Whitehorse, Y.T. — Having restructured and consolidated ownership of the Skukum mineral property, 80 km south of here,
The property exists in rugged, semi-arid terrain at elevations ranging from 1,000 metres in the river valley to 2,100 metres at the highest peak. Temperatures range from minus 30C in the winter, when there is little snowfall, to plus 30C in the summer. The property is accessible via an all-weather highway and gravel roads.
At Skukum Creek, Tagish Lake is in the midst of a 1,200-metre drill program on the Ridge zone, just west of the partially developed Rainbow and Kuhn zones.
Previous operators
Tagish Lake Gold was created from the amalgamation of Omni Resources and Trumpeter Yukon Gold. Each company held a half-interest in the Skukum property, which consists of the Mt. Skukum mine, the Skukum Creek deposit, and 178 sq. km of exploration ground that surrounds these deposits.
Under the merger agreement, shares of Tagish Lake Gold were issued on the basis of one share for each 4.4 shares of Omni, and one share for 7.4 shares of Trumpeter Yukon. Tagish Lake holds a 70% interest in the nearby Goddell Gully deposit, with the remainder held by
The junior’s goal is to outline sufficient mineral resources and reserves to support a viable mining operation at Skukum Creek. Based on a scoping study prepared by CME Consulting, Tagish Lake believes that an indicated resource equivalent to 1.7 million tonnes grading 7.45 grams gold and 240 grams silver would warrant a mining operation. CME holds a 30.7% interest in Tagish Lake Gold.
“We are concentrating on the Skukum Creek site because it has good road access and good development into the ore zone,” says CME President Christopher Naas. “It’s also well-defined, and there is potential to find more mineralization along strike and to depth. Of the deposits that exist on the property, it is the closest to the production stage. Our plan is to develop Skukum Creek and then, with cash flow, start work on the other deposits.”
Priorities for Tagish Lake include testing the strike extensions of the Rainbow and Kuhn zones at Skukum Creek. Combined, these represent a structurally controlled gold-silver deposit hosted in mid-Cretaceous-aged granodiorites, quartz monzonites and granites.
In total, six known mineralized zones are associated with a northeast-trending fault known as the Berney Creek Fault. One of these, the Ridge zone, is being drilled in the belief that it is the western extension of the Kuhn zone. The latter has been traced over a strike length of 500 metres, whereas the Rainbow zone has been traced over 350 metres. Both zones remain open along strike, as well as at depth.
The mineralized zones that constitute the Skukum Creek deposit consist of quartz-sulphide veins with associated carbonate, clay minerals and rare barite. These veins pinch and swell and reach widths of 1-10 metres. Sulphide minerals include pyrite, galena, sphalerite, chalcopyrite, stibnite, arsenopyrite pyrargerite, tetrahedrite and argentite, and these commonly occur in stringers, bands and fine-to-coarse disseminations.
Tagish Lake has completed mapping and sampling on the nearby Taxi and Charleston trends. The former represents an independent structure 150 metres northwest of the Ridge zone. Previous sampling returned up to 228.86 grams gold and 5,654 grams silver from narrow (3-cm) quartz sulphide veins. The zone consists of a broad zone of multiple, parallel (but discontinuous) veins hosted in the granodiorite intrusive. This past summer, 49 surface chip samples were collected, 15 of which returned values in excess of 3 grams gold per tonne. The highest sample returned 56.27 grams gold and 638.8 grams silver over 0.12 metre. The company hopes to perform a follow-up diamond drill program on the Taxi zone next year.
A major structural feature is the Charleston trend, which is intermittently mineralized with moderate-to bonanza-grade gold and silver values. The trend is 5 km west of the Ridge zone. In 1987, chip sampling produced uncut results that averaged 7.44 grams gold and 91.6 grams silver over an average width of 1.36 metres and a strike length of 250 metres. This year, follow-up chip sampling returned up to 222.07 grams gold and 626.5 grams silver over 0.5 metre. The total strike length of the zone is pegged at 3.8 km. No drill holes have tested this zone to date. Tagish Lake intends to drill the structure next year.
3-phase program
The junior’s exploration campaign has been divided into a 3-phase program starting with re-evaluation of the historical work, including data compilation, re-logging of drill core and down-hole surveying of all accessible drill holes. This phase also includes geological mapping and prospecting over the entire property. Some of this work has already been completed.
Phase two is focused on expanding resources. Drilling, as well as geophysical surveys, will test potential strike extensions to mineralization. In addition, the existing portal at the 1,300-metre elevation will be reopened and definition drilling will test mineralization at depth.
As well, induced-polarization surveys will be performed at the Mt. Skukum and Goddell Gully deposits.
In phase three, Tagish Lake will sink a decline at the 1,100-metre level in order to gain access the Rainbow zone. If warranted, the decline will be extended to test the Kuhn zone at depth.
All three phases of exploration are expected to cost a total of $7.9 million.
If the resources reach critical mass and a feasibility study indicates that mining is warranted, the junior will proceed with production at Rainbow and Kuhn. It will then look to the Lake zone at Mt. Skukum and the P.D. zone at Goddell Gully for further resources.
CME’s scoping study envisages an initial mining rate of 350,000 tonnes per year (1,000 tonnes per day).
High recoveries
The Skukum Creek deposit contains sulphides with high concentrations of arsenic and antimony and is partially refractory. Metallurgical tests indicate that flotation followed by cyanidation of the flotation concentrate and tails in separate circuits would produce recoveries of 75% gold and 72% silver.
Using their minimum mining resource (1.7 million tonnes grading 7.45 grams gold and 240 grams silver), the junior believes it can produce gold at an average cash cost of US$168 per oz., net of byproduct credits over a 7-year mine life.
This estimate was calculated using a gold price of US$270 per oz. and a silver price of US$4.75. The estimated after-tax internal rate of return is 15%. Capital costs are pegged at $39.8 million.
The Mt. Skukum deposit is a former producer. Commissioned in 1986, the mine produced 77,790 oz. gold from 233,440 tonnes of ore before closing in 1988. A total of $7.1 million was spent exploring Mt. Skukum, and an additional $11 million was spent on the consolidated project area, which led to the discovery of the Skukum Creek and Goddell Gully deposits.
Mt. Skukum is hosted in pyroclastic and porphyritic andesitic volcanic rocks on the southwestern portion of the Mt. Skukum volcanic caldera complex. All of the volcanics are intruded by steeply dipping intermediate-to-felsic dykes. Several mineralized zones are hosted in felsic-to-intermediate intrusives within fault and shear zones on the caldera margins. The gold mineralization at Mt. Skukum is associated with epithermal quartz-carbonate veining.
There are three zones of interest within the deposit: Main Cirque, Brandy and Lake. Main Cirque is hosted in a 200-metre section of the Main Cirque fault and ranges from 1 to 40 metres in width. The zone was the principal mining area in 1996. The veins narrow at depth and bottom-out in quartz-carbonate stockwork.
The Lake zone contains an indicated resource of 109,000 tonnes grading 13.4 grams gold per tonne. It is 500 metres northwest of Main Cirque and consists of three sub-parallel, steeply dipping veins. In the early part of 1988, test mining was performed at the Lake zone; however, the zone was found to lack continuity of gold grade between drill intersections.
The Goddell Gully deposit, 10.5 km east of Mt. Skukum, is a fault-controlled gold-antimony deposit hosted in mid-Cretaceous-aged granodiorites. The east-trending Goddell Fault is the controlling structure and extends for more than 6 km. Exploration has focused on known mineralized zones close to, and within, the shear zone. The deposit’s P.D. zone has received considerable attention. It is situated at depth and appears to thicken at depth. The zone has been explored over a strike length of 400 metres and to a vertical extent of 170 metres. An indicated resource is pegged at 145,000 tonnes grading 10.2 grams gold and 4 grams silver. The indicated portion of the resource stands at 92,000 tonnes grading 16.41 grams gold and 4 grams silver. The resource remains open in all directions.
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