StrataGold on the trail of riches in historic gold district

SITE VISIT

Mayo, Yukon — The bumpy, twisting road extends for 45 km and crosses two rivers before reaching the camp at StrataGold’s (SGV-T, SAGDF-O) Dublin Gulch project. A short drive to the top of the hill shows that the Silver Trail highway is actually only 10 km away. It’s just on the other side of a mountain.

And so it goes in the Yukon, and especially in this part of the territory. The land is rugged, but many a man or company has found geological treasures in the rocky hills. StrataGold is hoping to do the same.

The company’s Dublin Gulch project lies in the north-central portion of the Tintina Gold Belt, 700 km north of Whitehorse, and 30 km northwest of Elsa — the now-deserted town that sprung up to support the United Keno Hill lead, silver, and zinc mine, until it closed in 1989.

Placer miners worked the streams starting in the 1890s, with the mining population growing and growing until the 1950s. During the Gold Rush, the area around the town of Mayo, which sits 50 km southwest, produced more placer gold than all but one other region in the Yukon. Stories tell of an 8-oz. gold nugget found in the stream that runs right past the Dublin Gulch camp.

StrataGold workers still like to try their hands at panning gold from the stream, but novelties aside, they have their work cut out for them. The property is a fair size — 10 km wide by 17 km long — and hosts at least four gold zones and a tungsten deposit.

“It’s a big piece of ground,” says StrataGold president Terry Tucker. “And we know we have to concentrate on the big picture so we don’t miss anything, like how the old feasibility plan put the heap-leach pads right on top of what we now know is the Shamrock deposit because it looked like a convenient spot.”

The project’s main deposit, called the Eagle zone, climbs the side of a hill that rises up steeply beside the camp. Access roads lace the hillside, some so steep they’re closed off to the 4-wheel-drive trucks used to get around the project. One “monster” pump pushes water for drilling up the hill’s 350 vertical metres.

The Eagle zone is the most southerly of the project’s four gold zones. The Steiner zone lies 700 metres northwest of the Eagle zone, around the side of the same hill. The Olive target sits 1.5 km northeast of Eagle on an adjacent hilltop, and the Shamrock zone sits 500 metres further to the northeast.

The property is underlain by Proterozoic to lower Cambrian-age Hyland Group metasediments and the intrusive Dublin Gulch granodiorite stock. The Dublin Gulch stock is comprised of four phases, with granodiorite being the most significant.

Gold mineralization is generally hosted in sheeted vein sections within granodiorite that is weakly altered and moderately sheared, with weak sulphide mineralization. Higher-grade gold is associated with arsenopyrite veining.

Throughout the 1980s and 1990s, exploration and mining companies took turns poking around Dublin Gulch. The various companies together outlined the property’s four main zones, but only the Eagle zone saw enough drilling to define a resource.

A 1997 feasibility study (not compliant with National Instrument 43-101) estimated the Eagle zone held reserves of 50.4 million tonnes at an average grade of 0.93 gram gold per tonne. Mine development plans called for a mill at the top of the Eagle hill.

“Then the gold price dropped and it all fell apart — the property sat untouched for six years,” says exploration manager Jim Sparling.

StrataGold bought the property from a subsidiary of Sterlite Gold, now part of private GeoProMining, in winter 2004 for US$2.9 million in cash and 5 million shares, plus US$3 million in cash or shares over the next three years. Tucker says they saw potential in the property because exploration had only scratched the surface on the Steiner, Olive, and Shamrock zones, and because no one had yet tested whether the various zones were connected.

“Since we picked it up, we’ve been plowing away, trying to add ounces,” Sparling says. “There’s a big resource here, and in a good part of the world.”

StrataGold’s successes

In the summer of 2005, StrataGold focused on Eagle, drilling 22 holes into the zone. Hole 276 cut 148 metres of 0.94 gram gold from 61 metres depth; hole 289 returned 66.3 metres of 0.84 gram gold from 104 metres down-hole; and hole 302 intersected 122 metres grading 0.91 gram gold. All widths are true widths.

In 2006, focus expanded to include the Steiner zone. A 4,280-metre drill program included three drill holes into Steiner and seven testing the area northwest of Eagle for potential expansion. The year saw some promising drill results and an updated resource estimate.

The Steiner zone drilling returned the promising results. The zone had previously seen one reverse-circulation hole, which returned gold mineralization in the granodiorite stock. Two of the three widely spaced diamond holes that followed up on the historical find hit numerous zones of gold mineralization. Hole 316 cut 1.11 grams gold over a 22-metre interval (11 metres true width) from 199 metres depth, among other mineralized intervals. Hole 319 returned 0.84 gram gold over 35.7 metres (18 metres true width) from 311 metres depth.

A new resource estimate for the Eagle zone pegged indicated resources at 66.5 million tonnes grading 0.916 gram gold, plus inferred resources of 14.4 million tonnes grading 0.803 gram gold. The new estimate increased resources by 17%, compared with the historic numbers.

The year also saw a mishap with a silver lining.

During the summer, StrataGold’s drilling company pulled out partway through the season, leaving StrataGold with workers and funds, but no drills. So the company turned to soils and trenching.

“It worked out well for us, actually, having to do soils and trenching, because that’s how we realized the potential of the Shamrock zone,” Sparling says.

The company knew about the Shamrock zone from historic work, but hadn’t yet had the chance to explore it. Taking the opportunity offered by a lack of drillers, Stratagold completed extensive soil sampling and trenching on the Shamrock zone. The results from the program outlined an area of highly anomalous gold in soil and exposed an arsenopyrite-scorodite-quartz vein system mineralized with gold and silver over a 300-metre strike length.

In 2007, once again staffed with drillers, StrataGold returned to Dublin Gulch. A $3.2-million drilling program over the summer tested the newly uncovered Shamrock zone, probed potential offset zones around the Eagle deposit, and infill-drilled the Eagle zone, with 5,525 metres drilled in all.

The best Shamrock zone result came from hole 326, which intersected 15 metres (true width) grading 1.11 grams gold from 72 metres down-hole. Hole 329, collared immediately north of the zone, returned 46 metres grading 0.53 gram gold, indicating a separate, parallel zone.

Around the Eagle zone, diamond drilling tested Targets A and B, areas of potential fault offset of the deposit to the southwest and northeast. The previous summer, a hole collared west-southwest of the Eagle zone intersected 12.7 metres grading 0.85 gram gold, a hit worth following up.

“The Eagle zone is boring to look at, but runs well,” Sparling says. “The Shamrock zone is more exciting to look at — big, visible veins.”

For now, the property is frozen solid and snowed under. Over the winter, armed with three years of drill results and exploration knowledge, StrataGold is setting out to reinterpret the magnetic/electromagnetic airborne geophysical survey conducted in late 2004. The company has also commissioned a gap analysis and regulatory review of Dublin Gulch’s environmental database and historic environmental assessment.

One aspect of Dublin Gulch that StrataGold has not yet dug into is the Mar-Tungsten deposit. Less than 1 km east of the Olive zone, Mar-Tungsten hosts a non-NI 43-101-compliant resource of 8.9 million tonnes grading 0.67% WO3.

“We’ve
started poking around the Mar-Tungsten area,” Tucker says. “The first step is to inventory the core and move it to a safer spot because the core shed is collapsing, so we’ve done that.”

Exploring Mar-Tungsten is really a job for another day, but that hasn’t stopped Tucker and his team from pondering how it might fit in with a possible gold mine.

“If we could add a gravity circuit on the front of the Dublin mill to separate tungsten, that would work out very well,” he says.

Tassawini

Stratagold also reached a major milestone this year with its Tassawini gold project in Guyana. In April, the company released a resource estimate for the gold project that pegged indicated resources at 3.74 million tonnes grading 1.73 grams gold, plus 3.7 million inferred tonnes grading 1.27 grams gold.

The estimate fell short of expectations, as Tucker admitted in his annual letter to shareholders, but he reminded investors that the Tassawini deposit itself represents only a small portion of the known gold targets on the Tassawini and Anaturi prospecting licences. With a new exploration target discovered at Sonne North, less than a kilometre away from Tassawini, StrataGold plans to update the project’s resource estimate again in the near future.

The last year of trading has not been kind to StrataGold, which saw its share price fall from a 2006 average of around $1.20 to a current share price near 20. In mid-November, the company announced a public offering of units and flow-through shares worth $19.5 million; in late December, the offering closed, raising only $11.7 million. Newmont Canada, an affiliate of Newmont Mining (nmc-t, nem-n), spent $2 million to purchase 10 million units.

StrataGold now has 204.6 million shares issued, on a fully diluted basis.