Sees Excellent Potential for Historic High-Grade Gold Project North of 60 Mining News - Aug 27, 2021
Contango ORE Inc. announced on August 25 that it acquired full ownership of the historic Lucky Shot gold mine project in the Willow mining district of Southcentral Alaska.
A road-accessible project about 75 miles north of Anchorage, the 8,590-acre Lucky Shot property covers a large portion of the Willow Creek mining district, including the pre-WWII Lucky Shot and War Baby mines. It is estimated that from 1918 until it was shut down by the federal War Production Board in 1942, these two underground operations produced some 252,000 ounces of gold from 169,000 tons of ore, indicating an average head grade of around 1.6 oz (50 grams) of gold. per metric ton.
In total, the various mines on the Willow Creek property produced approximately 500,000 ounces of gold from ore with an average north grade of 1 oz / t (31 g / t) before closing during World War II.
With Kinross Gold Corp., taking the lead in feasibility studies at Manh Choh, a gold mine project near the village of Tetlin in eastern Alaska that is being advanced as part of a joint venture between Kinross (70% ) and CORE (30%), Lucky Shot offers CORE another accessible gold mine project.
"Although the Manh Choh project is moving full steam ahead based on the latest Kinross guidance, the Lucky Shot project represents an exciting opportunity to add significant additional value for Contango shareholders and marks a new approach for the Company," he said. Contango ORE President and CEO Rick Van Nieuwenhuyse.
After the Willow District mines were closed due to the war effort, little happened on the property until the 1980s when Enserch Exploration carried out an extensive exploration program, which included the development of a 457-inch exploration tunnel. meters below the Lucky Shot mine. In 1984, Enserch completed 11 underground holes and seven surface holes in the Coleman area at Lucky Shot.
From 2005-2009, Full Metals Minerals completed an additional 34,103 meters of drilling in 173 holes from the surface along a trend of more than a mile of high-grade gold mineralization spanning four zones: Coleman, Lucky Shot, War Baby and Murphy. Each of these zones is a section of a continuous vein that has been segmented by wide angle faults. Coleman, Lucky Shot, and War Baby were historically drawn; Murphy is a possible eastern extension of the vein system that was discovered later.
Looking to reset a mine in Lucky Shot, Miranda gold Corp. acquired the project in 2013 and incorporated Alaskan torrent of gold Inc., a private company run by a mining engineer, to advance the project.
In 2016, Miranda and Gold Torrent released an updated resource estimate for Lucky Shot covering 206,500 metric tons of measured and indicated resources averaging 18.3 grams per metric ton (121,500 oz) of gold; and 59 thousand metric tons of inferred resource with an average of 18.5 g / t (35,150 oz) of gold. These resources are found in the Coleman and Lucky Shot areas, both near the historic mines.
Based on the initial resource, Gold Torrent commissioned a preliminary feasibility study describing a 200 metric ton per day operation that would produce about 25,000 ounces of gold per year once the mine reached full production.
Gold Torrent planned to use a gravity system to recover the gold, a method that has historically released more than 85% of the gold and is expected to increase to 90% with modern recovery equipment and techniques.
However, the company was unable to repay a loan sent by Cartesian Royalty Holdings and Gold Torrent (70%), and Miranda's (30%) stakes in Lucky Shot were transferred to the Singapore-based financier in 2018.
CORE agreed to pay up to $ 30 million in cash and shares to acquire these interests in the Lucky Shot project, which includes 725 acres of patented mineral rights over the historically mined area; 7,825 acres of state claims around the patented land; and a processing site located about 30 miles to the west.
The total purchase price of this attractive high-grade gold mine asset includes a $ 5 million cash down payment and a $ 6.25 million promissory note payable by CORE due February 28, 2022; an additional payment of $ 5 million in cash and $ 3.75 million in CORE shares if a resource equivalent to 500,000 oz of gold is established or 30,000 oz of gold is produced in Lucky Shot; and an additional payment of $ 5 million in cash and $ 5 million of CORE shares if the resource reaches 1 million ounces or 60,000 ounces of gold.
CORE has also committed to investing $ 10 million in exploration at Lucky Shot within three years of the closing date of the transaction, including $ 5 million in the first 18 months.
Additionally, after CORE has incurred additional exploration, mining and development expenses on the Lucky Shot prospect of at least $ 5 million in excess of the required $ 10 million exploration expense, the additional expense will go toward any outstanding payments due. by Lucky Shot.
CORE plans to restore underground access to drill the downward extension of the Lucky Shot and Coleman mines.
Once access is established, the company plans to renovate the underground workings, where the granodiorite host rock generally needs little support and develops a 600-meter drift parallel to the vein, followed by approximately 2,400 meters of underground diamond drilling to define a new resource.
The Lucky Shot and Coleman veins have only been mined about 200 meters deep. CORE says that these types of mesothermal vein systems typically extend for miles downward and the company sees the potential to develop significant high-grade gold resources by drilling the vein system that extends more than 1,600 meters east of Coleman. , through Lucky Shot and War Baby.
Additionally, Full Metals Minerals drilling at Murphy, which is approximately 600 meters east of War Baby, cut a one-meter vein sample averaging 54.6 g / t, suggesting that mineralization may continue past the three historic mines.
"Contango is well positioned, with experienced staff and capital, to explore and expand the historic high-grade resource at Lucky Shot," said Van Nieuwenhuyse. "We believe that the exploration potential of the Willow District is excellent, although perhaps underestimated."
