Things are finally coming together for Yukon-focused explorer Golden Predator (GPD-T) at its wholly owned Brewery Creek gold project, which waits peacefully at the end of a 55 km, eastbound drive from Dawson City.
When the company embarked on its quest to become the Yukon’s premier gold miner three years ago, it immediately saw the past-producing gold mine as a quick-strike asset that could pour first new gold by 2014, and that vision looks set to become a reality.
Cruising into Golden Predator’s camp on a warm, sunny day, it’s hard not to be struck by the effectiveness of the historic remediation efforts.
A heap-leach mine was operated at Brewery Creek by Viceroy Resources from 1996 through 2002, but — at least from the ground — it would be hard to tell unless someone knew what to look for. The old heap-leach site lies on a grassy knoll on the way into camp, with its former identity masked by a lush, green carpet of clover and calf-high brush.
Golden Predators administrative offices are painted twin shades of yellow in a nod to the company’s golden ambitions, and the main level doubles as a well-organized core shack through which the company would run 25,000 metres worth of drilling in 2012.
“We have a number of more advanced projects, but we’ve really focused on Brewery Creek this year,” chief geologist Mike Burke explains over coffee at Golden Predator’s mess hall. “What we’re looking at is a staged approach. We’re not looking at the ultimate size of the deposit and trying to put it all into production. What we’re doing is looking at what is here, and trying to stage our development so we can get some cash flow sooner, and build up the project through new discoveries.”
And there is a deep well of historic data about exploration and production from which Golden Predator can draw inspiration. The main focus to date has been on four deposits that lie within Brewery Creek’s quartz-mining and water licences, which should allow the company to expedite permitting and start-up production.
According to Burke, a first mining phase would involve restarting Brewery Creek’s heap-leach circuit, with a focus on near-surface oxide deposits at the Fosters and Bohemian-Schooner zones, as well as the West and East Big Rock zones. Combined with a deposit at the North Slope zone, Golden Predator has amassed oxide resources totalling 14 million indicated tonnes grading 0.7 gram gold per tonne for 313,000 contained oz. at a 0.2 gram gold cut-off. The stage-one deposits hold an additional 7.3 million inferred tonnes of oxide material averaging 0.47 gram gold for 111,000 contained oz. gold.
“The quartz-mining licence encompasses many of the resource-stage deposits that were not mined during previous operations,” Burke points out during a helicopter flight over the company’s 182 sq. km land package. “So we will be able to go ahead and mine those deposits with a slight amendment to that licence in a couple of cases. The water licence also applies in these areas. We’ve submitted our applications for amendments, which will set us up for a full-season of construction next year.”
Though the gold recovery plant that sat adjacent to the leach site was removed during closure, Golden Predator has completed test work on the foundation and estimates that rebuilding the facility shouldn’t be a large capital expense, considering much of the material is “relatively cheap, off-the-shelf technology.” The heap-leach area itself comes with built-in potential for expansion.
“The heap leach had ten cells planned on it, but they only built seven,” Burke explains, pointing out the site of the previous operation during a walk around the property. “So there is room on the pad to build the last three cells that would give us an additional five-million-tonne-per-year capacity, which in turn would allow us to get into production really quickly.”
Burke mentions that the heavily drilled Fosters-Canadian zone is looking like it will be tapped first when mining starts up. The company has catalogued 537 holes at Fosters-Canadian over 23,150 metres — resulting in an oxide resource totalling 3.8 million indicated tonnes grading 0.68 gram gold for 83,500 contained oz. gold.
The Lower Fosters deposit sits within the licence package northeast of the heap-leach site, and near the previously mined Canadian and Upper Fosters pits. Golden Predator will have to amend its quartz-mining permit for Fosters due to a change-up in the mining sequence on the pit during previous operations.
“We have to look at an amendment on where we’re going to put our waste rock. It’s a pretty minor adjustment, and we’ve had good dialogue with the regulators,” Burke points out from the co-pilot’s chair during a helicopter tour. “But we do have a couple things to do on that licence. It shouldn’t be a big stumbling block, especially on a site that was run so successfully in the past.”
Other potential first-phase mine targets include the West and East Big Rock zones, which host 5 million indicated tonnes of oxide material grading 0.58 gram gold for 92,400 contained oz.; the Bohemian-Schooner targets, where the company has over 23,000 metres of drill data and a 3.6-million-tonne indicated oxide resource averaging 0.86 gram gold for 99,844 contained oz.; and the North Slope zone, which holds 1.3 million indicated tonnes carrying 0.81 gram gold for 33,250 contained oz. oxide.
“We did a little drilling down there at Fosters, but not too much exploration. It was mostly metallurgical,” Burke explains during the air tour. “We’ve done quite a lot of drilling around Big Rock looking at resource expansion, and included Bohemian-Schooner as a single deposit, though they don’t quite join up. We think there might be a fault running through there kind of cutting them off. They will likely be one merged pit though due to how close they are together.”
Standing on outcrop near one of Golden Predator’s mid-year drill pads, it isn’t hard to see why the company is wagering on low and relatively consistent strip ratios across its early life oxide deposits — with preliminary estimates averaging less than 2 to 1 over the West and East Big Rock, Fosters and Bohemian-Schooner zones.
In a bid to complete a prefeasibility study by the fourth quarter, Golden Predator is focusing on its geotechnical and environmental baseline work, and Brewery Creek’s permitting process. The company is also working with its metallurgical data to improve the average recovery rate of 60% during previous operations.
The company has done a lot of drilling for metallurgical test work, Burke says during a presentation at the company’s administrative offices. “We’re looking at a few reasons as to why that recovery was a bit lower. Firstly, it was run-of-mine ore. They just blasted it in the pits and never crushed anything. The other culprit was the transition ore between the oxides and sulphides, which was based pretty much on visual estimates. We’ve been doing a lot of refined assay work designed to identify cyanide-soluble gold to try to iron out that transition a little bit better.”
Meanwhile, president and CEO William Sheriff and his team have been busy filling Golden Predator’s coffers in anticipation of a big year ahead. Following hot on the heels of a US$17-million private placement that saw the company through its 2012 programs, Sheriff nailed down a US$35-million loan facility with RK Mine Finance (Red Kite) at the end of September.
Golden Predator received its first US$10-million advance under the facility upon signing, and will receive the remaining US$25 million upon completing its prefeasibility study and receiving any permit amendments required at the site. The deal also includes an off-take component, under which Golden Predator will sell its first 500,000 oz. gold production at Brewery Creek to Red Kite at a 1.5% discount to the spot price.
And that is just the first phase in a grander vision Golden Predator has for the Brewery Creek land package. For Burke and his exploration team, it is almost time to hand the resource-stage deposits to operational personnel and move onto promising regional targets that would provide a foundation for the company’s planned expansion.
“It’s a really big property, and I think sometimes we don’t emphasize that enough,” Burke says, unfurling a map of the entire Brewery Creek package. “The past producing areas are strung out from the Pacific zone in the west to the Lucky zone in the east over roughly ten kilometres. Phase two will focus on the zones we’ve discovered outside of the current licence area. As we complete drilling on those, we’ll bring the deposits into the indicated category and complete additional metallurgical work on that material. That’s the expanded mine life we’ll be looking at.”
Two deposits close to making the grade are the Moosehead and Classic zones.
Classic lies 4 km southeast from the heap-leach site, and was an earlier-stage target when Golden Predator took over the project. Since then the company has completed over 9,000 metres of drilling at Classic, and delineated 4.9 million inferred tonnes of oxide averaging 0.35 gram gold for 55,600 contained oz. gold.
“We have some exploration targets with the Classic and South Classic zones, and feel that particular intrusion could be the source of the gold-bearing fluids in the whole camp. So we’re obviously excited about the size potential there,” Burke says. The company is mapping the area in a bid to cut higher gold grades in future drill campaigns, and Burke notes that the area “responds really well to heap leaching. It’s just a mineralized intrusive body, within that there seems to be the structural zones where the gold-bearing fluids have migrated through. That’s what we’ll be trying to key in on for potentially higher grades.”
The Moosehead zone is located 2.1 km east of the Big Rock zones, and was mined from a small open pit near the end of operations in the early 2000s — it is not yet included in any of Golden Predator’s resource estimates. The majority of the deposit remains untouched at depth, and was not mined towards the southwest. In late July, Golden Predator released results from nine diamond drill holes at Moosehead that extended the deposit’s gold mineralization, with highlights including: 59 metres averaging 1.22 grams gold from 15.9 metres depth in hole 12-466; 17 metres grading 1.01 grams gold from 89 metres in hole 12-462; and 27 metres of 0.96 gram gold from 66 metres in hole 12-460.
And Golden Predator has had success on Brewery Creek’s greenfield ground as well, announcing its open-ended Lone Star zone discovery on Oct. 11. When combined with the Classic zone, Lone Star gives the company known mineralization for more than 6 km along strike of the post-mineral Classic fault. Highlights from the Lone Star program include 27 metres averaging 1.24 grams gold from 1.5 metres depth in hole 12-2528, and 32 metres grading 0.81 gram from 172 metres in hole 12-2519.
“Soil sampling has been an effective exploration tool here — in fact, it has been pretty successful in most of the Yukon,” Burke comments. “We have a lot of exploration targets. Even within the main reserve trend, there are areas where the gold in the soils indicate that there is probably something there that hasn’t been discovered yet. As far as exploration goes, even though we’re at a brownfield property, there is a ton of potential.”
Long-term, Golden Predator may explore the upside in its sulphide resources, which total 6.5 million indicated tonnes grading 1.29 grams gold for 268,000 contained oz. gold, but Burke says that is a few years off and outside the immediate heap-leach strategy. For now the company is focused on upgrading its resources and taking Brewery Creek through prefeasibility by year-end for a 2013 construction campaign.
Golden Predator has 152 million shares outstanding and closed at 34.5¢ at press time. The company maintains a $52-million press-time market capitalization, and reported US$12 million in cash and marketable securities at the end of September. Golden Predator has traded within a 52-week range of 29¢ and 88¢.
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