TerraX Minerals options Sunbeam-Pettigrew gold property in Ontario

Higher gold prices mean lower grade gold deposits are attracting more attention than they have in the past.

Take the Sunbeam-Pettigrew property about 25 km northeast of the town of Atikokan in northwestern Ontario and about 180km west of Thunder Bay.

The majority of previous work on the property dates to 1900 and since then exploration has been very intermittent, with the last work completed there nearly twenty years ago.

But TerraX Minerals (TXR-V) sees more potential there than others and has optioned 100% of the gold property, which lies about 15 km southeast of Brett Resources‘ (BBR-V) Hammond Reef gold deposit.

The Vancouver-based junior believes Sunbeam-Pettigrew has the potential to host a large, low-grade deposit similar to Hammond Reef.

Sunbeam “has two major structures that are parallel to the mineralized structure at Hammond Reef and what is in the structures seems to be similar to Hammond Reef– not just the gold but the associated minerals,” says Tom Setterfield, TerraX’s vice president of exploration.

Hammond Reef has a National Instrument 43-101 compliant resource of 141.5 million tonnes grading 1.05 grams gold per tonne for about 4.8 million oz. gold, and has reported wide zones of mineralization including 154.5 metres grading 1.21 grams gold per tonne.

“Hammond Reef is a lower grade deposit and not everybody appreciates the potential for making money from that sort of deposit,” Setterfield says.

Although there are similarities between the geology and mineralized structures of the two deposits, TerraX believes that some of the showings on the Sunbeam-Pettigrew property suggest that a smaller, higher grade deposit might also be present. A 1982 drill hole on the property for instance intercepted 8.5 metres grading 4.8 grams gold per tonne, including 1.8 metres at 15.8 grams gold.

Under its option agreement, TerraX can earn a 100% interest in the property over a three-year period by making payments totalling $210,000, issuing 600,000 shares, and funding $450,000 of exploration and development work.

The vendors will retain a 2.5% net smelter royalty, 1% of which TerraX can purchase for $1 million. An annual pre-production royalty of $20,000 will also be in effect starting from Apr.15, 2013.

The option agreement provides for an immediate non-refundable payment of $10,000 to the vendors, followed by a due diligence period that ends on May 30, 2009.

Sunbeam-Pettigrew lies within the Archean Marmion Batholith, which contains a number of phases, varying from tonalite to quartz diorite.

Gold mineralization is associated with northeast-trending lineaments traceable for up to 80 km within and along the margin of the batholith, TerraX says.

The lineaments are thought to represent faults or shear zones. Mineralization occurs in and adjacent to quartz vein systems within the shear zone, and is associated with pyrite and alteration consisting of sericitization, saussuritization, carbonatization and chloritization.

The Sunbeam-Pettigrew property lies in the central part of the batholith, with Hammond Reef on its western edge.

The property contains two northeast-trending intermittently mineralized zones: the Sunbeam-Atiko shear zone and the Pettigrew-Jack Lake shear zone.

Both shear zones contain significant gold occurrences over a strike length of about 15 km. Historic gold values from these showings reportedly range from less than one gram gold per tonne to 898 grams per tonne in a sample collected by the Ontario Geological Survey.

TerraX’s initial plans include following up known mineralization and mapping and prospecting structural targets.

A grab sample taken by the Ontario government in 2008 returned 48.6 grams gold per tonne, which TerraX says attests to the strong possibility of finding additional mineralization at surface on the property. “The fact that you can find an entirely new showing demonstrates that the entire area hasn’t been examined carefully yet,” Setterfield says.

Results from a government-sponsored airborne magnetic survey, justified in part by the results of Brett Resources’ exploration, will be released in the coming months. That information should help TerraX develop additional targets on the property.

In addition to the Sunbeam Pettigrew property, TerraX is in the midst of the exploration work on its Needle Lake property in Nunavut.

The Needle Lake property is made up of two contiguous claims, 460 km northeast of Yellowknife and about 204 km southeast of the past-producing Lupin mine and 70 km south of Dundee Precious Metals‘ (DPM-T, DPMLF-O) George and Goose Lake deposits.

TerraX can earn up to a 60% interest in Needle Lake from Kaminak Gold Corp. (KAM-V).

Like Sunbeam-Pettigrew, there has been very limited exploration on the Needle Lake property and the last major phase took place in 1990. At that time, drilling intersected mineralization in three holes and returned 9.46 grams gold per tonne over 3.43 metres in one hole and 11.58 grams gold per tonne over 2.02 metres in another.

TerraX collected a grab sample during field work in 2007 that ran 14.8 grams gold per tonne above a mineralized structure that had been drilled at depth. It also discovered a new vein structure grading 486 grams gold per tonne over a 1 cubic metre, angular boulder or subcrop within 100 metres of the mineralized structure.

In 2008, TerraX drilled five holes to test extensions from the main zone, which had been last drilled in 1990. Three holes returned notable mineralization including intersections of 1.27 metres grading 1.03 grams gold per tonne; 3.25 metres grading 2.47 grams gold; and 2.95 metres returning 1.09 grams gold per tonne.

The junior currently trades at about 10¢ per share and has a 52-week trading range of 5¢-40¢. The company has 9.9 million shares outstanding.