Wild Horse, Nev. — With gold prices heading higher and showing no signs of stopping anytime soon, Nevada is enjoying a third wave of gold exploration across the northern reaches of the state.
The first wave came more than a century ago and lasted many decades, with the discovery and exploitation of high-grade gold and silver in such venerable camps as Goldfield and Tonopah.
The second wave swept over Nevada in the 1970s, ’80s and ’90s, with feverish exploration for low-grade oxide and sulphide gold deposits suitable for the pioneering heap-leaching and autoclave techniques being perfected by new players such as American Barrick in the Carlin trend.
In the third wave of exploration, now upon us, we see companies large and small returning to Nevada’s old workings, both high-grade and low-grade, and taking a second look at their deeper, high-grade potential.
Among the juniors now active in the state, there’s no better example of this third-wave mentality than Vancouver-based
The ground lies almost entirely on public lands about 80 miles north of Elko in northeastern Nevada, and 20 miles north of
Access from Elko to Gateway’s core Big Springs property is by Highway 225 north to the small settlement of Wild Horse, and then westward by gravel road to Gateway’s base camp at the Doheny Ranch, which is being rented from
Apart from Big Springs, Gateway has four more gold-exploration properties in the area: Dorsey Creek, southwest of Big Springs; Island Mountain, to the northeast; Golden Dome, immediately south of Big Springs; and Jack Creek, south of Dorsey Creek. All are wholly owned.
“I convinced myself in 2001 that the gold price was going to get elevated,” recalls Gateway President Michael McInnis. “There was no question, with what was going on in the U.S. economy, that it had to go up, and so I wanted to be in gold.”
He and his team then began looking at potential gold acquisitions in Canada, the U.S., Mexico and Chile.
“We went into Nevada because it is one of the premier gold-producing regions of the world, and some hundred and twenty million ounces of gold have been discovered in the state in the past twenty years,” says McInnis. “By anybody’s yardstick, that is pretty impressive.”
He adds: “It isn’t always readily apparent to everybody, but if you’re going to take advantage of a rising gold price in U.S. dollars, the place to be finding gold is in the U.S.A.”
Still looking for the right gold assets, McInnis was introduced in 2002 to Utah-based geologist Donald Merrick and his partner John Zimmerman, who had been quietly assembling a land package north of Jerritt Canyon.
Merrick and Zimmerman assembled the package by systematically re-staking claims AngloGold had let expire on and near the old workings at Big Springs. They then turned around and sold three properties to Gateway in 2002 for 1 million Gateway shares (which last traded at C$1.84 apiece, and numbered 28 million, fully diluted). Merrick and Zimmerman also retain a 2-3% net smelter return royalty on the three properties, and Merrick now works in a consulting capacity as Gateway’s project manager in Nevada.
Says McInnis: “I looked at Don’s properties and picked three, because they’re all a little bit different: Big Springs had high-grade, underground possibilities; Island Mountain is a lower-grade, heap-leachable, open-pittable possibility; and then Golden Dome was blue-sky. That’s something you could put in front of investors and, depending on what they liked, there’d be a property for them.
“It’s a philosophy change,” says McInnis. “We’re no longer just looking for shallow, open-pit, heap-leachable material, as the previous operators did; we’re going after targets that might be a thousand feet below surface but are restricted and high-grade. People used to joke that if you ever drilled below three-hundred feet in Nevada, they’d fire you. Of course, now, that’s all changed.”
Regionally, the area is dominated by major structures that can be picked off from Landsat satellite imagery, low-level aerial photos, and geological mapping.
Gateway sees three sets of structures ripping through its properties and creating conduits for gold-rich fluids: “west-northwesters,” “northeasters,” and a fairly substantial north-south structure running through the whole Independence Range.
“Where these structures come into favourable lithology is where we see the very good high-grade that we’ve been reporting,” says Stanley Keith of MagnaChem Exploration, a geological consultant to Gateway. “When you look at the Jerritt Canyon mines, lo and behold, they’re all tucked in and around these major structures, right where they should be. The reason we picked up the ground where we did is that these structures come up the same way here.”
The Big Springs deposits were explored by Superior Oil and Falconbridge in the 1970s and by Bull Run Gold Mines in the early 1980s. Between 1987 and 1993, mining was carried out by Independence Mining, formerly Freeport-McMoRan Gold, which, at the time, was also part owner of Jerritt Canyon.
During the first two years, the Big Springs mine was a heap-leach operation, exploiting Carlin-type, structurally controlled gold deposits hosted primarily by Mississippian-Pennsylvanian calcareous sediments and secondarily by possibly Jurassic intrusions.
Ore mineralogy was characterized by pyrite, marcasite, arsenopyrite, spahlerite, chalcopyrite, stibnite and gold. Alteration included dolomitization, de-calcification, silicification, sericitization and carbon mobilization.
Oxide mineralization grading 0.058 oz. gold per ton was taken off and leached on various pads, including one across the street from the Doheny Ranch, which AngloGold is still re-contouring as part of its nearly complete mine reclamation activities. (The mine’s ongoing closure and reclamation responsibilities still reside entirely with AngloGold.)
As the miners worked their way down into mixed sulphides grading 0.16 oz. gold, the recovery rate dropped from the mid-80% range down to an unsatisfactory level in the low 60s, at which point the operators built a roaster and brought the recovery rates back into the 90%-plus range for the balance of the mine’s life.
In all, the operators recovered 386,000 oz. gold from five small pits and two large ones. The large pits are named North Sammy and South Sammy.
The average pit grade varied from 0.1 to 0.22 oz. gold per ton, comparable to the now-closed open pits at Jerritt Canyon.
In 1990, however, Minorco acquired Freeport’s Independence Range gold assets and, in 1993, abruptly shut down the Big Springs mine, stopped the pumps, and then dismantled the roaster, the carbon-in-leach plant, and all other surface facilities.
AngloGold, in turn, bought Minorco’s gold assets in 2001, and in mid-2003, AngloGold and Meridian Gold sold Jerritt Canyon to Queenstake.
After securing the Big Springs property in December 2002, Gateway spent much of 2003 drilling 11 gold-bearing structures with 45 holes. Gold mineralization was found in 37 of the holes.
Most of the holes were drilled into the depth and lateral extensions of mineralization at the North Sammy pit, the best result being 58 ft. of 0.78 oz. gold at a down-hole depth of 425 ft. under the pit.
Gateway is also keen to continue exploring the area near the small 701 pit and the stripped-but-unmined 601 resource, immediately east of North Sammy’s southern pit boundary.
Comments McInnis: “I think this whole area around 601 and 701 ultimately is just going to rock. And once we really drill this thing, we’re going to have some serious ounces.”
Drilling into 701 has already returned 154 ft. (from 476 ft.) grading 0.182 oz. gold.
Gateway is also testing its grassroots North Beadles Creek target, in the southeastern portion of the Big Springs property. Results there have included 105 ft. grading 0.14 oz. gold at a down-hole depth of 460 ft.
Merrick notes that the past operators developed 800,000 oz. of gold resources only 500 ft. from surface, and that the average mining width in the pits was 50 ft.
“All that geology projects right from the bottom of the pits,” says Merrick. “We feel that if you extrapolate at depth and have drilling success, you can come up with three to four million ounces.”
An environmental assessment is under way at Big Springs and should be completed by next summer. Says Merrick: “We’re looking at going underground here, so our impact on the environment will be so much less than the old open-pit mines.”
While Big Springs is the main target, Gateway has also been exploring the grassroots Dorsey Creek property, immediately to the west. Dorsey Creek is on the southern side of the mid-Paleozoic, east-west-trending Headwall Fault, which defines a fundamental, stratigraphic change in the district.
Rock units south of the Headwall Fault are extensively jasperized (highly silicified). One zone of jasperization takes the form of a large, bulbous hill, where, in the 1990s, Independence Mining defined a 25,000-oz. gold resource near the surface.
The stratigraphy at Dorsey Creek is generally shallow dipping — anywhere from 20 to 40 toward the northwest, into the Headwall structure.
“We’re currently interpreting this as an ‘updip leakage anomaly’ above more-proximal type, hopefully high-grade gold mineralization associated with a dyke element that fills the Headwall Fault,” says Keith. “One of my favourite things to point out is that every high-grade gold occurrence in this entire mountain range, including those at Jerritt and up here, is within a stone’s throw of a dyke that’s typically intruding a structure.”
Gateway completed geochemical and induced-polarization surveys at Dorsey Creek earlier this year and is now starting a 3,000-metre first round of drilling.
At its Golden Dome property, immediately south of Big Springs, Gateway is exploring what seems to be a steeply plunging anticlinal structure below shallow glacial till.
Work in the past couple of years has consisted of mobile-metal-ion (MMI) soil-geochemical and magnetometer surveying, and now a 3,000-metre drilling program is nearing completion.
Says McInnis: “Our attraction to it was this structure, which was smokin’ hot with Carlin-style indicators and mineralization, and very high numbers in arsenic, antimony and mercury. That’s the good news. The bad news is it’s in quartzite, which is not a good host for many gold deposits.”
At Island Mountain, north of the community of Wild Horse, Gateway is drilling three target areas to determine the potential for a low-grade, sediment-hosted gold deposit that could be mined by open-pit methods followed by heap-leaching.
Gateway drilled 27 holes at Island Mountain last year, adding to the 180 holes drilled there in the 1980s and 1990s by Cordex, Westmont, Kennecott, Aur Resources and BHP Minerals.
Gold was first discovered in the Island Mountain area in 1864, which led to a placer gold rush in 1870. Placer miners, which consisted mostly of Chinese railroad workers, recovered about 40,000 oz. gold from the area between 1873 and 1901. Minor placer-gold activity, as well as antimony mining, resumed during the Great Depression and lasted two decades.
This year, at all its Nevada projects, Gateway is spending some C$7 million following up on targets developed in 2003. By year-end, the company expects to have drilled 30,000 metres in 80-90 holes, one goal being to calculate a resource estimate at Big Springs.
In October, Gateway at long last acquired AngloGold’s full database for Big Springs in return for 60,000 shares and another 120,000 shares upon commercial production from any Big Springs deposits.
The upcoming resource calculation and the overall exploration program will be watched over by geologist Giles Peatfield, Gateway’s “qualified person” under National Istrument 43-101 guidelines.
“I share Queenstake’s view that we’re not a mature camp by any stretch of the imagination,” says McInnis. “This mountain range is really just starting to get cooking.”
At the end of the third quarter, Gateway still had C$10.6 million in working capital and no long-term debt.
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