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

Auryn Resources Inc. Aug. 16 closed a C$7.3 million financing that will fund exploration of its Committee Bay and Gibson MacQuoid gold projects in Nunavut; and drilling on its Homestake Ridge gold-silver property in northwestern British Columbia.

Originally slated to be C$4.6 million, the financing was increased by nearly 59 percent due to significant demand.

This substantially increased private placement consists of roughly 2.1 million flow-through common shares at C$1.60 each and approximately 2.2 million charity flow-through shares priced at an average of C$1.80 each.

Under a provision of Canada's Income Tax Act, flow-through financings allow exploration companies to transfer exploration expenses to individual investors that purchase the flow-through shares. The flow-through investor, in turn, can apply his portion of the exploration expense to reduce or eliminate his tax liability.

Because of the tax benefits, flow-through shares typically have a low or nil-adjusted cost to the purchaser. Investors can avoid tax on that gain by investing flow-through share to charity.

Goldcorp Inc. is maintaining its roughly 12.4 percent interest in Auryn by acquiring 490,000 common shares from the purchasers of the charity flow-through shares sold and donated in the private placement.

This financing will help fund Auryn's extensive drill program at its nearly 1-million-acre (390,000 hectares) Committee Bay gold property in Nunavut.

In July, Auryn launched a 10,000-meter drill program at this expansive property anchored by Three Bluffs, a deposit with 2.1 million metric tons of indicated resource averaging 7.85 grams per metric ton (524,000 ounces) gold; and 2.9 million metric tons of inferred resource averaging 7.64 g/t (720,000 oz) gold.

Roughly half of the 2018 drilling is targeting Aiviq, a high-grade gold discovery made last year about 7.5 miles (12 kilometers) north of Three Bluffs.

The gold identified at Aiviq is situated along a regional shear zone that is defined by a 7,000-meter-long gold-in-till anomaly.

One hole drilled at the Aiviq discovery last year, 17RGR003, cut 12.2 meters of 4.7 g/t gold, including 3.05 meters of 18.09 g/t gold.

Roughly 3,200 meters of diamond drilling originally planned for Aiviq is stepping out from this discovery to test extensions of the gold mineralization. Additionally, the company slated about 1,800 meters of rotary air blast (RAB) exploration drilling with three fences across the shear zone to the northeast.

RAB drilling was also carried out at five earlier staged Committee Bay prospects – Kalulik, Aarluk, Castle Pebble, Tulugaq and Koffy.

So far, the company has completed about 7,200 meters of the drilling and expects to be finished with the program by the end of next week.

Auryn is also exploring Gibsons MacQuoid, a 329,000-hectare (813,000 acres) property that blankets another large greenstone belt (275 kilometers) in Nunavut.

Auryn picked up this property between Agnico Eagle's Meadowbank Mine and Meliadine Mine project early in 2017 and carried out the first systematic exploration of the property last year. This program, which included regional till and rock sampling, identified eight priority targets for further sampling to refine targets for exploration drilling.

In northwestern British Columbia, Auryn is working to unlock the value of the high-grade gold and silver at its Homestake Ridge property.

When Auryn acquired Homestake Ridge in 2016, the three main deposits – Homestake, Homestake Silver and South Reef –hosted 604,000 metric tons of indicated resource averaging 6.4 g/t (124,000 ounces) gold; 48.3 g/t (939,000 oz) silver; and 0.18 percent (2.4 million pounds) copper. These zones host another 6.77 million metric tons of inferred resource averaging 4.2 g/t (911,000 oz) gold; 93.6 g/t (20.37 million oz) silver; and 0.11 percent (16.3 million lb) copper.

A 27-hole drill program carried out last year identified the geometry of the high-grade mineralization at the South Reef zone, remains open to the northwest, and discovered an emerging parallel high-grade structure (Upper zone) 175 meters to the north of the main zone.

Auryn Resources Inc.

The goal of a roughly 3,000-meter drill program that began on Aug. 7 at Homestake Ridge is to follow-up on these intercepts along strike of both structures with the objective of significantly expanding the known mineralization.

"The high-grade resource at the Homestake Ridge project has an exceptional opportunity for expansion along the South Reef mineralized corridor," said Auryn Resources COO Michael Henrichsen.

Auryn plans to incorporate the results from its exploration into a preliminary economic assessment for this high-grade precious metals project in B.C.'s Golden Triangle.

–SHANE LASLEY