Midway sparks Tonopah revival (March 11, 2003)

Vancouver The latest drill results from the Midway prospect has intensified exploration interest in Nevada’s Nye Cty.

Midway Gold (MDW-V), previously Red Emerald Resource, holds the prospect and in September 2002, Newmont Mining (NEM-N) joined the fold by inking a deal to earn a 51% interest in the property by spending US$8.8 million on exploration and development. The major can acquire a further 19% by delivering a feasibility study.

Located 24 km northeast of Tonopah, the low-sulphidation epithermal gold prospect was previously held by Kennecott, a division of Rio Tinto (RPT-N), and consists of four previously identified zones, three of which, Discovery, 121 and 63-77, are open in all directions.

Midway lies between the famous Tonopah mining district to the south and the venerable Round Mountain gold mine to the north. Tonopah and Round Mountain were considerable producers in the first half of the past century, and the latter lives on as a heap-leach operation under the banners of Echo Bay Mines, now part of Kinross Gold (K-T) and Barrick Gold (ABX-T).

Although Midway pales in comparison, it is not for want of trying. Houston Oil & Minerals was first on the scene in the 1970s, followed by Coeur d’Alene Mines (CDE-N), Rio Algom and finally Kennecott exploration and partner Tombstone Explorations (TSO-T) in the early 1990s. Kennecott managed to outlined a 270,000-oz. resource at the Discovery zone.

Last year, Midway Gold carried out drilling designed to define a resource at the Discovery and 121 zones. Highlights include 37.2 metres averaging 3.97 grams gold per tonne, starting at 39 metres down-hole, in hole 269 on the 121 zone. This included a 3.8-metre section that averaged 26.13 grams gold. On the Discovery zone, hole MW-260 cut 7.3 metres averaging 18.12 grams gold starting at 92.3 metres down-hole, while hole MW-253 cut 1.5 metres of 131.4 grams gold starting at 87.5 metres down-hole.With Newmont as a partner, the joint venture has increased its land position to 125 sq. km. The claims now cover the projection of the Discovery zone trend, a distance of 23 km.

The Midway property is covered by alluvium, underneath which lies the favourable tuffaceous rhyolites of the Tombstone formation and older sedimentary rocks of the Palmetto formation. Subvertical dykes emplaced during the Upper Cretaceous intrude the Palmetto units. Hills to the east, north and south represent trachyandesite flows left over from the Miocene. The average thickness is 3-4 metres, though beds can thicken to as much as 300 metres.

Gold is mainly found in a silicified portion of the rhyolite sequence, and, to a lesser extent, in a similarly altered argillite unit of the Palmetto formation. Regional extensional faulting provided the conduits for the hydrothermal fluids, but mineralization is pervasive.

The newly formed partnership launched a 9,100-metre drill program early in 2003 with the main focus on expanding the mineralized zones beyond the Discovery zone. So far the results are in for 14 of the holes, which confirm that gold mineralization extends more than 1-km southeast from the Discovery zone. The best values came from hole 289; 34.8 metres grading 1.96 grams gold from 46.8 metres, including a 4 metre section running 12.2 grams gold. Other highlights include:

• Hole 287 5.2 metres grading 0.62 gram gold from 24.4 metres,
• Hole 288 1.5 metres grading 0.4 gram gold from 15.8 metres,
• Hole 290 1.5 metres grading 0.9 gram gold from 71.6 metres,
• Hole 293 3 metres grading 1.06 gram gold from 30.5 metres,
• Hole 294 4.6 metres grading 1.82 grams gold from 83.8 metres,
• Hole 297 3 metres grading 1.26 grams gold from 41.1 metres,
• Hole 299 2 metres grading 4.49 grams gold from 90.5 metres, plus 6.7 metres grading 11.24 grams gold from 127 metres and
• Hole 300 13.7 metres grading 1.08 gram gold from 62.5 metres.

The partners aim to drill test the Midway North target later this month. Prospecting in this area yielded values of up to 3.56 grams gold from rhyolite float.

Placer Dome (PDG-T) recently entered the region by inking a deal with Pacific Intermountain Gold Company, a 75% owned subsidiary of Seabridge Gold (SEA-V), to pick up the Stonewall gold project.

Lying on the Tonopah trend, the Stonewall project is 22-km southeast of Goldfield. Previous exploration discovered a series of quartz veins occupying concentric ring fractures of a Tertiary caldera. These veins range from 0.3-to-20 metres wide and show strike lengths of over 2-km.

Under the deal, Placer must pay US$300,000 over a three-year option period. Anytime during the option, the major can purchase the property for 10,000 oz of gold or its cash equivalent. The vendor retains a sliding scale net smelter royalty based on the gold price, which ranges from 2.0% with the gold price less than US$300 per oz to 9.0% with the gold price above US$900 per oz. The option agreement is subject to a due diligence period, which terminates on June 30, 2003.

“With junior companies, we are entering into traditional JV agreements whereby our partner can acquire a working interest in the property by making option payments in cash and/or shares and funding exploration work on the property," says Seabridge Gold President Rudi Fronk. "With companies that are proven producers, our aim is to generate gold flow from our exploration projects."

Late last year, Seabridge’s subsidiary dealt a 50% interest in the Thunder Mountain gold project to Castleworth Ventures (WTH-V). The project is immediately adjacent to the Midway gold discovery near Tonopah and hosts Tertiary volcanic rocks with hydrothermal alteration surrounding quartz veins.

Castleworth can earn a 50% interest in the project by paying US$25,000 at closing, spending US$1.5 million over a three-year period and issuing 1.5 million shares.

The Thunder Mountain project lies along the western edge of the Hannapah mining district in the Tonopah Trend portion of the Walker Lane structural zone. The deformation zone is characterized by a series of parallel to sub-parallel northwest trending strike-slip faults extending for several hundred km generally paralleling the Nevada-California border south of Lake Tahoe.

The Tonopah trend is orientated East-West and defined by a number of significant low-sulphidation epithermal gold-silver districts lying along major lineaments like the Warm Springs and Kawich-Toyaibe lineament.

Mineralization occurs along both west-northwest and north-south structural zones and comprise quartz and quartz-carbonate vein textures indicative of the upper levels of a low-sulfidation epithermal mineral system.

Moving 32 km southeast of the Midway ground, Pacific Ridge Exploration (PEX-V) has inked a deal to earn a 60% stake in the Golden Arrow property.

"For the past six months, Pacific Ridge has been searching for an opportunity to participate in an advanced stage gold project with drill indicated target potential for a million ounce resource, a mining friendly location and terms allowing earn-in to a majority interest," says company President, John Brook. "The Golden Arrow meets these criteria."

Some 260 holes punched over a 1.5-by-4.5 km target area gives a preliminary resource of 11.2 million tonnes grading 1.21 grams gold. With localized intercepts of up to 58.16 grams gold over 4.6 metres, Pacific Ridge feels that previous explorers have overlooked the higher-grade sections.

Under the deal, Pacific Ridge can earn a 25% interest by making staged payments totalling US$300,000, issuing 1.2 million shares and spending US$2 million by the end of 2004. The junior can then pick up a 50% interest by making another US$250,000 in payments, issuing 400,000 more shares and spending another US$2 million by the end of 2006. To take a 60% interest, Pacific Ridge must spend another US$2 million by the end of 2007.