HighGold Mining (TSXV: HIGH; US-OTC: HGGOF) has released the latest results from its 2020 drill program at its flagship Johnson Tract (JT) poly-metallic project in Alaska, about 200 km southwest of Anchorage.
Assays for four drill holes, including additional step-outs from the main JT deposit, were reported. Highlights included drill hole JT20-106, which intersected 22.8 metres grading 3.2 grams gold per tonne, 4 grams silver per tonne, 0.4% copper, 6% zinc, and 1.4% lead (8.2 grams gold equivalent per tonne) starting from 249.4 metres, including 17.4 metres grading 3.9 grams gold, 5 grams silver, 0.6% copper, 7.6% zinc, and 1.8% lead (10.3 grams gold equivalent) from 249.4 metres.
Hole JT20-106 was drilled as a 20-metre step-out from a previously reported drill hole, JT20-096, which returned 20.1 metres grading 11.5 grams gold, 3.6 grams silver, 0.5% copper, 3.1% zinc, and 0.01% lead (14.1 grams gold equivalent) from 240.9 metres.
Other highlights included drill hole JT20-100, another 20-metre step-out from hole JT20-096, and cut 17.3 metres grading 0.2 gram gold, 1 gram silver, 0.1% copper, 6.1% zinc, and 0.02% lead (4.1 grams gold equivalent) from 199.2 metres.
“It’s been our first full-scale exploration of the project, and we’ve learned a tonne about it,” Darwin Green, the company’s president and CEO, said in an interview. “We started a little later this year because of Covid-19, but it didn’t slow us down too much.”
HighGold was spun-out of Constantine Metal Resources (TSXV: CEM; US-OTC: CNSNF) in August 2019. The “catalyst” for HighGold’s creation, Green said, was the acquisition of the JT project, which he described as “an exceptional project that required its own vehicle to fund and explore.”
Under the arrangement, Constantine transferred its gold assets to HighGold, and Constantine shareholders received one common share of HighGold for every three common shares of Constantine held.
In addition to JT, HighGold also acquired Constantine’s gold projects in Ontario, including the Munro-Croesus, Golden Mile, and Golden Perimeter projects in the Timmins Gold Camp.
“The gold projects in Ontario also had the potential for high-grade gold mineralisation and had been largely unexplored,” Green said.
Exploration of JT goes back to the mid-1960s, when the United States Geological Survey undertook a regional mapping program, identifying the local lithologies and structures of the western side of Cook Inlet, 15 km from the project.
From 1974 to 1975, Resource Associates of Alaska Inc. were contracted by Cook Inlet Region Inc. (CIRI), one of 12 native regional corporations created under the Alaska Native Claims Settlement Act of 1971, as well as the Cook Inlet Land Exchange, to prospect the region and evaluate the land for selection under the terms of the Act.
The work led to the discovery of anomalous zinc samples in a single float boulder. Follow-up work in 1975 traced the source of the boulder three kilometres upstream to the JT prospect.
In 1981, Anaconda Minerals signed an agreement with CIRI allowing Anaconda to explore the JT prospect. Detailed exploration work began that year with rock and stream sediment sampling to delineate the source of the gold and base metal anomalies. Anaconda began the first drill program on the property the following year, completing 88 drill holes totalling 26,840 metres between 1982 and 1985.
The drilling led to the discovery of the JT deposit in 1982. The discovery hole, JT82-004, intersected 108.6 metres grading 10.4 grams gold, 8.1 grams silver, 0.7% copper, 7.6% zinc, and 2% lead, including 48 metres grading 21.1 grams gold, 12.3 grams silver, 0.9% copper, 9.9% zinc, and 2.9% lead.
In 1985, Anaconda shuttered all its global mining operations.
Private developers then held the project until March 1997, when it reverted to CIRI. No significant exploration was conducted on the property until HighGold acquired it in 2019.
Soon after acquiring JT, the company began a nine-hole drill program totalling 2,247 metres in September 2019 to confirm historical drill results. Highlights included drill hole JT19-090, which intersected 75.1 metres grading 10 grams gold, 6 grams silver, 0.6% copper, 9.4% zinc, and 1.1% lead (17.8 grams gold equivalent) from 253.9 metres.
“When we acquired JT, we found that the data from the past exploration work was excellent quality and extremely well archived,” Green said. “We combined our drill results with the historical drill results and generated an initial resource estimate for the project.”
A mineral resource estimate released in April 2020 outlined indicated resources of 2.1 million tonnes grading 6.1 grams gold, 5.8 grams silver, 0.6% copper, 5.9% zinc, and 0.8% lead (10.9 gold equivalent grams) for 417,000 oz. contained gold, 397,000 oz. of silver, 26.8 million lb. of copper, 275.3 million lb. of zinc, and 37.6 million lb. of lead (750,000 oz. gold equivalent).
Inferred resources add 581,000 tonnes grading 2.1 grams gold, 8.7 grams silver, 0.5% copper, 6.7% zinc, and 0.3% lead (7.2 grams gold equivalent) for 38,000 oz. of gold, 162,000 oz. of silver, 6.9 million lb. of copper, 85.5 million lb. of zinc, and 4.2 million lb. of lead (134,000 gold equivalent).
“The JT deposit has that rare combination of high-grade mineralisation with bulk tonnage and has the potential for significant development laterally and to depth,” Green said. “All these attributes are very attractive from a mining engineering standpoint and should translate to a lower-cost underground mine.”
The company began its 2020 drill program in late June, starting with two drills and then adding a third in July. Initially, it had planned for a 7,000-10,000 metre drill program, which, Green said, then increased to 15,000 metres. HighGold completed 33 drill holes totalling 16,420 metres in October.
“Successive step-outs from the main deposit significantly expanded the known mineralisation,” Green said. “The deposit has now been intersected over a strike length of 250 metres and down-plunge 315 metres and remains open to the northeast, southwest, and at depth.”
The deposit sits within a mineralised alteration trend that extends for 10-12 km with at least nine other mineral prospects that have seen very little past work.
Concurrent with the drill program, the company undertook early exploration work to advance these prospects in readiness for its 2021 exploration program. The work included mapping, prospecting, 23 km of geophysical surveys, collecting 1,200 soil and silt samples, and 600 rock samples.
According to Green, the JT deposit doesn’t fit easily within a deposit-type and has been described as a Volcanogenic Massive Sulphide (VMS) deposit or an epithermal deposit. Although JT doesn’t host massive sulphides, he noted, it has base metal grades often associated with VMS deposits.
The most comparable deposit to JT, he continued, is Sandstorm Gold Royalties’ (TSX: SSL; NYSE: SAND) Hod Maden project in Turkey. Both deposits share the same combination of very high grades over very wide widths hosted by submarine volcanic rocks that appear to share epithermal and VMS like characteristics, he explained.
“Although we don’t have any economics for JT yet, Hod Maden is currently a little over three times the size of JT and has reported extremely attractive economics,” Green said. “So this is the target we’ve set for ourselves.”
A preliminary economic assessment of Hod Maden in 2018 forecast an after-tax net present value of US$1.1 billion, at a 5% discount rate, and an internal rate of return of 50% using a gold price of US$1,300 per ounce.
HighGold is waiting for assays for 23 holes from the 2020 drill program. The results are expected in the next few months and should help guide the design of the 2021 exploration program.
“Although some momentum is lost during the shutdown over the winter months, this gives our geological team plenty of time to come up with a plan to hit those next big drill intersections,” he said. “The upside to the seasonality in Alaska is that the sun shines for a long time in the summer, and you can you double up on your efforts to compensate, allowing you to ‘make hay while the sun shines.’”
The company has around $17 million in the treasury and is fully funded to continue exploration in 2021, Green said, adding that he expects to scale up exploration efforts when its team returns to the property next May.
At press time in Toronto, HighGold was trading at $1.68 per share within a 52-week trading range of 57¢ and $3.14. The company has around 45 million common shares outstanding for a $74.9-million market capitalization.