ISTANBUL, TURKEY — Eurasian Minerals (TSXV: EMX; NYSE-MKT: EMXX) started exploring Turkey’s Western Anatolia and Eastern Pontides mineral belts for gold and silver, as well as porphyry copper targets, more than a decade ago, allowing it to stake and acquire promising projects.
“We did a lot of grassroots work here six to five years ago, and now we’ve focused down to eight projects,” Eric Jensen, the company’s general manager of exploration, says during an October site visit. While we wait at a seaside cafe to take a ferry from Istanbul to Bandirma, Jensen gives a brief overview of the Alankoy high-sulphidation gold–copper project, the Balya zinc–lead royalty property and the Akarca gold–silver project that we’ll see during the tour.
Two hours later, we cross the Sea of Mamara to the port town of Bandirma, where we meet with Michael Sheehan, the business unit manager for Turkey, and members of his team.
Early the next morning we drive through the rolling countryside — dotted with wind farms and a few limestone mines — to the Alankoy property in the Biga Peninsula. Jensen describes Alankoy as a “gold- and copper-enriched, high-sulphidation epithermal lithocap with underlying porphyry copper–gold potential.”
Sheehan says the company wanted a property so badly in the Biga Peninsula that it swapped its Balya and Sofular base-metal properties for Alankoy in 2006. The property was previously held by local base-metal miner Dedeman Madencilik.
Alankoy is adjacent to Alamos Gold’s (TSX: AGI; NYSE:AGI) Kirazli and Agi Dagi gold deposits and near Pilot Gold (TSX: PLG) and Teck Resources’ (TSX: TCK.B; NYSE: TCK) TV Tower and Halilaga deposits. Sheehan notes several of the projects in the region may go into production as porphyries, adding that Alankoy could host a copper–gold porphyry system at depth. To test this theory, the Vancouver-based firm is seeking a drilling partner.
Eurasian operates as a royalty generator that partners or sells its projects for cash and or share payments while keeping a net smelter return royalty (NSR). This business model protects it from development and financing risks, while preserving its healthy cash balance. At the end of September, Eurasian had $13.1 million in cash and equivalents and working capital of $14.4 million.
During the two-hour drive to Canakkale province, Sheehan explains that historically there’s been little work done on the Alankoy property. The copper–gold project was initially discovered through a Turkish–Japanese government exploration expedition between 1989 and 1991. A Japanese group drilled 12 shallow holes totalling 1,800 metres on the property. While those holes weren’t deep enough to test for a potential porphyry system, hole no. 10 ended in copper mineralization, returning 22 metres of 0.25% copper, Sheehan says, noting that this, along with the mineralization found at Alankoy, supports the company’s porphyry theory. “So what we are seeing at Alankoy looks like the top of a porphyry system,” he says.
As we reach the property, Sheehan points to the altered red-and-orange volcanic rocks by the roadside. “This stuff has been baked and cooked, and just going around you can see silica caps and silicified rocks all around the place,” he says.
Despite the highway cutting through Alankoy, most of the project is covered by soil and vegetation. We hike up a steep hill to the outcrop of hole No. 10 to get a better view of the 20 sq. km property.
“This is a sizable anomaly — a big expression of alteration, with metal in it — which has to be tested, but we are really excited about it,” Jensen says.
Dedeman owns a 3% royalty on the property that Eurasian can buy at any time for US$1 million.
From Alankoy, we set off to the nearby town of Can for a quick lunch of manti topped with a dollop of yogurt before heading to the Balya royalty project. The 15 sq. km property is located in the past-producing Balya district in the Balikesir province, 55 km southeast of Can. The district hosts skarn, vein and replacement deposits that were mined to yield lead, zinc, silver and copper from 1880 to 1938. The Balya project is best described as a lead–zinc–silver carbonate-replacement deposit.
The Turkish government first drilled Balya in the late 1970s, when it completed eight core holes totalling 1,900 metres.
In the early 2000s, Eurasian picked up Balya in an auction for US$17,000 and sold it to Dedemen, the private Turkish miner, while retaining a 4% uncapped and “unbuyable” NSR.
“We got it for a song, but we knew it was a lead–zinc, so we said ‘Yeah, it’s pretty interesting, but it’s not our cup of tea,’” Sheehan comments during the drive through the countryside.
Eurasian, looking for gold targets with underlying copper porphyry potential, exchanged Balya and its Sofular lead–zinc asset for the Alankoy prospect in 2006. “It was pretty much an easy swap,” Sheehan says.
Along with the 4% NSR, the Turkish miner advanced a US$100,000 royalty payment to Eurasian in 2007 for Balya. It also drilled the property in the following three years. To date, Dedemen has drilled over 31,000 metres in 170 core holes, mostly on the Hastanetepe zone. Hastanetepe is a moderately dipping and measures 750-by-350 metres, hosting lead–zinc–silver mineralization in limestone and dacite.
Dedeman had planned to put the project into production as a small-scale, 500-tonne-per-day underground operation in 2012. But when it conducted drilling to sink a shaft at Hastanetepe, it encountered more mineralization. This prompted Dedeman’s management to move the location of the shaft and headframe, and keep exploring to better understand the extent and potential of mineralization at Balya.
In 2012, Dedeman drilled 3,300 metres in 32 holes and expanded the Hastanetepe zone to the east and southeast. Earlier this year, it reported assays from 11 of those holes, with the best intercept returning 13.3 metres of 3.54% lead, 4.62% zinc and 45.35 grams silver per tonne. It also uncovered a new lead–zinc–silver zone, 200 metres south of Hastanetepe.
“They encountered a nice zone of high-grade, lead–zinc–silver mineralization, and they went back to the office and did a little head-scratching, and punched another hole and hit more mineralization. They did it a third time and saw there was more mineralization again,” says Scott Close, the company’s director of investor relations. “They thought ‘Wow, we have a problem here,’ and so started doing stepout drilling, and still hit mineralization. So it is substantially larger than anyone could have imagined.”
While Jensen admits the production delay was “a bit frustrating,” it means that Balya could evolve into a much larger project. This would be “favourable on the royalty side for us,” he says.
The Balya project is one of the most advanced properties in Eurasian’s Turkish portfolio, and likely to be the first organic project that will generate a royalty, Close says.
The following morning we leave Mustafakemalpasa, Bursa province’s main town, to visit Eurasian’s gold–silver Akarca project, located 450 km west of the country’s capital of Ankara.
What brought the company to explore this region were the mountainous terrains. Eurasian’s Turkish geologists were studying regional maps of the area for signs of mineralization when they discovered a village in the valley, with the old Turkish word for alunite, or “Sapci,” in its name. Alunite is a mineral that occurs in epithermal gold systems. Despite the village being in an area previously labelled as “too young” to host such mineralization, the company’s geologists trekked out to the valley, Sheehan says.
“So they went out there and took a walk and the hills were covered with quartz — bladed quartz after calcite — and there was nice epithermal quartz vein float all over the place.” Surprised with what they encountered, the geologists checked the land status on the area and found it was open. “The whole area was open because nobody ever thought of staking there. So we staked the whole area in 2006,” Sheehan says. That area contains what is now the Akarca project.
“This was a great example of our geologists stepping out of the dominate paradigm that was existing in a region and looking at an opportunity that was previously unrecognized,” Jensen adds. “In this case, looking for epithermal gold–silver deposits in rocks thought to be previously post-mineralization and not prospective for this style of mineralization.”
The Akarca property comprises six main epithermal gold–silver mineralized zones on two licences. The mineralization occurs in structurally focused, higher-grade vein zones and in disseminated, lithologically controlled, lower-grade zones. Combined, the two licences cover 39 sq. km.
Initial exploration on Akarca resulted in three discoveries: the Kucukhugla Tepe, Hugla Tepe and Fula Tepe zones. Altogether, they make up the Central Target area that is covered by one licence. (Tepe means “hill” in Turkish.)
Further exploration from 2009 to 2012 led Eurasian’s geologists to more vein targets, including the Percem Tepe, Arap Tepe and Sarikaya Tepe zones.
In June 2013, Eurasian agreed to sell Akarca to Colakoglu, a private Turkish firm, in exchange for cash payments, work commitments, gold bullion and a 3.5% NSR on any production from the property.
Colakoglu is drilling 7,000 metres to support an environmental-impact assessment expected by late 2014. Its initial focus is to confirm the near-surface oxide mineralized zones at Arap Tepe and Kucukhugla Tepe, and establish a maiden resource estimate.
Before Colakoglu, Centerra Gold (TSX: CG; US-OTC: CAGDF) had an option agreement with Eurasian to earn up to a 70% interest in the Akarca property. From 2009 to 2012, Centerra spent more than US$5 million exploring and drilling the property. It earned a 50% interest in the property in early 2012, but terminated its option agreement later that year, with Eurasian regaining full ownership of Akarca in October 2012.
To date, Akarca has seen 155 drill holes totalling over 18,000 metres.
At the Central Target area, we first check out Kucukhugla Tepe, the southernmost zone. Mid-year drilling on Kucukhugla Tepe returned promising oxide intercepts, including 62.7 metres averaging 2.11 grams gold per tonne and 25.78 grams silver per tonne. The intercept included a 7-metre interval grading 10.12 grams gold and 87.78 grams silver per tonne. From Kucukhugla Tepe we head to Hugla Tepe, the relatively lower-grade central zone, before driving north to Fula Tepe.
From here, Jensen points out the village of Akarca a few kilometres away that hosts active hot springs. Akarca is one of the three villages near the property. Jensen says the company’s community relations representative regularly meets with the communities to maintain open dialogue, noting all three are supportive of the development.
There’s also an amethystine quartz vein on the Fula Tepe prospect. Sheehan notes the company has applied for a “gemstone” exploration licence to cover this mineralization.
After checking out a few amethyst samples and observing the drillers, we drop by the core shack. We can see the mineralization at Akarca grades from 0.2 to 10 grams gold per tonne and 10 to 100 grams silver per tonne, and is oxidized to depths of 80 to 100 metres.
Sheehan admits there’s a lot of work to do before the company can fully understand the geological system at Akarca. “The mineralization that formed the Akarca system was related to hot-springs activity,” Sheehan later explains in an email. “The existing active hot springs no more than 2 km from the gold-bearing veins are quite coincidental, but to this date we have not correlated the mineralization . . . [it] most likely predates this system, and may be totally unrelated. But the spatial correlation cannot be denied.”
So far 20% of the 1.4 km strike length of vein targets on the property has been drilled, leaving plenty of upside potential. Colakoglu is drill testing the Central Target zones and the Arap Tepe prospect, while exploring for new discoveries on the property.
Along with Akarca, Balya and Alankoy, Eurasian has several other properties in Turkey, including the Golcuk copper–silver property in the Eastern Pontides metallogenic belt of northeast Turkey. Pasinex Resources (CNSX: PSE) is working to earn a 100% interest in Golcuk through share payments and work commitments. Eurasian will retain a 2.9% NSR.
Outside of Turkey, Eurasian has four other business units, including Western U.S., Sweden, Australia–Asia Pacific and Haiti, where it has forged strong partnerships with Vale (NYSE: VALE), Antofagasta (LSE: ANTO; US-OTC: ANFGY), Freeport-McMoRan Copper & Gold (NYSE: FCX) and Newmont Mining (TSX: NMC; NYSE: NEM), among others.
It has controlling or shared interests in 81 projects, covering 166 properties globally.
Eurasian shares recently closed at 94¢ within a 52-week range of 81¢ to $2.15. There are 72.9 million shares outstanding.
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