Aton drills ‘lost mountain of gold’ in Egypt

Aton Resources (TSXV: AAN; US-OTC: ANLBF) has drilled 4,125 metres across 50 reverse-circulation holes in a first round of drilling on the South Ridge at its Rodruin gold project, part of its 738 sq. km Abu Marawat concession in Egypt.

The company hit gold mineralization in every zone it drilled: Aladdin’s Hill, Spiral Pit, Central Buttress and GF. Highlights include 5.36 grams gold per tonne and 15.9 grams silver per tonne over 20 metres from surface at Spiral Pit and 1.63 grams gold and 5.3 grams silver over 12 metres from 4 metres downhole at Aladdin’s Hill.

Before Aton picked it up, Centamin (TSX: CEE; US-OTC: CELTF) owned Abu Marawat. Centamin dropped the concession in the early 2000s after discovering its Sukari deposit and bringing it into production as Egypt’s first modern gold mine.

As of June 2017, Sukari contained 244 million proven and probable tonnes grading 1 gram gold for 8 million oz. gold. The mine produced more than 544,000 oz. gold in 2017.

“We started off at Abu Marawat and followed up on what had gone before, and then shifted our focus to an area called Hamama,” company president and CEO Mark Campbell says in a telephone interview with The Northern Miner from Cairo. “The conventional wisdom was there was a classic volcanogenic massive sulphide deposit at Hamama, but we’ve demonstrated that is not the case. It’s a sort of VMS-epithermal hybrid.”

The company would go on to declare a significant discovery at Hamama West in May 2018. While developing Hamama, it embarked on a regional exploration program at Abu Marawat — a program it began in December 2017.

“We had never done any serious regional work,” Campbell says. “We wanted to develop and see what we had out there.”

The company is focusing on an ancient processing area called Eradiya, where it sampled tailings grading more than 20 grams gold. When it trenched the area, however, it didn’t find anything.

“The Bedouin had always talked about this lost mountain of gold, this legendary mountain of gold, but nobody knew where it was,” Campbell says. “We did some satellite imagery and found these … ancient trails. Because it’s desert — because it’s barren rock and its very dry — nothing really erodes.”

Aton Resources’ senior exploration geologist Tim Neall approaches ancient workings at Aladdin’s Hill, near the Rodruin gold prospect area, in December 2017. Credit: Aton Resources.

The company followed the trails to a mountain 3 km south of Eradiya and 18 km west of Hamama West.

Campbell says that “we went up there and that’s when everybody went ‘wow.’ The place is honeycombed with ancient workings, some that go down 80 metres below ground. We found old clay lamps with wicks still in them, old ropes, stone tools — and it was obvious that we were the first people up there in 1,600 years.”

The company named the area Rodruin. It built a 4.5 km road up the side of the mountain that in some places slopes up to 70 degrees. It also built several drill pads that it used for the first phase of drilling.

The mountain consists of two ridges split by a wadi, or dry channel. The company started with the mountain’s south ridge because it’s less steep than the north ridge, but says the north ridge also shows evidence of ancient workings. It hopes to find a bulk-mineable deposit — an objective consistent with early indications.

“We have a wide area of mineralization with good grades, but we do get some high-grade shoots interspersed,” Campbell says. “It’s interesting geology in that it’s all in the carbonates. I mean were seeing mineralized slate — something that most people never see.”

Aton is taking a break from exploration over the holidays, but will continue access road construction to parts of Rodruin’s South Ridge it intends to drill in early 2019.

The company aims to build a road to the project’s North Ridge to follow up on surface samples it took there that graded as high as 321 grams gold per tonne. It says that the terrain on the North Ridge is extremely rugged, and road construction could take several months.

The company intends to drill another 16,000 metres in the new year spread across Rodruin and its other Abu Marawat targets. Part of the drilling is intended to upgrade the inferred resource at Hamama West to the indicated category.

Hamama West contains 3.8 million indicated tonnes grading 0.72 gram gold and 27.6 grams silver for 88,000 oz. gold and 3.37 million oz. silver, as well as 8.2 million inferred tonnes at 0.87 gram gold and 29.7 grams silver for 230,000 oz. gold and 7.8 million oz. silver.

In May 2018, Aton declared “commerciality” at Hamama West in the context of Egypt’s regulatory regime. The company intends to develop it into a small, open-pit operation.

A few months later the Egyptian Mineral Resource Authority accepted Aton’s commerciality study, which extended its exploration licence.

Aton is working towards a preliminary economic assessment at Hamama West and could make a production decision based on its results.

Campbell has been involved in mining in Egypt for over 20 years. He joined the board of Alexander Nubia in 2009. In 2015 he became CEO, and a year later the company was renamed Aton Resources.

The company had two concessions at the time: Abu Marawat and Fatiri.

“Two years ago I relinquished Fatiri to focus on Abu Marawat,” Campbell says. “When we arrived, the land package that we had was larger than Luxembourg.”

Egypt had based its land bids on the oil and gas industry, and many concessions were over 1,000 sq. km. While the company’s oil and gas industry took off, mining got left behind. Campbell notes Sukari is the only modern mine developed in Egypt in the last 90 years.

To address the problem, the Egyptian government  hired consultants Wood Mackenzie, who previously helped reshape the Ecuadorian mining industry.

Egyptian Prime Minister Madbouly’s cabinet recently approved amendments to the country’s Mineral Resource Act that were recommended by Wood Mackenzie.

Notably, miners will no longer have to form a fifty-fifty joint venture with the Egyptian Mineral Resource Authority to go into production. The government hopes to ratify the changes by year-end.

“The two great opportunities in Egypt are the geology and the frontier nature of it, but frontier with a small “f,” because it’s got a lot of infrastructure,” Campbell says. “And then you’ve got to change the fiscal regime to make it more attractive.”

Aton shares are trading at 4¢ in a 52-week range of 2¢ to 11¢. The company has a $12-million market capitalization.

Sandstorm Gold (TSX: SSL; NYSE: SAND) invested $2.1 million in Aton earlier this year. The company paid nearly $1.8 million for 40 million Aton shares and another $300,000 for a 1% net smelter return royalty on Abu Marawat.

At the same time, Aton closed a separate private placement worth nearly $2 million. Sandstorm now owns 14.94% of Aton, making it the company’s second largest shareholder. Private company OU Moonrider owns 23.95% of Aton.

“We will finish drilling Rodruin, then take a break and starting drilling some of its other targets to start building up a better picture of these targets, and how they fit into our exploration portfolio,” Campbell says. “It’s all about narrowing down our focus.”