Yukon explorers rally after late start
COVID-19 restrictions and rainy summer present challenges Mining Explorers 2020 - Published January 19, 2021
Last updated 2/11/2021 at 3:59pm
From the first glimpse of a potential new discovery to watching the first load of ore pour into a new mill, mineral explorers working in Yukon Territory during 2020 reported experiencing the full gamut of mining highs. Encouraged by the commissioning of the Eagle Gold Mine, government grants for exploration projects, and metals prices, dozens of juniors rushed to the Yukon to chase prospects in the northern territory.
"Based on the historic trends, coming into 2020, it looked like we could expect decreasing exploration expenditures and with the Eagle Gold Mine construction nearly complete, we expected development expenditures to drop, but production revenues to increase," said Scott Casselman, head of Minerals Geology at the Yukon Geological Survey. "Then COVID hit!"
The newness and uncertainty created by the government's pandemic response brought Yukon mining activity to a halt.
"The exploration activity virtually stopped, until about mid-June, then companies slowly started to figure out how to work in this new environment," Casselman told Mining News.
"It was a big challenge to figure out, but once it was done, things went smoothly," echoed Sebastian Tolgyesi, general manager of Minto Explorations Ltd., who shared his insights with investors in a virtual panel discussion in October.
Minto Explorations re-started copper and gold production at the Minto Mine north of Carmacks, YT in 2019.
Tolgyesi said Minto, worried about spreading contagion to Yukon's small communities, initially sent home with pay its workers from Yukon's First Nations last spring. The company also took steps to prevent the spread of the virus on site, such as hiring extra medical support staff.
Minto employees also began working a modified work schedule of five weeks in camp and five weeks away, including two weeks in isolation in Whitehorse before returning to camp.
Following Yukon's COVID-19 restrictions it soon became costly for companies and tiresome for their workers. In October, the Yukon government eased the requirement that workers self-isolate for two weeks in a Whitehorse hotel before returning to camp.
"The cost of the pandemic has been a big burden, so far," Tolgyesi said.
With special permission from the Yukon government, as of late 2020 mine workers could go into quarantine at the mine sites and where possible, even work while in isolation.
This is the case at the Eagle Gold Mine where owner Victoria Gold Corp. charters air travel to Vancouver for workers who live in southern Canada. Half of Victoria's employees live in the Yukon. The company also isolates returning workers in a separate bunkhouse until they are cleared to enter the main camp and mingle with others.
New mines on the way
Getting a late start last spring did not deter explorers from pushing ahead with exploration and development projects. Nor did an uncommonly rainy field season dampen the enthusiasm of construction and drilling crews eager to make up for lost time. A few companies working on mine construction and development as well as exploration programs made substantial progress.
"We started 2020 with one operating hard rock mine (Minto) and ended the year with three operating hard rock mines (Minto, Eagle Gold and Keno Hill). In July, Victoria Gold (Corp.) announced commercial production at the Eagle Mine, and also that month, Alexco Resource Corp. announced that they had received their water license and that they were going to re-start mining and milling at their Keno Hill operations in the fourth quarter of this year. So that is very good news for the Yukon economy," Casselman said.
Alexco aims to produce silver, lead and zinc concentrates at its new Keno Hill mine, located in the historic Keno Hill Silver District of central Yukon. Alexco shuttered its first Yukon mine, Bellekeno, in 2013, due to collapsing metals prices. Ore from Bellekeno will be used to commission the new mine in 2020.
Alexco, which spent much of the year building an underground ramp and other mine facilities, also conducted aggressive exploration, targeting more than 11,000 meters of core and rotary blast drilling on the Keno Hill property with hopes of adding significantly to the 100 million-plus oz silver resource it has already identified on the property.
BMC Metals Inc. is another company advancing toward production at a proposed open pit, silver, zinc copper, gold and lead mine on the Kudz Ze Kayah property located 115 kilometers (71 miles) southeast of the Ross River in southern Yukon. The subsidiary of BMC Minerals (UK) Ltd., a private company, won approval for developing the ABM mine from the Yukon Environmental and Socio-economic Assessment Board in October. The positive recommendation lists 30 mitigation and six monitoring measures for the project. BMC is now preparing development permit applications for the project.
In a feasibility study updated in November, BMC estimated it will cost about C$376 million to bring the mine into production by late 2023, with average annual output of 7.8 million oz silver, along with zinc, copper, gold and lead by-products for nine years, initially.
At the Eagle Gold mine, Victoria reported third-quarter 2020 gold production of 35,312 oz, sold at an average price of US$1,886 per oz, for gross revenue of C$80 million as the miner coped with the challenges of ramping up a new mine.
The Eagle mine is situated on the 555-square-kilometer (214 square miles) Dublin Gulch gold property roughly 375 kilometers (233 miles) north of Whitehorse, and about 85 kilometers (53 miles) from the town of Mayo.
Besides the Eagle mine, the property also hosts the Olive gold deposit and numerous gold prospects. A 2019 NI 43-101-compliant resource estimate for the Eagle and Olive deposits include proven and probable reserves of 3.3 million oz of gold from 155 million metric tons of ore averaging 0.65 g/t gold.
Victoria mounted an extensive 2020 exploration program, including 35 diamond drill holes covering 8,040 meters; 3,000 meters of surface trench construction; collection of 3,700 soil samples; and more than 6,000 core and trench samples.
The explorer expanded its new Raven target to more than 750 meters in strike length, tripling the extent of known Raven mineralization from 2019. Multiple short intervals averaging up to 65.9 g/t gold over 1.4 meters have been identified within long intersections averaging up to 0.62 g/t gold over 295.9 meters. Raven remains open in all directions.
Victoria also explored the nearby Nugget deposit and the Lynx target, another high-priority, intrusive-related and hosted gold system at Dublin Gulch.
Other Yukon explorers with advanced projects expected to begin mineral production in the near future include Western Copper and Gold Corp. (Casino copper-gold-silver project), Newmont Gold (Coffee gold project), and Golden Predator Corp. (Brewery Creek Mine project).
Mining investment matters
Though investment capital dried up quickly during early days of the pandemic, the markets soon bounced back in search of explorers with good prospects.
"In midsummer the price of gold and silver rose significantly," said Casselman. "This, combined with a steady rise in base metal prices through the summer, spurred investment in exploration companies. The exploration activity ramped up relatively quickly... (and) exploration activity was pushed well into the fall to allow for companies to get their work completed."
The Yukon government was tracking at least C$60 million in total mineral exploration spending in the territory in 2020, along with another C$64 million in development expenditures. These are considered good levels, considering gloomy early projections of decreased spending further depressed by the impact of COVID-19.
"Considering what it was looking like in May, I am quite pleased we were able to get this amount of exploration in 2020," Casselman observed.
One factor that contributed to Yukon's busy 2020 mineral exploration season is the territorial government's popular mineral exploration program. This year, the Yukon Mineral Exploration Program (YMEP) attracted a record 130 applicants, including 96 projects. Of the 96 exploration projects, 61 are for hard rock mining and 35 are for placer operations.
"Given pandemic uncertainties early in the spring, the Yukon placer mining industry adapted quickly and went on to have an outstanding 2020 season," said Jeff Bond, head of surficial geology at YGS. "The majority of operators were active this season, with only a few no-shows related to COVID-19."
The global economic downturn significantly boosted gold prices and fuel prices dropped C25 cents a liter in time for the mining season. Gold sale prices throughout the summer averaged C$2,506/oz, up C$576/oz or nearly 30% from 2019 prices, Bond said.
Placer mines, considered the "family farms" of the Yukon Territory, produced 82,602 crude ounces of placer gold reported through export taxes in 2020 for a total value of C$165.6 million, of which at least 87% is spent in local communities.
"The placer mining industry provided steady and valuable economic stimulus into the Yukon's economy at a time when it was needed," Bond told Mining News in November.
YMEP funding helps applicants with hardrock projects to leverage private sector investments into early stage exploration projects. Applicants are expected to contribute to the project as well, which encourages investments from the private sector.
The C$2.5 million awarded to explorers in 2020 was expected to generate a total C$8.9 million investment in the hardrock and placer mining sectors.
Longtime explorers lead pack
Among the most active explorers in 2020 were gold-seeking juniors, including White Gold Corp., Strategic Metals Ltd., ATAC Resources Ltd., Rockhaven Resources Ltd., Banyan Gold Corp. and Klondike Gold Corp. All these juniors have advanced exploration projects and reported sizable gold resources and continued to hunt for the precious metal in 2020.
White Gold owns a 420,000-hectare (1.4 million acres) land package comprised of 21,111 quartz claims across 33 properties or more than 40% of the highly prospective White Gold District located about 60 miles south of Dawson City.
White Gold's advanced exploration projects include Golden Saddle, Arc, and VG Zone. So far, the company has identified a 1.4 million-oz indicated gold resource and 738,000 oz in the inferred category among these three projects.
With a C$6 million-plus exploration budget in 2020, White Gold focused on drilling its Titan project on the Hen property, where it previously identified two distinct gold trends. The junior also tested existing targets and recent new discoveries on the White Gold and JP Ross properties and other prospects with ground surveys and other tools in a systematic data-based exploration strategy, including detailed soil sampling, ground geophysical surveys, GT probing, mechanical trenching and detailed geological and structural mapping.
Strategic Metals, a leading exploration project generator with 80 Yukon exploration projects, focused on its Mt. Hinton Property in 2020. The high-grade gold and silver project is located in the Keno Hill Mining District where Strategic reported the discovery in 2019 of bonanza grade gold values of up to 2,340 g/t gold, and followed up by identifying vein mineralization grading 202 g/t gold and 2020 g/t silver, about 120 meters along strike from the original discovery. The junior also identified numerous other high-grade showings elsewhere on the property.
Despite a late start and an unusually wet field season, the explorer completed a 7,000-meter drill program in 2020 that also required construction of a road to the project site.
"Our people worked every day, through rain, sleet and snow, and they got it done," Strategic President and CEO Doug Eaton told investors in October.
Commenting on the relative ease of raising capital in 2020, Eaton said he expects to see more market interest in Yukon projects in 2021 if gold prices remain high.
ATAC Resources Ltd. identified an orogenic gold system at its Airstrip target in the first phase of a two-phase 2020 exploration program. Airstrip is located at the western end of the 1,700 square-kilometer (656 square miles) Rackla Gold Property in east-central Yukon.
ATAC's Rackla property is already known to host the Osiris Project with a current inferred mineral resource of nearly 1.7 million oz of gold at an average grade of 4.23 g/t (in 12.4 million metric tons), the Tiger gold deposit with a 454,000-oz measured and indicated resource and a positive preliminary economic assessment for a pre-tax net present value of C$118.2 million and a 54.5% internal rate of return, and numerous early-stage gold and base metal discoveries.
In phase 1, of its Airstrip exploration, the junior completed drilling 13 rotary air blast scout holes, along with mapping, and prospecting before undertaking diamond drilling in phase two.
ATAC encountered broad intervals of mineralization at Airstrip, including 36.58 meters averaging 0.51 g/t gold in hole ASR-20-018 that ended in mineralization, as well as higher-grade intersects such as 1.53 meters of 3.11 g/t gold in ASR-20-014. Outcrop and subcrop rock sampling returned values up to 6.39 g/t gold, demonstrating high-grade potential.
The RAB drilling identified gold mineralization over a 1,000-meter by 500-meter area, and across a vertical extent of 300 meters.
ATAC President Graham Downs said the new Airstrip target illustrates how huge mineral properties in Yukon can be, and with the territory's wide diversity of geology, how easy it is to overlook valuable prospects "right under your nose."
"I don't know how many times I've flown over (the Airstrip discovery) just south of our Tiger project," he told investors in October. "It also shows the mineral potential of Yukon is tremendous. This new system is over four- to five kilometers, and we're seeing gold at surface in 500-meter- to one-kilometer-long step-outs."
Downs said systems like the Airstrip mineralization have the potential to host significant bulk-tonnage gold deposits, and it is the first identification of this style of gold deposit in the area.
The Airstrip anomaly stretches more than six kilometers (four miles) in length, and the explorer had only systematically evaluated a fraction of it when the phase 1 program ended in late summer. While diamond drilling tests priority targets at Airstrip, he said RAB drilling will continue to evaluate the target at the kilometer scale.
Unlike the rugged and remote Rackla project, Rockhaven Resources Ltd.'s Klaza Project is located 50 kilometers (31 miles) west of Carmacks, in the southern Dawson Range Gold Belt. While Rockhaven is advancing a 750,000-oz gold and 13.8 million oz silver resource at Klaza to feasibility, the junior is also looking ahead to exploring numerous other targets on the 25,000-hectare (61,775 acres) road-accessible property.
The junior carried out more than 6,000 meters of diamond drilling in 2020 focused on evaluating at least four other high-priority targets on its property that lie outside the Klaza deposit.
Important factors in the explorer's successful 2020 exploration campaign are the tremendous support of the Yukon government and the Yukon people as well as the territory's "phenomenal" infrastructure, Rockhaven President and CEO Matt Turner told investors in October.
One example of Yukon's support was the government's move to extend by one year the expiration of quartz and placer mining claims set to expire before April 22, 2021.
"This extension would relieve the pressure on claim and lease holders, so as to not force them to rush to work their property in these uncertain times," Casselman explained.
The "receptive" capital market also enabled Rockhaven to raise C$5.5 million, mainly because of metal prices "doing so well," Turner said.
Banyan Gold, another junior aggressively exploring for gold in 2020, reported a 903,945-oz inferred mineral resource in late May at its 92-square-kilometer (35.5 square miles) AurMac Property in central Yukon, before launching its 2020 exploration program and raising C$4.74 million to fund the work.
AurMac is short for the Aurex and McQuesten properties, located 56 kilometers (35 miles) northeast of Mayo, YT.
In August, the junior reported early drill results that not only demonstrated the continuity of the AurMac gold deposit, but also included long intervals that will add meaningfully to the mineral resource, according to Banyan President and CEO Tara Christie.
"Grades of up to 19.5 g/t gold have been reported to date as well as multiple intercepts over 3 g/t gold. We continue to methodically execute the AurMac exploration program based on the application of our geological and resource models. We plan to drill late into the fall," she added.
Banyan has optioned AurMac from Victoria Gold and Alexco, respectively, with a right to earn up to a 100% interest subject to royalties. Road and power-accessible, AurMac hosts the near/on-surface pit-constrained Airstrip and Powerline deposits.
Klondike Gold, an active explorer in the Yukon since 1980, is one of the longest standing participants in hardrock exploration in the region. The company currently owns 2,780 quartz claims in the 586 square-kilometer (34 miles) long Klondike District Property covering the area of the historic Klondike goldfields. According to YGS figures, some 20 million ounces of alluvial gold have been extracted since 1896 from Klondike area creeks and gravels within the boundary of Klondike Gold's current bedrock mineral claims.
In September, Klondike launched a 27-hole phase 4 drilling program targeting the Lone Star Zone on the Klondike property intending to extend the dimensions of the zone's gold mineralization in all surface directions, and to test for mineralization that would add to the company's effort to establish a maiden mineral resource.
The company also reported results of phase 2 and phase 3 drilling in the property's Stander Zone. The best hole in phase 2 intersected 7.57 g/t gold over 10.5 meters from 48 meters depth within a larger envelope of 3.93 g/t gold over 21 meters from 46 meters. All five holes in phase 2 intersected near-surface gold mineralization and successfully identified areas for further drilling.
In phase 3, the explorer tested for possible parallel structural repeats of the Stander Zone to explain down-slope gold-geochemical anomalies generated from GT-Probe deep overborne sampling. Three of four holes contained weakly gold-mineralized quartz veins with the best, EC20-356, assaying 0.4 g/t gold over 1.5 meters from 4.5 meters depth. Klondike said the GT-Probe anomalies remain unexplained.
Assay results from most of the 2020 drill programs in Yukon have delayed until late 2020 or early 2021.