Aquila targets Upper Peninsula

JAMES WHYTEBob Mann (left) and David Black (middle, foreground) of Aquila Resources display core from the Back Forty massive sulphide project in Michigan.

JAMES WHYTE

Bob Mann (left) and David Black (middle, foreground) of Aquila Resources display core from the Back Forty massive sulphide project in Michigan.

Menominee Cty., Mich. — In the Upper Peninsula of Michigan it’s not hard to imagine you are in northern Ontario. The scenery is much like the north shore of the big lakes, and the little details fit, too, like the occasional French or Finnish name on a roadside mailbox.

And into that patch comes Aquila Resources (AQA-V, AQARF-O), with a mineral deposit not unlike many in northern Ontario, a classic massive sulphide under the spruce and alder; proof that the geology never stops at a customs post.

The Penokean volcanic belts of northern Wisconsin and Michigan are early Proterozoic, rather than Archean, but otherwise bear a strong resemblance to the Superior Province belts that produced Kidd Creek, Horne and Manitouwadge, large volcanogenic massive sulphide (VMS) deposits. Moderately metamorphosed volcanic and sedimentary rocks are intruded by younger granites and the area has a general east-west structural grain with steeply dipping stratiform rocks.

And the Penokean belt has its own jewel, the Crandon deposit, some 60 million tonnes of it, grading 5.6% zinc and 1.1% copper, plus some lead, silver and gold. Crandon was a 1975 discovery, but never went into production, thanks to restrictive development rules and public opposition. When the Sokaogon Mole Lake Chippewa and Forest Cty. Potawatomi tribal councils bought the property in October 2003 — using, it was noted at the time, US$16.5 million in casino revenue — they finished Crandon as a development project. A moratorium on mining, signed into law in 1998, also finished Wisconsin as an exploration destination; the last mineral exploration hole drilled in Wisconsin was on the Bend deposit in the western part of the belt in 1996.

But while the Wisconsin regulatory regime stops at the Menominee River, the rocks do not; and the Penokean geology in the little corner of Michigan’s northern peninsula is as good as anywhere else in the belt. The discovery of the Back Forty deposit has proved the Wisconsin deposits have a cousin to the east.

In fact, of Back Forty’s cousins on the Wisconsin side, the closest is Flambeau at the western end of the belt, the little deposit that could — be mined, that is. Flambeau, discovered in 1967 near Ladysmith, Wis., produced just over a million tonnes of ore from a supergene-enriched zone near the surface. It also produced one Wisconsin municipality that really liked its experience with mining: local industrial taxes on Flambeau paid for development of a business park that kept Ladysmith humming after the last rail car of Flambeau ore left for the Kidd metallurgical plant in 1997.

Back Forty

Back Forty was discovered by accident; a water well drilled in 2001 intersected 12 metres of zinc sulphide mineralization. A pair of private companies assembled the mineral rights and a Max-Min electromagnetic survey provided some conductors to drill. A gravity survey along a county road near the prospect showed a large gravity anomaly, extending onto ground that the companies didn’t hold, and boot-and-pick prospecting turned up a number of gossan outcrops, the rusty weathered vestige of massive sulphides at surface.

Inco (N-T) briefly optioned the property, but did not do enough work to vest its interest. The private companies, headed up by the well driller and two geologists that had first identified the prospect, brought the property into Aquila (the former JML Resources) in a reverse-takeover transaction.

By then there were enough holes for a qualifying report that put the inferred resource on Back Forty at 3.1 million tonnes at an average 6.8% zinc, 0.25% copper, 32 grams silver and 2 grams gold per tonne, on two stratabound horizons and in a footwall copper zone.

The reverse takeover, and a financing that brought in about $2.3 million, gave Aquila the chance to drill seriously, and also the chance to negotiate a deal with the remaining landholder on land covering the gravity anomaly last August. (Later warrant exercises brought in a further $4 million.)

Aquila got an option on the mineral rights in a straight-cash deal with an initial US$1.3 million and a further US$3.2 million payable over five years. If it picks up the purchase option, the vendor will get another US$7.2 million.

The acquisition was crucial to the program, as the ground covers some of the prospect’s best drill targets. In early exploration, an axial-planar foliation that, in outcrop, looked like bedding, led the geologists to believe they were dealing with a nearly vertical volcanic package. What has emerged in subsequent drilling is that the deposit occupies the hinge of an antiform trending southwest and plunging about 30, and that multiple mineralized zones, on two separate stratigraphic horizons, lie on the flanks of the fold and at its hinge. The lenses on the northern limb of the fold mainly dip gently to the north; those on the southern limb dip steeply to the south.

The optioned MRT property was such a vital piece of the puzzle because it covers much of the north hinge and contains two mineralized lenses, the Main Zone Hinge and the Pinwheel Zone, neither of which is part of the resource calculated in the qualifying report, and a part of the deposit’s East Zone. Since taking the option deal, Aquila has drilled a series of holes on all three zones.

New intersections on the East Zone, 25 metres west of holes drilled in the summer, cut gold mineralization in gossan material overlying fresh massive and semi-massive sulphides.

One hole intersected 55.5 metres grading 0.58% copper, 4.2 grams gold and 11.9 grams silver per tonne, plus trace lead and zinc, underlying a gossan zone of 3.6 metres grading 6.2 grams gold and 7.3 grams silver per tonne. Another cut 57 metres of massive sulphide with 0.39% copper, 2.2 grams gold and 9.7 grams silver per tonne, beneath a 3.1-metre gossan zone that ran 37 grams gold and 6.4 grams silver per tonne.

A third hole intersected 3.4 metres of gossan grading 9.3 grams gold per tonne, which was underlain by 40.5 metres of sulphides grading 8.17% zinc, 0.24% copper and 0.2% lead, with 1.7 grams gold and 22.2 grams silver per tonne.

Three other holes got similar results, including one that cut 19.3 metres grading 11.73% zinc, and two long intersections of gold mineralization in gossan material.

Gold-rich VMS

The gold is not only there as a minor constituent. Back Forty is “kind of on the end of the scale for gold in a VMS,” says Bob Mann, one of Aquila’s project geologists. There is gold — generally a few grams per tonne, quite high-grade for a massive sulphide — in the stratabound horizons and in the footwall stockwork, but there are also post-sulphide veins with higher-grade gold, particularly in a later group of quartz-feldspar porphyry dykes. And the gold also persists in leached surface material — hence the long gold-rich intersections in the surface gossans.

The vein-type mineralization was discovered in a late-summer drill hole, LK-90, which, in addition to cutting 14.6 metres of massive sulphide (at 7.91% zinc), intersected two separate gold zones — a near-surface zone of fractured and silicified sediments that averaged 10.4 grams gold and 32.9 grams silver per tonne over 19.4 metres, and a deeper zone near the edge of a porphyry dyke that averaged 23.5 grams per tonne over 2.4 metres.

Later stepout holes around LK-90 suggest that the zone is about 10 metres wide with grades ranging from 2 to 10 grams per tonne. There are about 200 metres of strike length to test for extensions of the zone.

The gold in the sulphide mineralization, lower-grade than the lode material, often correlates with lead mineralization, or with the copper-rich material in the footwall. Most is interstitial to the base metal sulphides, with some held in pyrite.

The base metal mineralization The Northern Miner saw in core is simple and fairly coarse-grained, mainly sphalerite, pyrite and chalcopyrite. The massive sulphide intersections tend to be fairly wide because the sulphide bodies are pushed to the hinge zones
of the fold, but the stringer systems are fairly wide as well.

The company plans to bring the zones on the MRT property into the resource, which should then allow some preliminary economic studies on the deposit. Along with the scoping study, there is metallurgical testing to come.

But having found a deposit and drilled it off, what is Aquila’s chance of mining it? Michigan “is so unlike across the river,” says Al Tripell, Aquila’s environmental consultant. While describing the United States as “a very tough permitting climate in general,” he points out that Michigan’s laws covering hard-rock sulphide mining were drawn up with mining industry input, and they contain strong (and legally binding) language that recognizes that mining is an important contributor to an economy. State regulators have been co-operative, although there has been local opposition to the project; while the local municipality can regulate a few aspects of the operation, approval is a state matter.

Still, the Michigan government presented the law as a strong regulatory regime, and there are some stringent provisions including an 8-season (2-year) program of environmental monitoring. Aquila plans to start that effort soon so that permitting can proceed once the deposit’s economic feasibility has been established.

Permitting itself has a 6-month timeline, although delays are possible. Aquila is working on the assumption that a mine would take four to five years to permit and build.

Elsewhere on the Back Forty ground, there is good potential for other VMS deposits in an underexplored area. The volcanic sequence is “altered off the scale,” says Mann, in “as big an alteration system as any deposit in the Abitibi.” To the east, thin sedimentary cover rocks of the Michigan basin are only 100 to 120 metres thick, making it conceivable that buried deposits could be detected with down-hole or deep-penetrating surface geophysical systems.

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