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Mining News: Tower Hill aims to spin out new explorer
Corvus Gold, led by exploration VP at Livengood, willtackle 2010 exploration in Alaska, Nevada after shareholders vote inJuly
Corvus Gold Inc., aVancouver B.C.-based junior company being formed to exploreInternational Tower Hill Ltd.’s early stage properties, will initiallyhold four projects in Alaska and the North Bullfrog project in Nevada.
Under the terms of the proposed transaction, Tower Hillwill retain all assets relating to the Livengood gold project in Alaskaand about C$41 million in working capital. Corvus will get the fiveproperties and about C$3 million in cash.
The spin-out proposal to be presented to shareholders at aspecial meeting in July would result in each Tower Hill shareholderreceiving one new Tower Hill common share and one-half of a Corvuscommon share in exchange for each Tower Hill common share held.
“The management and board of directors of ITH believethat the proposed spin-out is an excellent opportunity for shareholdersto fully maximize the value of their holdings,” said Tower HillPresident and CEO Jeff Pontius.
Pontius will retain his position as president and CEO ofTower Hill, and also will serve as CEO and chairman of Corvus. RussellMyers, currently vice president of exploration for Tower Hill, willbecome the new company’s president. Additional directors and seniormanagement of Corvus are expected to be appointed in the near future.
The five gold and copper-gold properties are currentlyheld by Tower Hill subsidiary Raven Gold Alaska, and once the newpublically-traded company is formed the assets will move into Corvus,which is Latin for Raven.
“The prospectus for Corvus Gold will include Terra,Chisna, LMS, West Pogo and North Bullfrog,” Myers told Mining News.
Corvus’ Alaska projects have more than C$8 million inpartner-funded exploration slated for 2010, giving the junior a jump onits objective of becoming a nonoperator gold producer with significantcarried interests and royalty exposure. Corvus also plans to expand itsportfolio by seeking out and acquiring new prospects.
Big budget at ChisnaThe exploration work at the 163,460-acre, or661.5-square-kilometer, Chisna project is targeting large copper-goldporphyry systems in the Wrangellia Terrane of eastern Interior Alaska.
Ocean Park Ventures Corp. has committed to spendingUS$6.2 million in exploration at Chisna in 2010 as part of its option toearn a 51 percent stake in the copper-gold prospect by contributing atotal of US$20 million in exploration expenditures, making stagedpayments and issuing shares over five years. Ocean Park can increase itsstake to 70 percent by producing a bankable feasibility study thatdelineates a mining project on the Chisna property with annualproduction of at least 300,000 gold-equivalent ounces. Raven, and thenCorvus, will be the operator of the joint venture for the first twoyears.
The 2010 exploration at the porphyry copper-gold prospectbegan with an airborne geophysical survey that was completed inmid-June. Raven will follow up with a ground induced polarization surveyand drill program expected to start in early July.
The first two targets of this year’s drill program willbe the 2,000-acre Ahtell alkaline porphyry copper-gold system and thelarge 10,000-acre POW system.
Earlier this year, Raven augmented its 87,940 acres, or356 square kilometers, of State of Alaska claims at Chisna by acquiring75,520 acres, or about 306 square kilometers, of additional prospectivelands surrounding the Ahtell discovery from Ahtna Native Corp. Theagreement with the Alaska Native regional corporation for eastern Alaskaincludes an exclusive right to explore and an option to lease theproperty.
Myers said now that Raven has an agreement with Ahtna,the company can finish the exploration work on the Ahtell discovery madeby Tower Hill.
“We will do a 3-D IP survey; that, plus the geochemicaland geology, will be used to target the first drill holes at Ahtell.Then we will go up and drill a couple of holes on the POW property,” hesaid.
A number of other targets have been defined that will befollowed up on within this 40-mile-, or 65-kilometer-, long belt of goldand copper mineralization. The company also is considering drillingsome of these other targets depending on the results of the inducedpolarization surveys currently under way.
“As soon as the guys finish at Ahtell, then we will moveover and start doing IP on other potential targets,” Myers said.
Production potential at TerraThe Terra project is centered on a 5-mile-, or 8-kilometer-,long trend of high-grade gold vein occurrences which have returnednumerous surface rock samples and drill intersection in excess of 50 g/tgold.
This property, located in the southwestern part of theAlaska Range, has been optioned to Nevada-based American Mining Corp., aprivately held mining company that can earn an initial 51 percentinterest in Terra by spending U$6 million on exploration over threeyears, including $1 million in 2010, and making cash payments ofUS$300,000 and issuing 750,000 common shares over the same three-yearperiod.
Corvus also will receive a sliding scale net smelterroyalty of between 0.5 percent and 5 percent, depending upon the goldprice, on all precious metal production from the property and a 1percent NSR royalty on all base metal production. The royalty to Corvusis in addition to the current royalty payable to the underlying lessor.
Drilling by Tower Hill in 2006 and 2007 defined anestimated inferred resource of 428,000 metric tons averaging 12.20 g/tgold, or 168,000 contained ounces, and 23.11 g/t silver, or 318,000contained ounces, at a cutoff of 5.0 g/t gold. In addition to the Ben’sVein, which hosts the resource, drilling at two other vein structuresconfirm the potential for significant resource additions on theproperty.
According to Tower Hill, the gold at Terra occurs ascoarse native gold and can be recovered by simple gravity methods,facilitating potentially rapid development of a small mining project.
American Mining is reportedly planning to conduct a bulksample of the Ben’s Vein in August, utilizing a small crusher andgravity separator. However, Mining News was unable to verify the reportby press time.
Pogo-style projectsThe two other Alaska properties going into the Corvusprospectus, West Pogo and LMS, have been joint ventured to First StarResources Inc. Both properties lie in the vicinity of Sumitomo MetalMining Co. Ltd.’s Pogo Gold Mine, a high-grade underground producer eastof Fairbanks. West Pogo lies 2.8 miles, or 4.5 kilometers, west ofPogo, and is situated along its western property boundary. LMS can befound about 25 miles, or 40 kilometers, to the north.
First Star President and CEO Bill Wishart said,“Acquisition of this gold project marks the return of First Star to itsmining roots. Our intention is to form a gold exploration anddevelopment company around these projects. In the coming weeks, we willbe building our technical staff and preparing for an active season ofdrilling.”
LMS is believed to be an intrusion-related vein system,with similarities to the gold deposit at Pogo. The property showspotential as both a high-grade, Pogo-style target and as a lower gradebulk-tonnage prospect.
“At LMS there is some phenomenally high-grademineralization, and we just haven’t quite figured how the structureswork that control it … at the Camp zone inside of the schists there arethese, what I think were originally cherty sediments, and those chertysediments get broken up in developed breccias that carry the lowergrade, bulk-tonnage mineralization,” Myers explained.
“At LMS we have some pretty good structural ideas, but we(International Tower Hill) discovered Livengood. If it hadn’t been forLivengood we would have been working LMS the whole time,” he added.
Under the terms of the agreement, First Star has theability to earn an initial 55 percent interest, and a second option toearn the remaining 45 percent interest. To earn the initial 55 percentinterest, the Vancouver, B.C.-based junior must pay Raven/CorvusUS$280,000 and spend US$3.5 million on exploration of the property. Toacquire the remaining 55 percent, First Star must fund the projectthrough to an advanced exploration stage by spending an additional US$3million by the end of 2015, or by producing a NI 43-101-compliantinferred resource of 2 million ounces of gold using a 0.3 g/t cutoffgrade, whichever costs less. A net smelter returns royalty of 3 percentor 4 percent on gold-silver and 1 percent on all other products will bepayable to Corvus, which can be reduced by 1 percent by paying CorvusUS$3 million.
The West Pogo prospect represents a high-gradeintrusion-related vein system gold target. The West Pogo claim blockconsists of 96 State of Alaska mining claims covering about 4,670 acres.
Myers said exploration by Tower Hill has encounteredPogo-style mineralization as well as other high-grade gold without thegeochemical signatures of the ore being mined by its neighbor.
First Star has the ability to earn a 100 percent interestin West Pogo. To earn the initial 55 percent the Vancouver B.C.-basedjunior must pay US$250,000 and expend US$2.8 million on exploration. Toacquire the remaining 45 percent interest, the company must fund theproject through to an advanced exploration stage by spending anadditional US$2 million by the end of 2015, or by producing a NI43-101compliant inferred resource of one million ounces of gold using a 0.3g/t cutoff grade. The property also has a royalty agreement with termsidentical to that at LMS.
First Star intends to conduct a drilling program on boththe LMS and WP gold prospects in 2010.
The way forwardCorvusintends to hold sole ownership of its North Bullfrog gold project,which is located about 9 miles, or 14 kilometers, north of Barrick GoldCorp.’s multimillion-ounce Bullfrog gold mine in Nevada.
North Bullfrog hosts an indicated resource of 2.02Mtgrading of 0.88 g/t gold and 0.45 g/t silver and an inferred resource of0.95 Mt grading 0.78 g/t gold and 0.36 g/t silver, both at a cutoffgrade of 0.5 g/t gold.
Corvus currently plans to spend about C$1 million tocomplete 10,000 meters of drilling in the fall.
“We are trying to develop another low-grade, at-surface,heap-leachable resource,” Myers explained.
The future Corvus president said the company will beactively searching for new promising properties to add to the company’sportfolio.
“The way forward for Corvus is finding good prospects,joint venturing them or discovering them ourselves. And we are veryactively evaluating projects in Alaska, Nevada and other places to seeif we can find the right upscale potential,” Myers said.
“I like geology,” he added. “The most fun for me istaking something, making sense of it and turning it into something thatlooks like you could turn into a mine.”
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