The purchase of a past-producing heap leach mine in southeastern Idaho marks Pilot Gold’s (TSX: PLG) first acquisition this year and underscores the junior’s heightened focus on gold projects in the Western U.S. under new CEO Cal Everett.
Pilot Gold is buying the mine and its surrounding property — now referred to as the ‘Mineral Gulch’ project — from Western Pacific Resources (TSXV: WRP) for US$800,000 in cash, 300,000 of its common shares and a 0.5% net smelter return royalty.
The large, oxidized, Carlin-style and sediment-hosted gold system — whose surface footprint extends over 12 sq. km — produced 435,000 oz. gold between 1992 and 1997 from seven small, shallow pits under previous owner Pegasus Gold Corporation.
The operation averaged head grades of 0.7 gram gold per tonne and historical recoveries of 65%.
“This was something I’ve had my eye on for the last four years and I’m just thrilled we were able to pull it off,” the company’s vice-president of exploration and geoscience Moira Smith says.
“It’s 12 sq. km, so it’s large. It’s a big, shallow oxide with historic intercepts, and it’s a past producer — those are all the qualities we’re looking for in new acquisitions — and a good price, of course, so in that sense it looks like our other major projects, Goldstrike and Kinsley, and it also suits our company and who we are.”
The company plans to use the same data-compilation approach at Mineral Gulch that it has at Kinsley in Nevada and Goldstrike in Utah.
The historic data for Mineral Gulch will be digitized and matched with surface mapping and sampling results to generate a 3-D model before starting a first-phase, reverse-circulation infill and step-out drill program.
The historic data includes 520 drill holes — a significant number of which with unmined intercepts, such as 1.12 grams gold over 25.9 metres, 3.3 grams gold over 21.3 metres and 3.15 grams over 18.3 metres. Of the 27,000 historic assay intervals, 4,100 intervals returned greater than 0.5 gram gold and 1,800 intervals returned greater than 1 gram gold. There are also 8,400 soil samples in the historic database.
In addition, Western Pacific Resources drilled 35 holes in 2011, with highlights of 61 metres grading 0.45 gram gold, including 12.2 metres grading 1.24 grams gold, 15.2 metres of 1.24 grams gold, 59.4 metres averaging 0.38 gram gold and 54.7 metres returning 0.88 gram gold, including 24.4 metres grading 1.59 gram gold.
“As a company we really like working in a data-rich environment where we can use a lot of data to leverage exploration,” Smith says in a telephone interview from her base in Elko, Nev. “There are 485 historic drill holes, and the cost to redrill would be astronomical, but to get them and use them to make a 3-D model is fantastic, and it also fits what we’re best at, too, because we have a technical team that is competent modelling data sets.”
Smith notes that it took the company almost 16 months at Goldstrike to work up data, validate it and do a 3-D model before drill-testing, and says a similar approach will be taken at Mineral Gulch.
In addition to the 520 holes for which they have data, the geologist says that there are another 400 drill holes they’re trying to track down. “When you think about what you’re really getting from an old property with that much drilling — it would take years to do that. So we can go right in and start compiling and do surface mapping, and integrate this into a 3-D model. We’ve already loaded this stuff into Leapfrog, so we sort of know what we’re dealing with.”
The Mineral Gulch property covers 28 sq. km with drill-tested oxide gold occurrences throughout, and gold-in-soil anomalies over 12 sq. km. The company says that a gold-bearing, low-angle fault, seen in most of the historic pits, underlies the broader target area. The company adds that the historic drilling focused on outcropping gold mineralization, leaving undrilled potential in target horizons beneath shallow cover, while gold mineralization continues down-dip of most of the historic pits under shallow cover. There are also large areas between the pits that haven’t been drilled.
“We’ll pick up where the previous operators left off, and what I really like about it from a geological standpoint is that there is a long-angle fault system that is in all of the old pits and it looks like it’s the same one, and if that’s the case it extends under all of those pits, and that gives us a large number of targets to fill in the mineralization,” Smith says. “Maybe it’s analogous to how we approached Goldstrike, where we’re looking at a relatively continuous gold mineralized system that underlies everything and we’re picking up where the old miners left off.”
Mineral Gulch is situated on the southeast flank of Idaho’s Black Pine Mountains, 13 km north of Curlew Junction, at the intersection of Utah state highways 30 and 42.
The mountain range is underlain by predominantly Devonian- to Permian-age sedimentary rocks — some weakly metamorphosed, according to a 2013 technical report on the property — and mineralization at the project is made up of multiple low-grade, sedimentary rock-hosted disseminated metal zones and related veins. Minor base metals, including copper, zinc and lead, are found in some of the veins, and mercury was produced early in the region’s history.
Other companies that have worked on the Mineral Gulch property include Newmont Mining (NYSE: NEM) (1964–1974), ASARCO and Noranda (1986–1990).
“The Noranda exploration soil sampling is particularly interesting,” the technical report outlined. “It is clear that the historic soil sampling identified a number of gold anomalies and that there is an apparent correlation between these anomalies and the historic open pits. This makes any untested anomalies excellent targets for additional work. The Noranda work resulted in the identification of seven mineralized bodies, which were subsequently mined from six pits.”
Pilot Gold’s Goldstrike and Kinsley projects are both Carlin-style, sediment-hosted projects. Goldstrike is in Washington County, southwestern Utah, 50 km northwest of St. George, with a stratigraphic and structural setting, and gold mineralization similar to other sediment-hosted gold systems.
Like Mineral Gulch, the Goldstrike property contains a past-producing mine (1988–1994) with an exploration database, shallow drill holes with unmined oxide gold intercepts, and untested gold targets. The past-producing oxide heap-leach mine churned out 209,000 oz. gold and 197,000 oz. silver from 8 million tonnes of ore at an average recovered grade of 1.2 grams gold from 12 shallow pits. It closed due to low gold prices.
Kinsley Mountain is south of Newmont Mining’s Long Canyon deposit, with a stratigraphic, structural setting and gold mineralization similar to other sediment-hosted gold systems in the underexplored area east of the Carlin trend in northeastern Nevada. Kinsley is also home to a past-producing mine with an exploration database and untested gold targets, southeast of Elko County and 90 km from Newmont’s Long Canyon.
As for Mineral Gulch, Smith can’t wait to get back to work. “We’re looking at probably a year before we get out there and drill, but there is a valid permit for drilling 30 holes, so we can get out there and actually start drilling,” she says.
“It’s such a great fit for us both in terms of the kind of thing we’re looking for and the people we have, and it’s a good match with the other projects … so we think that as far as junior miners go, we’ve got the best portfolio in the Great Basin, and we’re continuing to search for other opportunities where we can get clean ownership of significant assets.”
Tara Hassan of Haywood Securities said in a research note about the acquisition that “with a low purchase price and favourable geology, Pilot is well positioned to deliver value from the project over time.”