ELKO, NEVADA — Fremont Gold (TSXV: FRE; US-OTC: USTDF) is drilling 1,000 reverse-circulation (RC) metres at its Gold Bar gold project, a two-hour drive from Elko, Nevada. It’s targeting a potential southeast extension of the past-producing Gold Bar pit, in an area that has never been drilled.
It intends to follow up by diamond drilling 500 metres at its nearby Gold Canyon gold project. Both properties are part of the Battle Mountain-Eureka trend and are under option from Ely Gold Royalties (TSXV: ELY; US-OTC: ELYGF). They’re also both very close to McEwen Mining’s (TSX: MUX; NYSE: MUX) Gold Bar gold mine construction project. Gold Canyon, in particular, sits on inlying claims next to McEwen’s Gold Bar mine.
To earn a 100% interest in its own Gold Bar project, Fremont will pay Ely US$1 million over five years. Ely keeps a 2% net smelter return royalty that Fremont can halve for US$5 million.
Atlas Precious Metals previously operated the Gold Bar mine from 1986–1994, producing 286,000 oz. gold at 2.74 grams gold.
Fremont says a series of northeast–southwest faults offset the Gold Bar pit from the nearby Millsite deposit, which has a historical resource of 147,000 oz. gold at 2.57 grams gold per tonne. The company says the faults may also host the same mineralization southeast of Gold Bar. It has found coincident gold and mercury anomalies that support this idea, and partial halos of magnesium and niobium in the same area as well. It says these large alteration zones could indicate Carlin-type gold deposits. The zones sit a few minutes’ drive southeast from the Gold Bar pit to the RC drill the company turns in a nearby field, testing this theory.
“Most people don’t talk about niobium, but I love niobium,” Fremont vice-president of exploration Clay Newton says during a site visit hosted by the company. “What we see here is a great example of niobium zonation, where the magnesium stops and the niobium picks up.
“We have a great target here. How deep it is, we’re going to find out.”
To earn a 100% interest in Gold Canyon, Fremont will pay Ely US$802,500 over five years. Ely will keep a 2% net smelter return royalty that Fremont can cut in half by paying the company US$3 million.
Atlas produced 41,000 oz. gold averaging 2.67 grams gold at Gold Canyon from 1990–1994. It acted as one of five satellite pits to the company’s Gold Bar mine. The other four satellite pits now comprise McEwen’s Gold Bar development project.
According to a 2018 feasibility study McEwen tabled for Gold Bar, the project will produce 62,800 oz. gold per year over a seven-year mine life. At US$1,250 per oz. gold, the project has a US$54-million, after-tax net present value at a 5% discount rate, and a 23% after-tax internal rate of return. McEwen expects the project to pour its first gold in February 2019.
The mine has 26.32 million measured and indicated tonnes grading 0.87 gram gold for 730,000 oz. gold, as well as 4.9 million inferred tonnes at 0.78 gram gold for 120,000 oz. gold.
Gold Canyon sits 800 metres away and along strike from McEwen’s Gold Ridge pit, which has 2.7 million measured and indicated tonnes grading 0.028 gram gold for 76,000 oz. gold.
Drilling by Fremont in 2018 found a second gold-mineralized layer 60 metres below the Gold Canyon pit floor.
Fremont says Atlas didn’t mine this second layer because it didn’t fit its economic model — the layer was too deep and not entirely oxidized. At US$300 per oz. gold prices, Atlas couldn’t afford to truck ore from Gold Canyon to its mill 20 km away, near Gold Bar.
“When you look at the Gold Canyon pit you see this pink zone at the top, which is obviously oxidized, but most of what you see looks carbonaceous,” Newton says.
However, not all of it actually is carbonaceous, Clay adds. Underground, mineralization becomes sporadic. Some is oxidized and some is carbonaceous.
Fremont intends to finish a 500-metre diamond drill program at Gold Canyon to expand the second, deeper zone.
The company says it will use a diamond drill at Gold Canyon instead of an RC drill because it needs the best core it can get. It wants to validate historical drilling at Gold Canyon that was almost entirely RC for a future National Instrument 43-101 resource at the project.
“We need to add as much value as we can at Gold Canyon, as cheaply as we can,” Fremont CEO Blaine Monaghan says. “We need to prove it up and show McEwen what it’s worth to them.”
Monaghan took over as Fremont’s CEO last October, replacing company founder Dennis Moore, who remains Fremont’s president. Moore discovered the Tocantinzinho and CuiuCuiu gold deposits in Brazil. He previously founded Magellan Minerals, which Anfield Gold acquired in 2016. Anfield later became Equinox Gold (TSXV: EQX; US-OTC: EQXFF), when it — along with NewCastle — was acquired by Trek Mining.
“I replaced Dennis in October, so Dennis can do what he does best, and that’s focus on exploration,” Monaghan says.
Atlas also found the NW Gold Ridge anomaly and South French anomaly at the Gold Canyon property, north and northeast of the Gold Canyon pit, through soil and rock-chip samples. Although Moore calls the project “target rich,” Fremont will focus on the old pit for now, because it doesn’t need a permit to drill there. The Bureau of Land Management already classifies it as disturbed land.
Atlas also left behind stockpiles at Gold Canyon that Fremont could potentially re-mine. Newton says Atlas was probably stockpiling non-oxidized ore.
“Gold Bar and Gold Canyon are brownfields, and the risk is lower,” Monaghan says. “But what I like is that we also have these greenfield projects.”
The company’s North Carlin project consists of the Alkali, Coyote and Rossi claim blocks, covering 42 sq. km on the northern extension of the Carlin trend. Known deposits in that area tend to occur on a north–south trend.
“We are positioned to be the next bead on that trend,” Newton says.
“Pearl,” Moore interjects. “The next pearl on the string.”
“That’s right,” Newton continues. “Dennis likes to call them pearls.
“We generated some very significant soil anomalies that we’re hopefully going to drill this year.”
He says the area has not been explored before because it features upper plate rocks, while almost all the nearby projects are in lower plates. Barrick Gold (TSX: ABX; NYSE: GOLD) previously drilled one hole at Coyote, but not in Fremont’s anomaly. He doesn’t know of any other drilling in the area.
Fremont also has its Hurricane gold project in the Cortez trend, 4 km west of Barrick’s Hilltop gold deposit. Fremont recently trenched 0.56 gram gold over 102 metres at Hurricane, including 0.77 gram gold over 63 metres.
The company’s earliest-stage exploration property is Goldrun, located at the intersection of the Battle Mountain and Getchell gold trends. The project historically produced 50,000 oz. gold and 530,000 oz. silver from low-sulphidation veins in three sets.
The project consists of 14.15 sq. km that is wholly owned by Fremont, and 8.8 sq. km owned jointly by Fremont and a private partner. The property is next to Newmont Mining’s (NYSE: NEM) Adelaide-Crown claims, and near its producing Phoenix gold mine. Although it has not yet released its 2018 production results, Newmont anticipated Phoenix would produce at least 210,000 oz. gold. In the first three quarters of 2018, Phoenix produced 171,000 oz. gold.
“We’re trying to get the jointly owned claims at Goldrun, so we control enough of the land to do the exploration work ourselves,” Monaghan says.
“This is the best project we have,” Newton adds. “The potential to find something similar to Phoenix — and also Carlin style — is enormous.”
Shares of Fremont are trading at 19¢ in a 52-week range of 9¢ to 22¢. The company has a $10-million market capitalization.