Coastal Gold (TSXV: COD) has updated the resource estimate for its Hope Brook gold project on the southwestern coast of Newfoundland, with grades in the indicated category 30% higher than in the last resource estimate completed in October 2012.
Based on a 6,000-metre diamond drill program in the fall of 2012 and another 4,100-metre drill program from September to November of this year, the revised estimate puts total indicated resources at 20 million tonnes grading 1.93 grams gold per tonne for 1.24 million contained oz. gold, with inferred resources adding 1.3 million tonnes at 3.22 grams gold for 138,000 contained oz. gold.
Nearly 90% of the indicated resource lies within a potential open pit at a cut-off grade of 0.70 gram gold. The deposit is open along strike to the southwest and downdip, and the company says it’s on track to complete a preliminary economic assessment in early 2014.
BP-Selco discovered Hope Brook in 1983, and the deposit produced — under two separate owners — a total of 752,163 oz. gold from combined open-pit and underground operations between 1987 and 1997. A subsidiary of BP Resources operated the mine from 1987 to 1991, and Royal Oak Mines operated it between 1992 and 1997.
Coastal Gold president and CEO Bill Pearson says the new resource is based on drilling that filled in weaknesses and gaps in historical data, improvements in the company’s geological understanding of the deposit that led to targeted drilling, and checking and reinterpreting a lot of old information that in its first pass, it wasn’t sure exactly how to deal with, all of which resulted in the improved resource update.
The 21-hole drill program in late 2012 was significant for a number of reasons, Pearson says. First, Coastal Gold’s geologists confirmed that one of the major near-surface stopes had not been mined previously, which added ounces to the resource.
The second finding was that there was a big fold structure to the southwest in the Connector zone, which explains why shallow drilling by previous operators had found little mineralization southwest of the mine. The Connector zone — 900 metres southwest of the former mine — connects the mine to the 240 zone, which is a kilometre southwest. The company’s geologists say the Connector zone alteration has a similar thickness and style to that of the former mine and its 240 zone.
“The assumption was that the mineralization petered out along strike to the southwest, but that is incorrect,” he explains. “The mineralization just didn’t get to the surface because of the fold. That is our major near-surface target now, and it’s a big one, because it suggests there’s another potential open pit there.”
Coastal Gold’s 2013 drill program is connecting the dots. Drilling in the footwall zone of the old mine showed “really nice resource remaining,” Pearson says, and at the same time, more drilling in the southwest pit extension hit a silicified zone, which averaged 30 metres in true width, and pushed the potential pit further south.
“We felt that there were areas in the southwest pit extension where there was an awful lot more, but old drilling was wide-spaced and had quite a few gaps in it,” he says. “We also felt there were historical holes that seriously underestimated the grade.” Results from the 2013 drill program showed that the next target would be the Connector zone, which could become another open pit.
Another thing that has improved the company’s understanding of the geology at Hope Brook, Pearson says, is its public–private partnership with Western University in London, Ont., and Memorial University in St. John’s, N.L.
For the last two years, the universities have provided Coastal Gold’s geologists with cutting-edge equipment and expertise on how to use it at the universities that is rarely — if ever — available at commercial labs, including oxygen isotopes and mineral-liberation analysis. The universities also know a lot about Newfoundland’s geology. For its part, the university’s geology students and professors get access to work on an ongoing project.
“We know from our work with Western and Memorial that the low-grade and high-grade mineralization and associated alteration at Hope Brook formed from the same hydrothermal system, so we can figure out where to target our drilling on a broader scale rather than just by looking at assay results,” Pearson says. “You can pick up the edge of the alteration and then move into where it is more intense, and more likely to have better-grade mineralization.”
The partnership has helped Coastal Gold understand that the system at Hope Brook was driven by a large intrusive that caused early stage and widespread low-grade alteration, with zones ranging from 15 to 80 metres wide, and a later-stage, higher-grade alteration that is more structurally controlled within the original silicified zone. These zones are tighter — between 5 to 25 metres wide — and located where the high-grade mineralization occurs, and where, for instance, intercepts have shown more than 5 grams gold per tonne, plus copper.
“That’s one of the reasons why Hope Brook is such a good deposit,” Pearson says, “because you have this wide, low grade, and the higher grade. The historic mine just mined the high grade, and we’re looking at the whole package. The key is to find more high grade.”
Pearson says there’s a lot of technical work to be done, and that Hope Brook is not a simple system. “If it was, it would have been done years ago,” he continues. “But it’s complicated due to the deformation. The partnership allows us to have people who are experts and access to types of facilities that support research . . . it’s been a solid contributor to our success here and our understanding, so I’m all for these kinds of partnerships, and I think that industry should do more of them.”
The equipment to measure oxygen isotopes showed that both mineralization styles formed from a single long-lived fluid source, he explains. That’s important from an exploration standpoint, because if the mineralization came from two separate events, you’d be looking at two different controls. “It’s not just academic,” he says. “For instance, if the later higher-grade mineralization was related to a later structural event that had a different orientation, you might chase the wrong model, and that can waste a lot of money.”
Similarly, by using the university’s mineral liberation analysis, Coastal Gold confirmed that the mineralization contains tin, which is one of the things that often indicates an epithermal system. The equipment also allows you to look for specks of gold that are only a few microns wide, something that couldn’t be done optically.
“It’s not just having the equipment, it’s having someone who really understands how to do the analysis, and it’s not a service that commercial labs can generally offer,” he says. “It’s worked well, and there’s no doubt the work they’ve been doing has helped us understand our system better, and the more you understand your mineralized system, the better you can plan and predict where the mineralization is likely to go. And with scarce money around, I’m looking to make my drilling as efficient as possible.”
Coastal Gold is also looking into using material from Hope Brook’s two tailings ponds as potential mill feed to either supplement the run-of-mine material, or provide stand-alone early feed for the project. It drilled 73 vibracore holes totalling 155 metres on a 100-metre-square grid over the two tailings ponds.
Drill holes from the first tailings pond were generally higher grade, most likely because most of the tailings in Pond 1 are reported to be from the earlier years of production, when the historic mill lacked a copper-flotation circuit for producing a copper concentrate, and had lower reported overall recovery. Most of the tailings in Pond 2 came later in production, when the plant recovery was higher because of the copper-flotation circuit.
Highlights from drilling the first tailings pond include 1.73 grams gold and 0.12% copper over 2.4 metres from Hole 8; 1.31 grams gold and 0.18% copper over 4.2 metres from Hole 13; and 1.32 grams gold and 0.13% copper over 1.2 metres in Hole 3.
Drill highlights from the second tailings pond include 1.40 grams gold and 0.08% copper over 3.3 metres from Hole 47, 1.12 grams gold and 0.08% copper over 3.8 metres from Hole 52, and 1.08 grams gold and 0.05% copper over 5.1 metres from Hole 64.
Vibracore drilling is a low-impact coring method that recovers unconsolidated sediments using a four-inch diameter aluminum core tube.
The Hope Brook project is 85 km by water east of the community of Port aux Basques, the year-round terminus for the CN Marine ferry service that connects Newfoundland with the rest of Canada at North Sydney, N.S., and it was used as the marine-service centre for the Hope Brook mine operations. Burgeo, a coastal community 50 km east of the project, connect to the Trans-Canada Highway.
The project can be accessed directly by chartered boat from either the Burgeo or Port aux Basques areas. But the most efficient way would be by a chartered fixed-wing aircraft, or helicopter from commercial bases in the Deer Lake–Pasadena area, 20 km north.
Some infrastructure from the previous mine still exists, including access to the provincial power grid through an existing transmission line.
Environmental reclamation of the Hope Brook site was not completed by Royal Oak Mines because the company went bankrupt in April 1999. The government of Newfoundland was then awarded ownership of the site and remaining infrastructure, and undertook a major reclamation effort between 2001 and 2004.
Their work included environmental assessments and monitoring, site-infrastructure removal, and updating tailing dams and other water-control structures. Provincial authorities put acid-generating waste rock and remaining heap-leach pad materials in the water-filled open pit, capped landfill sites, decommissioned hydro and communication services, installed fencing around the open pit, and set up ongoing watershed and tailings dam structural-monitoring systems.
At press time Coastal Gold was trading at 2¢ per share within a 52-week range of 1.5¢ to 15¢. The junior has 131 million shares outstanding.
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