Pogo property in Alaska the latest feather in Teck’s cap

Teck’s (TEK-T) 40% interest in Alaska’s Pogo gold project is comparable in significance to the company’s half-interest in the David Bell gold mine in Hemlo, Ont.

That was the message stressed by President Norman Keevil at the company’s annual meeting in Vancouver last month.

In 1997, the Vancouver-based major spent $10 million exploring Pogo, where reserves stand at 10.9 million tons grading 0.41 oz. gold per ton, equivalent to 4.5 million contained ounces.

“The Pogo reserve is 20% larger than that of the David Bell mine when it went into production, and it still has good potential to expand on,” Keevil told shareholders.

The 1997 annual report states: “With grades similar to those at the David Bell mine at Hemlo, and greater mining widths, this property has the potential to become an important, low-cost producer.”

Teck can earn its 40% interest from Japan’s Sumitomo Group by spending US$28 million and completing a feasibility study by Dec. 21, 2000. The company also is responsible for funding the first US$33 million of capital costs.

The deposit occupies the northwestern corner of the Stone Boy property, 150 km southeast of Fairbanks in east-central Alaska. Access is limited to helicopter and small fixed-wing aircraft, with road access limited to the winter months. Teck has proposed building a 46-mile all-weather road to the project.

Pogo is characterized by a series of sub-parallel and tabular quartz vein zones hosted by Paleozoic gneisses. The gneisses are former sediments and volcanics that were heated and cooked during high-grade regional metamorphism. They were later intruded by much younger bodies. “We think there is some importance with regard to both the age and the chemistry of those intrusives that may be localizing the gold mineralization,” said Fred Daley, vice-president of exploration.

The deposit is divided into an upper and lower zone.

The upper, referred to as L1, has a strike length exceeding 3,000 ft., a downdip length of 1,500 ft. and an average thickness of 25 ft. L1 contains 75% of the defined resource, or 8.8 million tons grading 0.4 oz., equal to 3.5 million contained ounces.

The L2, or lower, zone sits roughly 500 ft. below L1, has a similar thickness of 20-25 ft., and is estimated to contain 2.1 million tons grading 0.46 oz., equivalent to 1 million oz. L2 is less defined than L1 and is still open along strike and at depth. “There is potential to add significant ounces to estimates for L2,” said Daley.

At the annual meeting, Daley presented two cross-sections of the deposit.

The first showed good lateral continuity across a width of 1,800 ft. Drill intervals included 53 ft. averaging 0.4 oz., 91 ft. of 0.4 oz., 22 ft. of just under 2 oz., and 36 ft. of just under 1 oz.

The second section, 1,000 ft. along strike to the southeast, showed a close relationship between L1 and L2. Intervals in the upper L1 included 25 ft. of 0.4 oz., plus 25 ft. of more than a quarter of an ounce. The lower zone has similar thicknesses and grade, returning 25 ft. averaging 0.7 oz. and 54 ft.

of more than 0.25 oz.

The underlying zones almost mimic the surface topography, which Daley described as having an almost “sinusoidal” wave. The L1 zone has a stingray-style geometry, and faulting along Liese Creek (which cuts the northern part of the deposit) has dismembered the zone into smaller panels, bringing it to within 350 ft. of surface.

The deepest hole drilled last year intersected what may be a third parallel vein system, some 300 ft. below the lower L2 zone. An intercept of 70 ft. of just under 0.4 oz. has yet to be followed up.

Teck commenced a 70,000-ft. drill program in mid-May, consisting chiefly of definition and stepout work. So far, the program has extended the L1 and L2 zones to the southeast and confirmed the third lens at depth. However, the bulk of this year’s program has been directed at infilling a higher-grade section of the deposit.

The Alaskan subsidiary of Watts, Griffis & McOuat (WGM) is credited with the initial discovery. Working on behalf of Sumitomo, WGM first carried out a regional program of stream sediment-sampling, which identified a weak geochemical gold anomaly coming out of Liese Creek. The anomaly was in the order of only 35 parts per billion. Follow-up grid soil sampling was carried out, and an airborne magnetic survey identified the intrusive body to the north. At that point, WGM drilled three or four shallow drill holes and intersected narrow quartz-vein mineralization in the northern fringe of the L1 zone.

Sumitomo has since completed 11,000 metres of drilling. Last year, Teck drilled an additional 44,000 ft. in 41 holes. Virtually all the drilling to date has been directed at the Pogo deposit, which represents only 2% of the Stone Boy property.

Elsewhere on Stone Boy, several other surface expressions of gold in quartz-vein mineralization have been identified, though these have yet to be tested in earnest. In the Sonora Creek area, 10 miles to the southeast, surface sampling has yielded several clusters of multi-ounce material, including one sample grading 28.8 oz. gold.

As part of this year’s $5.5-million exploration program, Teck is carrying out further reconnaissance sampling and follow-up trenching on selected targets.

The company intends to apply for a state permit to develop an underground ramp.

Late last year, Teck signed an agreement with New Jersey-based Ventures Resource (VRS-V) to provide up to $7.6 million in exploration funding on the 1,500-sq.-mile Veta property, east of Stone Boy. Teck can earn up to a 70% interest in a designated project of its choice within the property area by arranging development financing.

Teck initially invested $4.1 million in Ventures by purchasing 3.7 million shares at $1.10 each in December 1997. In addition, Teck was granted 1.4 million share purchase warrants exerciseable at $1.25 for one year and 1.3 million warrants exerciseable at $1.40 for two years. The funds are to be used exclusively to explore the Veta block.

Ventures controls the mineral rights to more than 3 million acres of land in the state through an exclusive agreement with Doyon, an Alaskan native corporation. The agreement calls for annual payments to Doyon of US$250,000 over five years. Doyon is entitled to a 2% net smelter return royalty during the payback period of any commercial operation and a 5% NSR thereafter.

Ventures has budgeted $2.6 million for its 1998 Alaskan exploration program.

Besides Veta, this year’s activities are being focused on the Flat property.

Exploration is being conducted by WGM under the guidance of Ventures. WGM is also supervising work for Sumitomo in the immediate area.

At Veta, a program of mapping, soil and rock sampling, and geophysical surveying is evaluating the Carrie Creek prospect for intrusive-related gold mineralization. Carrie Creek lies 18 miles east of the Stone Boy property.

Detailed geochemical and geophysical surveys are also under way at the Eva polymetallic vein prospect, part of the Veta property. An 18-ft. surface composite sample taken last year assayed 28.7% lead, 9.4% zinc and 0.28% copper, plus 19.4 oz. silver.

Ventures intends to carry out 2,500 ft. of diamond drilling at the Flat property, just north of Placer Dome’s (PDG-T) Donlin Creek gold project in the central-western part of the state.

The program is scheduled to begin in mid-August and will follow-up on last year’s drilling, which encountered a 4.5-ft. interval grading 6.2 oz. gold on a newly recognized northeastern structural zone at the Chicken Mountain project. The high-grade interval occurred in a much wider intercept of 70 ft. averaging 0.42 oz. This year’s program will test 1,000 metres of strike length to determine if there is any continuity.

In the meantime, Placer is carrying out an aggressive helicopter-supported drill program on its Donlin Creek project, with three rigs turning. Placer expects to be ready to advance the potentially open-pit prospect to the prefeasibility stage by January 1999. A measured and indicated resource is estimated at 53 million tons grading 0.07 o
z. gold, equivalent to 3.7 million contained ounces. The total resource stands at 67.2 million tons grading 0.1 oz., based on a cutoff grade of 0.058 oz. This is equivalent to 6.7 million contained ounces.

During the past few months, Placer has worked to expand and upgrade the resource, and is currently targeting the Acme prospect. A shallower, higher-grade portion of the mineralized system, Acme lies 800 metres south of the existing resource and has the potential to serve as a starter pit.