A different kind of Nevada for Meadow Bay

The low gold prices of the mid-1980s forced the Atlanta mine in northeastern Nevada to close down. But remnants of the old mine still remain.

Nestled atop a small hill overlooking the current field offices of Meadow Bay Gold (MAY-V) a fading tin paneled structure resembles an over-sized barn more than a mill.

But the heavy machinery inside attests to the activity of 25 years ago, only now a veil of rust has come down over it along with the silence. A calendar in the old operator’s room reads June 1985- marking with eerie precision the moment when workers packed up and left the hulking machinery on its own.

What they didn’t know when they left was that another orebody, one entirely different from the one they were mining, lay just a few hundred metres north of the mill.

The area they had been mining, the Atlanta fault zone, has been providing gold miners with material off and on since it was discovered back in the 1860s, “presumably by former Confederate soldiers,” Doug Oliver, Meadow Bay’s project manager quips, “otherwise they would’ve named it the Boston deposit instead of the Atlanta.”

By 1910 miners on the property were getting more serious and managed to sink two shafts and mine down to 120 metres. That underground mine operated right up until 1950.

Unfortunately for historical types mining in such a remote part of Nevada at the time was done without good book keeping and no records of production were left.

That would change in the 1970s when a joint venture between Bobcat Exploration and Standard Slag built a small mining operation that ran between 1975 and 1985. The 800 tonne per day mill turned out a total of 110,000 oz. of gold and 800,000 oz. of silver from 1.5 million tonnes of ore in that time.

But even then, the companies were content to keep a low profile in the little explored region of Nevada just a few kilometers from the Utah border.

In fact Oliver only found out about the mine by chance. It was 1977 and he was doing a uranium survey in the region for the federal government.

“One of the guys I was working with comes back one day and says he found a gold mine out there. So I asked him where it was exactly. The next day I set out to find it and I found it,” he says. “They weren’t too happy to see me when I showed up but eventually they told me a bit about what they were doing. I kept an eye on it ever since.”

And while he kept an eye on the property any attempts to acquire it were thwarted by an owner whose price seemed to rise dramatically every time Oliver went to talk to him about it.

Finally it was a company named Desert Hawk that contacted Oliver and told him they wanted to get a deal done for the ground. Oliver was able to negotiate a price of $6 million. There was a glitch, however, as Desert Hawk was lacking in capital to close the deal. In stepped Meadow Bay, which acquired Desert Hawk in March of this year and made the required payment in full.

At the time of the deal Meadow Bay believed it was acquiring a project with a well defined mineralized zone, the Atlanta fault zone, and one with excellent infrastructure as the project has access to a power line and has permitted water usage from a well that sits just 16-km a way. What it didn’t realize was that not long after the acquisition the property would yield a gold rich porphyry zone that had been missed by everyone else over the projects long history.

Bringing Atlanta to the future

After the Bobcat and Standard Slag operation collapsed the Atlanta mine sat idle for five years until Gold Fields (GFI-N, GOF-L) came along in 1990 and drilled three core holes into the orebody.

They left shortly after and then Kinross Gold (K-T, KGC-V) arrived in 1997 and showed more commitment to the ground.

The company drilled 80 RC holes which led to do a non-compliant historical resource calculation of 9.3 million tonnes grade at 1.7 gram gold and 2.0 grams gold equivalent for 464,500 oz. of gold and 3.86 million oz. of silver. But with gold prices falling in the late 90s, they too decided to pack up and leave.

The only other company of significance to have a sniff was Atna Resources (ATN-T). Oliver says Atna thought it had a deal with the former property owner back in 2009, and in anticipation of getting the deal done it staked the ground around Atlanta proper.

When the deal between the owner and Atna fell through, the company became amenable to the idea of selling the ground surrounding Atlanta to Meadow Bay.

The two companies’s reached an agreement back in June of this year that will see Meadow Bay pay Atna $250,000 in cash and 400,000 in shares.

“We wanted the claims for a few reasons,” Oliver explains. “We needed the flat ground for a future mine, the Atlanta structure trends on to the Atna ground and they have a good geophysical target.”

The Geology

As alluded to earlier, what all the previous miners on the property missed was that Atlanta was really the story of two different ore bodies.

There was, of course, the Atlanta fault, with its mineralization occurring in a jasperoid fault breccia between overlying Tertiary volcanic rocks and Paleozoic sedimentary rocks and then there was the unknown porphyry, deeper down and to the southwest of the historic Atlanta pit.

Standing at the edge of the historic pit, where the mineralized zone can still be seen slicing diagonally through the darker volcanic rocks on hanging wall side, and the reddish sedimentary rocks on the foot wall side, Oliver hypothesizes that the deposit was formed by multiple mineralizing events, each of which brought silica into the brecciated host rock. Sometimes that silica was associated with increased gold values and lower silver values, while at other times there was more silver and less gold

The process repeated itself several times over millions of years and left a mineralized zone that he describes as “monotonous.”

“It just keeps on going like the Energizer Bunny,” he says. “At every place we’ve drilled, if you go deep enough, you hit it.”

So far that drilling has taken them 915 metres north of the historic pit (which is at the southern extension of the fault) and 300 metres deep. Mineralization along the fault zone ranges in width from 18 to 30 metres.

The fault zone itself is covered by roughly 10 metres of alluvium, beneath which the mineralized zone runs contiguously northwards.

And while Meadow Bay is drilling, and plans to drill more holes northwards in an effort to determine how far the zone runs, it is increasingly being enticed by what it discovered to the south of the pit earlier this summer.

An exploration hole drilled down dip and adjacent to the old Atlanta pit hit upon thicker and richer mineralization in a different rock type. The hole returned 62 metres grading 1.63 grams gold.

“We started to get the feeling that this thicker part was not part of the volcanic rocks but is actually a porphyry,” Oliver says of the discovery.

Once that realization was made, the entire geological model began to get re-envisioned.

“Everything started changing,” Oliver says. “We started to see the porphyry as a head engine that could be driving the mineralization in the fault.”

Two other holes were collared in the vicinity of the first and confirmed the first holes results, with one of the new holes striking the zone cleanly with an intercept of 64.01 metres grading 1.43 grams gold equivalent.

The third hole, which Oliver says was on the margin of the porphyry, still retuned 35.05 metres grading 3.86 grams gold equivalent.

At this early stage the company doesn’t yet have a firm handle on the zone’s geometry, but says it is open to the west and to some extent the north and south as well.

“It’s always nice to get good surprises,” Oliver says of the discovery. “In this business most of the time the surprises aren’t good. This was a nice surprise.”

What the discovery means for the project is that Meadow Bay may well have an unexpected, large tonnage deposit in close proximity to the existing open pit.

The discovery is also motivating it to test out another geophysical anomaly that mirrors the one registered where the porphyry was found.

Pushing Ahead

Meadow Bay plans to drill another 300 metres north of the northern most drill holes along the Atlanta Fault. The rock there will be tested with diamond drill cores first, so the geologist know what they are looking at, and then will be followed up by an RC drill rig which will aim at doing infill and pre-collar drilling.

In all the company has budgeted for 20 diamond drill holes and 40 to 50 RC holes for 6,000 metres, and of course the porphyry target will see its share of the drill bit.

Oliver says the exploration budget will be split in equal parts between testing the porphyry and the fault system.

The story will likely really begin gathering some steam in the early part of next year as Meadow Bay is targeting having a maiden resource estimate out by the first quarter.

Coinciding with the release of the estimate will be the second phase of drilling which would see another 12,000 metres drilled and a scoping study, which is expected to get underway in the second quarter of next year.