Barkerville sees long-term potential in Cariboo Gold

Barkerville Gold Mines (TSXV: BGM) is in for a busy year at its Cariboo Gold property outside the historic 3 million oz. Barkerville placer gold camp in south-central British Columbia. The junior explorer has plans to begin small-scale underground production at the property’s Bonanza Ledge deposit, followed by a resource update for the project’s most promising assets: Cow and Island Mountains.

Chris Lodder, president and CEO of Barkerville, says during a phone interview with The Northern Miner that the underground mining could test for future production at Cow and Island Mountains — the details of which would be outlined in a feasibility study expected in 2018.

“We’ll start with something small so we can learn how to mine these deposits from underground, and apply it to the rest of the property,” Lodder says, noting the vein-hosted and replacement-style orogenic gold deposits fall within a 67 km long belt of prospective rocks.

Barkerville Gold Mines has 2,120 sq. km of land holdings surrounding the historic Barkerville placer gold camp in south central British Columbia. Credit: Barkerville Gold Mines.

“Anything we build for the long-term will have to be scalable, because we expect to find deposits along the entire mineralized trend … we envision this camp as a 20-year-plus asset,” he adds. 

As of April 4, the company is fully permitted to mine Bonanza Ledge at a rate of 150,000 tonnes of ore per year. Barkerville expects to start production by July, and process the material at the company’s QR milling facility, 110 km south.

After two years, Lodder says the company would switch to mining resources at the BC Vein, a structurally controlled gold vein that subvertically crosscuts the replacement ore at Bonanza Ledge.

Mineralization at Bonanza Ledge was originally mined as an open-pit between March 2014 and April 2015. The operation produced 91,234 tonnes of 8.66 grams gold for 24,000 oz. gold.

An updated, geologically constrained resource announced on April 7 states that the Bonanza Ledge and BC Vein contains 684,900 tonnes of 7.21 grams gold per tonne as measured and indicated, and 108,100 tonnes of 5.34 grams gold as inferred.

The company is continuing with a 130,000-metre drill program focused largely on Island Mountain, which builds upon a 60,000-metre campaign last year at Cow Mountain.

The rolling topography surrounding Barkerville’s landholdings outside the town of Wells, British Columbia. Photo by Maggie Layman.

Lodder says the company wants to drill enough metres to geologically constrain the upcoming resource model, and not over-rely on statistical interpolation, as was the case in previous resource estimates at the property.

“We don’t believe in the resource we inherited,” he says, referring to the 2012 incident where previous management announced that Cow Mountain had 10.6 million oz. gold, which triggered the British Columbia Securities Commission to issue an 11-month cease-trade order, and call on the company to revise the estimate to meet National Instrument 43-101 standards.

“With these structurally controlled deposits you need a lot more drilling to get a competent resource that you’ll go to feasibility with. You’re looking at spending $25 million for every million ounces of indicated resources.”

A revised 2015 resource estimate says that Cow Mountain has 35.8 million indicated tonnes at 2.4 grams gold per tonne for 2.8 million oz. gold, plus 27.5 million inferred tonnes at 2.3 grams gold for 2 million oz. gold, using a 0.5 gram gold cut-off. The deposit was the site of an underground mining operation between 1952 and 1993 — the Cariboo Gold Quartz mine — which saw 1.7 million tonnes of production between 12.5 and 18.8 grams gold, for a total of 626,800 oz. gold.

Although no resource is outlined at Island Mountain, over 603,800 oz. gold at grades between 10.9 and 20.9 grams gold was produced from the deposit’s Aurum and Mosquito Creek underground mines between 1934 and 1987.

“Previous producers found high grades, but keep in mind that they were being selective, and we’re not going to do that. We’re looking for corridors of higher vein densities, which means more tonnage and lower grades,” Lodder says, adding that Island Mountain appears to fit the bill. 

“We always liked Island Mountain. The historical data and some of the underground mapping and sampling we did last year really indicated that we see much higher vein densities. The mineralization would be more amenable to underground mining rather than open-pit, which is environmentally friendly and easier to permit.”

Drilling at Island Mountain has established new vein corridors, and expanded upon previously known mineralized zones, with highlights of 24.7 grams gold over 6.6 metres, 12.5 grams gold over 3.7 metres and 21.2 grams over 5.1 metres. 

But what makes Island Mountain attractive as an exploration target, the technical report states, is that it falls within a 2.4 km long mineralized trend — almost twice the length of Cow Mountain.

“We’ve drilled thousands of metres and mapped kilometres of underground drives to figure out what’s going on geologically, and we realized there’s a repetitive control to mineralization that we can apply to our drilling,” he says. “So instead of hitting mineralization within three out of 10 holes, we now hit our targets in 10 out of 10 holes, and that’s been a real game changer for this project.”

An analyst report from Haywood Securities, which initiated coverage of Barkerville on March 30, agrees that the previous resource estimate for Cow Mountain is “technically deficient.” The report predicts that Cow Mountain’s resource could drop to 750,000 oz. gold in the new resource estimate, whereas Island Mountain could contain upwards of 1.25 million oz. gold.

The firm speculates the property could be an “acquisition target for a producer looking to add to its long-term project pipeline,” and values Barkerville shares at $1.

“We’re looking at internal financing from the group, so we won’t look to do anything major until we get to the stage where we decide if we’re going to build something on-site,” Lodder says.

Shares of Barkerville have traded within a 52-week range between 41¢ and 72¢, and closed at 63¢ at press time. The company has 310.3 million shares outstanding for a $214.3-million market capitalization.