Sage Gold hopes to extend neighbour’s discovery

Jellicoe, Ont. — Nigel Lees, president and CEO of Sage Gold (SGX-V, SGGDF-O), and Bill Love, the company’s vice-president of business development, are trying to solve a geological puzzle in the Beardmore-Geraldton mineral belt of northwestern Ontario. And having raised about $3.5 million in a private placement in October — at the depths of a bear market for juniors — it appears their investors believe that this particular puzzle is worth solving.

Lees and Love want to find out whether their Jacobus East property, newly renamed Golden Extension, hosts a continuation of Kodiak Exploration‘s (KXL-V, KXLAF-O) Golden Mile discovery. If it does, the name Golden Extension could become self-explanatory.

Kodiak’s property, which hosts Golden Mile, also named the Hercules project, is adjacent to Golden Extension. Following a ground geophysical survey, Sage identified an intrusion, which it traced to the property boundary with Kodiak. Material in the intrusion, which corresponds to magnetic highs, has the same lithology as the host rock of the mineralized vein structures on Golden Mile.

Sage Gold uses magnetic readings to look for gabbroic dykes, which are associated with quartz veins. These could be prospective for gold mineralization. Although there are multiple quartz veins in the intrusion, they are not all mineralized with gold. Mineralization is typically associated with pyrite, which is not present in all veins.

Zeroing in on targets identified in the geophysical survey, Sage used stripping, trenching and channel sampling to discover a mineralized zone where assays of channel samples returned gold values. A length of about 60 metres has been stripped.

To date, Sage has reported assays from 26 channel samples, where widths range from 0.22 to 1 metre, a typical width being 0.5 metre. Most channels were spaced 1 metre apart. Grades range from 0.01 gram gold per tonne to 137 grams gold. Next to the 137-gram assay, the best grades were 81 grams, 50 grams, 30 grams, 14 grams and 10 grams gold. The average gold grade taken from channels in the mineralized vein, and weighted by sample widths, is 13.5 grams gold per tonne. Assays from another 75 channel samples are pending.

Sage has been particularly encouraged by the presence of visible gold in some channels. During The Northern Miner‘s recent visit, one instance of a small visible gold specimen, about 1 mm wide, was visible in the field among widespread pyrite occurrences. During the visit, Sage’s prospectors were panning for gold in newly stripped fine material. Away from the field, the company showed visitors other samples with small visible gold specks in the 1-mm range.

Sage describes the mineralized vein as quartz-pyrite-potassium feldspar, while the host rock is chlorite-epidote-sericite-potassium feldspar-altered mafic volcanic or a gabbroic dyke. This is an intrusion-hosted stockwork quartz vein system. The intrusion is characterized as granodiorite.

After such limited early-stage exploration, it would be premature to conclude that the mineralized zone on Sage’s project is the same vein discovered on Kodiak’s Golden Mile down the road, however, Sage believes that there is a good chance that it is. This is due to the similar lithologies, and also because Sage’s property is on strike with Golden Mile, lying northwest of Kodiak’s property.

It is also quite close by. The mineralization discovered by Sage is 1.6 km from the border of Kodiak’s property. From that point, it is about 4.5 km to the Golden Mile discovery. And both companies continue to explore the 6.1 km separating the two sites. So far, Sage has discovered a few outcrops on its property, although it has not stripped or sampled them yet. The geophysical survey indicates that the intrusion continues even farther, extending 500 metres northwest beyond the point currently explored on Golden Extension.

Kodiak is also exploring land on its side of the boundary. So far, exploration on the Golden Mile has reached a lake, tentatively called Golden Lake or Golden Pond. Now Kodiak has started drilling northwest of the lake, in the direction of Golden Extension. To date, about a dozen holes have been drilled beyond the lake, and assays are pending.

Sage is also hopeful that the Golden Mile mineralization continues into Golden Extension because it looks like a substantial discovery. According to Kodiak’s website, Golden Mile is now about 4 km long, and remains open along strike and at depth. All 70 holes drilled to date returned some gold mineralization, and 40% of surface grab samples returned at least 10 grams gold per tonne. Continuous gold mineralization has been traced along strike for 400 metres, with an average grade of 20 grams gold per tonne over an average width of 3.8 metres. The mineralized vein is 1 to 3 metres wide, and there are many instances of visible gold.

This is quite impressive, but it is all on Kodiak’s side. Meanwhile, Sage itself is planning to continue stripping the intrusion on Golden Extension and taking channel samples of the mineralized vein. With its treasury cashed up, it is also planning a drilling campaign totalling about 2,000-3,000 metres to depths of 100-150 metres for early next year.

Because the system is long and narrow, one key to define an economic deposit would be the presence of many near-surface ounces. Another key is the presence of parallel veins. Sage reports that to date, four parallel veins have been discovered.

Sage’s second gold project is the Paint Lake property, which is surrounded by the Brookbank project, owned by Ontex Resources (ONT-T, OXRSF-O). Brookbank hosts an indicated and inferred resource of 2.6 million tonnes grading 7.4 grams gold per tonne, equivalent to 630,000 oz. gold at a cutoff grade of 3 grams gold. Sage’s current exploration site is about 750 metres away from, and on strike with the mineralized zone at Brookbank. Sage believes there is a good chance that the structure continues into Paint Lake.

Brookbank consists of three zones. “The Foxear zone is right up to our western boundary,” Love says. “The mineralization is associated with a contact between the upper part of the mafic volcanics, and a stratigraphically overlying band of sediments.”

He adds that mineralization may also be associated with a northwest-trending deformation zone.

To date, Sage has done some stripping at Paint Lake, and has taken 24 channel samples. Channel widths range between 0.3 to 1.5 metres, and grades are between 0.4 and 23 grams gold per tonne. The best assays, next to the 23 gram gold sample, returned 7 grams, 6.4 grams, 5.8 grams, 5.3 grams, 5 grams and 4.9 grams gold per tonne.

Love says mineralization is associated with a pyritic tuffacious unit, and there is quartz-ankerite veining. The Paint Lake shear is stratigraphically between the top part of the volcanics and the sediments.

Before deciding how to explore Paint Lake further, Sage was waiting for Ontex to report assays from a number of holes on its side of the boundary. Ontex has now reported some drill results, so Sage may move ahead with Paint Lake, or alternatively, concentrate on Golden Extension and postpone work on Paint Lake. At this point, any work on Paint Lake will probably be limited to stripping and channel sampling.

Third on the list of projects is the Lynx property, which is a part of Sage’s Onaman claim block. This is a copper-silver-gold project, where historical and current drilling total 19,000 metres in 106 holes over a strike length of 1 km. The mineralized zone is open in several directions.

Drilling at Lynx has returned: 3.7 metres grading 8% copper, 6.1 grams gold and 236 grams silver from a depth of 195 metres in hole 52; 16 metres of 0.9% copper, 0.8 gram gold and 30 grams silver from 106 metres in hole 42; 13.6 metres of 2.2% copper, 0.75 gram gold and 55 grams silver from 50 metres in hole 73; 12.1 metres of 3.2% copper, 1.3 grams gold and 88 grams silver from 106 metres in hole 33; and 13.6 metres grading 1.1% copper, 1.7 grams gold and 75 grams silver from 152 metres in hole 40.

Ron Therriault, project geologist, says that copper mineralization at Lynx is found in chalcopyrite, while gold and silver are found in electrum, either hosted in sulphides or as inclusions in sulphides. All the mineralization is hosted within intermediate to mafic tuffs and flow sequences. (The Big M zone on Onaman occurs within the felsic volcanic unit and is characterized by massive sections of pyrite and pyrrhotite.)

They are mostly crystal tuffs, and possibly quartz feldspar porphyry intrusives. Quite often the margins of the quartz veins also contain mineralization. The system can be silicified, carbonate-altered, and sometimes sericite-altered. It does not have the intensity and widths of alteration that can be seen in other orogenic gold systems. For example, the material at Lynx has less sericite alteration.

Sage is planning a National Instrument 43-101 resource estimate for Lynx. However, Lees and Love have an intriguing theory — that a larger volcanogenic massive sulphide (VMS) system could be somewhere on the Onaman property, in which case, the mineralized zone at Lynx could be just the footwall of a larger system.

There are a number of signs pointing them to this theory. Love says that there is a lot of hydrothermal activity in a small surface area, and significant alteration, mostly at the top of the mafic volcanics. At the contact zone, there is a lot of chlorite and kyanite within the felsic volcanics. He believes this is a distinct VMS-type alteration, with kyanite zones, chlorite zones and chloratoid zones.

Sage would like to map the system so it could point to the possible location of this hypothetical VMS mineralization. The company is planning to use outside VMS expertise.

Referring to another project in the area, the Abitibi showing, which hosts zinc-lead mineralization, Love says that there is zonation in the mineralization in the mafic volcanics from east to west on the Onaman property.

There is a “relatively small, high-grade, series of mineralized horizons, stratigraphically on the same (strike) line. On the east, they are copper-rich; to the west they are zinc-lead-rich. . . This (Abitibi) is a lead-zinc showing.”

Love continues: “There is a whole series of mineralized horizons on Onaman. Stratigraphically, the lead-zinc horizons line up on one strike line, and the copper ones line up on another. So there are hydrothermal events that open and close in all sequences. It is all a seafloor, black smoker-style mineralization that subsequently has been deformed and influenced by structure.”

Love says that the key challenge here is getting tonnage.

Sage controls a total of about 445 sq. km in the Beardmore-Geraldton belt. The region hosts a number of past-producing mines. Most were small and ceased operations many years ago, some of them closing in the 1930s and 1940s. However, some orebodies that were mined were high-grade.

Sage uses a fishing lodge, Pasha Lake Cabins, near Jellicoe, as a base. The lodge is located at a driving distance of about 220 km northeast of Thunder Bay, and 30 km northeast of Beardmore.

Infrastructure in the area is good. The lodge is located off the unpaved highway 801, and about 9 km from a paved road, highway 11, and there is a railway line about 16 km away, with a station at Jellicoe. Distances to the electric power line on highway 11 (depending on route) are 14-22 km for Golden Extension, 6-11 km for Paint Lake and 42 km for Lynx.

The area hosts commercial forests, and staff travels to exploration sites on logging roads, but some sites can only be accessed on a short bush road, using an all-wheel-drive vehicle. Travel distances can be long, sometimes as long as 60 km or more on a logging road.

Most projects are subject to a 2% net smelter return (NSR) royalty, half of which can be bought for $1 million for each property. After the latest financing, the company has about 233 million shares fully diluted and working capital of about $3.8 million. At presstime, Sage shares traded at 8.5 in a 12-month window of 8-61. The company has 148.9 million shares outstanding.