Goldspike drills high-grade zinc at Lone Mountain in Nevada

Bruce Durham initially set up Goldspike Exploration (TSXV: GSE) to focus on early stage projects in the Yukon’s White Gold district, and the company went public in August 2011.

Like many others at the time, the veteran geologist was swept up in the Yukon staking rush that heated up after Kinross Gold’s (TSX: K; NYSE: KGC) $140-million acquisition in March 2010 of Underworld Resources and its 1 million oz. White Gold project.  

Durham accumulated 40 properties in the Yukon and narrowed them down to four or five. At the same time, he looked for another project that could be explored during the Yukon’s off-season.

With 35 years in the business and hundreds of contacts, Durham heard about a gold exploration company that in 2007 had drilled five holes in Eureka, Nev. 

One of those holes intersected several intervals of high-grade zinc mineralization, including an intercept assaying 41.3% zinc and 1.4% lead over 4.1 metres.

Durham says he was reviewing dozens of opportunities at the time, but this one “came out of the blue.”

“They only assayed for gold and silver, and by the time they did multi-element assays the drill had already left the property,” he says. “In the 2007–08 malaise they weren’t raising money. Then they were merged with another company, and before they got back to do any more drilling, they’d lost title to the property and it reverted to its original owners.”

When Durham took a closer look at the property, it didn’t strike him as a zinc vein. And he was also aware that there was zinc mining in the area from the 1940s to the 1960s at the nearby Mountain View zinc mine, which had produced 5 million lb. zinc.

“It was hard for me to believe that the previous operators had drilled the needle in the haystack and that was all there was,” Durham recalls. “No follow-up was ever completed.”

After six months of negotiations with the property owners — a private group focused on a rare earth element property in Illinois — Goldspike acquired the claims in June with the help of merchant bank Norvista Capital.  

After fieldwork and more geochemical surveys, prospecting and geological mapping, along with the re-analysis of historical data, Goldspike began drilling the Lone Mountain property on Oct. 1. 

The company has finished the first 11 holes totalling 1,500 metres, and plans to resume the drill program in December.

Durham is pleased with recent assay results. One hole, drilled parallel to a historic zinc discovery hole and beyond the bottom of where drilling had stopped, returned an intercept of 89.9 metres grading 6.2% zinc and 1.3% lead, including 13.7 metres of 10.6% zinc and 0.6% lead. The second hole returned 77.7 metres of 2.8% zinc and 0.3% lead, including 19.8 metres of 9.1% zinc and 0.04% lead.

The two holes were drilled from the same set-up, with the first drilled at 70 degrees and the second at 60 degrees, putting the intersections 30 metres apart.

In the meantime, Goldspike has outlined a strong zinc-in-soil anomaly that accompanies the up-dip projection of the mineralization discovered for a minimum 1,400-metre length parallel to stratigraphy. The anomaly coincides with the near-surface zinc mining that took place at the Mountain View mine. (Mountain View mine sits on a 20-acre claim surrounded by Goldspike’s Lone Mountain claims.) Durham also points out that the company has only drilled on 100 metres of the geochemical anomaly, and that the anomaly extends beyond overburden.

“It’s exciting,” Durham says.  “It’s one of those special situations where we’ve identified a particular project with what we think has excellent potential to host a significant deposit, or several deposits.”

He says the property brings infrastructure, including roads (“you can drive your car right up to the drill”), rail lines, power and a mining community with people who are looking for jobs.

Durham also believes that “zinc is a good place to be” — demand is growing at 5% annually, coupled with decreasing supply, as many older zinc mines have closed or are about to reach the end of their life.

“When you take these larger mines off-line you need something to replace them with, and we just don’t see many large-scale projects coming online,” he says. “The overall world average zinc mine grade is 5.5% and that has been declining, and it’s likely to continue to decline.”

Durham points out that with some of the world’s zinc output produced as a by-product of silver production, falling silver prices have resulted in some mines shutting down in places like China.

While Goldspike will focus on Lone Mountain in the months ahead, the company still plans to run modest programs in the Yukon, where it has 3,000 claims, including a large property west of Kaminak Gold’s (TSXV: KAM; US-OTC: KMKGF) ground and another property next to Atac Resources (TSXV: ATC) Rackla gold project.

The one he particularly likes is called Livingstone, where 50,000 ounces of historic placer gold was mined, and people are still finding nuggets (one was 8 oz. and the other 12 oz.). “They’re huge and no one has ever found the source,” he says. “The geochemistry of the nuggets matches the geochemistry of the vein we found.”

In the meantime, the company has $700,000 in cash, and Durham says Goldspike has shareholders who hold warrants that are in the money, so he thinks there’s a good chance they’ll be exercised and will provide enough money to drill into next year.

“There was only one financing ever done by the company so it was structured well, and it still has its loyal shareholders who are still willing to put up money, so the company is tightly held,” Durham says. “We have a sponsoring broker out of Calgary, and he and his clients own a significant part of the company.”

He says that some of the people intimately involved in financing Goldspike include Sheldon Inwentash of Pinetree Capital and Pat DiCapo of Power One Capital Markets.

As for Durham, who got hooked on geology from looking at the gold samples his grandfather, a prospector, used to bring home from northern Ontario, the thrill is in the chase.

“I like exploration — the treasure hunt side of things,” he says. “I’m not in this to build a mine or be a president of a mining company … the part I like is trying to evaluate projects, and I look at dozens of them at a time on a long-term basis.”