Gold prices revive NWT projects

Improved metal prices have always had a way of giving new life to old projects, so it need not be a surprise that the recent rise in the gold price has acted like a defibrillator on several projects in the Northwest Territories.

Back in the summer of 1999, with gold down around US$250 per oz., there was little interest in the gold deposits of the Slave province back country. Yellowknife, with established infrastructure and mill capacity at both Giant and Con, was one thing, but if you had to get on a plane to get to a project, you really didn’t have a project.

At US$400-per-oz. gold, that picture has now changed, and projects whose resources were never in doubt but whose feasibility was shaky back in the late 1990s are being seen as possible company-makers in the new economic environment.

Where you find marginally economic gold deposits in North America, you will usually find Seabridge Gold (SEA-V), which has made it its business to pick up idle projects with known gold resources. What it picked up in the Slave was the old Courageous Lake gold project, in a deal with Newmont Mining (NEM-N) and Total Resources, now part of the French energy behemoth Total-Fina-Elf. Newmont and Total, which sold off their operating interests in the project for US$2.5 million, retain a 2% net smelter return, and a novel clause entitled the vendors to US$1.5-million payments if the spot price of gold closed above US$360 per oz. for 10 consecutive days (it did, in early 2003). Another clause entitles the vendors to US$1.5 million once gold stays above US$400 or Seabridge puts the project into production.

Seabridge has since been re-evaluating Courageous Lake in the hope that the higher gold price will grease the project’s economics enough to bring it to feasibility. The work started with a recalculation of a resource estimate based on earlier drilling by Noranda (NRD-T) and Placer Dome (PDG-T), which had both drilled the property in the late 1980s and through the 1990s and prepared resource estimates.

The project’s history has been one of defining down resources: Noranda based its 1990 calculation on a 3.4-gram-per-tonne cutoff grade, and estimated 18.59 million tonnes at an average grade of 6.1 grams gold per tonne. Placer, thinking “open pit,” had outlined 69 million tonnes at 2.7 grams, based on a 1.5-gram cutoff. Seabridge is now looking at a measured and indicated resource of 49 million tonnes grading 2.1 grams gold per tonne, plus an inferred resource of 65 million tonnes, also running 2.1 grams.

The Courageous Lake belt is centred about 230 km northeast of Yellowknife, and is host to two old producers: Salmita and Tundra. Those mines were supplied by a winter road, which ultimately was used as the jumping-off point for winter roads to the Lupin gold mine and the Ekati diamond mine. Seabridge’s property, about 160 sq. km, covers the FAT claim block, host to the main mineralization, and 53 km of strike length that includes the two old producers.

Work in the 2003 field season identified 12 targets that had been drilled by previous operators; at these targets, about 110,000 metres of core had gone unassayed, and Seabridge saw potential for low-grade gold mineralization in envelopes around known mineralization. Assaying of stored core in the Salmita area returned zones of 9-35 metres, with gold grades of 3-6 grams per tonne, which hadn’t been documented previously. Similarly, targets south of Salmita at the Olsen and Boundary prospects returned grades mainly in the 1-gram to 4-gram-per-tonne range over intervals of 6-38 metres.

About 1,000 tonnes of stored core was also assembled and sent for metallurgical testing. Flotation concentrates recovered about 93-94% of the gold in the samples, and consulting firm Hatch suggests ultimate recovery of sulphide-bound gold in the concentrate will be 90-92%.

Seabridge has raised $1.6 million in flow-through money to fund exploration and a scoping study.

Closer to Yellowknife, the Discovery mine, which produced just over a million ounces of gold between 1949 and 1969, is getting a new look from junior Tyhee Development (TDC-V). Newmont and Canamax Resources took kicks at Discovery in the 1980s, but both companies dropped the project and it ultimately passed to GMD Resource (GMD-V), which did some work in the lean years of the late 1990s. GMD’s former president, David Webb, vended the 65-sq.-km property (which includes the Nicholas Lake prospect, about 12 km to the northeast) into Tyhee in 2001, and the company started drilling in 2002.

A revised calculation, made this summer, put the measured and indicated resource at Discovery at 54.6 million tonnes grading 1.1 grams gold per tonne, based on a 0.5-gram-per-tonne cutoff. A further 42.8 million tonnes, grading 1 gram per tonne, was classed as inferred. The resource is all hosted in the Ormsby zone, about 2 km southwest of the old Discovery Mine main zone.

Using a 5-gram cutoff and an underground-mining scenario on the same deposit, consultants for Tyhee could put together an 834,000-tonne measured and indicated resource grading 10.8 grams gold per tonne, with a further 1 million tonnes at 9.7 grams per tonne inferred.

A second phase of drilling in late 2003 outlined another zone of mineralization, over a 210-metre strike length lying between the Ormsby and the Discovery West zone. Drill holes on the new zone returned grades mainly in the 1-to-4-gram-per-tonne range, over widths of 1.5-26 metres, but local high-grade intersections ran to 10.7 and 13.3 grams per tonne over 1.5 metres.

Up at Nicholas Lake, there is a 661,000-tonne measured and indicated resource grading 10.1 grams, again based on a 5-gram-per-tonne cutoff and an underground mining scenario. The inferred resource, in addition, amounts to 220,000 tonnes, again at 10.1 grams per tonne.

About 190 km north of Yellowknife, Anaconda Gold (ANX-V) has optioned the Damoti Lake gold property from Doublestar Resources (DSR-V). Damoti Lake, about 12 km south of the old Colomac mine, saw 40,000 metres of drilling between 1992 and 1997 on a gold deposit hosted in banded iron formation. That work outlined a 2.1-million-tonne resource grading 9.2 grams gold per tonne, including 456,000 tonnes grading 16 grams per tonne in the highest-grade area, the Horseshoe zone. (The resources are pre-National Instrument 43-101.)

The 47-sq.-km property covers a 12-km strike length of iron formation, and Anaconda plans to tighten up the current drilling to block out a reserve.

Under the terms of the option agreement, Doublestar gets $170,000 in cash and 100,000 shares of Anaconda during the option period, and Anaconda is obliged to spend $2.5 million on exploration and development over four years to earn a 55% interest.