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

Prowling through the Klondike gold fields with a knowledgeable driver is a little like traveling back in time. Thanks to rutted, dirt access roads, the bumpy ride takes hours as the SUV crawls past an extended parade of active and abandoned gold diggings and placer mining camps in central Yukon Territory.

It is not difficult to envision the thousands of miners who streamed into this wilderness early in the last century to pan, dredge and dig up millions of ounces of gold, or the hardships they must have endured along the way.

Ultimately, these early explorers pulled more than 20 million ounces of placer gold out of the Klondike since the gold fields were discovered in 1897 and left behind a lingering mystery. Where did all that gold come from? Are there really lode sources for the placer gold tucked away in these hills?

One company, Klondike Gold Corp., has been looking for answers for years. Led until recently by Richard Hughes, one of Canada's great explorationists, the company is focused on the Lone Star property, centered in the Klondike gold fields about 20 miles south of Dawson City.

The company theorizes that there are at least five reasons why the Klondike has no hardrock mines. They include:

A lack of a deposit model;

Thick overburden and permafrost;

High nugget effect;

Sporadic exploration and a lack of data control and compilation;

And looking in the right location.

Focus on Lone Star

Klondike Gold is currently exploring a 200-square-kilometer (77 square miles) land package, including the Lone Star Property which is comprised of 728 quartz claims and 14 crown grants covering 137.6 square kilometers (53 square miles) of prospective ground. The flagship Lone Star Mine Project is located in the center of this contiguous land package, which covers the Bonanza/Eldorado Creek drainages recognized as the world's richest placer gold camp (based on historic production per square meter).

With gold prices climbing to new heights in recent years, Klondike Gold has renewed its efforts to identify lode gold sources at Lone Star, a property with 60 percent of its area significantly under-explored.

The company also hired a new president and CEO in 2010, longtime local placer miner and entrepreneur Erich Rauguth, to lead a new phase of exploration.

In 2012, the company launched a systematic program of exploration that has resulted in a better understanding of the structure and mineralization of the main targets across the property, including the Lone Star Ridge where the Boulder Lode open cut and a network of underground workings (site of the historic 1911 Lone Star Mine which was the largest of the historic hardrock gold mines in the Yukon) is located; the potential strike length between the Violet and 310 zones, Nugget to Buckland Trend, JF Zone, Boy Soil Anomaly and Upper Eldorado Gold Occurrence.

In 2013, Klondike Gold set out to move forward with exploration of all known gold occurrences at Long Star. Exploration work, including compilation of 30 years of exploration data, mapping, sampling and trenching, has confirmed the potential of a bulk tonnage target in the Boulder Lode area as well as shallow-dipping, high-grade vein systems across the property.

It is believed that the eroded portion of the mineralization on the Lone Star Ridge has been the source for the millions of ounces of placer gold that have been recovered out of the Eldorado and Bonanza drainages, according to the company.

Klondike also reported observations made by geological consultant Jim Mortensen, Ph.D., P.Eng., which contributed to a better understanding of the underlying structure of Lone Star Property and its known gold occurrences.

"Working towards developing a cohesive structural model for the Lone Star Ridge area will further increase the understanding of the controls on mineralization on the property and provide the basis for a comprehensive drilling program," Rauguth reported in a Sept. 5 update.

Placer JV

Klondike Gold, meanwhile, formed a 50/50 joint venture, KG46 Holdings Ltd., with 46799 Yukon Inc., a group of private investors, to operate a placer mining facility on the Indian River.

Rauguth manages the joint venture.

"In addition to providing operating capital during a down-market cycle, the JV is helping Klondike Gold's exploration team to gain a better understanding of the geology of the company's Klondike land package by providing the opportunity to study the gold-bearing gravel dug up at the placer operation."

"This is an important exercise for us," Rauguth said.

"It's important to analyze the gold. It shows us which types of bedrock and which types of gold we have," he told Mining News during a visit to the placer mining operation in early August.

"We're still working our way around the property, and when we are working (at Klondike Gold), we can identify where we may find pay dirt," he explained.