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Freegold Ventures to apply ounce-finding aptitude to new Alaska project

17th July 2014

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – Alaska-focused Freegold Ventures on Thursday announced that it had acquired the Shorty Creek copper/gold porphyry target, located about 100 km north-west of Fairbanks, Alaska, where it would apply its ounce-finding prowess over the next decade.

The Vancouver-based explorer, which is mainly focused on its flagship Golden Summit project, also near Fairbanks, said its subsidiary Grizzly Bear Gold had entered into a ten-year lease with Gold Range, under which it would issue Gold Range with 750 000 common shares.

Gold Range would still be responsible for paying the $36 000/y State-of-Alaska rent for the first five years, after which Freegold would take over responsibility for the payments.

Gold Range would also retain a 2% net smelter return royalty on the project, subject to regulatory approval. 



The property is located 4 km south of the all-weather paved Elliott Highway and within the Livengood-Tolovana mining district.

The total recorded historic output from the district through 2007 was about 530 000 oz of placer gold. The Shorty Creek target was originally identified as an antimony prospect in the 1970s. In the mid 1980s, soil sampling identified significant gold, copper and pathfinder elements associated with gold/copper porphyry mineralisation.

The Asarco-Fairbanks exploration joint venture (JV) in 1989/90 completed a limited 2 000 m, 20-hole drill programme, where the maximum hole depth reached 150 m. The programme returned several promising intercepts.

Freegold would conduct a ground geophysical programme to evaluate this new project during the current field season.

GOLDEN SUMMIT

Meanwhile, Freegold is making strides in finding more ounces at the flagship Golden Summit project. The project has one of the lowest unit discovery costs in the world at under $2/oz compared with the worldwide discovery cost average of about $32/oz.

Freegold’s president and CEO Kristina Walcott told Mining Weekly Online in an interview that one of the significant drivers for the low discovery costs was the fact that Freegold had managed to grow the resource from about 700 000 oz, in 2011, to 6.5-million ounces of yellow metal in two years.

“We have become very good at finding ounces," Walcott said, adding that Golden Summit had a lot going for it.

“There certainly are not many significant resources like it in North America. The project ranks 139th out of 580 gold projects with more than one-million ounces globally. Combined with the existing nearby infrastructure and a stable jurisdiction, it certainly sets it apart from competitors,” Walcott noted.

The world over, resource grades are declining, often making the pursuit for high grades futile.

Walcott explained that Freegold had held the Golden Summit property since the 1990s, but it remained on the backburner under the company’s previous management, who were in favour of high-grade vein-type projects and looking to bring in JV partners to explore further.

“In 2010 Freegold was completely reorganised with the new management rethinking the company’s strategy and taking a closer look at the bulk tonnage potential of Golden Summit. Having a great example – Kinross Gold’s Fort Knox – that it is doing well next door certainly helped,” Walcott stated.

The Golden Summit project currently hosts a National Instrument (NI) 43-101-compliant indicated resource of 79.8-million tonnes, averaging 0.66 g/t of gold for 1.68-million ounces, and an inferred resource of 248.06-million tonnes, averaging 0.61 g/t of gold for 4.84-million ounces, using 0.3 g/t as a possible openpit cutoff.

The technical report completed in June last year, also included an oxide component for the overall resource, comprising 25.03-million tonnes, averaging 0.55 g/t of gold for 439 000 oz in the indicated category, and 16.62-million tonnes, averaging 0.47 g/t for 253 000 oz in the inferred category, using a 0.2 g/t cutoff.

The oxide cap was contained largely within the upper 60 m of the resource. Resource drilling had been confined to a 300 m X 1.5 km area; however, the entire Golden Summit project area covered a 5 261 ha area and was host to several other significant exploration targets with the potential to host additional resources, all of which had an oxide cap in the upper 60 m.

Freegold started a preliminary economic assessment (PEA) in April and expected to have that completed by the end of October, which would essentially become the roadmap for moving the project forward.

Last month, Freegold reported results of metallurgical tests for the golden Summit project.

Walcott explained that the company would like to grow with the project. “This is why the oxide component of the resource is very important for us,” she stressed.

The oxide component of the project currently comprised about 700 000 oz, with the recent results pointing to recoveries of about 88% on 24-hour bottle-roll tests.

A cyanide bottle roll test is the industry standard first step in assessing the gold recovery possible by cyanide leaching.

“The idea is to look at the project as an initial small-scale heap leach operation – Fort Knox had a heap leach operation since 2009, and that is now accounting for about 170 000 oz of their 420 000 oz operation, which is also bringing down their overall costs,” she pointed out.

In conjunction with completing the PEA, Freegold plans to undertake further column tests to find the sweet spot between implementing a straight leach scenario, where all of the sulphide ore is also treated through the heap leach facility, versus an autoclave pressure oxidation system. “The tradeoff then becomes at what point do you call it a middle and trade the capex [capital expenditures],” Walcott said.

PROSPECTIVE JURISDICTION

Having existing infrastructure around is also a significant advantage to developing new projects these days. Golden Summit has the benefit of being half an hour’s drive from Fairbanks and is located next to an operating mine that in 2013 produced 421 641 oz of gold equivalent.

“So we have power, water and good access. These are things that help lower capex and operating costs. I think people have been a bit unfair when looking only at grades, because there are obviously a lot more criteria impacting the overall viability of a project,” Walcott said.

She underlined that Freegold had differentiated itself from other juniors in being able to use the proceeds from each financing to undertake drilling, find ounces and growing the resource.

Walcott added that Alaska was a very favourable jurisdiction. She said the media had been a bit unfair towards Alaska in recent times, asking questions about whether it was possible to permit projects in the pristine environment.

“That largely depends on where you are in the state. We’ve seen good cooperation from the state authorities and feel that Fairbanks is a very stable and positive jurisdiction. Having an example such as Fort Knox in the region certainly helps to demonstrate that mining can be a significant positive economic impact on the community,” Walcott said.

Freegold also holds a 100% lease interest in the Rob gold project, near Sumitomo Metal Mining's Pogo gold mine, in the Goodpaster mining district of Alaska, and has an exploration agreement with an option to lease the Vinasale gold project in central Alaska, which hosted an indicated NI 43-101 resource of 3.41-million tonnes, averaging 1.48 g/t of gold for 162 000 oz of gold, and an inferred resource of 53.25-million tonnes, averaging 1.05 g/t of gold for 1.8-million ounces of gold, using a cutoff value of 0.5 g/t as a possible openpit cutoff.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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