SpectrumGold picks up Galore Creek

Vancouver — SpectrumGold has inked a deal with mining giants Rio Tinto (RTP-N) and Anglo American (AAUK-Q) to buy the Galore Creek gold-silver-copper deposit in northwestern British Columbia.

The price tag for the project is US$20.3 million payable over eight years with US$300,000 due in the first three years. The junior, soon to be publicly listed, must also perform a prefeasibility study.

Galore Creek is a classic alkalic intrusive-related gold-silver-copper deposit that has been worked since the early 1960s. A 1992 estimate by Kennecott Exploration, a subsidary of Rio Tinto, pegged the measured and indicated resource at 243.2 million tonnes grading 0.45 gram gold and 6 grams silver per tonne, plus 0.75% copper. The inferred resource was estimated at 70.6 million tonnes grading 0.63 gram gold, 6 grams silver and 0.59% copper. A 1997 provincial government report gave the Central zone an indicated resource at 233.9 million tonnes grading 7 grams silver, 0.35 gram gold and 0.67% copper, based on a cutoff grade of 0.27% copper- equivalent. The Southwest zone has an indicated resource of 42.4 million tonnes grading 7 grams silver, 1.03 grams gold and 0.55% copper, whereas the North Junction zone has 7.7 million tonnes grading 1.5% copper in the indicated category, based on a 0.4% copper cutoff.

SpectrumGold is preparing to develop a geologic model based on re-logging of existing core, followed by a 2,000-metre drill program.

On the back of the deal, NovaGold Resources (NRI-T) bought 2.28 million shares shares, or 16.3% of SpectrumGold, from Quest Capital (QCCNF-OTC) for $1.7 million in cash. The transaction ups NovaGold’s total interest in the junior to 8.28 million shares, which equates to a 59% equity stake.

NovaGold says the increased ownership will allow it “to consolidate its interest in SpectrumGold as a subsidiary for future financial reporting.”

Says President Rick Van Nieuwenhuyse: “Management believes Galore Creek represents one of the best undeveloped resources in western Canada, with five million ounces of gold, sixty million ounces of silver, and five billion pounds of copper. We’re encouraged by recent developments in the silver and copper markets and believe the global shortage of copper concentrate for smelters presents a significant opportunity.”

SpectrumGold was formed earlier this year when Novagold and Viceroy Resource (VOY-T) combined their Yukon and British Columbia gold assets.

The new company got all of NovaGold’s Yukon exploration properties, along with Viceroy’s mineral assets in the Yukon and British Columbia. Initially each company held a half-interest in SpectrumGold, with NovaGold retaining a 50% equity interest, and Viceroy, 19%.

NovaGold brought to the table its four properties in the Yukon, namely Klondike, McQuesten, Harlan and Sprogge. Viceroy contributed its gold resources and exploration rights to the Brewery Creek gold mine in the Yukon, along with its British Columbia assets.

McQuesten

Situated near Mayo, the McQuesten property is NovaGold’s most advanced Yukon property. Previous drilling identified a large mineralized system in calcareous meta-sediments and intrusive rocks along the McQuesten structural zone.

In 2000, Newmont Mining (NEM-N) tested a 1.2-km portion of the structure with five holes as part of an option agreement with NovaGold to earn a 51% interest in the property. All five holes intersected significant mineralization, with hole 1 yielding 2.5 metres grading 3.2 grams gold per tonne, plus 6.1 metres grading 2.6 grams gold.

SpectrumGold has launched a 3,500-metre drill program on the McQuesten gold property in the Yukon’s Keno Hill mining district. The program will test airborne geophysical anomalies, as well as surface trenching and auger geochemistry targets.

Once the drilling is complete, the junior will have earned a 70% stake from Eagle Plains Resources (EPL-V).

The company is also completing a geologic compilation at the Brewery Creek property, a former heap-leach oxide gold mining operation that was in production from 1997 to 2001. Situated in the Dawson mining district, the property has been explored for near-surface oxide gold mineralization, and now SpectrumGold aims to evaluate the prospects for deeper sulphide mineralization.

The junior has 14 million shares outstanding and $1.5 million in cash, with an additional $1.35 million held in escrow and to be released subject to a public listing.

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