May 2013

Canada’s first Carlin-type gold discovery

How ATAC’s team located “no-seeum” deposits in Yukon’s Rackla gold belt

By Graham Chandler

ATAC Resources’ president Rob Carne (above left) won the H.H. “Spud” Huestis Award for Excellence in Prospecting and Mineral Exploration from the Association for Mineral Exploration British Columbia with colleagues Bill Wengzynowski  and Doug Eaton | Courtesy of ATAC Resources

It was the summer of 2010 and geologist Bill Wengzynowski was fresh from a mine tour hosted by the Geological Society of Nevada, where he observed the vivid oranges and yellows of realgar and orpiment. The two minerals, both sulphides of arsenic, are associated with Nevada’s Carlin-Trend gold deposits. But this day, he was thousands of kilometres north of there, in the eastern end of Yukon’s Rackla gold belt, following up on a hunch from colleague Rob Carne.

“He found realgar within hours of stepping out of the helicopter,” says Carne, president of Vancouver’s ATAC Resources, which has the area staked. “By the end of the day, he had followed it up to a cliff face that became the Osiris zone.”

Gold grains in Carlin-type deposits are extremely fine and found in sedimentary rocks. Popularly dubbed “no-seeum” gold, they are named after the Carlin Trend, which has produced over 70 million ounces since the mid-1960s. While similar deposits occur in China, Serbia and Macedonia, none had been found in Canada until the ATAC discovery.

The team’s work has earned them accolades. In January, Carne, Wengzynowski and Doug Eaton were awarded the H.H. “Spud” Huestis Award for Excellence in Prospecting and Mineral Exploration from the Association for Mineral Exploration British Columbia. Discovery is one key criterion for the award, says Ed Kimura, chair of the awards committee. “The other is geoscience excellence and this group exemplified that. They knew about a prospect that was showing way out in no-man’s land northeast of Mayo. They went out and found it, and identified that very interesting mineralization. We call it boots-on-the-ground type of exploration.”

Bringing data to life

Carne, Wengzynowski and Eaton had been partners in the past at Archer, Cathro & Associates (1981) Limited, a geological consulting firm that has long been a leading force in northern B.C. and Yukon exploration successes. The three maintain a close working relationship. Wengzynowski is now a consultant to ATAC and Eaton is a principal at Archer Cathro.

In 2006, Eaton recognized that the western edge of the Rackla belt had significant gold and tungsten geochemical anomalies in the government database. Exploration over the next four years led to the delineation of the Tiger zone, a limestone-hosted replacement-style gold deposit. While conducting reconnaissance geochemical surveys there three years later, though, the team recognized they were standing on a narrow band of largely Paleozoic carbonate rock: shelf margin rocks that extended some distance to the east. So, guided by a Geological Survey of Canada (GSC) interpretation that those rocks were similar to northeastern Nevada, and that all the creeks sampled by the GSC were anomalous for arsenic 100 kilometres to the east, in another isolated mountain range, they were soon looking east. “It didn’t discourage us that there were no gold anomalies in those creeks because we knew Carlin-type gold is typically so fine-grained it was going to continue to move downstream,” says Carne. They were confident that if they sampled further upstream, they would find the source of the GSC’s arsenic anomalies.

In 2009, Carne, Wengzynowski and geologist Sara Dreschler re-sampled three of those eastern drainages. “They all came back anomalous for arsenic and gold,” says Carne. The headwaters of the creek sampled by Dreschler have shown a new discovery called Anubis, where a first drill hole last year returned a high-grade intersection of 8.51 metres at 19.85 grams of gold per tonne. “The one I sampled became our Osiris zone and the one Bill [Wengzynowski] sampled became the Conrad zone.”

The next year, after Wengzynowski’s surface finds of realgar and orpiment showed fairly definitive Carlin-type mineralization, they had to move quickly to stake. “We embarked on an ambitious staking program,” recalls Carne. “We outlined a large block of claims around the Osiris discovery showing and then proceeded to connect between the Tiger and the Osiris zones, a 100-kilometre strike length by a width of about four kilometres – that was a lot of staking.” Word was already leaking out. They’d staked to the east, but by the time they had about 8,500 claims, a prospector was staking towards them. “We kind of met about 30 kilometres east of the Osiris. He subsequently optioned that package to a Chinese company called Anthill Resources.” Last year, Anthill made a significant discovery of Carlin-type gold on those claims.

Claims spur cash flow

The discovery’s significance was quickly recognized by the investment community. In June 2010, shortly after Wengzynowski’s spotting of realgar and orpiment, Michael Gray, senior vice-president of mining equity research at Macquarie Capital Markets Canada Ltd., visited the site and subsequently initiated coverage in September. He focused on the Osiris gold target. “It’s the most similar geological setting to Nevada of any other Carlin-type system in the world,” he says. “And that’s not a surprise because they are located on the same North American continental margin. You’ve got a similar large-scale geological setting with a similar style of mineralization – sedimentary host rocks and importantly the same geochemical pathfinders.” Gray reckons the finds are potential new mineral provinces, not just districts. Moreover, “they are finding things right on the surface.” Gray says there is still a long way to go before commercial viability can be established, but “it would impress any of the Nevada guys.” Macquarie has managed public offerings of securities for ATAC over the past year.

Carne says these Canadian Carlin-type finds are significant because they are large. “The northern Carlin trend is, I think, only 40 kilometres long and has in various estimates between 100 million and 200 million ounces of gold – both produced and defined,” he says. “Now it’s not a given that because it’s the same type of deposit that we are going to find that much gold. But because we are in the same geological environment and possibly the same age of mineralization, that invites the comparison that potentially, maybe there is that endowment.” Carne adds that since the first Carlin find in Nevada 60 years ago, most of it has only been discovered in the last 25 years: “And effectively, if you add up all of our days of exploration, it’s only 359 days so we are still very early in this story.”

With a mid-March private placement injecting $13 million into ATAC by Agnico-Eagle Mines, together with about $14 million on hand, the company can forge ahead with a 2013 drilling program. Some will be at a Carlin-type discovery close to Osiris called Sunrise, different from Osiris in that it is a feeder fault system.

As for production prospects, Gray figures the crucial next steps will be determining where the best concentrations are, and whether or not they are continuous. “They’ve got some good flashes of mineralization and some spectacular holes, but the continuity is not there yet,” he points out. “At the Conrad situation, they’ve drilled that off systematically and they haven’t announced a resource, but what we published in Macquarie Equities Research Reports is somewhere between three-quarters of a million ounces and one million ounces.” However, Gray says, there is probably more at depth and despite having some very high grades, the Conrad zone probably averages close to six to eight grams per tonne. “For that part of the world, that’s not anywhere near critical mass [to justify developing a mine] – you would need a larger resource to justify infrastructure costs and want high open pit and underground grades to provide a high margin.”

Should economic factors materialize to justify building a mine, infrastructure considerations would of course be critical. The Tiger gold deposit is 48 kilometres from the highway and it is another 100 kilometres to the Osiris zone. “So it’s 150 kilometres to the Carlin-type mineralization,” says Carne. “We fully recognize that, and what we are trying to demonstrate with our program is that the ounces are there to justify that sort of infrastructure investment.”

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