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

With financing in place to fund its 30% share of development expenses at Manh Choh and Kinross Gold Corp. on track to have that eastern Alaska mine pouring its first gold bar next year, Contango ORE Inc. is focused on pushing ahead a second gold-producing asset at the historic Lucky Shot project.

Located 112 road miles (180 kilometers) north of Anchorage, Alaska, Lucky Shot encompasses three pre-World War II era underground mines – Colman, Lucky Shot, and War Baby – that produced gold from a high-grade vein system that extends for at least 1.5 miles (2.4 kilometers) across the property.

It is estimated that from 1922 until being shut down by the federal War Production Board in 1942, Lucky Shot produced 252,000 ounces of gold from 169,000 tons of ore averaging around 40 grams per metric ton (1.6 oz per metric ton) gold. Additional gold was produced from the Colman and War Baby mines.

Since acquiring the project in 2021, Contango has been working toward establishing a resource that would support a modern high-grade gold mine at Lucky Shot. This includes the rehabilitation and extension of the historical Enserch tunnel, which served as a platform for a 29-hole drill program the company carried out at the project in 2022.

Contango had the 2022 and historical drilling incorporated into the first resource estimate for Lucky Shot that is compliant to S-K 1300, the mineral resource and reserve reporting standards for companies listed on U.S. stock exchanges.

According to the new calculation reported on June 12, Lucky Shot hosts 226,963 metric tons of indicated resource averaging 14.5 g/t (105,620 oz) gold and 82,058 metric tons of inferred resource averaging 9.5 g/t (25,110 oz) gold.

The new resource is hosted within Coleman and Lucky Shot, the two westernmost segments of the larger vein system at Lucky Shot.

"We are very pleased with this initial resource at Lucky Shot and are planning a follow-up surface and underground drill program to augment resources sufficient to begin mine planning," said Contango ORE President and CEO Rick Van Nieuwenhuyse.

Boosting resources, grade

Toward the goal of expanding and upgrading the resources to support a new era of mining at Lucky Shot, Contango intends to carry out roughly 12,000 meters of drilling this year.

The bulk of this meterage will involve underground drilling within the Lucky Shot segment, which hosts 36,871 metric tons of the indicated resource averaging 8.93 g/t (10,584 oz) gold and 7,793 metric tons of the inferred resource averaging 5.9 g/t (1,468 oz) gold.

This resource includes the 29 holes drilled by Contango last year and six historically drilled from surface. The underground development also completed last year provides a platform for systematic drilling of the Lucky Shot vein segment this year.

"Now that we have completed access to the downdip projection of the Lucky Shot vein exploration area via the expanded Enserch Tunnel, we will be able to accomplish more detailed infill drilling to define better quality resources," Van Nieuwenhuyse said.

This detailed drilling is slated to involve fans of holes drilled on 15- to 20-meter centers from drifts off Enserch Tunnel.

The surface drilling is expected to primarily focus on confirming the results from previous programs at Coleman in order to upgrade the resources in this segment to higher confidence categories.

Coleman, which has been outlined with 146 surface holes drilled by previous operators, hosts 190,092 metric tons of the indicated resource averaging 15.55 g/t (95,036 oz) gold and 74,265 metric tons of the inferred resource averaging 9.9 g/t (23,642 oz) gold.

While the current drill density is sufficient to elevate some of the Coleman segment resources to the higher confidence measured category, Contango's qualified person, which is responsible for compliance with industry standards, would like to confirm the historical drilling with holes drilled by Contango.

"Our QP recommended a few infill holes to confirm previously drilled areas of the Coleman segment of the vein," said Van Nieuwenhuyse.

There is also significant potential to increase the gold grades within the resource due to a conservative strategy employed to cap the highest gold grades, which resulted in a 30% drop in gold content when compared to using the gold grades actually intercepted.

Without capping, the grade of the indicated resources within the Coleman segment is 20.82 g/t gold, which bumps the total contained gold up to 127,237 oz, and the Lucky Shot segment indicated resource grade jumps to 13.15 g/t gold, which increased the contained gold to 15,583 oz.

A better understanding of the high-grade deposits is expected to result in a less conservative capping strategy, which will bump up the grade and ounces of gold reporting to the resources.

"More drilling – particularly in the areas of the higher-grade ore shoots evident in the grade-thickness model, and bulk sampling of the vein material – will assist in a better understanding of grade definition, including a renewed look at the capping strategy," the Contango ORE CEO said.

Manh Choh on track

As Contango looks to raise the funds for a 2023 program that is expected to significantly boost the high-grade gold resources at Lucky Shot, Kinross continues to make headway toward 2024 production at Manh Choh.

Being advanced by Peak Gold Joint Venture, owned 70% by Kinross and 30% by Contango, the Manh Choh mine is expected to produce roughly 1 million gold-equivalent oz, which includes the value of both the gold and silver, over an initial 4.5 years of mining.

This operation is based on 3.9 million metric tons of proven and probable reserves in the Peak Gold deposits at Manh Choh averaging 7.88 g/t (998,000 oz) gold and 13.6 g/t (1.7 million oz) silver.

A feasibility completed last year details plans for trucking high-grade ore mined at Manh Choh roughly 250 miles to the Fort Knox Mine for processing.

Van Nieuwenhuyse, who visited both the Manh Choh and Fort Knox mine sites earlier this week, told Mining News that preparations at both locations are going well.

Contango ORE Inc.

Crews work on the roughly 18-mile road connecting the Peak Gold deposits at Manh Choh to the Alaska Highway.

"I think Kinross has done a great job of continuing to advance the project ahead of schedule and on budget," he said.

The work at Manh Choh has primarily involved building and upgrading a roughly 18-mile road connecting the Peak Gold deposits to the Alaska Highway, the completion of a 176-person camp in the nearby town of Tok, and other work in preparation for mining.

The Peak Gold JV received state permits needed to begin development of the Manh Choh mine in mid-May, and early site work is already underway. This work is expected to ramp up as the larger mining equipment arrives over the coming weeks.

In the meantime, Kinross is carrying out modifications of the mill at Fort Knox in order to process the much higher-grade ore from Manh Choh.

In May, Kinross said that first gold production remains on track for the second half of 2024.

Author Bio

Shane Lasley, Publisher

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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