Old core, new gold at Cochrane Hill

VANCOUVER — By dusting off decades-old drill core and reanalyzing it, Australian-listed Atlantic Gold (ATV-A) has doubled the indicated resources at Cochrane Hill to 200,000 oz. gold, a project 200 km northeast of Halifax, in Nova Scotia.

Combined with the gold contained at its Touquoy properties, 80 km southwest, the Cochrane Hill deposit brings Atlantic Gold’s measured and indicated gold resources to 734,000 oz.

Atlantic can earn either a 60% option at Cochrane Hill from Scorpio Mining (SPM-T, SMNPF-O) or 100% ownership subject to a 20% free carried interest. A third party retains a 3% production royalty.

In 2004, Scorpio had estimated indicated resources of 534,000 tonnes grading 6.5 grams gold per tonne for 112,500 oz. gold and inferred resources at 26,700 tonnes averaging 5.7 grams gold for 4,900 oz. Scorpio had based its analysis on underground extraction methods.

In Scorpio’s resource estimate, much of the core had either been graded zero or deemed uneconomic.

So Atlantic Gold, which optioned Cochrane Hill in 2007, enlisted Sydney-based consultants Hellman & Schofield to reassess the deposit based on a lower 0.5- gram gold cutoff and an open-pit mining technique — the same as it has proposed to use at its Touquoy property.

The effort appears to have been worth it.

As it now stands, Cochrane Hill’s indicated resource is 3.6 million tonnes grading 1.7 grams gold for 200,000 oz., and its inferred resource is 6.4 million tonnes at 1.7 grams gold for 347,000 oz. Notably, hole 08-011 returned 24 metres of 1 gram gold, and 09-012 returned 22 metres of 2.9 grams gold.

The deposit appears to be a 20- metre-wide zone from surface to a depth of about 150 metres of sheared and quartz-veined slate, with a strike length of 650 metres.

Atlantic Gold is only now beginning a 5,000-metre drill program at Cochrane Hill to upgrade resources to measured and indicated status. But in a preliminary economic analysis based on parameters from the Touquoy property, the company states that with gold at US$900 per oz., it would be possible for an open-pit design to capture 7.5 million tonnes grading 1.7 grams gold for 395,000 oz., or 70% of the resource.

The company assumes a 95% recovery rate, a number arrived at from its heap-leach tests at Touquoy.

Between 2007 and 2011, Atlantic Gold must spend $4.75 million on the property to receive either the 60% interest or a 100% interest subject to Scorpio’s 20% free carried royalty.

If developed, Atlantic Gold proposes to process the ore from Cochrane Hill at a plant it would build for Touquoy.

The gold would add to Atlantic Gold’s throughput at Touquoy, which, as outlined in a scoping study, could handle about 1.5 million tonnes a year for 90,000 oz. gold over at least six years.