Kaminak drills for more mineralization at Coffee

VANCOUVER — With every drill hole it punches into the ground, Kaminak Gold (KAM-V) is connecting the dots at its Coffee gold project in the Yukon.

Three years after first finding gold at Coffee, Kaminak has outlined almost a dozen mineralized zones at the property. Last year the company focused on three of those zones — Supremo, Double Double, and Latte — and the work defined an initial inferred resource of 64 million tonnes grading 1.56 grams gold per tonne, or a contained 3.2 million oz. gold.

Most of those tonnes sit near the surface and host oxidized mineralization. And that is precisely the kind of mineralization — amenable to open-pit mining and heap-leach gold recovery — that Kaminak is targeting in 2013.

By year-end the company wants to start planning how a Coffee gold mine would work. To that end, Kaminak’s primary 2013 exploration goal is to expand the heap-leachable resource by growing and connecting these three zones of near-surface oxide mineralization.

Supremo is the largest such zone. It is made up of eight north- to south-trending structural zones, known as T1 to T8. The two other zones that contributed to the defined resource run perpendicular to Supremo and extend out from its southwest and southeast flanks. Kaminak is trying to expand each of these zones and, where possible, connect them to increase continuity within the resource.

“We are targeting those areas that could positively impact mining economics by adding proximal, near-surface oxide ounces in the vicinity of the known deposits,” says Eira Thomas, Kaminak’s president and CEO. “While significant work remains to evaluate the overall potential at Coffee, work at Supremo alone represents a near-term, potentially transformative economic opportunity for our company.”

The deposit seems to be delivering on Kaminak’s desires. The latest holes include several that probed for southward extensions to the T2 trend within Supremo, and the results expand the known structures up- and downdip. Intercepts include 10.53 grams gold over 4.6 metres from 9 metres depth, 5.28 grams gold over 10.7 metres from 72 metres depth, 13.13 grams gold over 3.1 metres from 45.7 metres depth and 4.29 grams gold over 13.7 metres from 30.5 metres depth.

These results have widened the T2 zone to 300 metres, or 400 metres, if the adjacent T3 structure is included. Drill cores indicate that the mineralized structures are completely or partially oxidized to at least 150 metres depth.

Another fence of holes drilled 100 metres farther south returned similar results from three mineralized structures, such as 4.31 grams gold over 7.6 metres and 7.93 grams gold over 6.1 metres.

At the Latte zone, which runs east to west and intersects Supremo at its southwest corner, drills tested for continuity between the main zone and the offset Latte North zone. Latte North previously returned high-grade intercepts from two fences of drilling, including 28.1 grams gold over 1.5 metres and 11.75 grams gold over 3.1 metres.

Drills aimed at the interpreted intersection of Latte and Latte North let geologists find what they were looking for, cutting through Latte North before hitting Latte just below. These holes returned such intercepts as 8.22 grams gold over 9.1 metres and 8.31 grams gold over 13.7 metres.

Kaminak is spending $11 million advancing Coffee this year. On the exploration front, the company wants to expand and connect the zones with Supremo, Latte and Double Double, as well as drill test several nearby gold-in-soil ­anomalies.

Soil sampling has proven an effective tool for finding mineralization at Coffee, and targets with cumulative strike lengths of several kilometres remain to be tested. In particular, Kaminak wants to drill more holes at Arabica, where three fences of holes hit into multiple mineralized structures carrying good gold grades. Arabica sits 1.2 km east of Supremo.

The number of untested gold-in-soil targets at Coffee may soon increase.

At the beginning of the year Kaminak had only taken soil samples from 20% of the 600 sq. km property, which it is working to increase by taking 10,000 soil samples in the next few months.

Alongside drilling and sampling, Kaminak is busy in the lab and at the computer. The company is working through a comprehensive metallurgical program to follow up on heap-leach column tests completed last year. At the same time, drill data is being incorporated into the Coffee model to inform an updated resource estimate that Kaminak hopes to release before year-end.

Once the Coffee resource is updated, Kaminak plans to initiate a preliminary economic assessment for the project.

Investors were pleased with Kaminak’s latest drill results. The stock added 4¢ on the news to reach 99¢, finally gaining a healthy buffer from the 52-week low of 76¢ it hit in mid-April. In September 2012, KAM shares traded at $2.42. Kaminak has 82.9 million shares outstanding, or 91.7 million fully diluted.