It has been nearly a year since Adrian Fleming and his team studied from afar drill results from Prosperity Goldfields’ (PPG-V) wholly owned Kiyuk Lake project in southwestern Nunavut’s Kivalliq district, and felt they could be looking at the next big gold play in Canada’s Far North. Ten months later, Fleming is Prosperity’s new president, and he states the company holds “the best new gold discovery in Nunavut.”
Back in January, Fleming was at the helm of Smash Minerals working on the early stage Whiskey gold project in the Yukon. He had enjoyed regional success in 2010 when Kinross Gold (K-T, KGC-N) bought the company he co-founded, Underworld Resources, and its Golden Saddle deposit for US$139 million. But it was a meeting with seemingly omnipresent explorer Quinton Hennigh, who headed up Prosperity at the time, that would push Fleming to set aside his Yukon interests and commit himself to exploration at Kiyuk Lake.
Prosperity and Smash would complete a merger in late April, with Hennigh stepping back into a director role, but Fleming and Hennigh had the drills turning nearly a month before the marriage was official. A drill program started up in March, and featured 3,000 metres following up on promising results Hennigh had released in 2011. The spring program totalled 12 holes, and focused on Kiyuk’s Cobalt, Gold Point and Rusty zones.
“Quinton ran a fourteen-hole drill program in 2011. He hits at Cobalt, he hits at Gold Point and he hits at Rusty,” Fleming says, rolling out a site map in Prosperity’s board room in Vancouver. “What gets my blood pumping is that forty-metre interval at around four grams gold per tonne that we hit at Rusty from surface. That’s something to chase after. I started at Rusty because I love things at surface, and we came away with some promising grades.”
Prosperity punched three holes near Hennigh’s original hole at Rusty, which cut 4.2 grams gold over 37.8 metres in 2011. Hole 12-001 was collared 50 metres west of the Rusty discovery, while holes 12-002 and 12-003 were stepouts 200 metres to the south. Highlights include 61.5 metres of 3.3 grams gold from 159 metres depth in hole 12-003, 18 metres of 3.5 grams gold from 157 metres in hole 12-002 and 23 metres of 1.5 grams gold from 82 metres in hole 12-001.
The company found that grades in the breccias, which host most of the gold mineralization at Rusty, were consistent and extended over significant widths. Rusty also remains open in all directions.
The remaining nine holes from the spring program focused on known mineralization at Gold Point and Cobalt, as well as two previously untested zones called North Snake and Amundsen. Hole 12-006 cut two mineralized zones at Gold Point and returned 12 metres averaging 2.4 grams gold from 120 metres depth. Drilling at Cobalt was highlighted by 9 metres at 2.05 grams gold from 57 metres depth in hole 12-008.
Prosperity also had success with its greenfield initiative, when the company discovered its newly minted Amundsen gold zone with discovery hole 12-012 — located 1 km southwest of Cobalt. The drill was collared to test multiple magnetic highs in an area where seven surface samples from boulders returned grades greater than 2 grams gold. Amundsen’s inaugural hole returned 12 metres grading 2.3 grams gold from 170 metres depth.
“The next thing we did was more detailed grid sampling,” Fleming comments, pointing out 50-by-100-metre spacing across the Rusty and Amundsen zones. “This kind of geochemistry had never been done. I’m always systematic in the way I do exploration. I’ve always believed that, quite often, what you’re lacking is a better foundation. Your house will just fall down without it. I wanted to get a better handle on the model before we went back in and spent money on drilling.”
Prosperity summer drilling allowed the company’s geological team to nail down a better understanding of Kiyuk’s 590 sq. km land package, and also sustained capital through a fairly bearish market.
Prosperity discovered five new areas with anomalous gold values during its mid-year sampling program, including a new surface showing called Rasmussen that returned values up to 6.96 grams gold. Work at Rusty focused on an orientation study to determine the size and magnitude of the till-dispersal train associated with the mineralized zone. The company found that elevated gold values extend southwest from the surface showing for 1 km.
“Where we’ve ended up with this project is both a blessing and a curse,” Fleming says, pointing out the multiple target opportunities generated by his mid-year field programs. “We have to be disciplined on where we drill, because this isn’t exactly an affordable region in which to be running programs. We’re going to start drilling in March with two machines. I want to drill with two because my all-up cost per metre will be less, and by having two turning, I won’t be ahead of my understanding of the system.”
Prosperity’s priority is to show Rusty’s size potential. Fleming explains that he sold Golden Saddle to Kinross with just over 1 million contained oz. gold, and wagers he will need to delineate around twice that much to make a worthwhile run in Nunavut.
Using data from the summer program as a foundation, Prosperity is already busy planning a 5,000-metre drill program slated for March 2013. Fleming says it would cover 20 holes, and end by June.
“Of those twenty holes, we’ll probably sink a dozen on Rusty. We’ll have one-hundred-metre stepouts there to demonstrate its size, and then two or three on our auxiliary targets. We haven’t reached the point quite yet where I’ve identified the locations on the auxiliary holes,” he concludes, stating that the company would lean heavily on its extensive scouting program to optimize shareholder funding.
During an interview in mid-October, Fleming speculated he would need US$4 million to comfortably complete the program, and on Oct. 26, the company arranged a brokered private placement worth US$3.5 million. The placement includes 15 million flow-through units at 20¢, and 2.9 million units at 17¢.
Prosperity has 59 million shares outstanding and closed at 17.5¢ at press time. Major shareholders and funds hold roughly 50% of the company, which maintains a $9-million press-time market capitalization.
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