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By Shane Lasley
Mining News 

Mining Explorers 2016: Peak Gold accelerates into 2016

Royal Gold, Contango Ore make exciting connections at Tetlin

 

Last updated 2/3/2018 at 6:57pm

Avalon Development Corp.

Winter drilling expanded the Peak and North Peak zones at Contango ORE's Tetlin project in Interior Alaska.

While many of Alaska's mining explorers were riding the brakes on their promising projects going into 2016, Royal Gold and Contango Ore put their figurative foot to the accelerator at the high-grade Tetlin gold project near Tok, an eastern Alaska community at a junction of highways that lead from Canada to Fairbanks and Anchorage.

Neither of these companies are your prototypical mineral explorer. Texas-based Contango Ore came to Alaska seeking natural gas and discovered metals instead.

Denver-based Royal Gold usually opts to fund exploration through royalty purchases and stays away from becoming directly involved in exploration.

"(I)n my tenure here, we haven't been attracted to do any exploration ourselves," said Royal Gold Vice President of Development and Operations Bill Heissenbuttel.

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 was one of the first Alaska mineral explorers out of the gate in 2016, launching an US$11 million exploration program at Tetlin in February.

Stars align

Contango Ore President and CEO Brad Juneau was not seeking gold when he ventured into Alaska in 2008. Instead, his privately held company, Juneau Exploration L.P., was investigating the natural gas potential of a large land package owned by the Tetlin Village Council, an Alaska Native group.

Juneau's exploration of Tetlin did not turn up much in the way of natural gas potential, but the Texas oilman was convinced the roughly 675,000-acre property was prospective for more solid minerals, such as gold and copper.

To confirm his hunch, Juneau set out to find a geologist familiar with Alaska and willing to take a look at this geologically unknown property. While dubious that an important mineral deposit was hiding in plain sight, Fairbanks-based geologist Curt Freeman agreed to take a look at the property.

It did not take long for Freeman and his team at Avalon Development to get excited about the discovery potential of this enigmatic property. Over the next couple of years, Avalon and Contango Ore identified numerous precious and base metal targets across what is now a roughly 774,000-acre (313,234 hectares) land package made up of the original lands that Juneau leased from Tetlin Village and adjoining State of Alaska lands that the Texas-based company staked to cover similar prospective lands to the west.

While the property turned out to be rife with prospects worthy of serious geological investigation, by 2012 the search was narrowed to a zone in the heart of the Tetlin lease named Peak, after co-founder and original CEO of Contango Ore, Kenneth Peak.

By the end of the 2013 exploration season, 6 million metric tons of indicated resources averaging 3.46 grams-per-metric-ton (664,112 ounces) gold, 11 g/t silver and 0.25 percent copper had been identified at Peak. Additionally, the calculation published early in 2014 included 3.9 million metric tons of inferred resources averaging 2.07 g/t (256,000 oz.) gold, 14.28 g/t silver and 0.23 percent copper. In total, this equates to 1.2 million oz. of gold when you calculate in the value of the copper and silver.

As it turns out, Peak is a unique type of skarn deposit that was formed when metal-laden magmatic fluids came in contact with carbonate-enriched sandstones, causing the metals to quickly drop out and result in high-grade concentrations of gold and copper suspended in acidic fluids.

Attracted by the growth potential of this relatively high-grade gold deposit resulting from this process, situated along the Alaska Highway and an Alaska-based support network led by Avalon Development, Royal Gold agreed to become an active partner in Tetlin exploration early in 2015.

Royal Gold VP Heissenbuttel said "a lot of the stars come together" at Tetlin, a situation that led to the royalty company's decision to become actively involved in exploration of the intriguing gold project.

Peak Gold, the resulting limited liability joint venture forged between Contango Ore and Royal Gold, completed US$6.8 million of exploration in 2015, a program that expanded the breadth and depth of the Peak deposit as well as discovering Peak North, a seemingly parallel zone of mineralization with similar grades and thicknesses about 250 meters to the north.

"We really like the Royal Gold people, and we really like the joint venture and how it is functioning," Juneau told Mining News. "They have done everything they said they would do, and are very straightforward and open."

The Contango Ore CEO said Royal Gold's contribution to Tetlin goes beyond the nearly US$20 million the Denver-based royalty company will have invested in the project by the end of 2016.

"The folks at Royal Gold have definitely made a material impact, both with their capital and their work," he said.

About to get exciting

Going into 2016, the Peak Gold partners had their sights set on expanding North Peak, a deposit not included in the 2013 Tetlin resource but extensively drilled in 2015.

By the end of the winter program, 19 holes had been drilled at Tetlin.

Results from this drilling continued to return some impressive intercepts at North Peak, including:

• Six mineralized intercepts in TET16192, including 13.27 meters averaging 49.19 g/t gold, 4.5 g/t silver and 0.035 percent copper from a depth of 78.5 meters;

• Three mineralized intercepts in TET16204, including a silver-rich 1.82-meter zone averaging 16.34 g/t gold, 328.4 g/t silver and 0.157 percent copper from a depth of 60.95 meters; and,

• A 43.43-meters in TET16206 averaging 3.6 g/t gold, 2.08 g/t silver and 0.108 percent copper from a depth of 78.5 meters.

The most intriguing and potentially the most important intercept of the winter program, however, came in TET16210, a hole drilled about 200 meters southeast of North Peak and 200 meters northeast of the Peak deposit.

This wildcat hole cut two mineralized intercepts, including 43.96 meters averaging 3.28 g/t gold, 30.6 g/t silver and 0.402 percent copper.

"The winter drilling program was successful in expanding the known limits of both the Peak and North Peak zones, and perhaps most importantly found new, significant mineralization in its first drill hole in the Connector zone that may lead to a better understanding of the relationship between Peak and North Peak and possible further expansion of the mineral system," explained Juneau.

Encountering grades and thickness remarkably similar to those identified in both Peak and North Peak, going into summer it seemed that Royal Gold and Contango Ore might be on their way to a continuous deposit much bigger than previously imagined.

"I think it is starting to get really exciting out there," Juneau said at the time.

Making the connection

As soon as the snow melted and the ground dried, the Peak Gold partners set out to prove their idea that the Peak, Connector and North Peak zones link up to form a roughly 2,000-meter arc of contiguous high-grade skarn mineralization. This would be roughly three times the footprint of the Peak deposit outlined in a resource estimate calculated in 2013.

By late June, the first holes supporting this notion began to roll in.

Highlights from North Peak include:

• TET16211 cut four mineralized intercepts, including 10.31 meters averaging 3.5 g/t gold from a depth of 16.11 meters;

• TET16220 cut three mineralized intercepts, including 26.03 meters averaging 4.67 g/t gold from a depth of 30.2 meters; and

• TET16221 cut four mineralized intercepts, including 17.92 meters averaging 8.23 g/t gold from a depth of 21.61 meters.

All three highlighted intercepts were to the southeast of North Peak, in the direction of the Connector zone.

Hole 211 was drilled adjacent to 210, and holes 220 and 221 were drilled about 200 meters northeast of the Connector discovery hole.

As nice as these intercepts were, they paled in comparison to what came back from the assay labs in mid-August, including the best intercepts ever drilled at Tetlin when you consider the very high gold grades across long lengths.

• TET16235, drilled about 150 meters northwest of the Connector discovery hole, cut three gold-rich intercepts, including 38.88 meters averaging 51.62 g/t gold from a depth of 14.5 meters.

• TET16237, drilled about 70 meters north of 235, cut five gold intercepts, including 14.19 meters averaging 45.33 g/t gold from a depth of 9.75 meters.

• TET16227, drilled about 100 meters northeast of 235 cut two gold intercepts, including 10.75 meters averaging 18.62 g/t gold from a depth of 21.56 meters.

"The new core holes show that gold mineralization is present from the Connector hole to North Peak, and hole TET16235 in this newly delineated area has the highest amount of gold grade (times) thickness drilled to date," said Juneau.

This drilling also linked North Peak to Connector, leaving only a small gap east and north of the Peak deposit. This drilling also linked North Peak to Connector, leaving only a small gap east and north of the Peak deposit in what appears to be one contiguous skarn deposit that folds in a tight arc.

At the same time, drilling northwest of the main deposit is extending the deposit in that direction.

"We continue to refine the exploration model and, with new drilling in West Peak, are testing for mineralization zones which are connected to the Main Peak deposit," the Contango Ore CEO said.

Highlights from West Peak include five mineralized intercepts in TET16218, including 15.01 meters averaging 7.1 g/t gold from a depth of 191.47 meters; and two mineralized intercepts in TET16219, including 9.9 meters of 1.37 g/t gold from a depth of 37.65 meters.

All of the drilling completed since Royal Gold joined the project – more than 150 holes – will be included in a Peak-Connector-North Peak resource slated for completion early in 2017.

With the strong connections made over the past two years – both between the Peak Gold partners and the Peak zone deposits – Juneau is enthusiastic about the prospects for Tetlin.

"We are really, really excited about the future," said the petroleum engineer turned mining executive.

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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