La Teko drill programs on track at True North

Drilling continues on the True North deposit near here amid a blaze of autumn colors.

With 190 reverse circulation drill holes now complete, La Teko Resources (NASDAQ) estimates the project’s proven and probable resource at 5.7 million tons grading 0.07 oz. gold per ton. The stripping ratio is projected at 2-to-1.

La Teko originally optioned the property, which The Northern Miner recently visited, from Amax Gold in late 1993. It exercised its purchase option in early 1994 after completing confirmatory drilling and agreeing to pay Amax US$1.5 million over four years. The latter retains a 1% net smelter return with advanced payments of US$250,000 per year in each of 1996, 1997 and 1998. Other underlying lease payments include a net smelter royalty of 4-5%. Since 1902, when gold was first discovered here, the Fairbanks district has yielded more than 9.5 million oz. of placer gold, 350,000 oz. of which were recovered from the two streams draining the True North property. No lode gold sources have been mined on the property, although stibnite was produced from the Hindenburg mine in the central part of the property during the First and Second World Wars.

Mineralization is controlled by northeast-trending structures near the thrust contact between the Chatanika Terrane and the underlying Cleary Sequence-Fairbanks Schist.

Gold is hosted in stockworks, as well as in flood-silicified calcareous and carbonaceous schists. The mineralization is strongest within favorable horizons above, and adjacent to, low-angle thrust faults en echelon to the Chatanika thrust.

As a result, True North (also known as the Hindenburg, because of its location at the old Hindenburg mine) encompasses a series of flat-lying mineralized zones, some measuring up to more than 50 ft. in thickness. The deposit now measures 1,400 ft. long by 1,100 ft. wide and remains open in all directions except to the northeast.

Eight recent core holes correlate well with the reverse circulation results, even returning somewhat higher grades. One of the core holes, TN-121-C, intersected a total thickness of 150 ft. in six flat-lying zones, with an average grade of 0.12 oz.

Drilling at True North is expected to continue through October. Encouraging results from the property this year prompted La Teko to redirect most of its energy away from its Ryan Lode project. Although permitting work is continuing there, a project feasibility study is now on hold while efforts concentrate on True North.

Ryan Lode, 17 miles to the southwest, contains an estimated proven and probable reserve of 14.6 million tons grading 0.056 oz. The stripping ratio is calculated at about 3.8-to-1 based on a 0.015 oz. cutoff grade. The reserve is split between two pits, offset by about 500 ft. along a 1-mile strike length. The pits will be about 350 ft. deep and 650 ft. wide. La Teko plans to permit an 11,600-ton-per-day heap-leach operation, combined with a 950-ton-per-day gravity mill.

Material grading more than 0.1 oz. will be run through the mill, with tails reporting to the leach pad to make up the 11,600-ton-per-day total. The proven and probable reserve contains an estimated 1.2 million tons grading 0.25 oz., about half of which will be recovered in the gravity circuit. Overall gold recovery is estimated at 80% while preliminary estimates project cash production costs at US$225 per oz.

Mining and milling will take place 180-200 days per year while leaching will be a year-round operation, bringing yearly throughput up to 2.3 million tons. “You don’t want to be mining in the winter,” Project Manager Richard Hughes told The Northern Miner. “If the ore is piled when its frozen, you’ll just get a giant ice-cube.”

Hughes does not believe winter leaching will be a problem. Several operations in the U.S. carry out heap leaching under cold conditions, including Pegasus Gold’s Beal Mountain and Zortman-Landusky operations in Montana. The pad is covered with snow, and solution temperatures are monitored.

Preliminary estimates of capital costs put the total for the mill and leach facilities at US$34.7 million.

Hughes admits that the company faces opposition in bringing Ryan Lode into production, as it is adjacent to an acreage-type neighborhood; the closest house sits about 1,600 ft. from one of the proposed pits.

Despite that, the company believes that any permitting problems will be surmountable. The addition of fire service and the fact that water quality is better than that which is available from their existing wells should be strong enticements for the neighborhood to allow mining to proceed. Besides its Ryan and True North projects, La Teko is looking at other prospective ground near Fairbanks

The discovery of the True North deposit within the upper plate rocks of the Chatanika Terrane, north of the Chatanika thrust, opens up a great deal of ground which was previously considered unfavorable and which, therefore, remains largely unexplored.

International Freegold Mineral Development (VSE) can earn up to a 60% interest in the Golden Summit project, east of the True North property. Golden Summit covers 11 strike miles of the Chatanika thrust fault, which has prompted La Teko to negotiate a 750,000-unit private placement with Freegold. The placement is priced at 42.5 cents per unit and includes share and a warrant exercisable at 42.5 cents in the first year and 49 cents in the second.

The placement is subject to shareholder approval and, prior to its completion, Freegold has 3.6 million shares outstanding.

More than 6.7 million oz. of placer gold have been recovered from streams draining the Gold Summit project, in addition to the more than 510,000 oz. of lode gold from several past-producing mines.

Recent work on the project, specifically in the vicinity of the Chatanika terrane, identified four targets in the Newsboy area which require follow-up trenching and drilling.

Past production from the Newsboy mine is estimated at 40,000 oz. from a 14-ft.-wide stockwork zone averaging 1 oz. The prospect has seen little exploration since the mine closed in the late 1930s.

Another target on the property is the Too Much Gold prospect — a large, northwest-trending, arsenic-and-gold soil anomaly extending for more than 10,000 ft.

Gold occurs on oxidized fractures and shear zones varying from a few feet to more than 200 ft. in width and is exposed in trenches over a strike length of 4,300 ft.

Significant trenching results on the Too Much Gold zone include: 110 ft. grading 0.060 oz.; 115 ft. grading 0.046 oz. and 655 ft. grading 0.022 oz. Previous drilling on the prospect returned widths of up to 70 ft. grading 0.09 oz. and values of up to 0.16 oz. over 25 ft.

Gold mineralization is fine-grained (less than 150 mesh), and bottle-roll cyanide leachability analyses returned recoveries of more than 90% within two to six hours.

Gold Summit hosts several other targets, including the Cleary Hill mine (the district’s largest past gold producer). Gold output totaled 280,000 oz. between 1908 and 1946 from ore averaging 1.3 oz. The mine was worked to a maximum depth of 400 ft., with all the workings (except the lowest level) accessible via adits.

The prospect has not been drilled or explored since the mine closed in 1946, and recently discovered underground maps suggest mineralization is present below old workings.

Kelly Dolphin, vice-president of Freegold, said the company is holding discussions with property holders of several promising prospects in the Golden Summit area.

Dolphin expects to spend in the order of US$1.5 million on Gold Summit next year, including drilling on the Newsboy, Too Much Gold and the Cleary Hill mine.