Site visit: Exploration momentum puts PEA in near-term sight for Snowline Gold

EASTERN YUKON — In a remote corner of Yukon, Snowline Gold (TSXV: SGD; US-OTC: SNWGF) has moved from the first drill holes at its Valley target to an initial resource in less than three years.

“Snowline is still a fairly new company — this is our fourth summer of operation,” Snowline CEO Scott Berdahl said in a kitchen tent at the main Forks camp, in late June. “In 2021, we got a single drill together and drilled this orogenic target called Jupiter (and Valley). We moved down to Valley, where we’ve now defined a quite substantial, multi-million ounce resource as an initial resource.”

The highly anticipated resource for Valley showed the deposit is among the largest in size and grade across several projects in the Tombstone gold belt that runs under the Yukon.  

See a video of the visit

This year, the company has raised $72 million to support more than 15,000 metres at Valley, and 13,600 metres have already been drilled.

Near the border with the Northwest Territories, two drill rigs were turning at Snowline’s flagship Valley target when The Northern Miner visited in June. The company has completed a new, 50-person camp that will support more exploration. 

Cashed up for exploration 

The funds Snowline has raised this year add to $19 million B2Gold (TSX: BTO) invested in March last year for a 9.9% stake. They will also support 10,000 metres of drilling on three rigs at its other regional targets such as Aurelius, northwest of Valley, and Jupiter, north of the Forks camp at the Einarson project.  

“Given the scale of the program this year, and the construction (of) our second camp just coming online at Valley, that’s runway for essentially the next season, at the rate we’re exploring,” Berdahl said.

One of the great prizes of Valley is the quality of grades near the surface, Berdahl explained, pointing to hole V-23-039 drilled last summer. 

“One thing to note here is the continuity of grades,” he said. “There’s very little low-grade mineralization. That interval, you’ll see the top 132 metres that average five grams per tonne.”  

Such grades form part of Valley’s initial resource that hosts 75.8 million indicated tonnes grading 1.66 grams gold per tonne for 4.1 million oz. of contained metal; and 81 million inferred tonnes at 1.25 grams for 3.3 million ounces.  

Canaccord Genuity analyst Peter Bell wrote in a note in June that the resource provides a strong base for growth at Valley and in the region. He’s modelled a resource of 212.3 million tonnes at 1.35 grams gold per tonne for 9.2 million ounces.

Snowline’s portfolio covers about 3,600 sq. km and includes the main Rogue, Einarson, Ursa, Cynthia and Olympus projects. It has regional exploration neighbours Fireweed Metals (TSXV: FWZ; US-OTC: FWEDF), Rackla Metals (TSXV: RAK) and Onyx Gold (TSXV: ONYX; US-OTC: ONXGF). 

Valley of gold 

Out at the Valley target itself, standing amid a landscape thick with shrubs and near a rushing creek, Berdahl gestures at a wooden stake beside an old drill hole. 

“The gold is in these quartz veins and so the more quartz veins you get, generally the higher grades you have,” he said. “Every time you see a piece of flagging tape above the core, someone has noticed physical gold in the drill core and they just mark it with that. Sometimes we get hundreds of instances of visible gold within a single hole.”  

He waves his hand again and says the edge of Valley’s mineralization stretches about 500 metres up the valley, more than 400 metres in width, and hundreds of metres in vertical depth.   

“That would most likely be accessed by a pit constraint and produced from there,” he said. “Even what we’re standing on is very well-mineralized right from surface so we’re digging into some of the best material right from day one.”  

Infrastructure headwinds 

While Snowline has only just released its first resource, looking ahead to any potential development reveals some hurdles. The main ones are direct road access and power infrastructure. Its southern Cynthia project is within 8 km of the Plata Winter Trail that links to the North Canol Road, which touches Olympus, though that’s far from Valley. The nearest towns are Ross River, 200 km to the south, and Mayo, 223 km to the east.  

The creek at Valley, which runs over a part of the deposit, would have to be partially diverted if it becomes a mine. It could also be harnessed for its hydro-electric potential to power a camp, Berdahl said.  

But there are some potential solutions on the horizon, Berdahl explained. The Yukon government’s proposed resource roads regulations could help by simplifying the process for building private, project-specific roads that can be reclaimed after they’re no longer needed, he said.

For power, he cited the possible connection of Yukon with British Columbia’s green power grid, which the territorial and B.C. governments have been discussing. Yukon premier Ranj Pillai asked the federal government in June to provide up to $60 million for the connection, and the territory has earmarked $1 million towards the plan. Western Copper and Gold (TSX: WRN; NYSE-AM: WRN) also looks to the link up bid as a tailwind for its Casino project near Carmacks.

Snowline’s share price slid off the strong trajectory it had until July 19, after which it has lost 19% of its value. That loss came while it continued to report strong drill results.

The drop came amid jitters that Snowline would shut down exploration, Berdahl said, after the FNNND’s call for a halt to mining in its traditional territory following the accident at Victoria Gold’s (TSXV: VGCX) Eagle mine.

Its shares traded for $4.37 apiece on Friday, for a market cap of $701.8 million.

Drilling towards PEA 

Looking ahead to the rest of 2024, Snowline will likely drill more than 15,000 metres at Valley, combining infill drilling to upgrade the resource and expansion drilling, Berdahl said.

North of Valley, Jupiter hosts “mineralized boulders that are plain as day,” Berdahl said. “It just shows the paucity of exploration work done out here.” 

He hopes an updated resource can be ready for Valley by the end of the season, with a preliminary economic assessment possible next year.   

Beyond next year, the biggest hurdle the company must clear is long permitting timelines, even though Snowline has good relationships with the FNNND, the Ross River Dena Council and the Yukon government.

In the meantime, Snowline has plenty of exploration work to do. “There’s still data gaps out here,” he said. “Valley was a data gap, initially, when we first staked claims up here in 2008. There’s more to be done. And we want to make sure that there aren’t other Valleys sitting out there that we don’t know about.”