NATRONA COUNTY, WYOMING -- Two questions spring to mind at first mention of Evolving Gold's (EVG-V) Rattlesnake Hills gold project, located 70 km west of Casper. First, are there any rattlesnakes here? Oh, yes. Second, and perhaps more importantly, is there gold?
This is Wyoming after all, and even Evolving's president and chief geologist Quinton Hennigh admits the cowboy state has a bad rap in the gold business.
"Wyoming has had a horrible reputation in the gold exploration community because it's not known for any gold deposits and there are no gold mines," Hennigh explains.
At least there are no gold mines yet, and there are several reasons why Hennigh believes prospectors have overlooked Rattlesnake Hills. If Hennigh's hunch proves true, Evolving could be the first modern gold miner to operate in the state.
But that's a long way off. Not that Evolving isn't making progress: since 2008, the company has drilled more than 90 holes on the 22 sq.-km project that have shown positive signs of a large, bulk-tonnage, higher-grade gold system, and Hennigh isn't about to slow down any time soon.
Evolving finished a 78-hole, 30,000-metre drill program late last fall. Up to six rigs were turning at one point. The company wasted no time getting the core logged, sawed and sampled before shipping it to the assay lab.
Evolving is also having some metallic screen assays done on intervals with visible gold to complement the regular fire assay.
"We are just delighted that these holes we've reported lately are in-fill and it's holding together quite well," Hennigh said in late December.
All of the results should be out in February and so far the project is demonstrating continuity with some very long and consistent intercepts of gold mineralization.
Evolving says the geology is similar to the Cripple Creek district in Colorado, where Anglo-Gold Ashanti (AU-N) operates a 275,000-oz.-per-year open-pit, heap-leach operation that mines an average grade of 0.49 gram gold per tonne.
Rattlesnake Hills is an alkalic magmatic system that has come up through Archean rocks and is composed of granitic gneisses and schists.
At first, Hennigh describes Wyoming geology as "pretty darn boring layer cake," with lots of coal, oil and gas.
"On the other hand, there's some stuff in Wyoming that simply makes you scratch your head in disbelief," Hennigh says, noting that there are complex areas where you get a peek into the basement rocks where you need to explore.
Basement rock, for the most part, is several miles below the ground but has popped up through very young rock in recent time.
The diatreme, a breccia-filled volcanic pipe that is found on the property, is more complicated. Rather than one pop of the volcano it seems to have erupted over and over again so there are multiple breccias in the pipe.
Evolving and its predecessors have established that there is definitely a gold system at Rattlesnake Hills, but why is it just being explored now to its full potential? The region was ignored by prospectors even back in the 1800s when many flocked to other areas of Wyoming.
"The best explanation I have for why nobody has clued into this until recently is the mineralization is associated with carbonate veining," is Hennigh's reply.
Carbonate veins do not weather well. All you see now are orange-stained fractures on rocks and a little bit of discolouration, Hennigh explains. Carbonate-hosted deposits are believed to be formed when mineral-laden fluids travel through fractures or pore spaces in the rock.
Another reason is that there is simply no placer expression to the system. "Nevertheless, there is a pretty extensive system," he says.
It was a Wyoming state geologist who was the first to take gold-bearing samples from Rattlesnake Hills, but Hennigh says his predecessor's approach -- that the gold was related to Archean rocks -- was completely misguided.
Nevertheless, the confirmation of gold attracted others. American Copper and Nickel came looking for base metals and gold, but they abandoned the property in the early 1990s. The project was picked up by Newmont Mining (NMC-T, NEM-N) in 1992.
Hennigh was a senior research geologist for Newmont when he was asked to head up Evolving's exploration team in 1997. (Evolving's chairman is Robert Bick of the famed pickle family and the CEO is Robert (Bob) Barker, no, not the game show host).
For Hennigh, joining Evolving was an opportunity to more freely explore ideas -- something that's often very difficult to do when working for a major like Newmont. Hennigh then picked out a number of gold projects for Evolving's portfolio, including some Carlintrend projects in Nevada, and Rattlesnake Hills.
Newmont was looking for a particular model of shallow epithermal- type systems at Rattlesnake Hills, says Hennigh. But that wasn't what it found. Newmont drilled about 15 holes on the same targets that Evolving is focusing on. Most of the holes were drilled on North Stock and some on the Antelope Basin, 700 metres to the south. All of the North Stock mineralization encountered fairly long intervals in breccia and Archean schist.
When Hennigh was going over Newmont's data, he was simply comparing gold grade with depth and noticed that there was a pretty distinct trend where the grades were going from low levels to pretty significant gold values as they drilled to deeper levels of 125 to 150 metres, finding some samples returning 10 grams gold per tonne. That got him thinking.
Hennigh also says it's important to note that Rattlesnake Hills is extremely well preserved, with outflows of breccia that have carbonized trees and lake sediments with fossilized leaves.
"All sorts of things that tell us we are right on the tippy top of this system," Hennigh says. "Here, we are dealing with the whole enchilada -- we've got the entire system preserved -- and that's another reason the prospectors didn't find it. It's carbonate and nothing else."
So far, Evolving has focused on two main areas: the larger, North Stock diatreme target where longer intercepts have run in the 1-2 gram-per-tonne range and the Antelope Basin, a diorite intrusion that has returned lower grades.
Hennigh says that the character of the mineralization and alteration at Antelope could be linked to North Stock in some way because of the similarities. "At some point, these two are going to connect. The style of vein is very similar and looks to be derived from the same fluid -- it could be the porphyry that is driving the system," he says.
Hennigh says the diorite dyke at Antelope is difficult to detect as you won't see it in outcrop on one hill but you will see it on another hill. "It's kind of like the Loch Ness monster, it pokes its head up on surface here and there. That is what hosts the mineralization at Antelope Basin."
An example from recent drilling at the North Stock target; hole RSC-070 returned 115.8 metres grading 1.35 grams gold per tonne, including 30.5 metres of 2.65 grams gold and 9.1 metres of 6.42 grams gold. Another, hole RSC-056 returned 117.4 metres at 1.2 grams gold, including 64 metres of 1.71 grams gold and 9.1 metres grading 4.25 grams.
The North Stock target is open to the east and west, and drilling has shown that higher grades continue to a depth of at least 250 metres, and lower grades to 300 metres. Mineralization starts in places at less than 15 metres below surface.
Over at the Antelope Basin, assays have also returned long intercepts but with lower grades. Examples include hole RSC-045, with an intercept from surface of 219.5 metres grading 0.65 gram gold, including 61 metres of 1.02 grams gold. Another hole, RSC-047, returned 169.2 metres at 0.83 gram gold (starting 1.5 metres from surface) including 36.6 metres at 2.05 grams gold.
Hennigh says the targets are holding together well. "It looks like the Antelope Basin is open in a couple of directions to the northeast and to the southwest," he says. "At North Stock, we have just one hole after another intercepting the diatreme at 1-2 grams gold."
The drilling will continue in May at the same rigorous pace -- up to 30,000 metres again. Evolving also plans to complete a National Instrument 43-101 report on the project in the second quarter, which will identify what it needs to do to calculate a resource estimate.
Funding is not a problem because Evolving is all cashed up, having raised $11.1 million in a financing at the end of the year, topping up the treasury to $19 million.
A syndicate of underwriters led by National Bank Financial and Scotia Capital agreed to pay 90¢ per unit. Each unit consisted of one share and half of a warrant. At press time shares were trading at 94¢ each with 92.2 million shares outstanding and a market cap of $86.6 million.
Hennigh says Evolving has been dedicating a generous 80% of its budget to pure exploration. Antelope Basin and North Stock will get a lot of the attention but Evolving has other plans as well after having collected 4,000 chip samples last year.
About 15% of its exploration budget will go towards the Carlin project in Nevada.
"I have a firm belief that you find stuff by drilling," Hennigh says. "We are here to do the work, people give us money to explore and that's precisely what we are doing."
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