Nunavut gold find leaves Prosperity investors wanting more

Prosperity Goldfields (PPG-V) has drilled 157.6 metres of 1.7 grams gold per tonne at its main Kiyuk gold project in southern Nunavut, including a higher-grade section of 30.5 metres grading 4.9 grams gold. The results are from the company’s first-phase diamond drill program at the property, totalling 3,500 metres and covering three targets.

The best hole, mentioned above, came from the Rusty zone, a sequence of strongly albitized conglomerates with a large amount of outcrop. It was the only drill hole to target the zone. Surface sampling and geophysical surveys previously defined a magnetic anomaly at Rusty measuring 250 metres by 450 metres, with gold-in-soil values grading up to 9.2 grams gold. The hole was mineralized from top to bottom, reports Prosperity, starting at surface and ending at 157.6 metres. The bulk of the higher-grade mineralization, however, was found within the first 35 metres.

The company had planned on completing four holes on the Rusty target but had to stop drilling around Sept. 1 before caribou started migrating to the area. The program started later than expected due to permitting delays, so Prosperity similarly had to put off drilling a single hole into each of the North Snake Lake and Heart Pond targets until February 2012, when a winter drilling program is scheduled to commence.

Nevertheless, Prosperity managed to drill six holes at the Gold Point zone and seven holes at the Cobalt zone.

At Gold Point – a 400-metre-long portion of Kiyuk’s 24-km-long magnetic anomaly -one of the six holes found good gold grades over significant lengths. Hole GP11-003 hit 63.6 metres grading 2.84 grams gold starting from 148 metres downhole, including a 38-metre section averaging 4.15 grams gold. The next best hole, GP11-005, returned 13.2 metres of 2.32 grams gold around the same depth. That was followed by hole GP11-002, which hit 18.3 metres grading 1.41 grams gold starting from 102 metres downhole.

Assays from seven holes at the Cobalt zone were less promising. Hole CS11-002 intersected 17.3 metres grading 2.41 grams gold within a 32-metre section grading 1.82 grams gold around a depth of 64 metres, while CS11-007 found  a lone 6.1-metre section grading 4.38 grams gold at 104 metres downhole.

Shares of Prosperity fell 47¢ or 36% to close at 82¢ on 948,000 shares traded following the Sept. 15 announcement. The company has approximately 43 million shares outstanding, 61 million fully diluted. Prosperity’s share price rose from 15¢ in March to a high of $1.48 last month, as investors awaited results from the company’s first drill program amid several assay-less drilling updates filled with references to abundant visible gold in drill core.

Prosperity is a recent spin-off of Nevada-focused gold explorer Evolving Gold (evg-t), with which it shares an office and most of its management team. Both companies feature the busy Quinton Hennigh as chief geologist, who Evolving describes as “one of the most imaginative and visionary gold exploration geologists in the field.” Prior to joining up with Evolving and Prosperity, PhD-holding Hennigh worked as a senior research geologist with Newmont Mining (nem-n, nmc-t).

Besides his posts at Prosperity and Evolving, Hennigh is currently also a director of NV Gold (nvx-v), a technical advisor for Euromax Resources (eox-v), president and CEO of Novo Resources (nvo-v), and both technical advisor and director of Gold Canyon Resources (gcu-v).

Hennigh needed all the vision and imagination he could muster at Gold Canyon, which prior to his arrival had been drilling its main Springpole gold project in Ontario with little success since 1992. As reported by Canada Stockwatch‘s Jenna Green, Hennigh discovered the project needed a “non-classic” drill method. According to Gold Canyon’s president, Akiko Levinson, Springpole was a bit of “an odd duck.” Two subsequent drill programs designed by Hennigh helped bring Gold Canyon’s stock up over $4 in April 2011 from 25¢ in July 2010, returning sparkling intersections such as 353 metres grading 1.17 grams gold.

As for Prosperity’s Kiyuk project, Hennigh says, “These initial results from Kiyuk are extremely encouraging to us. We knew that we had the potential for a very large system here, because of the extensive gold anomalies from scattered outcrops and float sampling, but this drilling confirms the size potential and it confirms the potential for thick intersections of high-grade gold.

“Our geophysical surveys trace the potential mineralized horizon for 24 kilometres along the southeast limb of the Kiyuk basin, nearly 10 kilometres along the Snake Lake trend and 16 kilometres along the northwest limb of the basin. We have only just begun to test the potential of these huge target areas.”

Hennigh goes on to compare Kiyuk with the Kumtor gold deposit in the Kyrgyz Republic owned by Centerra Gold (cg-t). “Strong geologic comparisons can be made between Kiyuk and the Kumtor deposit… where sedimentary rocks including conglomerates host extensive gold mineralization accompanied by quartz-carbonate-albite-chlorite-sericite-pyrite alteration. Kumtor is primarily an open-pit operation with proven and probable reserves of 62.4 million metric tonnes grading 3.1 grams gold per tonne.” In comparison, Agnico-Eagle‘s (aem-t, aem-n) Meadowbanks open-pit gold mine in Nunavut contains 34 million tonnes grading 3.18 grams gold.

Like many exploration projects in Nunavut, Prosperity’s Kiyuk project is in a relatively remote location – about 85 km from an air-accessible fishing lodge, 300 km from a road-accessible town, 350 km from a boat-accessible harbour town and 50 km from the territorial border with Manitoba.

Evolving optioned a 100% interest in the project in 2009 from a private vendor, after Newmont dropped the claims in late 2008 due to budget cuts. Newmont had completed surface work and geophysical surveys prior to completing one diamond drill program there in the spring of 2008. The program comprised 13 holes drilled from 11 sites, cursorily assessing five areas. Assay results were mostly unimpressive, with the best hole returning 4.5 metres grading 3.36 grams gold and later 14.9 metres grading 1.8 grams gold.  

Prior to Newmont, Comaplex Minerals was the only other company to conduct exploration around the property, exploring it briefly on the surface during the early 1990s before letting the claims lapse.

Prosperity has agreed to pay $350,000 cash and 250,000 shares in stages over five years for Kiyuk. It says gold at the property is hosted by a sequence of conglomerates and breccias occurring along an unconformity between two thick sedimentary units, the Hurwitz supergroup and overlying Kiyuk group. It notes the Kiyuk subbasin, in which numerous gold showings occur, measures roughly 60 kilometres northeast-southwest and 35 kilometres northwest-southeast.