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

Miranda Gold Corp. has tied up a 20-year lease on the Willow Creek project, a road-accessible, high-grade gold property located a short 75 miles (121 kilometers) north of Anchorage, Alaska.

The 8,700-acre (3,520 hectares) property blankets a large portion of the Willow Creek mining district, including the historical Lucky Shot and War Baby mines. It is estimated that from 1918 until being shut down by the War Production Board in 1942, these two underground operations, collectively known as the Willow Creek mines, produced some 252,000 ounces of gold from ore averaging roughly 2.2 ounces (68 grams) of gold per ton.

All told, the Willow Creek property leased by Miranda produced roughly 500,000 ounces of gold from ore with an average grade north of 1.0 oz/t (31 g/t) prior to being closed during World War II.

Drawing comparisons to Mother Lode, the famous California mesothermal gold vein that extends to a depth of more than 1,200 meters and for many miles along strike, Miranda believes these rich veins of gold at Willow Creek are likely to continue beyond the historic workings, making the road accessible property an attractive target for a company seeking a project to develop in a softening gold market.

"Something I have always been told is 'grade is king'," Miranda Gold President and CEO Ken Cunningham said during a Dec. 2 interview with Kitco News. "We have a declining gold price … so coming up with something that has an historical production base of in excess of one ounce (per ton) I think in this market is going to be very attractive."

A roughly 100,000-ounce zone of high-grade gold outlined by Full Metal Minerals Ltd. adds to the appeal of the project, previously known as Lucky Shot.

"We think it has quite a bit of potential," Cunningham said. "There is a drilled off section that is running about 1 ounce per ton."

Extending Lucky Shot

Cunningham said Miranda has already been approached by a couple of companies interested in getting involved in the Willow Creek project. But, before bringing in a partner to potentially re-open the historic mines, Miranda plans to use data from past mining and recent exploration to model the high-grade gold system.

One of the primary areas Miranda is interested in investigating is the Hogan stope, a section of the Lucky Shot vein that accounts for the bulk of the 252,000 ounces of gold that has been extracted from the Lucky Shot Mine.

Averaging roughly 1.6 oz/t (49.8 g/t) gold over 450 meters horizontally and 200 meters vertically, Miranda says the vein mined at Hogan stope is narrow but predictable and continuous.

The company reports that previous miners left little material in the historical stope which measures up to 7.3 meters across, suggesting that pre-World War II-era mineable values were continuously distributed among the narrower high-grade shoots.

A previous high-grade drill intercept of 0.76 meters grading 82 g/t gold 20 meters below the Hogan stope, indicates to Miranda geologists that significant gold may occur beyond the level of workings. The company believes that if shoots can be developed by extending this high-grade vein roughly 200 meters above and/or below the historic workings, the potential of the Willow District could meet or outweigh the more than half-a-million-ounces of gold historically recovered.

Coleman block

In addition to extending the Hogan stope, Miranda has the potential to expand upon the roughly 100,000 ounces of gold outlined by 175 holes drilled by Full Metal Minerals from 2005 through 2009.

During its tenure at Willow Creek, known at the time as the Lucky Shot project, Full Metal focused primarily on exploring Coleman block, the westernmost known fault-offset extent of the Lucky Shot vein system.

Highlighted intercepts of more than 30,000 meters of surface drilling by Full Metal include:

•C05-09 cut 3.1 meters grading 62.2 grams per metric ton gold;

•C05-12 cut 4.0 meters grading 219.1 g/t gold;

•C06-16 cut 4.6 meters grading 51.5 g/t gold;

•C09-153 cut 0.9 meters grading 102 g/t gold; and

•C09-171 cut 7.3 meters grading 36.38 g/t gold.

Full Metal's work outlined a mineralized area measuring some 2,400 meters along strike and 700 meters down-dip. Miranda said subsequent modelling by itself and Mine Development Associates substantiates the Coleman block as an unmined, up-dip extension of the vein mined at Lucky Shot.

Alaska Hardrock Inc., the underlying owner of the Willow Creek property, said the drilled portion of the Coleman block contains an indicated resource of 112,000 tons of ore containing 70,000 to 157,000 ounces of gold, contingent on the reserve assumptions used.

In addition to the drilling, Miranda could benefit from the mine development completed at Coleman during Full Metal's tenure.

In 2008, Full Metal began rehabilitation of a tunnel briefly used to access the Coleman block in 1939. The work completed by the company includes blasting away material to make room for a new trestle near the Coleman portal; repairing the rails and ore cars left by the historical miners; and driving an incline 140 feet towards the Coleman zone, the western limit of the Lucky Shot shear.

Full Metal planned to cart a 5,000-metric-ton bulk sample of mineralized material from the Coleman zone to process onsite.

In preparation for this test, Full Metal had three samples lab-tested in 2008 to determine the amount of gold recoverable with a gravity concentrator. The sample grades were 4.7 g/t gold, 4.7 g/t gold and 7.8 g/t gold. Total recoveries were 68.2 percent, 68.5 percent and 78.3 percent, respectively. These tests along with historic mine records suggest that gold recovery should improve with higher grades.

Inclement market conditions, though, prevented Full Metal from completing the final stretch of development needed to mine the sample.

According to Alaska Hardrock, the incline would need to be extended roughly 290 feet to reach the Coleman mineralization and drifting an additional 470 feet along the Lucky Shot vein would be necessary to reach the highest grade material.

Connecting the dots

All told, the known extent of the Lucky Shot vein system stretches at least 1,500 meters along strike and is divided into four fault-blocks - Coleman, Lucky Shot, War Baby and Murphy.

Limited historic drilling to the east of the Lucky Shot Mine reportedly discovered a blind vein segment with values to 1.6 oz/t gold (55 g/t gold) below the depth of any workings in the district.

Across the valley, roughly 2,500 meters to the east, lies another stretch of early 20th Century mines -Gold Bullion, Nippon, DeWitt and Hope. Gold Bullion is reported to have produced 77,000 ounces of gold from ore that averaged 1.7 oz/t.

Some believe the gold extracted across the valley came from an extension of the Lucky Shot vein system.

Miranda believes it is possible that additional northeast raking, high-grade ore-shoots could be discovered both up and down-dip of the immediate area of the mines, and that the vein continues to the east and the west in other faulted segments.

A secure land package and established infrastructure will bolster the chances of any company hoping to re-open the high-grade Willow Creek gold mines. The Willow Creek property consists of 75 patented claims and 62 State of Alaska claims.

Miranda said it has been informed by state officials that the scope of permitting has not substantially changed since Full Metal received approval for test mining and bulk sampling in 2009; indicating that exploration and mining could be advanced quickly.

Under the terms of the lease with Alaska Hardrock, Miranda has made a US$50,000 payment with a final US$100,000 due after a 90-day due diligence period. Thereafter, the lease is subject to annual payments of US$150,000 or, if production is achieved, various net smelter royalties or revenues.

Joe Hebert, Miranda's vice president of exploration, "We see tremendous potential in the upside at Willow Creek and as a prospect generator, we think high-grade, low-risk projects that can be advanced quickly are attractive to JV (joint venture) partners."

Cash is king

Though Miranda has primarily been focused on exploring a number of gold properties in Columbia and Nevada, the Vancouver, B.C-based junior is no stranger to exploring Alaska. Most recently, the exploration company investigated the Ester Dome gold project, a group of 181 Alaska state mining claims situated some five miles (eight kilometers) west-northwest or Fairbanks.

The Ester project attracted the attention of Agnico-Eagle Mines Ltd., but following two seasons of drilling, the two companies dropped the project at the end of 2012.

After dropping the Ester project, Agnico Eagle and Miranda forged a strategic alliance to explore for precious metals in Colombia. Under the terms of the alliance, Agnico will supply 70 percent of the exploration expenditures. Miranda, which will operate the exploration programs, will fund the remaining 30 percent.

The alliance partners have agreed to spend at least US$1 million annually over an initial three-year period.

Cunningham said this exploration in Latin America is a primary focus of Miranda's efforts in 2014.

"Because, we think in the near-term Colombia gives us a shot at a discovery, and we need something near-term," he explained.

The Miranda CEO said his company will be doing far less in Nevada next year.

"Unfortunately, I am seeing a tough market ahead for juniors," he explained to Kitco. "We reacted to that. One of the things we did in the last two months is we curtailed our exploration activities in Nevada."

Describing the move as painful and difficult, Cunningham said Miranda laid off some 75 percent of its staff in Elko to conserve the cash it has in the bank.

"We think that cash is king - grade is king - and we are going to hold onto as much of our cash as we can and still do smart deals like Willow Creek," said the Miranda Gold CEO.

Author Bio

Shane Lasley, Publisher

Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.

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