Pilot Gold searches for next Long Canyon

On the hunt for the next Long Canyon gold deposit, Fronteer Gold spin-out Pilot Gold (PLG-T) has found encouragement some 75 km southeast of its original Nevada discovery.

The company, stacked with the Fronteer team that found Long Canyon and then sold it to Newmont Mining (NMC-T, NEM-N) for $2.3 billion almost a year ago, is reporting several strong drill intercepts from the Kinsley Mountain gold project that it is earning into from Nevada Sunrise Gold (NEE-V).

The first diamond drilling the former open-pit mine has seen include hole 4 that hit 19 metres carrying 5.91 grams gold per tonne from 43 metres depth, hole 3 that returned 8 metres of 6.75 grams gold from 103 metres downhole, and hole 2 that cut 9 metres of 6.23 grams gold from 112 metres.

What makes the core results particularly interesting, however, is that they show parallels in stratigraphy, structure and mineralization to the Long Canyon deposit.

“The main thing that we see between Kinsley and Long Canyon is that there’s mineralization at the same stratigraphic horizon, or interval,” explains Pilot Gold president and CEO Matt Lennox-King in a telephone interview. “The bulk of Long Canyon is hosted between Ordovician and Cambrian carbonate rocks, and we also see that same relationship at Kinsley.”

The same patterns occur at Barrick Gold’s (ABX-T, ABX-N) Bald Mountain gold project, and all are clearly different than the dominant Carlin trend.

“Both of them are up on the carbonate platform,” Lennox-King says. “It’s not on the Carlin trend. The rocks are quite different . . . you’re in big, thick sequences of limestone and dolomite up there.”

The team looked for geological signatures soon after cracking the code at Long Canyon, he explains. “Once we saw the relationship we started looking elsewhere in the state for similar geology, and one of those that came up very early on was Kinsley Mountain.”

The company bought the option deal from Animas Resources (ANI-V) in September 2011 for US$350,000, and what will amount to 150,000 shares when Pilot Gold completes its 51% earn-in sometime in the second quarter. To earn 14% more of Kinsley from Nevada Sunrise, Pilot will have to spend US$3 million on the project within five years.

After it secured the project, Pilot compiled geological information and drilled six holes for 1,250 metres last year, looking to confirm grades from old reverse circulation holes in the area. The diamond drill holes covered a broad zone around the old pit, with some holes spaced more than 2 km apart, and pushed much deeper than the 65-metre average drill depth previously seen on the property.

“We wanted to test a pretty wide area early on in our ownership of the project, and that’s really to get the broadest understanding of the region prior to attacking it intensively,” Lennox-King says.

Holes 2 and 3 were drilled 600 metres apart in the more northern part of the property while hole 1, closer to the centre, returned 17 metres of 1.64 grams gold. Holes 4, 5, and 6 were grouped more closely in the southeast, but while hole 4 had its impressive intercept, hole 6 returned 10 metres of 0.95 gram gold, and hole 5 returned 3 metres of 0.65 gram gold, along with a slightly longer intercept at similar grades deeper down.

Lennox-King describes holes 5 and 6 as getting more outside of the main mineralized system, and says there is a fairly strong northwest-southeast control in the district that could explain the disparity between the holes.

“Disappointing, obviously, but it certainly doesn’t change our enthusiasm for the project,” he says.

With initial results being overall encouraging, Pilot is launching into a 12,000-metre drill program for 2012. The company will concentrate drilling on the 11.4-sq.-km option property, but will also start exploring the 10.6 sq. km it staked independently to the north.

Pilot will also continue to explore its 40%-owned Turkish properties this year, with Teck Resources (TCK-T, TCK-N) as majority partner. Pilot plans to drill 15,000 metres at its Halilaga copper-gold porphyry project, where it just announced an initial resource of 168.2 million indicated tonnes grading 0.3% copper, 0.31 gram gold and 0.006% molybdenum, plus and additional 198.7 million inferred tonnes grading 0.23% copper, 0.26 gram gold and 0.007% molybdenum. It will also drill 10,000 metres at its TV Tower project.

In response to news of the Nevada drill results, Pilot’s shares climbed 6¢ to $1.63 apiece. The company listed last April at $3.74 before making a long descent to a 91¢ low in December. Nevada Sunrise’s share price shot up 67%, or 6¢, to 15¢ each on the news, with almost 14 million shares changing hands on the day.