Sticking to the trend - gold exploration permits differ across the USA

Materials World magazine
,
3 Jun 2013

With US state land offering cheaper and quicker mining permits than federal land, West Kirkland Mining has seized a golden opportunity in southwest USA. Michael Forrest talks to West Kirkland Mining’s Chief Operating Officer, Sandy
McVey, about its gold exploration in the Nevada–Utah Long Canyon trend.

When the US intercontinental railway made its way though western Nevada and Utah in 1872, a series of trust lands were set up in a checkerboard fashion to ensure right of way. These trust lands eventually became state lands when the territory achieved statehood in 1896.

The influence of this land parceling can still be seen in the mineral licensing areas of Nevada and Utah. State lands have the advantage of promising quicker and cheaper permitting than the federal lands that make up the remainder of Utah. While some railroad parcels have fallen into private hands over the past century, there are many blocks available for exploration. This opportunity has been seized by Canadian company West Kirkland Mining, which has established a large land holding in the northeast part of the Long Canyon trend crossing the Nevada–Utah border.

Long Canyon is the eastern-most of a number of mineralised trends across Nevada and Utah resulting from early to mid-Tertiary magmatism 43–21Ma, which also marked uplift and crustal extension forming a series of faults and grabens. These structural breaks allowed the circulation of mineralised fluids that intensely altered the host rocks and mark the style of mineralisation in the region. This led to the extensive deposition of fine-grained gold with only occasional nuggets, which delayed large-scale discovery until more sophisticated geochemistry (particularly satellite remote sensing of the pervasive alteration) became available in the 1960s, aided by the development of heap leach recovery. Such is the scale of discovery and extraction today, if Nevada were a country, it would be the fourth largest gold producer in the world.

Exploration is continuing throughout the region along a series of trends. New discoveries are still being made, such as Gold Standard Venture’s Railroad discovery on the Independence trend (see Materials World October 2011). The Long Canyon property, which was acquired in 2011 by Newmont from Frontier Mining for around US$2.3bln, is indicative of the Long Canyon trend’s potential, further illustrated by the resource announcement in late 2012 of the discovery of 2.6 million ounces at 3.22 grammes per tonne (g/t). ‘West Kirkland is focused on developing mines on major trends,’ says Sandy McVey, Chief Operating Officer at the Canada-based mining company.

The Long Canyon trend has some mining history, with the Tecoma Mining District centred on the old Tecoma mine that operated in the late 1860s and early 1870s. This was followed by the Jackson Mine, which primarily extracted lead from 1907–1955. However, the extensive nature of the mineralisation was not recognised until the 1990s, when the Pittson Nevada Gold Company used a then novel approach of collecting bulk samples in off-explored areas and subjecting them to laboratory-scale cold cyanide leaching to identify concentration of fine-grained gold. The method can identify microscopic gold undetectable by the naked eye while ignoring nuggets in the sample. Although its results can understate grade, it is nonetheless an effective exploration tool in this type of terrane.

New frontiers
From a slow start in 2000, a number of companies inherited ground through company acquisition, each adding field and drill results. A result of the exponential increase in the price of gold throughout the decade was the NI43-101 compliant resource produced by Frontier in 2009 at the Long Canyon deposit. Prior to the Newmont takeover, West Kirkland had optioned from Frontier the TUG area of the north end of the Long Canyon trend, along with the adjacent KB property and other extensive holdings to the southwest that were optioned from Rubicon Minerals, who control private mineral rights.

The local geology of the region is typical basin and range, with lower to middle Paleozoic units of limestone, dolomite and sandstone reflecting a passive continental margin. At the TUG area, the oldest horizons form an anticline comprising thick carbonate shelf rocks – the Guilmette Formation of Devonian age. Like other Nevada/Utah trends there is extensive alteration in the region, with large thicknesses of the formation replaced by hydrothermal dolomite sitting immediately below the mineralised horizon hosted in the Tripon Pass limestone. This unit shows decalcification, where calcite has been removed by circulating fluids that have focused gold deposition along the axis TUG anticline, where it is controlled by a structural break or low-angle faults. Jasper and late calcite veins are also common in the region.

Drilling by West Kirkland at TUG has identified an oxide zone 875m long to a depth of 150m, outcropping at surface with a grade of around 1g/t. The ore body is oxidised to the drilled depth and, therefore, amenable to cyanide leaching – gold is precipitated from solution using zinc powder and smelting into ore on-site. The TUG deposit is adequately drilled (twin holes confirmed significant historical drilling of more than 400 holes), has grid power available and is road accessible. There is also a good metallurgical database and an initial strip ratio of less than 2:1. A preliminary economic assessment (PEA) by Canadian mining organisation Roscoe Postle Associates is expected in the second quarter of 2013.

‘The target date for a production decision is the second half of 2014, after a permitting timeline and all the necessary testwork have been determined,’ says McVey. If it proves economically viable and likely to achieve permitting, the company aims to get TUG into production as soon as possible, so that any cash flow generated may help to fund additional exploration in the trend. In today’s financial climate it can be tough to raise equity for greenfield exploration projects, and West Kirkland’s management recognises the difficulty in attracting shareholders. ‘During 2012 and early 2013 we were able to raise significant capital through private placements to complete the program on TUG,’ says McVey. ‘To this end we recovered ore from six boreholes that were used for metallurgical testing and to provide data for pit design.

‘In addition to TUG, West Kirkland has a number of other lookalike targets under exploration in the Long Canyon Trend, plus the adjacent KB deposit,’ adds McVey. Last year at the 12 Mile property 10km west of TUG, seven shallow holes gave TUG-equivalent grades while this year, detailed drilling of a large gold anomaly in soils is underway at Lewis Spring, located 35km southwest of the deposit. With the Newmont Mining joint venture, West Kirkland is committed to a spend of US$15,440,000 to earn controlling interest on 11 properties throughout Nevada – US$5m has been completed, with a focus on TUG. The company can now reduce the number of properties it develops to reduce overall spend. The east Nevada properties require another US$15m of exploration expenditure, with US$2m already spent on year-one exploration.

These significant cash flows are underpinned by the results gained so far. ‘However, with the market reluctant to buy into exploration, only those near or at production will be able to move forward,’ notes McVey.