Kodiak invigorates forgotten gold camp

SITE VISIT

BEARDMORE, ONT. — Multi-ounce gold grades from Kodiak Exploration’s (KXL-V, KXLAF-O) Hercules project, located in the B e a rdmore – Geraldton greenstone belt of northwestern Ontario, have woken up the sleepy old gold camp, triggering a staking

rush and area play.

Despite historic production of more than 4 million oz. gold, the Beardmore-Geraldton belt has largely been ignored for decades. The Rodney Dangerfield of greenstone belts, it has never really garnered much respect compared with the prolific Red Lake and Timmins-Kirkland Lake- Abitibi belts, located to the west and east, respectively.

That changed last October, when Kodiak Exploration announced high-grade drill intercepts and channel samples in a series of newly discovered quartz-carbonate vein structures on its Hercules property. The company has identified more than 5 km of the structures containing significant visible gold mineralization.

Fuelled by successful initial results, the junior has focused exploration on Golden Mile — a vein structure at least 2 km long where channel sampling has tested roughly 400 metres of trench exposure and returned significant gold grades, including 33 grams gold per tonne over 11.6 metres in a swell or “blow-out” within the structure. So far, the vein shows good continuity of mineralization along strike.

Drilling designed to test the depth extension of the veins also returned good numbers with intercepts of up to 3.6 metres grading 358.6 grams gold in hole HR07-51, including a 0.3-metre section running a whopping 3,876 grams gold. Needless to say, the system certainly appears strongly mineralized.

Additionally, geophysics indicate the structure likely continues at least another 2 km to the northwest — giving Kodiak an attractive surface exploration target this upcoming season.

“The exploration team is extremely excited about the rapid development of the Hercules project,” says Brian Maher, Kodiak’s vice-president of exploration. “In a very short period of time, drilling has significantly expanded the scale and geometry of this system both to depth and along strike.”

Enticed by the magnitude of gold grades, the strike extension of the vein system and the area play it has generated, The Northern Miner visited Hercules recently. Unfortunately, the trench-exposed vein was covered by light snow, but Kodiak’s exploration crew removed the snow from the surface exposure of the quartz vein, revealing a section with abundant coarse visible gold at surface. Some independent confirmation sampling with a rock hammer turned up additional visible gold throughout several sections of the vein.

Late last year, the company closed a $54-million bought-deal financing, selling just under 2.5 million flow-through shares at $4.80 apiece and over 11 million non-flow- through shares at $3.80 each. Dollars are earmarked for ongoing work at Hercules, but the company plans to allocate some of the funds toward potential new acquisitions.

With its treasury filled, Kodiak is now in the midst of a 60,000- metre drill program designed to test the Golden Mile vein system and generate data for an initial resource estimate. The company is drilling at 30-metre spacings along the Golden Mile system and has three rigs active on the Hercules project.

A back-of-the-napkin estimate on the Golden Mile quartz vein structure could see a 3-metre-wide vein projected to about 100 metres depth and along 1.5 km of strike with the potential to host roughly 1.5 million tonnes of material, but drilling will tell. The company believes Hercules has multimillion ounce gold potential.

Kodiak’s drilling to date has tested the Golden Mile vein to only about 130 metres depth. A general rule of thumb applied to Archean vein systems is that the depth extent of the structures tends to average roughly half its surface length; given the current projected 4 km of strike, the vein could have deep roots.

Interestingly, some of the drill holes have intersected narrow intervals of the vein (from 0.3-1 metre) with grades of 1-3 grams gold indicating a pinch-and-swell structure and a nuggety characteristic. Kodiak may find itself needing to extract bulk samples from the Golden Mile vein to ascertain

a more representative grade for the system.

The company notes that every one of its 70 drill holes to date has cut gold mineralization — something it says is unusual in an Archean vein system.

Besides Golden Mile, the company has identified several other sub-parallel gold-mineralized vein structures on the Hercules property. The Yellow Brick Road vein, about 1 km northeast of Golden Mile, has been exposed over a strike length of more than 1.2 km with drilling and channel sampling encountering high-grade gold values.

The Marino vein — one of a swarm of vein structures between Golden Mile and Yellow Brick Road — returned a shallow drill intercept of 1.6 metres at 38.5 grams gold in hole HR07-16. Kodiak says it has identified at least nine parallel veins in this area.

The company says its exploration plan for this year will start from the known Golden Mile vein system, working outwards.

The Archean quartz-carbonate vein-hosted gold mineralization occurring at Hercules is associated with the Elmhurst Lake grano-dioritic intrusion. The intrusive is situated in the Beardmore- Geraldton greenstone belt –a roughly 35 by 140-km-long sequence of metavolcanics and metasediments that extends eastwards from Lake Nipigon through to the Long Lac area.

Visible gold in the vein structures is often accompanied by pyrite and base metal sulphides.

Kodiak also recently announced initial drill results from its Sleeping Giant nickel-copper project in the Beardmore-Geraldton belt. The first drill hole cored 27.1 metres of 0.49% nickel and 0.25% copper including a 5.1-metre section running 1.5% nickel and 0.44% copper. Narrow intervals of gold, platinum and palladium mineralization were also noted.

Other players

Reported production from the Beardmore-Geraldton greenstone belt is pegged at about 4.1 million oz. gold from ore that averaged 12.7 grams gold. Past production came from 14 mines that operated from the mid-1930s through to about 1970.

The largest historic operation in the belt was the MacLeod- Cockshutt mine near Geraldton.

Operated from 1938-1968 by a predecessor company to Lac Minerals, the mine produced almost 1.5 million oz. gold from ore averaging 4.8 grams gold in a banded iron formation sequence.

The past-producing Leitch gold mine, now 63%-held by Roxmark Mines (RMK-V, RMKMF-O), is situated near Beardmore and was operated by a predecessor company of Teck Cominco (TCK.B-T, TCK-N) from 1938-1968. Underground operations produced about 850,000 oz. gold from ore averaging 31.5 grams gold with workings extending to depths of around 1,500 metres. Mineralization was hosted in high-grade vein structures within metavolcanics.

A longtime explorer in the region, Roxmark has also consolidated interests in several other past-producers in the belt, including: the Northern Empire (historic production of about 149,000 oz. gold), Sand River (50,000 oz. gold), Magnet (152,000 oz. gold), Bank-field (66,000 oz. gold), and Little Longlac (605,000 oz. gold) mines. The junior wants to restart operations at Northern Empire. It plans to dewater the past workings, begin an underground drill program and extract a 4,500-tonne bulk sample as part of a feasibility study.

Ontex Resources (ONT-T, OXRSF-O) holds the Brookbank project, which holds a historic resource estimate (from the 1980s) of 3.2 million indicated and inferred tonnes grading 6.6 grams gold within five zones (using a 2- gram gold cutoff grade) for about 695,000 contained ounces.

Kodiak’s recent discoveries have also spurred a resurgence in new exploration activity by other juniors throughout the belt.

Alto Ventures (ATV-V, ALVLF-O) has been an active explorer in the area for years and holds five projects in the Beardmore-Ge
raldton belt (Mud Lake, Green Oaks, Cote-Archie Lake, Cote-801 and Expansion Lake) in the area around Hercules.

Alto’s Mud Lake project is optioned to Wescan Goldfields (WGF-V, WEGOF-O), which is earning a 50% interest for exploration commitments.

The junior has also optioned out its Cote-Archie Lake property to Kodiak, which is earning a 51% interest for $1 million in exploration over three years. Several trenches on the property have yielded significant gold mineralization in a mafic volcanic sequence that is on strike with the old Leitch mine.

Sage Gold (SGX-V, SGGDF-O) is another junior that has come into the spotlight with its half-dozen projects in the Beardmore area. In early 2007, the company grabbed market attention when it drilled a couple of holes that returned significant copper and nickel grades on its Jacobus property, just northwest of Hercules. A historic resource at Jacobus reviewed about 850,000 tonnes of 0.4% copper and 0.4% nickel hosted in a lens within a layered gabbroic sill sequence.

Kodiak land

In the fall, after the major discoveries on its 30-sq.-km Hercules land package, Kodiak quietly embarked on an aggressive claim-staking program throughout the Beardmore-Geraldton belt. It now controls about 1,400 sq. km– a major portion of the entire camp. Most of the newly acquired ground is masked by overburden, a factor that has prevented any thorough past exploration. But given its success in peeling back the glacial till at Hercules, the company would like to try its luck over the rest of the gold belt.

Kodiak’s staking initiative gives it an attractive regional-scale footprint in the reactivated gold belt — something that will not go unnoticed by ounce-hungry senior companies should the junior prove up a major resource at Hercules.

Outside of the belt, Kodiak holds its Caribou Lake project on the north shore of Great Slave Lake in the Northwest Territories, where it has identified significant copper, nickel, cobalt and platinum group metals within a layered mafic intrusive complex. It also has the Nighthawk nickel project, near Timmins, and is exploring at its Otish Basin uranium project in Quebec.

Given its 88.3 million shares outstanding and recent $2.80 share price, Kodiak posts a market capitalization of about $250 million. The stock has a 52-week trading range of 35-$5.04.