The old adage that the best place to look for gold is near a gold mine is proving true for
The junior recently closed A $10-million private placement financing of special warrants through Loewen, Ondaatje, McCutcheon (LOM). The financing consisted of 5 million special warrants priced at $2 each. A special warrant is exchangeable for one unit consisting of one share and half a warrant. One full warrant will entitle the owner to buy an additional share at $2.50 for one year.
The financing raises Great Basin’s cash on hand to $15.7 million. Investors recently exercised just under 4.9 million warrants at $1.30 per share and 250,000 warrants at $2 per share, for a total of $6.8 million. The company has about 33 million shares outstanding.
With a re-loaded treasury, Great Basin is intent on advancing the Ivanhoe project with the aid of four drill rigs.
LOM mining analyst Robert van Doorn views Great Basin as a prime takeover candidate and, last January, recommended the issue as a speculative buy at $3.15 per share. In a more recent report, in June, he reiterated his recommendation as the stock hovered just above $2.
Great Basin is part of the group of companies led by Vancouver-based Robert Dickinson and Robert Hunter. “The Two Bobs” have created a loyal following based on their past success in advancing exploration projects, such as Golden Bear, Mount Milligan and Kemess, and then selling them to majors.
Great Basin was formed in December 1997 as a result of a merger between Pacific Sentinel Gold and Consolidated North Coast Industries. The two companies had acquired a 75% interest in the 25-sq.-mile Ivanhoe property from Newmont Exploration and Cornucopia Resources.
Ivanhoe straddles the northern Carlin trend, lying 14 miles southeast of
The property has a long and varied history, which started with mercury mining in the early 1900s. Various companies set their sites on molybdenum, uranium and gold exploration from the 1960s until 1980. U.S. Steel then explored the historic district for gold and outlined a small resource. Cornucopia acquired the property in 1986 and later formed a 50-50 joint venture with Robert Friedland’s Galactic Resources. The pair developed the near-surface Hollister deposit, focusing on delineation and production from oxide deposits minable by open-pit methods. From 1990 to 1995, the short-lived heap-leach mine produced more than 115,696 oz. About 900 drill holes have defined a 2.8-million-oz. resource of mixed oxides and sulphides, contained within 84 million tons grading 0.034 oz. gold per ton.
In 1992, Newmont purchased all of Galactic’s position and half of Cornucopia’s interest for a total of US$20 million in an attempt to expand known low-grade open-pit resources. However, after three years and 80,000 ft. of drilling, Newmont had failed to find an economic deposit that met its minimum operating requirements. Great Basin’s predecessor, North Coast, picked up Newmont’s 75% stake in August 1997 for US$1 million and agreed to contribute US$1 million to the property reclamation fund, purchase an US$800,000 private placement of Cornucopia and spend US$2.8 million on exploration.
In June 1999, Great Basin increased its interest in Ivanhoe to 100% by purchasing Cornucopia’s 25% working interest in exchange for 2.75 million Great Basin shares and 250,000 warrants exercisable at $2. Cornucopia has since undergone a reverse-takeover and now trades as
While past exploration efforts at Ivanhoe focused on near-surface gold resources with open-pit potential, management of Great Basin recognized that these Carlin-type deposits are often underlain by high-grade feeder vein systems and deep, lower-plate, carbonate-hosted high-grade gold deposits. A further 1.5 miles to the east, Great Basin’s geologists identified two major targets, known as Hollister and Hatter. The Hollister disseminated gold deposit was interpreted to have represented a “leakage anomaly” stemming from an underlying high-grade feeder system that had not been systematically explored or drill-tested. The Hollister deposit is unique to the Carlin trend in that it is hosted in a thin veneer of Tertiary volcanic rocks that cover the more typical sedimentary host rocks. During previous drilling, at least 34 holes intersected high-grade veins in the underlying Valmy Formation quartzites, including a 1994 Newmont core hole that intercepted 2.4 ft. of 33.5 oz. gold.
In January 1998, Great Basin targeted this intercept with a fence of six vertical core holes drilled on 25-ft. spacings. One of these holes pierced a high-grade vein shoot of 4.6 ft. grading 11.1 oz. gold and 103 oz. silver within a thicker interval of 10.6 ft. averaging 4.96 oz. gold and 47.8 oz. silver. Another intercept of 12.6 ft. grading 1.63 oz. gold and 39 oz. silver was cut down-hole. Great Basin noted a similarity to the Midas-style veining at Ken Snyder. A further five holes were drilled in August 1998 to test the vein’s direction.
In 1999, the junior carried out a 2-phase drilling program to test the newly interpreted multiple-feeder vein systems beneath the Hollister deposit. A total of 59 holes in 47,827 ft. of drilling tested potential mineral-controlling structures striking northeast, east and northwest. The program resulted in the discovery and initial delineation of the Clementine and Gwenivere high-grade vein swarm systems. Clementine was tested over a strike length of 1,800 ft. in an east-west direction, while Gwenivere was drilled along 1,000 ft. of strike.
The Clementine and Gwenivere vein systems occur as multiple, close-spaced, high-grade gold-silver veins and include multi-stage, silica-healed vein breccias, argically altered breccias and more classical multi-stage colloform banded veins.
Great Basin spent $7.4 million on the property in 1999, including exploration work and acquisition and reclamation costs.
Working from a planned $6-million budget, Great Basin continued drilling through the first half of 2000, extending the strike length and number of drill intercepts on the two vein systems. By June 15, the company had completed a further 54 holes totalling 51,731 ft. and drill-tested the Clementine vein array over a strike length of 2,700 ft, Gwenivere over a strike length of 2,000 ft., and the South Gwenivere over at least 500 ft. The top of the veins range from 250 to 500 ft. below surface. Mineralization extends consistently over vertical depths of at least 500 ft.
Using a cutoff grade of 0.25 oz. gold-equivalent, 53 of 81 holes drilled by Great Basin along the strike of the Clementine, Gwenivere and South Gwenivere vein systems have cut 108 intersections in the Valmy Formation that average 4.7 ft. grading 1.16 oz. gold and 8.24 oz. silver. The composite strike length of the three multi-vein systems exceeds 5,200 ft.
In addition, Great Basin has identified two potential new vein systems: North Rowena, 600 ft. south of South Gwenivere; and the Velvet zone, 1,100 ft. north of Clementine. Follow-up drilling is under way in these areas.
Haywood Securities analysts Glenn Brown and Ed Flood, who continue to recommend Great Basin as a speculative buy, see potential for an inferred resource of 1 million oz. gold grading about 1 oz. per ton.
“Great Basin has been successful at advancing a conceptual target to the stage where the major producers in the area have taken notice,” the pair state in a recent report. “Positive results from the planned stepout drilling program could initiate serious takeout discussions.”
Van Doorn is a bit more optimistic: “We believe a 2-million-oz. target for the high-grade zone is very attainable. Increasing consolidation in the sector will force the large producers to step up their efforts to acquire good properties. The management [the Hunter-Dickinson group] is prepared to sell to the highest bidder.”
He says likely suiters would be Newmont, Franco-Nevada and Placer Dome.
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