Exall, Southern Star drill deep into Red Lake gold camp

Red Lake, Ont. — This is a gold camp that has a history of regeneration, rising every few years on the back of a big discovery or an upturn in the gold market. The mid-1990s discoveries at the Red Lake mine did much to bring junior miners back, as have the improved gold prices of the last four years.

Rising and falling with the camp’s wider fortunes has been the Gold Eagle property, on McKenzie Island in Red Lake. An old producer from the 1940s, it is now held by a joint venture of Exall Resources (EXL-T, EXALF-O) and Southern Star Resources (SSR-T, SNSRF-O). The partners are testing some of the camp’s ultimate geological targets — structural extensions of other peoples’ mineralization, down nearly 2 km below the surface.

Exall is the original Gold Eagle Gold Mines, formed in 1934 and the product of mergers and reorganizations that took the company through incarnations like Goldray Mines and Canray Resources. Gold Eagle produced about 43,000 oz. in the late 1930s and early 1940s, while its richer neighbour to the north on McKenzie Island, McKenzie Red Lake, produced 647,000 oz. from about 2 million tonnes of ore between 1935 and 1966.

The Gold Eagle property stayed in the company through those years, often gathering dust during low periods in the gold market. In 1988, consultants recommended a drilling program on the property — prophetically, they suggested testing the southwest extension of the Cochenour-Willans mineralization — but poor conditions in the market held that program up.

In 1995, Canadian Golden Dragon Resources (CGG-V, CGDGF-O) optioned the property, with the intention of earning in for 50% by spending $3 million. Dragon ultimately dropped the option without significant results.

Southern Star came to the property in 2002, with a deal to earn a 50% interest by spending $2 million over three years. (Exall also got 3 million shares of Southern Star and $160,000 cash.) A property with a history of being optioned just as the market turned bad finally got a break, and stayed well-financed long enough for some real exploration. By early 2004, Southern Star had spent its full obligation and was a 50% partner.

The earliest efforts were spent on McKenzie Island, testing a zone that would ultimately be named the Western Discovery Zone. By 2004, drilling had outlined an inferred resource of 309,000 tonnes at a grade of 16.7 grams gold per tonne, or with high-grade assays capped, 13.2 grams.

But it is on deep targets in the Bruce Channel — the strip of Red Lake that separates McKenzie Island from the mainland to the east — that Exall and Southern Star are now concentrating. This is the same southwest-plunging zone from the Cochenour-Willans mine that Exall’s consultants had recommended testing in 1988. The zone crosses out of the Cochenour ground — now held by Goldcorp (g-t, gg-n) — at about 500 metres vertical depth. The joint venture’s intersections have been at 700 metres and deeper. The plunge is not steep, about 45, but further west, in the channel, the targets are as much as 1,900 metres down.

Grades have often been in the multiple-ounce or hundred-gram range, though sporadic high-grade intersections are not unusual in the Red Lake camp. Coarse gold is very common in the Bruce Channel zone, and high-grade intersections are reanalyzed after a sieve analysis to separate and fully assay the coarse fraction of the sample.

“There are some very spectacular numbers in here, but it’s very complex geologically and we need more pierce points,” says John Whitton, who is managing the exploration program for the partners. “Basically, we’ve got some very nice mineralization and we’re trying to follow it.”

Follow it up-plunge, that is; the drilling program has consisted of a series of secondary wedge holes drilled from one primary hole, sometimes collared on the winter ice of the channel and sometimes collared from either the island or the mainland.

That has meant that holes take a long time and results trickle out slowly. Still, when they do trickle out, they can be quite exciting. In early March, for example, the partners reported 291 grams gold per tonne over an intersection of 2.4 metres in hole BC11-3, one of several holes that intersected the zone at depths of 1,200 to 1,800 metres.

The recent drilling also unearthed a new style of mineralization, in brecciated and altered volcanic rock, with fine-grained needles of arsenopyrite. That material graded 17 grams gold per tonne over 17.1 metres.

One move the partners made was to engage consulting geologist Chester Kuryliw as an “idea man” for Whitton and geologist Dennis Forgeron. Kuryliw had been mine geologist at Cochenour-Willans in the 1950s and had done what he describes as “weekend consulting” for their cross-channel rival, McKenzie Red Lake Gold Mines. The picture that had been forming in Kuryliw’s mind for 50 years is now helping to guide exploration on the property.

Complex deposits

The deposits around the Bruce Channel are probably the most structurally complex in the Red Lake camp, sitting, as they do, at the junction of three deformation zones — one trending westward, another northeast, and the third southeast toward the larger Campbell and Red Lake (Dickenson) orebodies — now both controlled by Goldcorp. The gold zones at Cochenour-Willans, Wilmar, McKenzie Island and Gold Eagle were often small and usually in fracture zones that opened across faults or on cleavages in the rock fabric. And they were frequently high grade: Cochenour averaged a gold grade of 15.8 grams per tonne over a three-decade mine life.

By 1957, Kuryliw had already identified 11 different styles of gold mineralization at the Cochenour, mainly along stratigraphiccontacts and in steeply dipping structures in the volcanic rocks. From the 1960s through to the 1980s — when Wilanour Resources reopened the mine, then had to close it again — workers established that favourable “plumbing” along shallow faults and along the younger steep faults could bring gold into almost any host rock in the sequence. More broadly, Cochenour appeared to be at the western end of a large alteration system that also included Campbell and Red Lake.

Across the channel, on McKenzie Island, the McKenzie and Gold Eagle deposits are quite different. The McKenzie stock — a body of granodiorite and diorite elongated north and south — is the principal host rock, although the volcanics and sediments it intrudes were also ore hosts. The gold is in veins and shear zones, most of which are steep and displace older shallow-angle faults.

What Kuryliw recalled from his time at Cochenour was that zones often showed a hinge movement — he estimated it at 18 — while over at the McKenzie there was a corresponding system of helical fractures, like a spiral staircase centred on the McKenzie stock.

What most neatly explained the style of mineralization — shearing in the Cochenour and McKenzie mines, fracturing in the rocks of Gold Eagle to the south — was an eastward rotation of the McKenzie stock, which was already known to be older than the main mineralization. In the area around the stock, movement like that would have created compression in the northeast and southwest quadrants and tension in the southeast and northwest, as the surrounding rocks compensated for the movement by breaking or bending.

“This stuff looks outlandish, but it isn’t,” he says. “There’s some very good structural evidence.”

What that means for the old Gold Eagle claim block, extending out into the channel, is that most of the structures will be tension veins or breccias, something that has been borne out by intersections in drill core so far. “There’s an awful lot of crackling and opening of the rocks,” Kuryliw says.

At this stage, contractor Chibougamau Diamond Drilling has four large drills in operation, all turning N-size rods and going very, very deep. That has forced Exall’s and Southern Star’s hands on how to test targets, as well; the long trip down means that (as Whitton says) to “get as many cuts
as we can,” secondary holes wedged off a single primary hole provide more intersections for the drilling dollar. But that in turn, means holes have to be surveyed and controlled carefully as they advance.

While the drillers are using extra-long core tubes for the bulk of the drilling, to save time winching full tubes up the long hole to the surface, that practice has to be abandoned near wedges and in more brecciated ground, slowing the process down.

It’s a long wait for the core, but the Bruce Channel targets have yielded some core worth waiting for. If the theories are right, the proof may also be worth waiting for.

“They’re very productive, very rich,” Kuryliw says, “but they need a hell of a lot of exploration to prove up.”

Bruce Channel Time Line

1922

Herbert Tyrrell discovers gold on McKenzie Island and on mainland near East Bay (later McMarmac)

1935

McKenzie Red Lake mine opens on McKenzie Island

1937

Gold Eagle Gold Mines opens second mine on island

1939

Cochenour-Willans Gold Mines opens on mainland side of Bruce Channel

1941

Gold Eagle closes; 40,000 oz. produced

1948

Dickenson Red Lake Mines (ultimately Goldcorp) opens

1949

Campbell Red Lake Mines opens between Cochenour and Dickenson

1966

McKenzie Red Lake closes; 650,000 oz. produced

1967

Wilmar Mines starts production via main Cochenour workings

1971

Cochenour and Wilmar close; 1.2 million oz. produced

1974

Cochenour re-opens briefly, closes again

1988

Inco Gold and Wilanour Resources re-open Cochenour; Exall plans drill program on Gold Eagle

1991

Cochenour closes again

1995

Exall and Canadian Golden Dragon do option deal; Gold Eagle Hotel on McKenzie Island burns down, with the loss of 18 cases of Labatt’s Crystal

1996

Strike at Goldcorp shuts down Red Lake mine for three years

2002

Exall/Southern Star joint venture

2006

Goldcorp takes over Campbell Red Lake after merger of Placer Dome with Barrick Gold