Kinross investment in Nighthawk Gold points to Colomac’s potential

Nighthawk Gold’s (TSXV: NHK; US-OTC: MIMZF) Colomac deposit was previously mined by Royal Oak Mines and produced just over 500,000 oz. gold from a shallow open-pit operation. The deposit is situated on Nighthawk’s wholly owned Indin Lake gold property in the Northwest Territories. Indin Lake lies within a greenstone belt 200 km north of Yellowknife that is the same age and has many of the same mineralization styles as the Timmins camp in Ontario. Unlike Timmins and Canada’s other established Archean gold camps, however, the Indin Lake area has seen little exploration, with the exception of brief periods in the 1950s, the late 1980s and the early 1990s.

Nighthawk president and CEO Michael Byron describes Colomac as a unique deposit in terms of the typical mineralization styles found in Archean gold camps. The host rock is a differentiated mafic intrusion with gold preferentially located in the silica-rich upper part of the sill, and Byron, who has a PhD in geology, says it shares many similarities to the Kalgoorlie gold camp of eastern Australia including hosting high-grade domains of significant size.

In November, Nighthawk completed a $10.1 million non-brokered private placement that included an investment by Kinross Gold (TSX: K; NYSE: KGC). Kinross now holds 9.5% of Nighthawk’s outstanding shares on an undiluted basis.

The Northern Miner: Tell us more about the Kinross investment.

Michael Byron: That had been in the works for a bit. I initially met with them back in July. They were intrigued by our assets, not only Colomac but our regional land package as well, and the results we had been able to generate. After that initial meeting, a site visit was arranged for August, before shutting down our 2016 exploration program. From that point it was about finding common ground that was amenable to both parties, leading to our $10.1-million non-brokered private placement, which permitted Kinross to acquire 9.5% of Nighthawk’s common shares at the time. It’s a camp that has not seen the attention and dollars spent that other traditional mining camps in our country have seen. We view that as an opportunity, and are collectively interested in seeing not only advancement on the Colomac front, but also throughout the regional land package.

TNM: Earlier this month Goldcorp (TSX: G; NYSE: GG) acquired a 12.5% stake in another junior that has a project in Northern Canada. Do you think Goldcorp’s $35-million investment in Auryn Resources (TSX: AUG; US-OTC: GGTCF), which owns the Committee Bay gold project in Nunavut, suggests that interest is heating up for projects in Northern Canada? Of course, Auryn also owns the Homestake Ridge gold project in British Columbia and a portfolio of gold projects in southern Peru.

MB: Recently activity has picked up around northern stories. Any time something of this significance happens, it’s a success for all of us in the sector because it brings eyes to the north, and people see that there’s value generated here. It’s a positive sign for our industry when mid-tiers and producers take positions in junior companies. It helps validate what you’re doing, while ongoing success keeps everyone engaged.

TNM: Were other companies looking at Nighthawk in addition to Kinross?

MB: There’s no shortage of companies looking for good assets and that includes Nighthawk’s, which is just another healthy sign of our industry. However, it’s not like there are an unlimited number of near-surface deposits in jurisdictions that are stable, and that have the potential to grow to millions of ounces. We are one of those opportunities in the making.

TNM: In 2014, Nighthawk’s discovery hole for Zone 1.5 intersected 52.5 metres of 7.78 grams gold per tonne, including 21 metres of 16.73 grams gold. Since then, what have been some of the highlights in this zone?

MB: In our Sept. 13 news release, we reported on the first hole that was drilled to follow up on our initial Zone 1.5 discovery hole of 2014, marking the beginning of what I would consider the rebirth of Colomac. Before that, it was not recognized that Colomac could host high-grade gold zones. Our initial follow-up hole intersected 52.1 metres of 7.72 grams per tonne gold. That constitutes a 40-metre true width of mineralization, atypical of this deposit, yet a significant intersection for any jurisdiction and mining camp. It needed to be determined whether or not these intersections were “one-hit wonders” — or were we on the verge of discovering a bonafide high-grade zone at Colomac?

When we started drilling in 2016, our intention was to delineate Zone 1.5 by step-out drilling on 25-metre centres hoping to establish its strike length and better understand mineralization throughout its width and to depth.

If it turned out to be a distinct domain with well-defined borders, then maybe opportunities like Zone 1.5 would support exploitation with a ramp-driven operation to depth.

Mining would start as an open pit, and given these dimensions and grades, there may be an opportunity to continue by ramp to get deeper in the system and liberate more ounces. This would change the nature of Colomac.

Zone 1.5 was one of our objectives in 2016, and by the time we finished drilling, as described in our Oct. 12 news release, we defined its dimensions as 125 metres in strike, and 30 to 50 metres in true width. The last and deepest cut was reported in our Oct. 12 news release returning 72.7 metres at 5.58 grams per tonne gold, or a 50-metre true width at 260 metres vertical. Zone 1.5 is a distinct high-grade gold zone that outcrops at surface and has established boundaries along strike, but remains open to depth.

Having discovered and defined one near-surface, high-grade domain, searching for others became part of our program for the rest of 2016. We did initial drill testing of two other high-grade candidates, Zone 2.5 and Zone 3.0, located a couple of kilometres south of Zone 1.5. Both looked a lot like Zone 1.5 did before we drilled that area. Neither zone had ever been looked at in this context before, and never drilled to depth. Our initial results returned mineralization over widths similar to Zone 1.5, but the grades were not of the same scale, suggesting the holes penetrated lateral to higher-grade mineralization, which is a theory we are going to test in the 2017 drill program.

TNM: So altogether you have Zones 1, 1.5, 2.0, 2.5, 3.0 and 3.5, and then there’s Goldcrest, a 2.5 km mineralized mafic sill similar to the Colomac intrusion, 400 metres west, that is made up of Northern Goldcrest and Southern Goldcrest. Intercepts from Goldcrest have included 19.6 metres of 4.19 grams gold and 20.3 metres of 4.83 grams gold.

MB: We adopted the zone nomenclature from the previous owners. Within the Colomac sill, Zone 1.0 lies at its northern extent and Zone 3.5 about 6 km south. Zones were labelled sequentially based on their geographical distribution along the sill. So if we talk about Zone 3.0, you know it’s between Zone 1.0 and Zone 3.5, and just south of Zone 2.5. We know the Colomac sill is 9 km long, and these zones were some of the early ones identified. Goldcrest is a sill similar in composition to Colomac that lies 400 metres west. There are two distinct bodies that make up the Goldcrest, both of which were drilled in our 2016 program.

TNM: How would you rank your exploration success last year?

MB: 2016 was a very good year for Nighthawk Gold. We discovered and defined the constraints of high-grade Zone 1.5, opening the door for the possibility that other similar zones exist at Colomac. We validated the Kalgoorlie deposit differentiated sill analogue that we introduced in a 2012 news release, and that like Kalgoorlie, Colomac also hosts high-grade zones. We’ve changed the reality of what Colomac represents as a result. Since its high-grade opportunities had been overlooked for so long, it’s clear that it has tremendous untapped potential, and we are actively developing target criteria to identify other high-grade domains.

TNM: What’s your plan for this year?

MB: Zone 1.5 lies 100 metres north of high-grade Zone 2.0, which was the location of the former producing open-pit mine. Either these two zones are separate entities, or they merge and coalesce into one. However, no one has drilled to determine that one way or the other. This will be one of the places we plan on testing early in the 2017 program. If the zones merge into one larger, higher-grade body, we could be looking at something on a scale of several hundred metres long. A massive near-surface — in places outcropping — zone of these dimensions could impact resource expansion. Obviously we haven’t gotten there yet, and this is pure conjecture, but perhaps not so fictional a concept. None of these prospects have been investigated before, and if the deposit that was previously in production hasn’t been fully explored, the mining camp it sits in hasn’t, either.

If the main part of the sill was not thoroughly explored, probably areas of the sill north and south of the main body weren’t either, and the same can be said of the highly prospective stratigraphy east of Colomac.

It’s a mine property that has this incredible exploration opportunity … we’re preparing our most ambitious exploration program to date.

We will spend close to $10 million on direct exploration in 2017. This will include upwards of 25,000 metres of drilling at Colomac as well as some regional targets. We’ll continue searching for higher-grade zones at Colomac, explore Zone 1.5 to depth and resume our regional exploration activities. We are excited with what lays ahead for Nighthawk Gold in 2017. It will be a pivotal year.

TNM: You completed 8,400 metres of drilling in 2016 and are looking at drilling non-stop from March until September this year. When do you expect to update your 2013 resource (39.8 million inferred tonnes grading 1.64 grams gold for 2.10 million oz. gold at a cut-off grade of 0.6 gram gold per tonne)?

MB: We hope to update it by late 2017.