With a new president at the helm,
The appointment of John Paterson (formerly with Geomaque Explorations) as president, chief executive officer and director is part of a larger plan aimed at reshaping the company through the acquisition of more advanced-stage projects. The junior already holds several early-stage mineral properties in Ontario, Quebec, New Brunswick and Newfoundland.
“When I joined the company in May, the idea was to come up with an advanced gold project, because that’s what we figured the market was interested in,” Paterson tells The Northern Miner.
Aurogin reviewed several projects in Ontario and Quebec before striking a deal with a private Nova Scotia-based exploration company to buy into the Moose River gold project, 60 km northeast of Halifax. A 1997 report by Watts, Griffis and McOuat (WGM) estimates Moose River contains a geological resource of some 405,000 oz. gold.
Aurogin can earn an initial half-interest in the project from Moose River Resources (MRR) by paying $170,000 before Sept. 30, 2003, spending $2 million on exploration by Sept. 30, 2004, and issuing 500,000 shares by June 13, 2004. In accordance with the agreement, Aurogin has issued 1 million non-transferable share purchase warrants to MRR. The warrants are exercisable for two years — half of them at 13 per share, and the other half at 25 per share. Aurogin may increase its interest to 70% by completing a bankable feasibility study and arranging project financing.
“Not a lot of people know about this project,” says Paterson, adding that the economics look interesting at current gold prices. “There are 100 metres of mineralization starting right from surface, and it’s in a part of the world we can easily get at.”
Work to date on the Moose River property includes more than 170 drill holes, which have outlined an indicated resource of 3.8 million tonne grading 2.22 grams gold per tonne, equivalent to 274,000 oz. A further 1.9 million tonnes averaging 2.15 grams, or 131,000 oz., are categorized as inferred.
The WGM report states that “the current assay database may understate the grade of the mineral resource.” It goes on to say that, based on results from a 56,000-tonne bulk sample from the lower-grade halo in 1989, “a grade increase in the range of 20% could be reasonably anticipated.”
The Moose River project consists of two exploration licences covering 80 claims, or 13 sq. km, centred in the historic mining village of Moose River Gold Mines, near Middle Musquodoboit. The property is easily reached by paved and secondary gravel roads from several points in the province. Any future mining development at Moose River would likely affect most of the 15 to 20 permanent residents.
Gold mining in the area began in the 1870s and was carried out intermittently until 1947. Past gold production came from four operations: Caribou, Mooseland, Beaver Dam and Gold Lake. Recorded production from quarries and shallow underground operations in Moose River alone totalled 26,000 oz.
During the 1980s, Seabright Resources zeroed in on old gold mining camps in Nova Scotia. Led by Terence Coughlan, Seabright concentrated its efforts on the underground potential of high-grade narrow quartz vein deposits in the Meguma Group sediments. These vein deposits are notorious for their spectacular, nuggety, high-grade specimens but proved to be of limited tonnage and prone to major dilution problems.
Seabright acquired the Moose River property in 1985. Exploration was initially focused on the potential for quartz-vein-hosted mineralization in the area of the old Higgins and Lawlor underground mines.
By early 1987, all of Seabright’s exploration properties, except the more advanced-stage Beaver Dam and Forest Hill underground projects, had been rolled into a 51%-owned subsidiary, Seabright Explorations (Seabrex), which was taken public. In late 1987, Australia’s WMC, looking to establish a North American mining arm, went on a disastrous and ill-advised $500-million shopping spree that netted the assets of Northgate Mines, Grandview Resources, Western Goldfields and Seabright Resources. Without making any site visits or conducting any due diligence, and acting only on the strength of published records, WMC shelled out $160 million for two Chibougamau gold-copper mines owned by Northgate, $95 million for Grandview’s Carson Hill gold mine in California, $101 million for Western Goldfield’s Hog Ranch gold mine in Nevada, and $92 million for Seabright Resources.
In 1988, following its takeover of Seabright, WMC launched a $62-million lawsuit against the former directors of Seabright alleging they had failed to disclose certain material information about the company’s operations. A 1993 Nova Scotia court decision rejected WMC’s claim that Seabright had willfully misled them as to the viability of the main Beaver Dam property and found that the former directors acted honestly and in good faith with a view to the best interests of Seabright Resources. The original ruling, which awarded Terence Coughlan and the six former directors more than $10 million for legal costs and damages, was upheld by a Nova Scotia Court of Appeal in 1994.
Through the Seabright takeover, WMC’s Canadian division, known as Westminer Canada, gained majority control over Seabrex and shifted the exploration focus in 1988 to potentially large-tonnage projects. At the same time, WMC closed down the Forest Hill and Beaver Dam underground projects, based on disappointing results from major bulk-sampling programs.
Re-sampling
Exploration efforts at Moose River concentrated on a new style of disseminated gold mineralization discovered in 1996-1997 while drilling in an argillite package that appeared unrelated to quartz veining. Eleven holes had been drilled in an area of old open cuts and quarries. Initial sludge assays indicated the presence of wide zones of gold mineralization in the argillites.
Re-sampling of the core yielded 1.9 grams across 10.7 metres in hole MR86-48, 1.05 grams over 84.9 metres in hole MR87-95, 1.73 grams across 69.5 metres in hole MR87-101, and 1.33 grams over 71.9 metres (including 17.4 metres of 4.45 grams) in hole MR87-115. Seabrex began drilling aggressively in March 1998 and, over the next year and a half, completed more than 100 drill holes in the area known as the Touquoy zone. The fault-bound wedge of auriferous argillite yielded drill intercepts of 1.29 grams across 40 metres, 3.11 grams over 55 metres, and 5.3 grams across 27 metres. A November 1989 in-house resource calculation pegged Touquoy at 1.9 million tonnes grading 2.1 grams, equivalent to 128,000 oz.
The Moose River property is underlain by greywackes and argillites of the Cambro-Ordivician-aged Goldenville Formation of the Meguma terrain. The Goldenville Formation sediments are classified as deep ocean turbidites. The sedimentary sequence was subjected to intense compression and regional metamorphism during the Acadian Orogeny, forming a series of upright, isoclinal, northeasterly striking folds. The major fold axes are offset several kilometres in places by later, extensional, northwest-oriented faults.
The Touquoy zone is a fault-bounded tabular body draped on the northern limb of an anticline. Disseminated gold mineralization occurs in a 150-metre-thick stratigraphic package consisting mainly of mineralized argillite. The favourable mineralized argillite package is atypical of the Goldenville Formation, which is dominated by sandier grewacke and quartzite beds.
Touquoy
The mineralization is controlled by the intersection of the favourable Touquoy argillite stratigraphy, particularly the siltstone sub-unit, and the northeastern fault. The mineralized zones are associated with widespread chlorite-sericite-carbonate alteration. Carbonate alteration is in the form of both calcite and ankerite. The development of closely spaced ankerite-pyrrhotite bands directly correlates with an increase in gold mineralization and the intensity of deformation, particularly along the northeastern fault.
Native gold mineralization is often associated with pyrrhotite and/or arsenopyrite, and is non-refractory. The size of gold grains varies from 1 micron to greater than 1 mm.
Preliminary tests by Seabrex entailed milling a 57,000-tonne surface bulk sample taken from the upper fringes of the Touquoy zone. Results showed that the style of mineralization is amenable to open-pit mining by means of a conventional drill, blast, load and haul operation. The processing of the bulk sample through the nearby Gays River mill, using a combination of gravity and flotation methods, averaged a gold recovery of 83%. A lower bench, considered more typical of the mineralization as a whole, averaged a 90% recovery, with the gravity circuit accounting for 63% of the recovered gold.
The reconciled grade of the bulk sample, based on the gold actually recovered and tailings assays, was 1.56 grams, exceeding the grade as calculated from blast holes (1.38 grams), block modeling (1.46 grams) and a polygonal calculation (1.33 grams).
Exit Seabrex
Seabrex discontinued work at Moose River in the spring of 1990. Based on the limited ounces defined at the time, Westminer considered the Touquoy zone marginal at best and shifted its focus toward reopening the Gays River underground zinc mine.
After consolidating its shares on a 5-for-1 basis, Seabrex amalgamated with privately held Corner Bay Resources in April 1991, and today is known as
Other than limited metallurgical work by NovaGold Resources and the drilling of two metallurgical test holes by provincial government geologists, no further work was carried out at Moose River until MRR optioned the project from Corner Bay in 1996. Under the terms of a modified agreement, MRR can earn a 100% interest of Moose River by making cash payments totalling $100,000, which have been done, and by completing exploration expenditures of $750,000, of which $530,000 had been spent by the end of 2001. Corner Bay retains a 3% net smelter return royalty. Once MRR has earned its interest, Corner Bay will receive yearly preproduction royalty payments of $25,000.
Work by MRR has consisted of 38 diamond drill holes totalling 2,700 metres, with the objective of adding resources in the East zone, 200 metres east-northeast of Touquoy, and the Southeast Quarry area. There were 23 previous intersections not included in the resource calculated by Seabrex/Westminer. There were largely in the East zone and averaged 1.56 grams over a width of 27.5 metres.
The stratabound East zone occurs on the nose of the anticline, which has resulted in development of a fairly flat-lying, 20-metre-thick mineralized lens in the shape of a broad inverted U or W. Similar in style to Touquoy, The East zone mineralization differs only in that the alteration is less intense and much more of the gold is related to narrow, parallel quartz veins and a few high-grade argillite beds.
WGM prepared its 405,000-oz. resource estimate for the Touquoy and East zones using the drill results of 106 core holes that pierced the mineralized zones. The East zone remains partially open along strike to the east and southwest, as well as downdip, whereas the down-plunge extension of the Touquoy zone is open at depth.
This summer Aurogin carried out a $100,000 due-diligence-style program at Moose River consisting of drilling and some geochemical sampling, along with a bit of metallurgical testing. To get a better handle on grades, Aurogin tested the Touquoy and East zones, each with a single, 15-cm-diameter percussion hole from which 50-kg samples were taken every one metre. The samples were put through a roll crusher and the plus-30-mesh coarse fraction size sieved out and weighed, with the fines pulverized and bottle-rolled.
“It was quite an elaborate assaying recipe,” says Paterson. “It’s one step better than how the old assaying was done because it’s on a bigger sample, but it’s probably not the right method yet. We’re learning, and have hired a sampling expert.”
The one hole into the main Touquoy zone returned 77.2 metres grading 2 grams, starting from surface. The East zone yielded a 13.6-metre-long intercept grading 1.1 grams between 20.4 and 34 metres of depth.
A third hole, using HQ-size core (63.5-mm), was drilled between the two zones to test the potential for additional mineralization outside of the known resource. This hole hit 20.8 metres grading 2.4 grams at a depth of 11.9-32.7 metres, including 10.8 metres grading 3.3 grams.
No drilling
The WGM report states that “virtually no drilling has been carried out over the 5-km strike length of favourable stratigraphy northeast of the East zone.” Airborne geophysical surveys indicate a continuation of the host stratigraphy along strike, together with the presence of northeast-oriented fault structures. Paterson says geochemical sampling in the past has not been effective. Several new geochem techniques were tested this summer, including mobile metal ion (MMI) geochemistry and quantum particle extraction (QPX). “The QPX seemed to give us some anomalies,” says Paterson, “but it’s still early-days and we want to try some more things.”
Aurogin tested the grindability of the gold-bearing argillite material and confirmed it was easy to grind, with a work index of 7.3.
“The grinding characteristics will not only lead to lower operating costs but lower capital, with a smaller grinding circuit than a typical gold deposit,” states Paterson.
Under the terms of the option agreement, Aurogin has to spend $900,000 by the end of next September. “This will all be part of pushing it toward feasibility,” Paterson says. About 75% of next year’s budget will consist of definition drilling, metallurgical testing and engineering. The remaining 25% will be used to explore for new mineralization.
Efforts are under way to raise the capital to advance the Moose River project. The company has 14.2 million shares outstanding, or 17.1 million shares fully diluted.
Be the first to comment on "Aurogin aims to advance Nova Scotia bulk-tonnage prospect"