Constantine, CIRI cut gold project deal
Ink agreement for Johnson Tract on west side of Cook Inlet
Last updated 6/29/2018 at 4:22am
Constantine Metal Resources Ltd. is working on a deal to lease Johnson Tract, a gold-rich polymetallic deposit in Southcentral Alaska, from Cook Inlet Region Inc., an Alaska Native regional corporation more commonly known as CIRI.
Located about six miles west of Cook Inlet and roughly 125 miles southwest of Anchorage, the 20,942-acre Johnson Tract property hosts a gold and base metals deposit that is reminiscent of the historical Eskay Creek Mine in neighboring British Columbia and a 7.5-mile stretch of prospects that provide an exploration company such as Constantine plenty of upside potential.
"We are excited about the chance to explore and advance the project for the mutual benefit of CIRI and Constantine in a manner consistent with CIRI's cultural values," said Constantine President and CEO Garfield MacVeigh.
This commitment to cultural values and the company's record at its Palmer copper-zinc-gold-silver project in Southeast Alaska are important factors for CIRI.
"CIRI prides itself on projects that deliver economic benefits to our shareholders while respecting and preserving the land," said CIRI President and CEO Sophie Minich. "With Constantine's excellent reputation for responsible mineral exploration and development activities, we know we have chosen the ideal partner."
Discovering Johnson Tract
CIRI identified the mineral potential of Johnson Tract while seeking lands to select under the Alaska Native Claims Settlement Act, or ANCSA, and selected the property in 1976.
This 20,942-acre property consists of an 11,342-acre fee-simple land package, South Tract, that hosts the known deposit, and the 9,600-acre North Tract consisting of mineral rights only with several known high-grade prospects.
This package of private lands is situated within the Lake Clark National Park. As part of its land selection, CIRI was granted special rights, ratified by U.S. Congress and approved by the Alaska Legislature, that entitles the Alaska Native corporation transportation and port easements through park lands for the development of the rich mineral potential at Johnson Tract.
In 1981, Anaconda Minerals signed a joint venture agreement with CIRI to evaluate this mineral potential.
Exploration under this JV led to the discovery of the Johnson Tract deposit in 1982 with a hole that cut 102.6 meters grading 10.94 grams per metric ton gold, 8.01 percent zinc, 0.75 percent copper, 2.13 percent lead and 8.5 g/t silver, including 50 meters grading 20 g/t gold, 9.4 percent zinc, 1 percent copper, 2.8 percent lead and 12.7 g/t silver.
Other highlighted intercepts from the Johnson Tract deposit include:
• 36 meters of 13.41 g/t gold, 2.01 percent zinc, 0.41 percent copper and 3.57 g/t silver in hole 82-7;
• 71.4 meters of 20.94 g/t gold, 5.21 percent zinc, 1.23 percent copper, 1.51 percent lead and 9.81 g/t silver in 88-34;
• 99.7 meters of 10.07 g/t gold, 6.34 percent zinc, 0.9 percent copper, 1.27 percent lead and 6.68 g/t silver in 93-65; and
• 112.2 meters of 10.34 g/t gold, 5.01 percent zinc, 0.66 percent copper, 1.48 percent lead and 6.35 g/t silver in 93-69.
In all, 88 holes were drilled on the Johnson Tract property.
Two holes drilled at Difficult Creek, situated about three miles northeast of the Johnson Tract deposit, demonstrates the property's wider potential. DC-001 cut three meters of 7.54 g/t gold, 3.72 percent zinc, 0.11 percent copper, 1.15 percent lead and 27.4 g/t silver; and DC-02 encountered 13 meters of 8.57 g/t gold, 4.7 percent zinc, 0.5 percent copper, 0.9 percent lead and 37.7 g/t silver.
Difficult Creek is one of at least nine prospects areas spanning a 7.5-mile stretch of the property, most of which have seen little or no drilling.
The mineralization identified during this historical exploration is interpreted to have formed in a sub-sea floor setting that is similar to the well-known precious- and base metal-rich Eskay Creek deposit in British Columbia's Golden Triangle.
Westmin Resources Ltd., which took over exploration at Johnson Tract, considered the potential of shipping ore to a mill at its Premier Mine in northern B.C. for processing. Metallurgical testing at the time indicated good gold and base metals recoveries.
The project, however, reverted to CIRI in the late 1990s and has seen no further exploration over the ensuing two decades.
The terms of the non-binding letter agreement between Constantine and CIRI are designed to not only resume exploration of Johnson Tract but to take the project to the point of evaluating the feasibility of developing a mine there.
Under this initial agreement, Constantine would make annual lease payments of US$75,000 to CIRI for years one through five, escalating to US$150,000 from year six onwards, until production is achieved.
Constantine may exercise its option to maintain the lease rights by incurring US$10 million in expenditures over the first 10 years with at least US$7.5 million within the first six years.
Upon completing these expenditure requirements and satisfying other lease conditions, Constantine may renew the lease for an additional five years by making annual lease payments of US$150,000 (inflation adjusted) and completing an additional US$10 million in expenditures.
Upon completion of a feasibility study and a decision to construct a mine, CIRI has a one-time right to back-in to the project and participate to a maximum 25 percent interest. CIRI will also receive net smelter return royalties of 2 to 3 percent on base metals and a gold price adjusted NSR royalty of 2.5 to 4 percent.
The mineral explorer and Alaska Native corporation plan to finalize the agreement in the near future.
"CIRI is excited to work with Constantine Metal Resources on the Johnson Tract project, said Minich.
Flagship gold property
Constantine believes Johnson Tract could be the flagship property of its gold portfolio, which includes the bonanza-grade Munro Croesus and large Golden Mile properties in Ontario, as well as a package of Carlin-style gold prospects in the Yukon.
With all the previous exploration at Johnson Tract predating modern reporting requirements, however, Constantine's first order of business will be to complete an NI 43-101-compliant report that is expected to include a resource estimate and guidance for further exploration of this property.
To accomplish this, the company plans to:
• compile and digitize all the historic technical hard copy data;
• evaluate the condition of the existing camp and equipment and make needed improvements;
• re-log and re-sample portions of core from selected historic holes, which is stored in secure containers at the camp, to confirm previous results;
• potentially drill two to three confirmatory holes to validate previous results and provide sample material for new metallurgical work to confirm and expand on the good recoveries previously reported;
• complete an initial investigation of the surface geology and access routes; and
• review existing background environmental studies and evaluate future requirements.
Earlier this year, the company announced plans to spin its gold assets into a new exploration company. With Johnson Tract as its flagship, this gold-focused company could raise funds and explore the gold properties' potential independently of Constantine's advanced staged Palmer project near Haines.
"Johnson Tract is an exceptional gold asset and adds significant opportunity and value to Constantine's gold project portfolio," said Garfield.