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Early start at Tetlin

Peak Gold launches first-ever winter drilling at gold-copper-silver project

While many mining companies continue to scale back programs on their promising mineral exploration projects, Royal Gold and Contango Ore are expanding the extent of their work at Tetlin. This year, the partners have launched the first-ever winter drill program at this high-grade gold-copper project located near Tok, an eastern Alaska community at a junction of highways that lead to Fairbanks and Anchorage.

Neither of these companies are your prototypical mineral explorer - Texas-based Contango came to Alaska seeking natural gas and found metals instead, and Toronto-based Royal Gold usually opts to fund exploration through royalty purchases and stays away from becoming directly involved in exploration.

This unlikely duo, however, came together early in 2015 to form Peak Gold, a limited liability joint venture company operated by Royal Gold to follow up on the exploration success that Contango Ore had realized at Tetlin over the previous six years.

Despite (or due to) the uncharacteristic nature of this partnership, Peak Gold is one of the first Alaska mineral explorers out of the gate in 2016 and shows the potential to conduct one of the largest programs in the state this year.

The work will kick off with a US$4.4 million initial drill program that is about to get underway.

"We are pleased that the joint venture will conduct our first-ever winter drilling program beginning this month," said Contango Ore President and CEO Brad Juneau.

Reaching Peak Gold

Juneau first recognized the minerals potential of lands owned by the Tetlin Village Council, an Alaska Native village corporation in Alaska's Eastern Interior, while carrying out a natural gas assessment on the property in 2008. Over the ensuing five years, Contango Ore, with the help of Fairbanks-based Avalon Development, identified numerous precious and base metal targets across 774,000 acres of Tetlin Village and state of Alaska lands that the Texas-based company has accumulated over the underexplored area.

Peak zone, the most advanced of these discoveries, hosts the equivalent of 1.2-million ounces of gold, when accounting for the value of the copper and silver present in the deposit, according to a resource estimate calculated in 2013.

Attracted by the growth potential of the high-grade gold-copper-silver deposit identified at Peak and the prospects for discovering other similar deposits across the larger land package, Royal Gold agreed to become an active partner in Tetlin exploration early in 2015.

Under the deal signed in January last year, Royal Gold can earn up to a 40 percent interest in Peak Gold by investing up to US$30 million by October 2018.

The royalty company got off to a quick start on its earn-in by investing US$6.8 million on exploration at Tetlin in two phases of exploration carried out in 2015.

This investment resulted in 14,059 meters of drilling that expanded the deposit at Peak and tested new targets surrounding the deposit.

Expanding Peak

Peak is a skarn deposit that was formed when metal-laden magmatic fluids came in contact with carbonate-enriched sandstones, causing the metals to quickly drop out. The process resulted in high-grade concentrations of gold and copper that were suspended in acidic fluids that came in contact with the base rocks.

Much of the drilling carried out under the Peak Gold partnership in 2015 looked to extensions of Peak deposit, both at depth and laterally, as well as other similar nearby skarn deposits.

Two holes drilled show the expansion potential of Peak, especially at depth:

TET15147, which cut multiple zones of mineralization at Peak, including: 41.89 meters averaging 6.07 grams per metric ton gold, 4.6 g/t silver and 0.198 percent copper from 9.39 meters; and 48.42 meters of 4.98 g/t gold, 12 g/t silver and 0.338 percent copper from a depth of 101.7 meters; and,

TET15154, another hole targeting Peak Deep, which cut 26.79 meters of 0.18 g/t gold, 53.9 g/t silver and 0.139 percent copper from a depth of 21.79 meters; and 21.35 meters of 0.14 g/t gold, 22 g/t silver and 0.813 percent copper from a depth of 132.6 meters.

The gold-copper mineralization found at Peak is both highly conductive and magnetic; and a number of targets with geophysical signatures similar to the 1.2 million-ounce gold-equivalent deposit are found within the Chief Danny prospect area.

One such area confirmed during the 2015 drilling campaign is located just north of the Peak zone.

TET15153, cut for mineralized intercepts at Peak North, including 22.72 meters of 9.38 g/t gold, 1.9 g/t silver and 0.045 percent copper from a depth of 10.2 meters.

TET15165 cut three mineralized intercepts, including 1.92 meters of 70.9 g/t gold, 39 g/t silver and 0.015 percent copper from a depth of 30.4 meters.

TET15171 cut three mineralized intercepts, including 16.8 meters of 17.94 g/t gold, 4.2 g/t silver and 0.027 percent copper from a depth of 17.3 meters.

TET15177 cut two mineralized intercepts, including 23.04 meters of 19.86 g/t gold, 4.2 g/t silver and 0.056 percent copper from a depth of 45.8 meters.

TET15178 cut five particularly copper-rich intercepts, including 10 meters of 0.163 percent copper.

Another area of skarn mineralization was tapped immediately west of the Peak deposit. Among the drill results:

TET15174 cut three mineralized intercepts at Peak West, including 5.54 meters of 22.08 g/t gold, 7.6 g/t silver and 0.11 percent copper;

TET15176 cut 68.47 meters of 5.46 g/t gold, 0.4 g/t silver and 0.059 percent copper; and

TET15182 cut two mineralized intercepts, including 2.55 meter of 58.06 g/t gold, 38.9 g/t silver and 1.932 percent copper from a depth of 158.3 meters.

Juneau said, "Both of these new areas will require more drilling and analysis to define potential resource size."

Exploratory drilling of some of the outlying Chief Danny prospects cut intriguing mineralized zones.

TET15158, drilled about 650 meters north of Peak deposit, cut two areas of copper and gold mineralization at a zone called Blue Moon, including 6.24 meters averaging 2.88 g/t gold, 4.5 g/t silver and 0.146 percent copper from a depth of 66 meters.

TET15143, drilled at the 8 o'clock zone, located more than two miles (3.2 kilometers) west of Peak, cut 3.6 meters averaging 1.74 g/t gold and 0.171 percent copper from a depth a depth of 77.8 meters.

TET15143, drilled at 7 o'clock, a target about halfway between Peak and 8 o'clock, cut 5.03 meters of 1.08 g/t gold and 0.151 percent copper.

"Peak Gold is working to develop an exploration model to help determine new targets for future drilling, and the relationship between the separate zones of mineralization discovered to date," Juneau explained in November. "The joint venture will combine new drilling and assay results with information gained from surface samples and proprietary ground and airborne magnetics and conductivity data to develop these future targets."

Busy season indicated

While it is unclear what the full extent of the 2016 program will be, having drills turning in February suggests it could be a very busy season at Tetlin this year.

Last year's US$6.8 million exploration program started in late May. By way of comparison, the US$4.4 million initial phase of this year's program will likely be wrapping up at about that time. Dependent on the success of the winter program, Royal Gold and Contango Ore said they will entertain the idea of "a more extensive" second phase of drilling this year.

"This (winter program) will allow the joint venture to get results from core holes in various areas in time to follow up on successful holes before the end of the year," explained Contango Ore CEO Juneau.

While the wider Tetlin property hosts numerous prospects ready for drilling and further exploration, indications are the Peak Gold joint venture will spend this year continuing to follow-up on the high-grade gold and copper being found at and around the Peak deposit.

"Our goal for the 2016 drilling program is both to expand the limits of the Peak and North Peak areas, as well as to prove up new drilling targets," Juneau said on Feb. 4.

Peak Gold is planning to incorporate the 2015 and 2016 drilling into an updated resource estimate scheduled for completion by early 2017.

Author Bio

Shane Lasley, Publisher

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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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