Quiet season eclipses hectic activity

A substantial amount of mining activity continued apace in Yukon Territory this season even though most mining companies are shying away from the anorexic capital markets.

Many exploration companies raised funds in other ways, turning out their pockets to return to Yukon in 2013 to explore for Carlin-style gold mineralization in the east-central region of the territory, for more gold-bearing structures in the White Gold and Klondike districts to the west and for other styles and types of mineralization elsewhere in the territory.

In fact, business was as usual for some Yukon prospectors, especially those who have made discoveries in recent years.

"I'm just as busy as ever this year. A lot of people say it's slow for them, but I've actually turned down stuff this year," Yukon prospector Jean Pautler confided to Mining News at the annual Dawson Rocks event held Aug. 7 in Dawson City.

Pautler discovered significant gold mineralization in 2012 on Comstock Metals Ltd.'s QV Property located in the White Gold district.

Placer miners are also pressing forward at numerous small installations throughout central and southern Yukon, clearly recognizing that US$1,300-per-ounce gold can still be quite lucrative to operators accustomed to prices closer to US$300/oz.

But vacancy signs posted at lodgings throughout Dawson City at the height of the mining and tourist seasons in early August, along with the sparse turnout (about 40 registrants) at Dawson Rocks told a different story.

Mining, mine development and mineral exploration activity in Yukon is quite subdued in 2013, compared to levels of similar activities in recent years.

Yukon officials estimate that the territory will attract about C$40 million in mineral exploration investment in 2013, or roughly half of the C$80 million-plus spent in 2012.

"There is not a single new project in Yukon this year," observed Patrick Sack, a geologist with the Yukon Geological Survey.

"In the last rush, everyone did a backwards approach. They staked as big a property as they could, and now they are looking at what they have and picking and choosing where to explore," Sack told Mining News Aug. 4.

About a quarter million mining claims have been staked in Yukon Territory, including some 200,000 staked since 2009 when discovery of the 1.1-million-ounce-plus Golden Saddle deposit in the White Gold district ignited a modern staking rush that extended into 2010 and 2011 after the subsequent discovery of Carlin-style gold at ATAC Resources Ltd.'s Rackla Project. The recent stampede kicked up a lot more dust than the previous one, in which about 58,000 claims were staked in the Finlayson District in southeastern Yukon in the 1990s.

Today, about 88-90 percent of mineral exploration claims in the Yukon remains to be staked.

Sack said many companies that rushed to the Yukon in recent years have spent recent months renegotiating their option agreements, while others have released their options, altogether. Some properties have quickly changed hands, with large and small companies snatching up hot prospects.

Gold Fields Ltd., for example, has acquired the Oro Property, which is prospective for Carlin-style mineralization, from Colorado Resources Ltd., a junior now focused on promising claims in northwestern British Columbia.

Likewise, Pacific Ridge Exploration Ltd. grabbed the King Solomon Dome Property, when another junior relinquished its option and returned the claims to prospector Shawn Ryan.

Ongoing mining challenges

Of the territory's three operating mines, only Capstone Mining Corp.'s high-grade Minto copper-gold mine is forging ahead with construction of a new underground adit aimed at reaching mineral-rich ore in Area 2A and Area 118, while continuing extensive open-pit operations above ground.

Minto Mine Manager S. D. "Sebastian" Tolgyesi said one of the toughest challenges he has faced since moving to Whitehorse from Nunavut and joining Minto's management team two years ago is finding a system that provides reliable telecommunication services for the mine's workers and for its rapidly developing underground operations.

The territory's other two mines, Alexco Resource Corp.'s Bellekeno and Yukon Zinc Corp.'s Wolverine, are braking in response to dropping silver prices and disappointing production rates, respectively. Alexco reported that it will shut down Bellekeno for the winter months, beginning in September in hopes of waiting out slumping silver prices.

Yukon Zinc effectively reduced its operations at the silver-rich volcanogenic massive sulphide mine to 60 percent output during the first half of July. As a result, the mine's work force was decreased by 30 percent of both Yukon and non-Yukon staff and contractors to meet production levels. At July 31, Yukon residents comprised nearly 20 percent of the mine's 249-member work force, and this includes Kaska First Nation members.

"The underground mine operations are exceeding the 950 (metric tons) per day target to feed the mill ore for processing, or stockpile it for upcoming use," Wolverine Mine General Manager Floyd Varley told Mining News in an email Aug. 20. "The mill is operating on a two-week per four-week period and has been efficiently processing 1,900 tpd on average, 150 tpd above the continuous operations target, with the ability to add extra production shifts to meet concentrate sales demand."

Varley said Yukon Zinc remains focused on safely maintaining production, while maximizing head grades in the mine and concentrate recovery and quality in the mill.

Quiet times at Eagle Gold

At the Eagle Gold Project, the camp was closed for the season, but Victoria Gold Corp. President and CEO John McDonnell greeted a group of reporters at the site Aug. 5 and provided an update on the advanced development project.

McConnell, who moved to Whitehorse from Toronto two years ago, said Victoria was awaiting a quartz mining license in the third quarter, which will enable the company to begin construction of a planned heap leach gold mine on the property. Yukon regulators also are expected to issue a water license, which would give the green light for production, in 2014.

While awaiting these permits, Victoria has focused in recent months on finding sources of capital to ease the burden of bringing the 260,000-ounce-per-year into operation by in 2016. The project has proven and probable gold reserves totaling 2.3 million ounces, or 92 million metric tons grading 0.78 grams per metric ton.

Construction and working capital for Eagle Gold will require an estimated C$430 million in capital, of which Victoria has identified funding for roughly C$350 million. The remaining C$80 million will come from debt, royalties or a joint venture partner, McConnell said.

A new area of investigation is the potential of undertaking placer mining on the property to quickly generated revenue through the sale of placer gold. The Eagle Gold area on the Dublin Gulch property once was among the top 10 placer mining centers in the Yukon.

While awaiting improvement in the capital markets, Victoria is spending $3 million to $4 million at a rate of C$1 million to C$1.5 million per month this summer on detailed engineering based on results of a bankable feasibility study completed in 2012.

McConnell said Victoria Gold currently has about $30 million in receivables and enough ready cash to wait out the poor capital markets. The company has raised more than $70 million by selling its assets in Nevada and refrained from trying to raise additional capital in the markets for more than two years.

McConnell, a mining engineer credited with leading development of the Nanisivik zinc-lead mine on Baffin Island in Nunavut in the 1970s and recently the Snap Lake Diamond Mine in Northwest Territories, said the company chose to put on hold exploration drilling in 2013 near the Eagle deposit, including in the promising Potato Hills Trend which he said could contain "another Eagle deposit or two."

"One of the most difficult things to do is to take your foot off the gas, and that's what we've done in the past four months," he explained. Part of throttling back the momentum was laying off about 30 percent of the company's project team.

But this doesn't mean Victoria has turned its back on the future, even temporarily. The company is planning to conduct an extensive prospecting and sampling program on the vast Category B claims located to the west and south of the Dublin Gulch property later this season.

The company signed an agreement in 2012 with the Nacho Nyak Dun First Nation that will allow mineral exploration on the Category B lands for the first time in 30-40 years, McConnell said. Both Dublin Gulch and the Category B lands are part of the Nacho Nyak Dun's traditional territory. Victoria has signed cooperative benefits agreements with the First Nation that allows for mineral exploration and mining in exchange for consideration such as preferential employment, training and education assistance.

Hunt for Carlin-style gold

Explorers seeking Carlin-style gold in east-central Yukon this season include privately held Cantex, which bought Atac's old exploration camp near the Rackla Project air strip; privately held Goldstrike Resources Inc., which is drilling this year at its Plateau North and South projects and Goldfields on the Oro Property.

Yukon officials say Barrick Gold Corp. and Newmont Mining Corp. also have made their presence known, though little has been reported about their activities in the area this year.

At Anthill Resources Ltd.'s Einarson Project a program of stream sediment sampling, prospecting, silt sampling and a little grid work is underway.

Anthill reported the Venus discovery in 2012 with 38 meters of 9.6 g/t gold in near-surface mineralization where seven holes were drilled as well as four holes in the Mars Trend for a total of 1,800 meters in 2012.

This year, the privately held junior is drilling 5,000 meters, including 10 holes at Venus and three holes at Mars that already have been completed, with another 8-10 holes to finish the season. In addition the company will carry out a 20,000-plus soil sample survey to follow up on drill results at Venus and Mars.

The Einarson Property, located a stone's throw from the Yukon-Northwest Territories border, covers about 1,100 square kilometers due east of ATAC's better known Rackla Project. Anthill optioned the property from longtime Yukon prospector Ron Berdahl, who discovered Einarson while exploring the area and finding Carlin-style pathfinder minerals such as realgar, orpiment and zebra dolostone in the area.

After reading up on the Carlin Gold District in Nevada, Berdahl felt the pieces fit for Carlin-style mineralization in the area's mountainous terrain.

"It was kind of a big gamble. We put all of our money into staking these properties," said Steve Berdahl, exploration geologist at 18526 Yukon Inc. and Ron Berdahl's son.

Most of the claims that the Berdahls staked in the area have been optioned to Anthill, which now holds a 30 percent interest in the Einarson property along with an option to acquire up to a 100 percent interest. However, the Berdahls held on to a small area south of Einarson near the Mars Trend. The father-son duo returned to the area in 2011 and staked additional ground near this acreage. The work led them to make an additional realgar discovery (the F-2 Target) in 2012, two years after the area's record-setting staking rush in 2010.

Aside from a find near the Great Wall of China, Yukon Territory hosts the only known examples of Carlin-style mineralization outside of Nevada.

Jeff Cary, a geologist who has worked on Carlin Trend projects in Nevada for most of his career prior to relocating to Yukon Territory in 2010, said one of the most compelling parts of the whole exploration story in East Yukon is the sheer size of the area with signs of Carlin-style mineralization.

"You could fit the whole North Carlin Trend, which had 100 million ounces of gold when it was all mined, between the F-2 Target and the Venus Trend," said Cary, who joined the Anthill project team in July.

"Within our target areas (at Einarson), we're putting money and manpower into understanding the geology," Cary told Mining News Aug. 5.

Sunrise brightens outlook

At the nearby Rackla Project, Atac has drilled more than 60,000 meters of core since 2010, following up on geochemical sampling that sought pathfinder elements in a series of carbonate horizons in the eastern-most part of the 1,700-square-kilometer (656 square miles) property known as the Nadaleen Trend.

The work has paid off with a growing list of discoveries, including the Sunrise Zone, which was initially identified by a road-building contractor on the side of a mountain 300 meters east the Osiris Zone in last October.

Atac reported results Aug. 14 from the first seven diamond drill holes completed at Sunrise, including confirmation that the Sunrise and Osiris zones coalesce into a larger, near-surface gold zone.

Sunrise is located upslope of a strong gold-in-soil geochemical anomaly that had not been previously drill-tested.

Mineralization at Sunrise occurs as sub-parallel tabular bodies that dip steeply south.

The 2012 discovery was intersected at the top of hole OS-12-173 where intensely decalcified limestone is adjacent to a steeply dipping fault that separates the Osiris carbonate sequence from overlying shale.

The hole was collared directly within mineralization and returned 14.86 meters of 10.54 grams-per-metric-ton gold.

Drilling to the east and west of the discovery hole in 2013 has extended the strike length of mineralization or the characteristic alteration in the case of holes with assays pending, to 200 meters and tested it to a depth of 250 meters from surface.

"2013 drilling at the Sunrise zone has confirmed grade and continuity of gold mineralization westward where it becomes the down dip extension of the Osiris zone," said Atac CEO Graham Downs in a statement.

"We are very excited about the expansion of the Sunrise zone and resulting convergence of both zones into a larger near-surface gold zone. Results from additional Sunrise Zone step-out holes drilled toward and down dip of Osiris will be reported once received and compiled," he added.

Yet Atac's geologists say they may be more intrigued by the Conrad Zone, which was discovered in 2010 along with Osiris and Isis, but may be masked by mudstone and potentially larger than the Osiris and Isis discoveries, together.

Atac is also conducting a geochemical sampling program over 100 kilometers (62 miles) in the Nadaleen Trend.

The company said regional exploration is proceeding this season with work focused on the Anubis area, which is located 10 kilometers (6.2 miles) to the west of the Osiris cluster of gold zones. Follow-up exploration consisting of geochemistry surveys, prospecting or hand pitting has been conducted at all of the nine Tier 1 anomalies identified in 2012. A small excavator has recently been mobilized to the Anubis area to more effectively test priority targets and, if warranted, prepare drill sites.

Noting that Carlin-style mineralization is very erratic, Atac President Rob Carne said his exploration team is taking the time in 2013 during the current down capital markets to really understand the fairly complex system of Carlin-style mineralization on the property. Whether it's the 10-kilometer (6.2 miles) long anomaly to the west dubbed Anubis or the equally exciting Anubis and Pharoah discoveries, there remains an abundance of discoveries and new targets to investigate on the Rackla property.

Carne said Atac also embarked in July on a program of detailed soil sampling and prospecting, geochemical sampling and significant test pitting.

"We are two-thirds of the way through a resource definition for the property," he added.

Progress at Coffee

Kaminak Gold Corp. Aug. 8 reported results for 54 drill holes from its ongoing 2013 drilling campaign at the Coffee Gold Project in west-central Yukon.

The junior said drilling successfully identified shallow, predominately oxidized gold-bearing structures within the Supremo-Latte-Double Double area, which is host to a majority of the 3.2-million-ounce inferred mineral resource estimated in late 2012 for Coffee that consists of 64 million metric tons averaging 1.56 grams per metric ton gold at a base case cut-off of 0.5 g/t gold for oxide and transitional material and a 1 g/t gold cut-off for sulphide mineralization.

The latest drill results are presented from Supremo T1-T7, Connector and Latte zones from drill campaigns that extended the known zones of mineralization along strike, across strike and to depth.

Among highlights of the results: Drilling continued to successfully extend additional, near-surface oxide gold mineralization in Supremo's 'T' structures, including 3.53 g/t gold over 18.28 metres from 158.50 metres downhole in T2; 9.84 g/t gold over 6.10 meters from 134.11 meters in T5; 8.68 g/t gold over 4.57 meters from 35.05 meters in T3; 2.06 g/t gold over 6.10 meters from 68.58 meters in T7; and 2.69 g/t gold over 44 meters from 6 meters in T1.5 (drilled obliquely down-dip).

Drill results in multiple oxide gold-bearing structures intersected within a complex fracture zone marking the intersection point between the Supremo and Latte mineralized structures include: 5.67 g/t gold over 16 meters from 95 meters depth.

Step-out drilling west along strike beyond the existing Latte zone extended the Latte mineralized structure for an additional 300 meters. The total strike length of Latte is now in excess of 2 kilometers and still open. Results include 2.91 g/t gold over 6 meters from 95 meters.

2013 drilling at Coffee is ongoing and has now surpassed 40,000 meters while remaining on schedule and within a phase 1 budget of C$11 million.

In addition to the drill program, which will be incorporated into an updated resource estimate later this year, collection of metallurgical, geotechnical, hydrogeological and environmental data is ongoing with the objective to support a preliminary economic assessment to be formally commenced in early 2014.

Also, an extensive soil sampling campaign that includes 5,026 samples was recently completed with the objective of identifying future drill targets.

Kaminak is debt-free and fully financed to complete its 2013 objectives and launch a 2014 exploration program.

"While we have yet to define the limits of this extensive, structurally controlled, hydrothermal gold system, where an inferred NI 43-101 resource of 3.2 million ounces was established in 2012, drilling this year has so far demonstrated good continuity and connectivity between the deposits," Kaminak President and CEO Eira Thomas said in a statement.

"Further, we have continued to delineate near-surface, potentially heap leachable, high-grade zones that could represent accessible, early-stage mining opportunities.

Indeed, the presence of considerable shallow, high-grade ounces within the block model is a distinct advantage for the project as we begin to investigate future mining scenarios that take a disciplined approach towards capital investment and work to maximize margins."

Kaminak also has made considerable progress in establishing low-cost infrastructure to support exploration. This includes construction of a commercial barge landing site on the property and building a 23-kilometer (14.5 miles) access road from the Yukon River to the property's gold deposits at a cost of about C$50,000 per kilometer.

Thomas, who joined Kaminak March 1, told reporters visiting the Coffee Project Aug. 8 that she believes the property is situated "in area that eventually will be mined for a very long time."

She observed that Coffee is still an early stage exploration project that is already demonstrating district-scale potential, given that only 20 percent of the property has been explored.

"Part of our goals in 2014 will be to get out and test the rest of the ridge and spur anomalies on the property that are equally compelling," she said.

The junior, meanwhile, is positioning Coffee for possible early development of its high-grade areas in a scalable project that can be built over time. Because a large percentage of mineralization uncovered so far on the property is oxide and transitional material, the company is cheered by the prospect of constructing a heap leach mine.

Early metallurgical tests show that the fine-grained gold mineralization at Coffee is amenable to heap leaching with 90.4 percent gold recovery over 80 days and 83.2 percent recovered in the first 15 days.

Silver and iron projects

YGS geologist Sack said that in addition to gold projects, Yukon attracted a sprinkling of other types of mine projects this season.

Silver Range Resources Ltd., for example, is continued to explore its Keg Property located near Faro and about 20 kilometers (12.4 miles) from the territory's electrical grid. Silver Range released a NI 43-101-compliant inferred resource estimate of 40 million ounces silver at Keg in 2012.

"It's a large property that has piles of top-tier targets," Sack said. "Silver Range went from having a soil anomaly in 2010 to a reporting a resource in 2012. That has got to be one of the fastest turnarounds in recent memory."

Sack said the junior would like to mine the Keg Property, "but they are not sure how. The transition from junior to miner is pretty hard," he added.

A new magnetite mining operation in Whitehorse, meanwhile, could become the first-ever iron mine in Yukon. The mineralization would come from tailings left from years of copper and then gold production at the Whitehorse Copper Mine.

Developer Chuck Eaton's Eagle Whitehorse, LLC recently inked an agreement with the Alaska Industrial Development and Export Authority to stockpile, load and ship magnetite concentrate from the Skagway Ore Terminal to Asia markets. Construction on the US$7.5 million expansion project will begin late this summer, with project completion expected in the first quarter of 2014.

The unit of Eagle Industrial Minerals Corp. intends to process 12,000 tpd for six to seven months during the snow-free season, producing 250,000-350,000 metric tons per year magnetite over six to seven years and employing up to 20 people. The venture will involve running the tailings through a slurry to produce enough magnetite ore to fill an oceangoing barge every month.

Sack said another local entrepreneur, Jim Coates of Kryotek, is also investigating the potential of adding a gold circuit to the magnetite operation in hopes of recovering the remaining 0.5 g/t gold in the iron-rich tailings.