and Core have nailed down some characteristics that will help them expand the Peak zone and seek out other similar deposits at Tetlin. One of the clearest indicators is that the copper-gold mineralization intersected during drilling coincides with a zone that has both a high magnetic and high conductivity response - the lower the geophysical response, the lower the values of gold and copper.

"The Peak zone stands out as one of those really highly conductive and magnetic zones, and if you look around nearby, there are a dozen other places that you should go look because they have a similar geophysical signature," Freeman explained.

Seeking the big kahuna

While expanding and establishing an inaugural resource at the yet-to-be defined mineralization at Peak, Core will use what it has already learned to investigate some of the other zones with a similar geophysical and geochemical signature.

"Grow Peak zone but more importantly go look at some of these other zones and make sure they are not the really big kahuna out there," Freeman summarized.

Four of these highly conductive and magnetic zones are located within the larger Chief Danny area and will initially be the primary focus of the 2013 search for the "big kahuna."

About US$2.6 million of the 2013 budget has been allocated to drilling 15 to 20 holes in these areas located within about two miles (3.2 kilometers) of Peak.

Another US$1.5 million of the 2013 budget has been allocated to drill 10 to 13 holes at three more distal areas - MM, Chisana and Copper Hill.

MM, situated some nine miles (15 kilometers) southwest of Chief Danny, was first identified 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.

Later geophysical surveys have identified three areas that may be the big kahuna.

Located some 25 miles (40 kilometers) southeast of Chief Danny, Copper Hill is a prospect that Core planned to drill in 2012 but did not get to, due to the focus on the Peak discovery.

Pan concentrates collected from the north side of Copper Hill returned assays of more than 23 g/t gold and another stream draining to the south turned up 4.9 g/t gold. Rock and soil sampling have shown that copper and gold mineralization is most prevalent along an east-west trending thrust fault that runs along the highland area dividing the gold-enriched drainages.

Coincident magnetic and resistivity highs have confirmed the target area for the drilling planned for Copper Hill in 2013.

Streams draining Chisana, a prospect situated about 12 miles (19 kilometers) east of Chief Danny, have turned up visible gold in pan concentrates.

While a number of regions at Tetlin have sufficient geophysical and geochemical information to target drilling, there are many more prospects across the property for which the dataset is not complete.

To help generate the next set of targets, Core has budgeted US$750,000 for airborne geophysics and US$500,000 for additional reconnaissance exploration, including soil and rock sampling.

The company also has allotted US$500,000 to see if it can apply what it has learned at Tetlin to other regions of Alaska's Eastern Interior, an area that has been scanned for porphyry copper and intrusive-related gold deposits but never for Peak-style gold-copper-silver mineralization.