A small Nova Scotian exploration company led by William Felderhof believes a geological model developed by an Aussie junior to exploit the Bendigo goldfields in Australia is applicable to gold deposits in Nova Scotia.
Through the years, the Meguma gold terrain in Nova Scotia has drawn comparisons to the more prolific Bendigo gold camp, based on the many striking geological similarities between the two terrains. Lithologies are similar, as are age of the host rocks, style of mineralization and grades. And significantly, the deposits are generally found at, or close to, the anticlinal axis of the folded rock units.
The “ribbon model,” as proposed by Australian-listed
Bendigo Mining has used its ribbon model theory to promote its New Bendigo project and attract more than A$100 million in financing since 1997, including a A$50-million investment by South Africa’s
Discovered in 1851, the Bendigo gold camp in Central Victoria ranks behind Kalgoorlie’s Golden Mile as the second-largest producing goldfield in Australia. By the time mining ceased, in 1954, something in the order of 22 million ounces had been mined (including 18 million oz. of hard-rock production and 4 million oz. of alluvial production) from the thousands of small mining leases that historically supported some 1,300 different mining companies. The most productive portion of the Bendigo district came from 15 anticlines within an area measuring 15 km long by 5 km wide.
It was recognized very early on that gold-bearing quartz reefs occurred close to the anticlinal axis, forming ribbons, which repeated with depth. This early breakthrough in the predictability of the gold-bearing reefs led to the practice of deep shaft-sinking on productive anticlines as the main exploration tool — a practice which formed the basis of much of the exploration success and long history of production in the field.
More than 5,000 shafts were sunk on the Bendigo goldfields through the years. At least 140 shafts were deeper than 300 metres, 67 exceeded 600 metres, and 11 were well over 1,000 metres deep on three separate anticline structures. The two deepest shafts extended to 1,312 metres and 1,406 metres. And yet, despite the high degree of shaft sinking, most of the camp was mined to depths of less than 200 metres.
By comparison, gold was discovered in Nova Scotia in 1861 and over the course of the next 80 years or so, a reported 1.2 million oz. were mined sporadically from 64 or so small-scale operations scattered across the southern end of the province. Most of the Meguma discoveries were found by “boot and hammer” in the late 1800s and early 1900s. For the most part, these were exposed or near-surface showings, says Michael MacDonald, a mineral promotion geologist with Nova Scotia’s Natural Resources department. MacDonald still believes there is good potential for discovering additional deposits, as much of the Meguma is covered by a fairly extensive blanket of till.
“Production in the Meguma is generally shallow,” MacDonald told delegates at the province’s 2003 year-in review in Halifax. “We have only scratched the surface of these mesothermal deposits in Nova Scotia.”
Most of the early mining operations never went beyond a depth of 200 metres, though there were notable exceptions. The Sterling barrel lead in the Oldham district of Halifax Cty. was worked to a depth of more than 450 metres. In recent years, several of the historic camps were drill-tested to depths exceeding 400 metres, including Dufferin and Tangier. Seabright Resources encountered narrow gold-bearing quartz veins to a depth of more than 600 metres while drilling the Beaver Dam project in the 1980s.
Nova Scotia’s Meguma is about half the size of Australia’s Victoria gold fields. The Meguma terrain underlies much of southern and western Nova Scotia, and is separated from Avalon terrain rocks in the northern part of the province by the major east-west-striking Cobequid-Chedabucto fault boundary. Gold mineralization in the Meguma is found primarily in narrow mesothermal quartz-vein systems hosted in a Cambrian-to-Ordovician turbidite sequence of meta-sedimentary rocks. The Meguma group has been sub-divided into a lower meta-sandstone dominated Goldenville Formation and an overlying slate dominated Halifax Formation. The turbidite sequence is estimated to be at least 10-14 km thick.
These rocks were subjected to intense compression and regional greenschist facies metamorphism during the Acadian Orogeny, forming a series of upright, isoclinal, northeasterly striking folds. Late in the folding sequence, a complex array of quartz veins — many of them, auriferous — were emplaced into the Meguma. This sequence was intruded by Late Devonian granites, which, according to provincial government geologists, appear have no bearing on the gold mineralization.
The occurrence of stratabound, gold-bearing, bedding-parallel quartz veins and discordant quartz veins in a folded and sheared sequence of interbedded slate and greywacke is characteristic of the Meguma. These narrow vein deposits are associated with flexural folding and occur in the hinges or along the limbs of steeply dipping, tight, anticlinal structures. “It’s well-recognized that the primary mechanism for these fold developments and associated veins is that of flexural folding,” says Rick Horne, a provincial government geologist. There is a whole array of vein structures associated with flexural folding, including primary bedding concordant veins, en echelon veins, saddle reefs, angulars, and discordant veins. “All these veins are synchronous and all are auriferous in places,” Horne states. “Their distribution is highly predictable in terms of looking for new deposits and, more importantly perhaps, the exploring and developing of known deposits. You expect to find these things on steep limbs and in fold hinges — steep limbs, because that’s where there is high shear strain, and fold hinges, because you get structures developing in there, and fluids are focused into those areas.”
During the mid-to-late 1980s, Nova Scotia enjoyed a gold exploration boom led by Seabright Resources — a boom that was fuelled in part by flow-through financing. During its height, there were some 35 junior companies exploring for gold in Nova Scotia, with annual expenditures approaching $100 million in 1987 and 1988.
However, a series of disappointing results from major underground bulk-sampling programs on some of the province’s most advanced projects, along with a very public spat between Australia’s
Seabright was originally formed by Halifax-based businessman Terence Coughlin, who was drawn to the province’s historic gold mining camps in the early 1980s, Seabright concentrated its efforts on establishing the underground potential at several narrow quartz-vein deposits in the Meguma, including Beaver Dam, Forest Hill and Caribou.
These vein deposits, notorious for their narrow pay rich zones and spectacular, nuggety, coarse-grained gold specimens, proved to be “pockety” in nature and prone to major dilution problems.
Seabright went underground at Beaver Dam, with a decline in 1986 to conduct extensive bulk sampling. At the time, the company was promoting the deposit as containing proven and probable reserves of 1.5 million tonnes grading 9.26 grams, equivalent to 454,000 oz., to a depth of 400 metres. A further 342,000 of possible ounces were projected to a depth of 700 metres in 1.1 million tonnes averaging 9.26 grams. The estimate had been independently prepared by MPH Consultants, based on 155 drill holes totalling some 33,000 metres.
In conjunction with the Beaver Dam project, Seabright was also carrying out extensive underground bulk sampling at Forest Hill, 40 km southeast of Antigonish, where a shaft had been sunk to explore the Schoolhouse package of veins. A 1986 Seabright annual report quoted Forest Hill as having a drill-inferred resource of 300,000 tonnes averaging 18.8 grams, equivalent to 181,000 oz., to a depth of 250 metres. Eventually, 10,000 metres of underground workings were established on the 155- and 200-metre levels of Forest Hill, complemented by 22,500 metres of surface and underground drilling in 242 holes. It is estimated that at least $20 million was spent by Seabright and, subsequently, WMC on exploration and development at Forest Hill.
The underground ore material from both the Beaver Dam and Forest Hill operations was trucked to a refurbished mill at the former-producing Gays River zinc-lead mine for processing. Seabright had originally acquired the mill from Esso Minerals in 1985 for $3.5 million.
The beginning of the end for Seabright came in late 1987 in the form of an unsolicited $92-million takeover offer from WMC of Australia. Looking to establish a North American presence, WMC embarked on what turned out to be a disastrous and ill-advised $500-million shopping spree that netted the assets of Northgate Mines, Grandview Resources, Western Goldfields and Seabright Resources. Without making any site visits or conducting any due diligence, and acting only on the strength of published records, WMC shelled out $160 million for two Chibougamau gold-copper mines owned by Northgate, $95 million for Grandview’s Carson Hill gold mine in California, $101 million for Western Goldfield’s Hog Ranch gold mine in Nevada, and $92 million for Seabright Resources and its Nova Scotia assets.
While WMC’s arrival was initially heralded as a ringing endorsement of Meguma’s gold potential (as the Australian producer already held a major land position in the Bendigo district), it did not take long for WMC to sour on the Seabright acquisition and, in particular, the Beaver Dam project. Faced with a significant reserve shortfall at Beaver Dam, compounded by excessive ore dilution problems at both the Beaver Dam and Forest Hill operations, WMC launched a $62-million lawsuit against the former directors of Seabright in mid-1988 alleging fraud, civil conspiracy, failure to disclose certain material information about the company’s operations and insider trading.
A 1993 Nova Scotia court decision rejected WMC’s claim that Seabright had wilfully misled them about the viability of the main Beaver Dam property and found that the former directors acted honestly and in good faith with a view to the best interests of Seabright Resources. The original ruling, which awarded Terence Coughlin and the six former directors more than $10 million for legal costs and damages, was upheld by a Nova Scotia Court of Appeal in 1994.
By the time WMC brought Beaver Dam to a halt in 1988, some 40,000 tonnes had been mined and milled. WMC continued mining operations at Forest Hill until October 1989, by which time 105,143 tonnes had been milled at an average head grade of 6.07 grams.
Beaver Dam and Forest Hill were not the only hard-luck stories. Coxheath Gold Holdings spent more than $20 million in the late 1980s developing the Tangier project as a small underground mine, but low mill recoveries forced the suspension of operations in 1989 and Coxheath went bankrupt before ever achieving commercial production. The test mining of 21,800 tonnes of supposed ore-grade material yielded only 1,596 oz. gold, for an average recovered grade of 2.3 grams. At the time, Coxheath had promoted Tangier based on proven and probable reserves of almost 500,000 tonnes grading 10.3 grams, equivalent to 165,500 oz. An overall resource of 1.7 million tonnes of 9.46 grams, or 524,400 oz., had been outlined to a depth of 200 metres. The Tangier mine was later worked on a small scale by a private group from 1996 to 1999 before being abandoned.
WMC came away with some hard lessons learned from the Beaver Dam and Forest Hill projects — particularly in regard to the narrow bedding-parallel veins, which seldom exceeded a thickness of 10 cm at either deposit and created havoc with mining dilution. In terms of ore reserve calculation, the abundance of bedded veins posed additional problems as drill intercepts from separate shoots may be mistakenly joined on interpretation, resulting in inflated tonnage and grade over actual reserves. Gold mineralization is both coarse-grained and erratically distributed, resulting in a strong “nugget effect,” which caused problems in obtaining a true representation of grade. Bulk sampling proved to be the most effective way of determining grade. By 1990, WMC had shifted its focus away from the Meguma.
At one time, WMC controlled exploration and mining leases covering most of the Bendigo goldfields in Australia, where gold-bearing mineralization is found in structurally controlled mesothermal quartz veining hosted by Lower Ordovician turbiditic sediments. Compressional tectonism has pushed the sediments into a regular pattern of chevron folds to produce a series of anticlines and synclines.
WMC began working the Bendigo goldfields in 1978 and, for the next 14 years, spent a total of A$28 million on exploration, research, underground development and installation of a small 200-tonne-per-day mill for bulk sampling. In addition, WMC completed more than 45,000 metres of core drilling and 65,000 metres of reverse-circulation drilling. In April 1993, WMC sold all of its Bendigo assets and database to the reorganized Bendigo Mining for A$1.6 million.
In the four years that followed, Bendigo Mining focused its energies on gaining a better understanding of the potential ore distribution in the historic goldfields and the complexities it faced in mining the erratically distributed coarse gold.
Mineralization in the Bendigo goldfield is characterized by an extreme nugget effect. The problem was recognized early in the life of the field, and a system of large-scale bulk sampling of 50-200 tonnes, along with the visual identification of coarse gold, was used to determine grades. Historic mining essentially involved continuous bulk sampling, with individual parcels of ore treated separately through stamp mills to provide a running check on grade.
One of the challenges faced by Bendigo Mining was best illustrated by WMC’s drilling, which recorded encouraging values at various locations. However, none of the intercepts could be delineated into a resource, despite the fact that many of the vertical holes were only between 10 and 20 metres apart on lines spaced at 50-metre intervals.
In order to justify the development of its New Bendigo project and raise much-needed capital, Bendigo Mining used its “ribbon model,” to promote the project’s potential for 12.3 million oz. (recently increased to 13 million oz.) by suggesting that mineralization at historic grades continues beneath the old Bendigo workings in a series of predicted ribbons to a depth of 1,500 metres on five separate anticlines.
In the past 18 months, Bendigo Mining has advanced a 5.5-km-long decline to 850 metres below surface to gain access to gold-bearing reefs some 200 metres beneath historic working on the Sheepshead and Deborah anticline structures. The junior has completed 1,200 metres of underground development on seven separate reefs in the S3 and D3 ribbons to gain a first-hand look at the nature of the gold mineralization. With the objective of proving up grade and tonnage, more than 100 bulk samples averaging about 100 tonnes each were collected and processed. In excess of 130,000 metres of closed-space fan drilling have been completed. In addition, some 35,000 tonnes of development ore were processed through the pilot processing plant.
In spite of a probable reserve of only 193,000 oz., Bendigo Mining is putting the finishing touches on a feasibility study of a plan that would see an initial 90,000-100,000 oz. produced annually, based on an annual capacity of 300,000 tonnes. “Having reserves of around two years of production is not uncommon practice for deposits with a large resource potential,” says Bendigo’s managing director, Douglas Buerger. “It’s all to do with sensible mine planning. There’s no point in spending large amounts of capital well before we need to, and I think that is understood by experienced financiers.”
In December 2003, South Africa’s Harmony Gold Mining chose not to exercise some 360 million share purchase options of Bendigo Mining that would have cost the company A$108 million. “The Bendigo case was simply a financial decision, says Bernard Swanepoel, chief executive of Harmony. “We had an option to acquire additional shares at A30 a share, and the share price was trading at A19. I think we would have looked pretty stupid if we had exercised that option, so we allowed it to lapse.”
Harmony remains Bendigo’s largest shareholder, with a 31.6% position.
Felderhof’s
The company holds a portfolio of six gold properties in Nova Scotia, including Forest Hill and Beaver Dam, and recently announced its intention to buy the dormant Tangier gold mine from Erdene Gold, a private Halifax-based company. The junior closed a $3-million private placement financing in early December 2003 with the help of Northern Securities.
Acadian Gold was formerly known as Tempus, a capital pool company headed by James Borland. In 2002, the six Nova Scotia properties were vended into the company for 15 million shares at a deemed price of 8 per share for a total consideration of $1.2 million. With this transaction, the company’s name was changed to Acadian and Felderhof took over the reins. Felderhof is a Nova Scotia-based geologist who spent time in the Meguma during the 1980s heading a company called Jascan Resources.
Acadian began a 5,000-metre surface drilling program on the Forest Hill project last summer, and there is currently talk of expanding that program by an additional 1,500 metres. So far, results have been reported for the first 11 of 27 holes completed to date. Acadian is intersecting bonanza-grade values in narrow quartz-vein intercepts. Selected highlights include 9 cm of 415 grams (which, when spread across an interpreted 1.2-metre mining width, averages 31.5 grams), 14 cm of 204 grams (or 1.2 metres of 23.2 grams), 23 cm of 1,282 grams (or 1.2 metres of 243 grams), 14 cm of 568 grams (or 1.2 metres of 64.7 grams), and 9 cm of 1,019 grams (or 1.2 metres of 77.5 grams).
Peter Webster, a consultant geologist with Dartmouth, N.S.-based Mercator Geological Services, says a lot of the drilling is focused on the Schoolhouse package of veins, on areas above the 155-metre level. “We’re looking at relatively new areas within these vein systems that haven’t been defined by drilling,” Webster tells The Northern Miner. “We have applied the ribbon model or the plunging shoot idea to these vein systems and the old drilling, and we have been able to define what we believe are shoots.”
The Schoolhouse veins have been known for more than 100 years and proven to extend over a strike length of 2 km. There are at least 16 different vein sets within this package.
The “blue sky” of this model is the ability to project into the untested deeper environment, says Webster. The Bendigo ribbon model is based on the predictability of sub-parallel ore shoots that plunge across the vein structures. It is really a new name for the same old thing. Eugene Faribault, a geologist with Geological Survey of Canada, proposed in the early 1900s the concept of deep mining in the Meguma, based on his belief that other hidden saddle reefs underlie those exposed at surface. “These ore-shoot theories have been around since Faribault,” says Webster. “The application of them as stacked series of ribbons may not have been.”
Two of the deepest holes drilled by Seabright at Forest Hill intersected vein packages to vertical depths of 460 and 612 metres. Seabright’s deep drilling at Beaver Dam encountered good values at a depth of 600 metres, including 14.5 grams across 1 metre, 18.8 grams over 2.4 metres, and 31 grams over 1.2 metres. “Clearly, gold mineralization continues at depth in Nova Scotia — certainly at Beaver Dam — and that augurs well for Forest Hill and the other gold properties being explored by the company,” says Felderhof.
Acadian is keen to get underground at Forest Hill, and plans are in the works to remove the shaft’s concrete cap and dewater the mine workings so that deeper drilling can be carried out from the 200-metre level. The costs of going underground is pegged at $1 million.
Elsewhere in the Meguma, Australia-listed
The Touquoy project, 60 km northeast of Halifax, is a disseminated, near-surface, bulk-tonnage target offering open-pit potential. A 1997 report by Watts Griffis & McOuat estimates Touquoy contains a geological resource of 405,000 oz. in a mineralized argillite package.
Work to date on the Touquoy project includes more than 170 drill holes, which have outlined an indicated resource of 3.8 million tonnes grading 2.22 grams, equivalent to 274,000 oz. A further 1.9 million tonnes averaging 2.15 grams, or 131,000 oz., are categorized as inferred.
In December 2003, Diamond Ventures completed confirmation drilling of 25 angle holes for 2,085 metres to test possible extensions and infill some sparsely tested sections. Stepout drilling on the Eastern Extension yielded 29.4 metres averaging 2.7 grams starting at a down-hole depth of 8.6 metres, and 27 metres of 1.9 grams at 26 metres of depth. Confirmation drilling in the Northeast Fault, at the northern limits of the resource, encountered 42.5 metres of 2.49 grams, from 97 metres to the end of the hole, as well as 54 metres of 3.1 grams at a down-hole depth of 64 metres.
Encouraged by the results, Diamond Ventures is set to resume follow-up drilling as soon as possible. The board and management of Diamond Ventures comprise former long-term executives and directors of Plutonic Resources, a 500,000-oz. producer that was taken over by Homestake Mining for more than A$1 billion in 1998.
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