AMA sets tenor of fundraising season
High grades, largest field programs set Tetlin and Bornite grab the spotlight; Japanese investments advance Palmer, Man in 2013
Last updated 11/24/2013 at Noon
The Alaska Miners Association's annual convention marks the changing of seasons for junior exploration companies with mineral projects in Alaska. As a blanket of snow hides outcropping rocks and the water needed for drilling crystalizes, geologists who have spent the long summer days investigating the vast mineral endowment across the Far North trade in their hammers, backpacks and hiking boots for suits, ties and PowerPoint presentations that show off the achievements of their latest field programs.
While the 2013 exploration programs across Alaska were not without their successes, the fanfare of exploration results heralding the changing of seasons was notably less robust than typically seen at the beginning of the junior fundraising season - an upshot of the lack of capital available to mining and mineral exploration companies worldwide.
"The exploration expenditures are down worldwide by about 30 percent and for junior explorers about 40 to 50 percent; and some of those budgets are just to keep the lights on, they are not actually doing much," NovaCopper Inc. President and CEO Rick Van Nieuwenhuyse pointed out during a keynote speech at the 2013 AMA convention.
While money is undeniably tight across the sector, a number of junior explorers could afford to pay the electric bill and mount multimillion-dollar exploration programs on promising metals projects across Alaska. Several of these programs were featured at the November gathering in Anchorage, the first mining convention of North America's 2013/14 fundraising season.
Tetlin grabs attention
A recently discovered skarn rich in gold and copper provided a distinctive tone to the results being trumpeted from Contango ORE Inc.'s Tetlin project located about six miles (10 kilometers) southeast of the crossroads town of Tok, Alaska.
While raising funds was tough for most mineral exploration companies coming into the 2013 field season, Contango ORE closed a US$14.1 million financing in March.
With its coffers full, the company invested roughly US$10 million on a 2013 exploration program aimed at establishing a maiden indicated resource at Peak, a zone of high-grade gold and copper mineralization located in the northeastern part of the 675,000-acre (273,163 hectares) Tetlin property.
While geochemistry and intermittent drill results over the previous four seasons of exploration at Tetlin have whispered hints of the property's potential, a series of drill intercepts with grades topping 16 grams per metric ton gold and 1 percent copper over 40-plus meters grabbed the rapt attention of the attendees of the AMA convention.
Highlights from the first 34 holes include:
TET13062 cut 64.8 meters averaging 13.1 g/t gold, 21 g/t silver and 0.48 percent copper;
TET13063 cut 40.5 meters averaging 16.6 g/t gold, 36.1 g/t silver and 0.73 percent copper;
TET13082 cut 87.6 meters averaging 4.03 g/t gold, 19.3 g/t silver and 0.30 percent copper;
TET13085 cut 45 meters averaging 2.74 g/t gold, 69.5 g/t silver and 1.40 percent copper; and
TET13088 cut 138 meters averaging 3.62 g/t gold, 11.4 g/t silver and 0.11 percent copper.
All told, 69 holes (14,625 meters) drilled into Peak during 2013 traced a 500-meter-long dumbbell-shaped zone of skarn mineralization, with the southeast end being more copper-rich and the northwest side showing the higher gold values.
"I can't wait to release the rest of these drill results," Tetlin Project Geologist Chris Van Treeck told the audience during a Nov. 7 presentation on the exciting project.
The wait was not long. On Nov. 13 Contango ORE released the final results, highlights include:
TET13098 cut 84.4 meters averaging 4.99 g/t gold, 16.7 g/t silver and 0.167 percent copper;
TET13100 cut 95.9 meters averaging 5.75 g/t gold, 6.9 g/t silver and 0.14 percent copper;
TET13107 cut 159.3 meters averaging 7.01 g/t gold, 6.6 g/t silver and 0.102 percent copper;
TET13110 cut 96.9 meters averaging 9.06 g/t gold, 4.3 g/t silver and 0.093 percent copper; and
TET13117 cut 134.8 meters averaging 4.85 g/t gold, 2.9 g/t silver and 0.084 percent copper.
Contango ORE CEO Brad Juneau said, "Our drilling results clearly add a material amount of gold resources to the Peak Zone."
Contango ORE said an independently prepared resource that includes the 87 drill holes (17,949 meters) completed at Peak over the past two seasons is expected to be release by December, at which time the Texas-based explorer will evaluate its options with regard to further exploration, joint venture, potential sale, or other strategic initiatives.
The company said it has fulfilled its capital work commitments at Tetlin for the next several years, so it can hold its claims or leases on the expansive property with minimal capital expenditures.
Contango ORE expects to go into 2014 with more US$3 million in the bank, no debt, and an overhead of roughly US$600,000 per year.
Grade is king at Bornite
High-grade copper provided a distinctive tone to the Arctic and Bornite deposits at NovaCopper's Upper Kobuk Mineral Projects in Northwest Alaska.
"Grade is king, and in a world where most new deposits are about half-a-percent copper, the grades at Arctic and Bornite really stand out," Van Nieuwenhuyse touted during his address at the AMA convention.
Arctic, a volcanogenic massive sulfide deposit, has a potentially open-pit-minable indicated resource of 23.85 million metric tons averaging 3.26 percent (1.71 billion pounds) copper, 4.45 percent (2.34 billion lbs.) zinc, 0.76 percent (400 million lbs.) lead, 0.71 grams per metric ton (550,000 ounces) gold, and 53.2 g/t (40.8 million ounces) silver. Additionally, Arctic has an inferred resource of 3.63 million metric tons averaging 3.22 percent (239 million lbs.) copper, 3.84 percent (285 million lbs.) zinc, 0.58 percent (43.2 million lbs.) lead, 0.59 g/t (60,000 ounces) gold.
The roughly C$16-million exploration program completed by NovaCopper in 2013, though, focused on Bornite, a project situated about 16 miles (26 kilometers) southwest of Arctic that hosts two known carbonate replacement deposits rich in copper.
Ruby Creek is a near-surface zone at Bornite that hosts an indicated resource of 6.8 million metric tons averaging 1.19 percent (179 million lbs) copper and an inferred resource of 47.7 million metric tons averaging 0.84 percent (883 million lbs) copper.
South Reef, a richer but deeper zone, has an inferred resource of 43.1 million metric tons averaging 2.54 percent (2.4 billion lbs) copper.
This year, NovaCopper completed an 8,142-meter drill program focused on expanding and upgrading these resources.
One of the key achievements of this drill program was linking Lower Reef, a deep high-grade horizon at Ruby Creek, to the equally high-grade South Reef zone.
"This year we have had good success at extending and connecting those two deposits," Upper Kobuk Mineral Projects Manager Andy West informed the AMA crowd on Nov. 7.
Four holes targeting this connection have outlined what appears to be a 100-meter-thick zone of continuous high-grade copper mineralization that arcs in a 1,000-meter-long horseshoe between Lower Reef and Ruby Creek. NovaCopper has released the results on two of these holes:
RC13-220, drilled to the north of the South Reef zone, intersected two mineralized intervals. These two intervals, encountered over 131.3 meters of drilling starting at a depth of 809.1 meters, totaled 126 meters of mineralization with a weighted average grade of 1.59 percent copper and comprised of: 45.6 meters averaging 1.07 percent copper; and 80.4 meters averaging 1.89 percent copper.
RC13-224, drilled the north of the Ruby Creek zone, intersected two mineralized intervals. These two intervals, encountered of 241.3 meters of drilling starting at a depth of 513.3 meters, totaled 236 meters of mineralization with a weighted average grade of 1.9 percent copper and comprised of: 229.4 meters at a grade of 1.73 percent copper; and 6.6 meters at a grade of 7.70 percent copper.
Drilling at Ruby Creek in 2013, which cut multiple layers of roughly 1 percent copper, continues to expand and demonstrate continuity of this potentially open-pittable copper zone. Highlights from the first 10 holes include:
RC13-221 intersected five mineralized intervals, starting at 138.9 meters and ending at 367.7 meters (228.8-meter interval), for a combined 123.8-meter composite interval with a weighted average grade of 1.23 percent copper and comprised of: 10.0 meters at a grade of 0.85 percent copper; 12.5 meters at a grade of 0.98 percent copper; 25.8 meters at a grade of 1.18 percent copper; 16.8 meters at a grade of 1.13 percent copper; and 58.8 meters at a grade of 1.39 percent copper.
RC13-219 intersected 42.5 meter with a weighted average grade of 1.44 percent copper, starting at 425.9 meters. RC13-218 intersected three mineralized intervals, starting at 29.5 meters and ending at 340.2 meters (310.7-meter interval), for a combined 73.8-meter composite interval with a weighted average grade of 1.2 percent copper and comprised of: 14.1 meters at a grade of 0.84 percent copper; 23.5 meters at a grade of 0.94 percent copper; and 36.2 meters at a grade of 1.51 percent copper.
RC13-217 intersected four mineralized intervals, starting at 159.2 meters and ending at 293.3 meters (134.1-meter interval), for a combined 63.3-meter composite interval with a weighted average grade of 0.99 percent copper and comprised of: 18.8 meters at a grade of 1.23 percent copper; 8.6 meters at a grade of 1.08 percent copper; 5.2 meters at a grade of 0.59 percent copper; and 30.8 meters at a grade of 0.9 percent copper. A cut-off grade of 0.5 percent copper was used to calculate the above results.
As NovaCopper continues to expand the zones of high-grade copper at Bornite, the company is working on a prefeasibility for the Arctic volcanogenic massive sulfide project some 16 miles (26 kilometers) to the northeast.
NovaCopper, which had US$8.2 million in working capital at the end of August, will need to raise additional funds to keep the pace it has set at the Upper Kobuk Mineral Project over the past two seasons.
"We have got to raise some money but that is another story," Van Nieuwenhuyse told the AMA crowd.
Japanese smelter funds Palmer
With traditional sources of venture capital available to junior exploration companies being scare, Constantine Metal Resources Ltd. found a more reliable source of funds to continue the exploration of its Palmer volcanogenic massive sulfide project in 2013.
Early in 2013 Constantine finalized a US$22 million option and joint venture agreement with Dowa Metals & Mining Co., Ltd, which owns the largest zinc refinery in Japan. To earn a 49 percent stake in Palmer, Dowa has agreed to invest US$20.75 million on exploration at the VMS project and pay Constantine US$1.25 million in cash over a four-year span.
"This is huge for the project and for Constantine," Constantine Vice President of Exploration Darwin Green explained during a Nov.7 presentation.
In addition to a cash infusion during tight financial markets, Dowa brings 130 years of experience in the mining and smelting of VMS ores to its newly forged partnership at Palmer.
Dowa, in turn, gains a foothold in a potential source of metals concentrates that is located 35 road-miles (60 kilometers) from the Pacific Rim deep-sea port at Haines.
Dowa budgeted US$2.5 million for a 2013 exploration program that targeted Glacier Creek, which hosts an NI 43-101-compliant 4.75 million metric ton inferred resource estimate grading 1.84 percent copper, 4.57 percent zinc, 0.28 grams per metric ton gold and 29 g/t silver.
Including the 10 holes drilled this year, 20 holes (7,667 meters) have been drilled into Glacier Creek since this resource was calculated.
Five zones of mineralization have been discovered to date at Glacier Creek - RW East, RW West, and South Wall zones 1, 2 and 3.
Drilling focused on expanding the South Wall and RW zones, CMR13-49, a South Wall Zone I step-out hole, intersected 24.7 meters of 2.02 percent copper, 8.47 percent zinc, 31.7 g/t silver and 0.51 g/t gold. This massive sulfide intersection is located approximately 30 meters up-dip of CMR10-40, which intersected 20.8 meters of 1.03 percent copper and 5.01 percent zinc (reported in 2010). Both these intersections are outside the limits of the pre-2010 resource estimate.
Precious metal-rich RW Zone oxide mineralization was intersected in CMR13-50, including 37.5 meters of 123.2 g/t silver and 0.62 g/t gold. The intersection includes a partially un-oxidized subinterval of 13.7 meters grading 0.51 percent copper, 4.97 percent zinc, 1.61 percent lead, 134.3 g/t silver and 0.71 g/t gold. Highly successful expansion program with significant mineralization intersected in seven of ten holes, including five high-grade intersections 20 meters or greater in width.
Dowa, which began mining and smelting VMS ore in the 1880s, has refined the science of separating the precious and base metals common to these complex deposits.
Metallurgical testing of Palmer VMS mineralized material was carried out by SGS Canada in Vancouver under the observation and direction of metallurgists from Dowa this year.
This metallurgical work was completed on a composite of 212 assay sample rejects from past drilling that is a blend of all major ore-types within the South Wall resource area, with a head grade assay of 1.56 percent copper, 6.47 percent zinc, 28.5 grams per metric ton silver and 0.19 g/t gold.
Highlights from the locked cycle flotation tests include: an average copper recovery of 89.6 percent to a copper concentrate containing 25.5 percent copper; average zinc recovery of 84.9 percent to a zinc concentrate containing 59.1 percent zinc; combined total silver and gold recovery to copper and zinc concentrates of 89.7 percent and 75 percent respectively; and 73.7 percent of the silver and 61.5 percent of the gold report to the copper concentrate.
Of particular importance to Dowa, which undoubtedly sees concentrates from Palmer as a potential feedstock for its zinc smelters in Japan, is the quality of the zinc concentrates. The locked cycle tests are of very good quality, with low impurities and no potential penalty or problematic elements.
Dowa has a balance of US$18.25 million, or an average of roughly US$6.1 million annually for the next three years, to earn a 49 percent stake in Palmer.
Eureka discovered, Itochu lost
Thanks to its own partnership with a Japanese corporation, Pure Nickel Inc. has dialed in on a distinct zone of nickel-platinum group element-gold-copper mineralization across a the central portion of the Man property that stretches along the southern slopes of the Alaska Range, roughly 250 miles (400 kilometers) southeast of Anchorage.
Itochu Corp., Pure Nickel's partner at Man, has invested roughly US$23.6 million on exploration at the project since 2008, earning the Tokyo-based company a 30 percent interest in this property that blankets some 181.5-square-mile (470 square kilometers) of the Wrangellia Terrane.
This work led to the discovery of the Eureka zone, a subset of the 21-mile- (33 kilometers) long Alpha mafic-ultramafic complex that stretches across the central portion of the Man property.
Eureka was first recognized in 2010 drill holes PNI-10-35 and PNI-10-36. Hole 35 cut 32 meters averaging 0.169 g/t platinum-palladium-gold, 0.1 percent copper and 0.23 percent nickel. Hole 36 cut 165.5 meters averaging 0.272 g/t platinum-palladium-gold, 0.13 percent copper and 0.28 percent nickel. A 2012 drill hole, PNI-12-063 confirmed the continuity of the mineralization with an 80.95-meter interval averaging 0.315 g/t platinum-palladium-gold, 0.17 percent copper and 0.25 percent nickel.
Pure Nickel said that a review of past drilling on the property shows that all drill holes intersecting the Eureka zone stratigraphy have encountered disseminated sulfide mineralization with strikingly similar grades along seven kilometers (4.5 miles) in the central part of the Alpha Complex. To confirm this find, Itochu agreed to invest US$3.5 million in 2013 to complete a 2,991-meter drill program primarily targeting the Eureka, as well as prospecting and mapping work in various parts of the property.
Six of the seven holes that targeted Eureka cut the broad zone of nickel-PGE-gold-copper mineralization being sought, with one hole being abandoned in a fault zone.
Highlights from the drilling include:
205.2 meters averaging 0.34 percent nickel-equivalent (19 parts per billion gold, 61 ppb platinum, 122 ppb palladium, 0.09 percent copper and 0.24 percent nickel) in hole PNI-13-069;
162.6 meters averaging 0.29 percent nickel-equivalent (13 ppb gold, 49 ppb platinum, 104 ppb palladium, 0.08 percent copper and 0.2 percent nickel) in hole PNI-13-072;
130.5 meters averaging 0.30 percent nickel-equivalent (16 ppb gold, 52 ppb platinum, 118 ppb palladium, 0.07 percent copper and 0.22 percent nickel) in hole PNI-13-073; and
253.9 meters averaging 0.27 percent nickel-equivalent (11 ppb gold, 38 ppb platinum, 91 ppb palladium, 0.06 percent copper and 0.2 percent nickel) in hole PNI-13-074.
Pure Nickel said the results of the 2013 drilling confirm the presence of what is now interpreted as a continuous zone of magmatic sulfide mineralization containing elevated concentrations of nickel, copper, gold, platinum and palladium. The mineralization also includes minor silver and cobalt.
Pure Nickel President and CEO Dave McPherson said. "The results of our 2013 drilling program confirmed our interpretations regarding the scale and continuity of the Eureka zone."
Drilling and mapping have now traced Eureka for 15 kilometers (9.3 miles) and Pure Nickel believes, given the Alpha complex as a whole stretches for more than 30 kilometers (18.6 miles), it is likely that additional work could extend the zone to world-class proportions.
"We feel that we have made a significant discovery on the Man property, and we believe the zone has the potential to develop into a very large deposit. We look forward to 2014 when we hope to start the resource delineation process," McPherson added.
Pure Nickel estimates that a 6,000-10,000-meter drill program will produce an initial NI 43-101-compliant resource for the Eureka zone.
First though, Pure Nickel must find a new partner.
Itochu, which did not see the PGE-potential it was seeking in the nickel-dominated Eureka zone, has decided to withdraw from the Man project.
"We end up owning 100 percent of this project that has enormous potential," McPherson explained during a Nov. 18 conference call announcing the withdrawal of Itochu. "We need to start marketing this to other potential partners who have an interest in big-big-scale (nickel-dominated) projects."
Any potential partner will be interested in seeing the results of the initial metallurgical work to test the nickel recoveries in the Eureka zone, which are expected to be completed early in 2014.