Premier Hits Gold At Hardrock

Drilling targeting three zones at Premier Gold Mines’ (PG-T, PIRGF-O) Hardrock project, near Geraldton, Ont., has returned gold mineralization on each one.

Of the three, the most promising target is the EP zone, where Premier has confirmed mineralization along a 400-metre strike length. EP is divided into three sub-zones, and the latest 14 holes were drilled on the north limb sub-zone. Mineralization was found at depths of 5-201 metres, with grades ranging from 0.55-28 grams gold per tonne.

Highlights include: 1.3 metres of 28 grams gold from 14 metres depth in hole 36, drilled at an angle of -45; 1.3 metres of 13 grams gold from 146 metres in hole 23, drilled at -55; and 3 metres of 9.5 grams gold from 106 metres in hole 25, drilled at a -45 angle.

The longest intercept returned from the EP zone was in hole 26, drilled at a -60 dip, returning 63 metres of 2.4 grams gold from 79 metres. Since the mineralized zone is vertical, true width is about 70% of the intercept, or 44 metres.

Other long intercepts from the north limb of the EP zone include hole 29, which cut 25 metres (true width 17 metres) of 4.6 grams gold from 54 metres; hole 31, with 31 metres (true width 22 metres) of 3 grams gold from 111 metres; and hole 32, which intersected 44 metres (true width 30 metres) grad- ing 2.6 grams gold from 14 metres depth.

The 6-sq.-km Hardrock project hosts the past-producing MacLeod- Cockshutt mine, which produced 1.5 million oz. gold until 1968 at an average head grade of 4.9 grams gold per tonne (T. N. M. March 2- 8/09). More than 500,000 oz. gold has been mined elsewhere on the property, but the mines have never gone deeper than 600 metres.

“What’s truly remarkable here is that we’ve been hitting significant mineralization in every target that we’ve drilled to date,” says Tim Twomey, Premier’s exploration manager. “That’s a rare thing. That’s incredible, actually, that we would hit in every target.”

In March, Premier released assays from six holes on the north limb of the EP zone. Five holes intersected mineralization, including: hole 15, which returned 7.5 metres (true width 5.3 metres) of 8.6 grams gold per tonne from 115 metres; and hole 22, which cut 10.8 metres (true width 7.6 metres) of 4.3 grams gold from 85 metres.

Results from seven holes (all mineralized) from the south limb sub-zone were also reported. Highlights included hole 20, with 7.8 metres (true width 5.5 metres) of 7.7 grams gold from 73 metres; hole 16, with 10 metres (true width 7 metres) of 3.6 grams gold from 45 metres; and hole 11, with 8.8 metres (true width 6.2 metres) of 3.6 grams gold from 34 metres.

The two sub-zones are fold limbs, which are iron formations. The EP zone is wrapped around the north zone of the MacLeod- Cockshutt mine. Mineralization is open in all directions.

“These things have been left behind by the original operators, because they were focusing on the narrow, higher-grade quartz veins,” Twomey says. “They mined out the north zone, and this EP zone actually wraps around it, and these limbs are on the outer edges, so we have a north limb and a south limb. And both of these limbs contain significant amounts of gold, that I think we can have a good shot at making a resource out of.”

Assays from the second target, named the Tenacity zone, included 11 holes of which 10 were mineralized. Premier has defined 400 metres of strike length, and says mineralization remains open in all directions. Notable intercepts include hole 11, with 19 metres (true width 13 metres) of 4.1 grams gold from 258 metres depth. Other holes intersected between 10 and 25 metres (true widths 7-18 metres) grading between 1 and 2.3 grams gold. Assays are pending from nine more holes, and Premier reports instances of visible gold seen in the drill core.

Five of six holes in the third target, named the Oreo zone, returned mineralization. Hole 2 cut 1.4 metres (true width) of 8.3 grams gold from 316 metres depth. Other holes cut 4.5-9 metres (true widths) of between 1.5 and 2 grams gold per tonne.

Another target, known as the Ezone, is a high-grade target. In February, Premier released assays from three holes there, two of which were mineralized. Hole 2 cut 1.5 metres (true width 1.1 metres) of 40 grams gold per tonne from 203 metres. And a high-grade target on the EP zone returned 0.3 metre (true width 0.2 metre) of 2,870 grams gold per tonne in hole 8, from 27 metres depth.

Twomey describes the mineralization found so far in the EP zone as pyrite and silica replacement of magnetite iron formation. Mineralization in the other two targets consists of quartz veins and replacement zones in four types of host rock: iron formation, greywacke, arkose and quartz-feldspar porphyry.

“What’s really remarkable about this is the continuity of these . . . with pretty decent grades,” Twomey says.

With 50,000 metres of drilling planned this year, four drills are turning on the property. The program is budgeted at almost $10 million, and Premier aims at a resource estimate in the fourth quarter.

Hardrock is in the Beardmore- Geraldton greenstone belt. Premier is hunting for a few styles of mineralization, ranging from open-pit bulk deposits to narrow-vein, high-grade gold. The company considers the three main target zones drilled so far as possible candidates for open-pit mining.

The project is subject to a 3% net smelter return (NSR) royalty. Premier is earning a 70% stake in Hardrock from Roxmark Mines (RMK-V, RMKMF-O). In addition to incurring exploration expenditures, it has to pay Roxmark $500,000 and issue 250,000 shares in order to acquire a 51% stake. It can then raise its stake to 70% if it pays $250,000 and issues 150,000 shares, provided it brings the project to a production decision by 2016.

Even after earning in, Premier will have to continue to foot all expenditures. If Premier decides to advance the project to production, it will have to fund all capital spending.

If the project becomes a mine, however, all cash flow initially would go to Premier, which, as operator, would collect a management fee, plus all other cash flow, until the money repays Roxmark’s 30% share of spending, plus interest. When that is fully repaid, Roxmark would start receiving its 30% share of profits.

Inmet Mining (IMN-T, IEMMF-O) and Goldcorp (G-T, GG-N), are major shareholders in Premier, holding a combined 25% stake.

On Dec. 31, Premier had working capital of $18 million. The company has 78 million shares issued, or 80.8 million shares fully diluted. Premier’s shares traded at $2 at presstime. Over the past 12 months, the shares have traded in a range of $1.05-3.14.