Elko, Nev. — After years of trying to develop a string of base metal projects,
The company had tried to fund exploration by generating cash flow through diversified mining but found it was unable to generate sufficient interest in base metals. Consequently, about a year ago, it set about acquiring early-stage gold properties.
“On a global basis, Nevada is the largest gold-producing region per unit area, making it the richest place on earth for gold,” says Atna’s vice-president of exploration, Robert McLeod. “There is no better place to explore.”
So far, Atna has picked up six properties.
“We are focusing on northern Nevada, specifically a hundred-mile radius in and around Battle Mountain,” McLeod says. “There were five discoveries in this area in 2002, and each will probably become a mine.”
Atna’s Golden Cloud project is immediately east of one of those new discoveries,
Golden Cloud is also near the southern boundary of
Earlier work on Golden Cloud identified banded-to-vuggy chalcedonic and opaline quartz with anomalous gold and mercury values. Recent prospecting exposed opaline sinters with visible cinnabar mineralization. The prospective outcrop stretches for more than 800 ft., with subcropping occurring to the north for another 1,000 ft. Surface sampling yielded up to 34 parts per billion gold in the main body and up to 64 ppb gold moving north.
“This is what you see overlying the deposit at Ivanhoe,” says McLeod, referring to the gold-bearing sinter. “But with these systems you have to get down to the boiling point, whether it’s three-hundred feet or more than a thousand feet below surface, because that is where the gold drops out.”
A recent gravity survey identified a favourable, northwest-striking structure immediately south of sinter outcrop.
“We have great geochemical vectors, and generally you get sinter within 600 ft. of the vent, so that is where we want to test the structure at depth,” says McLeod.
North of the promising sinter outcrop is a ridge of highly silicified rocks, which have yielded arsenic values of up to 600 parts per million. The gravity survey indicates that this area is more deeply eroded. Of particular interest to the junior is an outcrop of recrystallized and silicified limestone, which may mark uplifted basement sediments pushing the favourable Valmy formation closer to the surface.
“There could be basement uplift here, which opens up all kinds of possibilities for Carlin-style mineralization,” states McLeod.
The project, which lies at the intersection of the northern Nevada Rift (a deep-seated structural alignment of Miocene-aged volcanic and intrusive rocks hosting quartz-adularia epithermal systems containing high-grade gold and silver) and the Carlin trend, has never been drill-tested. However, Atna intends to begin drilling by September.
Included in the Golden Cloud deal is the Beowawe property, 12 miles to the south. Situated only 6 miles from Newmont’s Mule Canyon mine, the project was worked in 2000 by Balaclava Mines, now
The property covers the intersection of the regionally extensive northern Nevada Rift and the more locally prominent Malpais range-front fault zone, both of which are normal faults active since the Miocene. The Malpais fault zone controls the location of the Beowawe geothermal field, near the western margin of the project area.
The Beowawe geothermal field, also known as The Geysers, is one of the largest hot-spring systems in the Great Basin. Geothermal exploration holes have intersected up to 0.22 oz. gold per ton in a 100-ft. composite sample.
The geological data suggest that the hot-spring system has migrated about 5 miles westward, along the Malpais fault, to its present position.
Previous drilling by Simon Ridgway-led Balaclava intersected multiple quartz-rich structures with anomalous gold and mercury values. The drilling focused on two areas in the footwall of the range-front, with two of the holes collared 1,200 ft. apart intersecting 190 ppb gold over 190.3 ft. and 502 ppb gold over 55.1 ft. This mineralization could mark a leakage anomaly over a mineralized body at depth.
“It’s an interesting system, and an ongoing hot spot,” says McLeod. “We have two major target areas: massive multiple parallel veins with banded chalcedony, and the active geothermal system.”
Based on the 1-to-1 correlation between sulphides and gold grades at Mule Canyon, Atna has launched an induced-polarization survey over the property as a prelude to assigning drill targets.
The Golden Cloud-Beowawe deal requires that the junior make an advance royalty payment of US$20,000, followed by US$20,000 after the first year. The payments increase to US$100,000 by the fifth year. It must also issue 150,000 shares over two years and drill 3,000 metres within three years. The owner retains a 3% net smelter return royalty (NSR).
Midas trough
Moving into the northern front of the Midas trough, some 6 miles west of Newmont’s Ken Snyder mine (2.7 million tons grading 1.23 oz. gold and 14.13 oz. silver), Atna picked up the Sno property.
Underlain by bimodal Miocene-aged volcanic rocks, the Sno property is transected by a northwest-trending structural corridor and hosts surface rock values of up to 1.02 oz. gold. The mineralized zone is strongly brecciated and silica/clay-altered, with crosscutting, steeply dipping quartz-pyrite veins. Previous drilling keyed in on the bulk-tonnage prospects; however, the geology suggests good potential for a high-grade, bonanza vein deposit at depth.
Says McLeod: “In the mid-1990s, new models for high-grade underground targets emerged as the low-grade oxide open-pit reserves became depleted,” explains McLeod. “The model led to the discovery of the seven-million-ounce Ken Snyder deposit, 1,300 ft. below surface. Sno looks identical to Ken Snyder at surface. It’s a high-risk, high-reward target — we want to see what happens to the veins at depth.”
Another of Atna’s bonanza-grade targets, Clover, is 11 miles east of the Ken Snyder operation. The Clover prospect lies in what Newmont calls the Jake Creek trend on the opposite side of the rift from Ken Snyder, along the northern margin of the Midas trough. The trend is a complex, northwest-trending structural corridor that hosts the same stratigraphy as Ken Snyder.
The property was originally explored in the 1980s for its bulk-tonnage gold potential. Previous drilling, consisting of 60 holes, intersected mineralized banded quartz-adularia veins and breccia fillings, with significant intercepts of 0.74 oz. gold over 32 ft., 8 oz. gold over 2.5 ft., 0.23 oz. gold over 25 ft., and 0.53 oz. gold over 5 ft.
Mineralization occurs within two zones that are largely open along strike and downdip, associated with north-northwest- and east-northeast-striking structures. High-grade float boulders grading up to 0.93 oz. gold and 9 oz. silver were discovered 2 miles northwest of the previous drilling. A recent airborne geophysical survey by Newmont outlined a 0.7-by-0.7-mile anomaly over the high-grade float.
“Newmont has the ground north and south of us, and plans to spend a considerable portion of this year’s regional budget in the Jake Creek trend,” says McLeod.
Under terms of the option agreement, Atna can acquire the property by paying US$300,000 in
staged payments. The vendor retains a 3% NSR, which Atna can buy back for US$1 million per 1% interest.
Carlin-type targets
At the southern end of the Carlin trend, Atna has acquired two properties prospective for hosting classic Carlin-type disseminated gold mineralization.
The Triple Junction property lies in the Rain structural trend, 14 miles south of Newmont’s Rain operation. The trend is home to nearly 6 million oz. gold, with most mineralization lying at the contact of the Webb formation clastic rocks and the underlying Devil’s Gate limestone.
Triple Junction covers a portion of the western side of the Pinon Graben, on the eastern side of a major, silicified, north-trending secondary graben structure called the Jasperoid Ridge. The Pinon Graben is a regionally extensive structural feature that trends north-south for at least 30 miles along the crest of the range.
Grab samples over the property have returned up to 0.22 oz. gold. The mineralization is associated with argillic and silicic alteration enriched in arsenic and barite and cut by felsic dykes.
Atna also picked up the nearby Dixie Fork (formerly Irene) project. Situated 20 miles south of the town of Carlin, Dixie Fork covers the antiformal portion of the western side of the Pinon Graben.
Alteration and mineralization occur in clastic sediments of the Mississippian Chainman formation, at a high-angle fault contact with pyritized, downdropped, blackish mudstones of the allochthonous Devonian Woodruff formation.
Atna can acquire Triple Junction and Dixie Fork by paying the owner a total of $35,000 and issuing 100,000 shares after one year. The vendor retains a 3% NSR.
Along with the steady stream of early-stage projects, the company is seeking a flagship gold deposit.
“We want ounces in the ground, but we don’t want to have to sit on those ounces and wait for a high-gold price,” says Atna President David Watkins.
The company is evaluating promising prospects that fit the bill in Mexico and Nevada.
Sheridan deal
Atna continues to negotiate with its largest shareholder, J. Pat Sheridan, to pick up $3.4 million in assets by issuing up to 11.2 million shares, subject to adjustment, at an average price of 30 per share.
The share issuance would come in three instalments, including 5 million shares on closing. In return, Atna gets certain royalty accounts and other assets from Sheridan. The realization of the assets into cash would take place over a period of less than 1.5 years. The final value may be adjusted to reflect the market value of the hedge account at the date of closing.
“I am pleased to have a significant stake in an undervalued company that appears to be on a growth path,” said Sheridan.
The deal would give Sheridan a 40% stake in Atna. Currently, through an affiliated company, Rimmer Mining, Sheridan owns more than a 10% interest.
Says Watkins: “This represents an excellent opportunity for Atna and its shareholders to move the company forward with the backing and financial acumen of one of the most successful people in the mining industry.”
In other news, Atna recently sold its Uduk Lake gold property in British Columbia to
Meanwhile, the junior is keeping its thumb in the base metal pie by retaining several prospects in the Yukon, including a 39.4% stake in the Wolverine deposit. Majority holder
Atna also holds ground around the Cerro Negro copper oxide deposit in Chile. Dubbed Celeste, the property covers sulphide copper mineralization along strike of the deposit. The junior dropped its option to buy the deposit in March, following a year-long program comprising bulk sampling, as well as drilling and extensive metallurgical tests. Based on the results, the project did not justify the total cash payments negotiated in the option agreement, and efforts to renegotiate terms or bring in a partner have failed.
Atna, which currently trades at around 27, has $2.5 million in cash and 21.8 million shares outstanding, or 25.2 million shares fully diluted.
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