EXPLORATION 1998 — Grayd prepares exploration program on key Alaskan projects

Recent acquisitions by Grayd Resource (GYD-V) have significantly increased its position and exposure in the state of Alaska such that it now holds a portfolio of 19 properties in seven districts.

Formed in 1996, on the heels of the Kudz Ze Kayah and Wolverine polymetallic massive sulphide discoveries in the Yukon Tanana belt in southeastern Yukon, Grayd has focused on exploring a similar package of rocks in neighboring Alaska.

The Vancouver-based junior initially acquired the right to earn a 100% interest in five properties in the Bonnifield district, 55 miles southwest of Fairbanks, from Pacific Northwest Resources (PNR), a private Alaskan company. Grayd is required to spend $3 million on exploration by Oct. 26, 1999, and issue a total of 1 million shares to PNR.

Commenting on the acquisition, Grayd director Peter DeLancey, who is also the president of Atna Resources (ATN-T), says: “As a geologist, it’s very rare to go into the field and see a property as advertised, and in this case the property was better than advertised.”

Additional staking increased Grayd’s position in the Bonnifield area to 21,500 acres (34 sq. miles). Grayd’s properties, which are all underlain by a thick sequence of Mississippian-age volcanic rocks, consist of Dry Creek, Anderson Mountain, Sheep Creek, Daniels Creek and Upper Kansas Creek.

Intermittent exploration work over the past 20 years revealed both massive sulphide and low-grade gold mineralization on the properties. The most advanced project is at the 15-sq.-mile Dry Creek property, where volcanogenic massive sulphide (VMS) mineralization was first discovered in 1976. Subsequent work, including extensive soil geochemistry, geological mapping, limited geophysical surveys and 43 diamond drill holes, defined the WTF zone on the northern portion of the property and the Red Mountain zone to the south.

Mineralization in the Dry Creek area occurs in an altered felsic volcanic and sedimentary sequence of Late Devonian-Mississippian Totatlanika schist.

The WTF zone occurs on the northern limb of an east-west-trending synclinal fold structure. It hosts a geological resource of 3.1 million tons grading 6.4% zinc, 2.7% lead and 0.1% copper, plus 0.03 oz. gold and 6.7 oz. silver per ton.

Most of the work done by Grayd to date has focused on the Red Mountain zone, which occurs on the southern limb of the synclinal structure, 3 km southwest of the WTF zone. At Red Mountain, the steeply-dipping DC North massive-sulphide horizon is one of a number of mineralized horizons that occur within the altered felsic volcanics, at the contact of an overlying sedimentary package.

The Red Mountain area is rugged, and is only accessible by air. The hillsides are covered with talus, and less than 10% of the bedrock is exposed.

In 1996, drilling was limited to six shallow reconnaissance holes on the DC North zone, where a hole drilled in 1976 encountered 38 ft. averaging 5.3% zinc, 2.2% lead and 0.3% copper, plus 0.04 oz. gold and 2.2 oz. silver, starting at a depth of 128 ft. The 1996 program was affected by poor core recovery. The best hole intersected 17.6 ft. averaging 6.7% zinc, 3.18% lead and 0.6% copper, plus 0.002 oz. gold and 0.34 oz. silver, starting at a depth of 61 ft.

A reconnaissance geochemical sampling program indicated the mineralized trend extended an additional 8,200 ft. to the west. Soil samples in the new extension ranged up to 0.65% zinc, 2.5% lead and 0.36% copper, plus 1.6 parts per million (ppm) gold and 229 ppm silver. In the overlying talus, massive sulphide rubble was found along trend, returning values as high as 35.4% zinc, 14.1% lead and 0.12% copper, plus 0.16 oz. gold and 10.8 oz.

silver.

Encouraged by the initial results, Grayd carried out a $1.5-million exploration program in 1997 consisting of a regional airborne electromagnetic (EM) and magnetic surveys, horizontal loop EM ground surveys, geological mapping and geochemical sampling, plus 12,900 ft. of diamond drilling in 37 holes. Most of the work concentrated on the DC North zone, where ground geophysical surveys defined a 6,000-ft.-long conductor extending along strike.

Stepping out 165 ft. west of the 1976 discovery hole, hole 97-1 intersected 37 ft. averaging 7.6% zinc, 3.18% lead and 0.26% copper, plus 0.03 oz. gold and 3.36 oz. silver, starting at a downhole depth of 135 ft. Hole 97-2, which was drilled downdip of the first hole, encountered a 57-ft. interval of disseminated to massive sulphides, including 13 ft. averaging 4.5% zinc, 0.48% lead and 0.04% copper, plus 0.001 oz. gold and 0.084 oz. silver at a depth of 222 ft.

A further 400 metres to the west, hole 97-30 hit a 4.2-ft. interval of 16.08% zinc, 8.26% lead and 0.87% copper, plus 0.24 oz. gold and 10.7 oz.

silver, beginning at a drilled depth of 58 ft. Downdip, hole 97-31 encountered 8 ft. averaging 12.72% zinc, 6.45% lead and 0.36% copper, plus 0.12 oz. gold and 31 oz. silver, starting at a 95-ft. depth.

Holes 97-3 and 97-4 were drilled 100 ft. to the east of holes 1 and 2. Hole 97-3 cut three narrow high-grade intervals, including 5.5 ft. grading 20.01% zinc, 8.52% lead and 0.52% copper, plus 0.043 oz. gold and 7.76 oz. silver at a depth of 135 ft. Hole 97-4 intersected 42. ft. of massive sulphides downdip of hole 3, including 18 ft. (approximate true width of 10 ft.) averaging 25.9% zinc, 11.7% lead and 0.88% copper, plus 0.1 oz. gold and 10.1 oz. silver at a depth of 228 ft.

Stepping out a further 100 ft. to the east, hole 97-7 intersected two massive pyrite zones, including 10 ft. of 0.83% zinc, 0.4% lead and 0.31% copper, plus 0.002 oz. gold and 1.14 oz. silver at a downhole depth of 119 ft. Downdip of hole 7, hole 97-8 encountered several intervals of mineralization, including a 13-ft. section averaging 3.13% zinc, 0.78% lead and 0.68% copper, plus 0.015 oz. gold and 1.1 oz. silver, overlying a 3-ft.

interval of 17.2% zinc, 5.35% lead and 0.59% copper, plus 0.1 oz. gold and 6.64 oz. silver, beginning at a depth of 242 ft.

Holes 97-13 and 97-14 were collared a further 100 ft. to the east. Hole 13 encountered only stringer to semi-massive mineralization, but hole 14 intersected two massive sulphide zones: an upper 57 ft., starting at 187 ft., averaging 4.88% copper and 0.37 oz. silver over the first 21 ft. and grading 2.5% zinc, 0.3% lead and 0.64% copper, plus 0.016 oz. gold and 0.37 oz. silver over the bottom 32 ft; and a lower zone averaging 12.56% zinc, 4.47% lead and 0.3% copper, plus 0.041 oz. gold and 6.75 oz. silver over 7 ft. at a 307-ft. depth.

Hole 97-26 stepped back from holes 13 and 14 to further cut the zone at depth. It encountered three mineralized intervals between a downhole depth of 464 and 492.5 metres, including 6 ft. grading 9.09% zinc, 3.41% lead and 0.11% copper, plus 0.04 oz. gold and 3.97 oz. silver.

Stepping out 100 ft. to the east, hole 97-23 hit two narrow intervals of mineralization, including a 2-ft. section grading 8.14% zinc, 3.67% lead and 0.2% copper, plus 0.061 oz. gold and 60.53 oz. silver, starting at a depth of 128 ft. No significant results were reported for hole 97-24, drilled downdip of hole 23.

A further 100 ft. to the east, hole 97-10 intersected a 2-ft. interval grading 6.96% zinc, 3.8% lead and 0.13% copper, plus 0.017 oz. gold and 3.1 oz. silver, at a downhole depth of 228 ft. Hole 97-9, which was drilled from the same site but angled to the east, intersected a couple of narrow intervals, including a 2.5-ft. section grading 1.63% zinc, 0.63% lead and 0.39% copper, plus 0.14 oz. gold and 43.2 oz. silver at a depth of 167 ft., and a 2-ft. interval grading 1.31% zinc, 0.62% lead and 0.68% copper, plus 0.14 oz. gold and 11.23 oz. silver, starting at a depth of 182 ft.

No significant results were report for holes 97-15, 16 and 17, which were collared an additional 300 metres to the east.

While drilling to date shows highly variable grade and thickness in the Discovery area, Grayd says results indicate higher-grade mineralization is plunging to the east. The planned 1998 drilling program will target the projected plunge of the zone at depth.

The Fosters Creek
area also remains a very prospective target for follow-up drilling in 1998. Fosters Creek is 2,600 ft. west of the Discovery area, along strike. Only four holes tested this area in 1997, returning some attractive high-grade numbers.

Hole 97-5 intersected 16.5 ft. averaging 5.79% zinc, 2.79% lead and 0.19% copper, plus 0.07 oz. gold and 3.8 oz. silver, starting at a depth of 56 ft.

Hole 97-6 was drilled downdip of hole 5 and intersected two intervals. The upper zone averaged 7.03% zinc, 3.26% lead and 0.2% copper, plus 0.01 oz.

gold and 2.23 oz. silver over 5 ft., starting at a 20-ft. depth; the lower zone averaged 5.11% zinc, 3.41% lead and 0.17% copper, plus 0.02 oz. gold and 8.5 oz. silver over 7 ft., at a depth of 60 ft.

A second fence of holes was drilled 100 ft. further to the west. Hole 97-32 encountered 19.2 ft. averaging 15.74% zinc, 7.47% lead and 0.4% copper, plus 0.03 oz. gold and 4.21 oz. silver, starting at a depth of 92.1 ft. Downdip, hole 97-33 intersected 23.5 ft. averaging 15.13% zinc, 6.59% lead and 0.35% copper, plus 0.03 oz. gold and 9.74 oz. silver, beginning at a depth of 128 ft.

About midway between the Discovery and Fosters Creek areas is the Lago Creek area, where three fences of holes tested an area 500 metres along strike.

Drilling intersected several mineralized zones, which Grayd says are difficult to correlate. Selected results include 12 ft. averaging 5.88% zinc, 2.89% lead and 0.18% copper, plus 0.002 oz. gold and 0.26 oz. silver at a drilled depth of 72 ft. in hole 97-11 and 7 ft. of 6.77% zinc, 3.26% lead and 0.21% copper, plus 0.003 oz. gold and 0.37 oz. silver at a depth of 44 ft. in hole 97-35.

Several reconnaissance holes were also drilled in the Red Mountain area, including a hole into the DC South zone that intersected 7.7 ft. grading 8.16% zinc, 1.12% lead and 0.16% copper, starting at a depth of 188.2 ft.

When drilling resumes on the Dry Creek property in late May-early June, Grayd will focus on testing the downdip extensions in the Discovery area before moving west to Fosters Creek. Management is also planning about a month’s drilling on the Anderson Mountain property, 18 miles southwest of Dry Creek. There, massive sulphide float up to 4-5 ft. in diameter is traceable over a trend coincident with an open-ended, 4,500-ft-long EM conductor. Grab samples from the float averaged 14% combined lead and zinc, 2.5% copper and 8 oz. silver.

“It’s a really exciting property on the basis that the boulders are indicative of something at depth that could be quite large,” says DeLancey.

The host rocks are Lower

Paleozoic sericite-carbonate-altered schist. Previous drilling was limited to three holes, which partially tested a 1,000-ft. strike length of the main horizon. The first hole was collared in a mafic dyke and missed the massive sulphide zone. The second hole, 200 ft. west of the first, intersected a 5.6-ft. true thickness grading 8.5% zinc, 2% lead, 1.2% copper and 1.79 oz.

silver, starting at a depth of 198 ft. The final hole, 820 ft. east of the first, hit a 2-ft. interval grading 22% zinc, 4.8% lead, 0.64% copper and 4.7 oz. silver, starting at a depth of 138 ft.

In 1996, Grayd carried out extensive soil geochemistry and completed several lines of ground geophysics on the Anderson Mountain property in preparation of drilling.

In early January of this year, Grayd acquired an additional 14 Alaskan properties from Pacific Northwest Resources and Pacific Alaska Resources, including two projects that are joint ventured with major mining companies.

In consideration for a 100% interest in the properties and joint-venture interests, Grayd is required to issue a total of 300,000 shares and make certain exploration expenditures.

The two joint-venture projects include a 17.5% interest in the Delta project with Inco’s (n-t) U.S. exploration subsidiary, American Copper and Nickel, and a 40% interest in the Bonnifield project with Inmet Mining (imn-t).

Grayd officials are excited about the potential of the Delta project, where more than 40 massive sulphide prospects have been discovered. Drilling to date has tested 18 of the prospects to some degree, defining seven zones of interest. The project covers 28,500 acres, or 44 sq. miles, and lies 180 miles southeast of Fairbanks in the east-central part of the Alaska Range.

American Copper and Nickel has spent US$5.5 million exploring for polymetallic massive sulphide deposits since forming the Delta joint venture in 1994. The company has concentrated on a Devonian-age greenschist metamorphic rock package informally called the Delta schist belt.

The massive sulphides are found to occur almost exclusively in two stratigraphic series known as Drum and Lagoon.

Grayd can increase its interest in the project to 38% by electing to fund a proposed US$1.7-million exploration program in 1998. Inco has already decided it won’t fund the 1998 program.

American Copper’s work has laid the ground work for a proposed drilling program focusing on three project areas, SuperCub-Trio, DD and DW-LP.

An extensive multi-element soil anomaly is defined in the SuperCub-Trio area, where high-grade massive-sulphide float has yielded 20% combined lead-zinc and 1% copper, as well as more than 5 oz. silver and 0.33 oz.

gold, valued at US$300-400 per tonne. Four drill holes in 1996 failed to find the source of this material, though

one of the holes intersected a

25-ft. section of semi-massive and massive barren pyrite along a siliceous metasiltstone horizon

that explained the targeted EM conductor. A re-interpretation of the geology and follow-up geochemical sampling in 1997 outlined 2 anomalous trends that warrant follow-up work.

The DD North and South deposits are hosted in rhyolitic metavolcanics. A drilled resource stands at 4.2 million tons, with a probable resource of 7.7 million tons at grades equivalent to US$100-120 per ton. There remains 4,000 ft. of untested stratigraphy between the North and South deposits, which American Copper feels could hold considerable upside potential.

American Copper also believes the DW-LP system, where one extensive mineralized horizon is segmented by recent faulting into five zones, holds upside potential for a 20-to-30-million-ton body at grades that could support development. The DW-LP system contains a drilled resource of 7.9 million tons at grades equivalent to US$69 per tonne, with a probable resource estimated at 19.3 million tons. Economic development of the system, though, would require the discovery of larger high-grade zones.

The Bonnifield joint venture with Inmet covers 24,500 acres, or 38.5 sq.

miles, in eight properties, situated near Grayd’s other holdings in the Bonnifield mining district. The properties cover massive sulphide occurrences associated with felsic volcanics in both the Totatlanika schist and the older Birch Creek schist. Only one of the properties has seen previous drilling.

Inmet has spent $1 million since then joint venture was formed in 1996. No exploration program has been announced for 1998.

Of the other 12 newly acquired, wholly-owned properties, which are located in the interior and in the pan-handle, four are reported to be at the drill-stage, while the remainder are grassroots. President John McCluskey says there is interest from majors and juniors in optioning some of these properties.

Grayd has 12 million shares outstanding, or 14.8 million fully diluted. Last fall, the company raised $5 million with two separate non-brokered private placements. Atna Resources purchased 1.5 million units of Grayd at a price of $2

per unit, while Altamira Management bought 1 million units at the same price.

With $4.7 million remaining in its treasury, Grayd is planning an aggressive $5-million exploration program in 1998. McCluskey anticipates further financing will be carried out over the summer.