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Hungry People Golden Hope

As a general rule, the most successful man in life is the man who has the best information

There are signs that in 2016 gold will reverse its losing streak.

In China, physical delivery from the Shanghai Gold Exchange reached a record 2,596 tonnes, or a whopping 80 percent of total global output for 2015.

Record Physical Delivery from the Shanghai Gold Exchange in 2015

In addition, the People’s Bank of China reported adding 19 more tonnes in December, bringing the total amount to over 1,762 tonnes.

Meanwhile, U.S. demand is just as electric. In the third quarter of 2015 U.S. buyers bought far more coins and bars than they did in any other quarter over the past five years - U.S. Mint Eagle sales reached their highest level since the second quarter of 2010.

“Global investment demand saw a significant increase this quarter, up 27% to 230t. Bar and coin purchases were up by a third on Q3 2014 with Western markets in particular showing a surge. In the US, bar and coin demand reached its highest total in five years, up 207% to 33t.

Europe also saw strong levels of demand in the investment sector as ongoing concerns surrounding the Greek debt crisis and c uncertainty in Eastern Europe, the result of a number of factors including continuing tensions between Russia and Ukraine and saw demand climb by 35% to 61t.

In China, investment demand grew by 70% to 52t, as demand was initially stimulated by the gold price weakness in July, which was further fuelled by the mid-August foreign exchange reform. In India, the investment sector saw its first increase since Q3 2014, up 6% year-on-year to 57t.

Central banks remained a significant source of demand, and were net buyers for the 19th consecutive quarter. Purchases by official sector institutions reached 175t, a level almost matching the record highs in Q3 2014, as the net widened to include new reports from countries such as China and the UAE.” World Gold Council

Gold demand and supply statistics for Q3 2015

  • Overall demand increased by 8% year-on-year to 1,121t.
  • Total consumer demand – made up of jewellery demand and coin and bar demand – totalled 928t, up 14%.
  • Global investment demand saw a significant rise of 27% to 230t, up from 181t in Q3 2014. This was led by the US which saw a surge in bar and coin demand, up 207% to 33t from 11t on the same period last year, with support from China, up 70% to 52t and Europe up 35% to 61t.
  • Global jewellery demand for Q3 2015 was up 6% year-on-year to 632t compared to 594t in Q3 2014. In India, demand was up 15% to 211t and China was up 4% to 188t. The US and the Middle East also saw gains, up 2% to 26t and 8% to 56t respectively.
  • Central bank demand reached 175t, the 19th consecutive quarter of net purchases.
  • Demand in the technology sector declined 4% to 84t as the sector continued to endure pressure, with the industry choosing to shift towards alternative, cheaper materials in technological applications.
  • Total supply was 1,100t in Q3, up 1% year-on-year. Total mine supply (mine production + net producer hedging) remained relatively flat up 3% year-on-year to 848t compared to 814t in the same period last year. Year-on-year quarterly mine production shrank by 1% to 828t in Q3 2015 against 836t in Q3 2014. Recycling levels were down 6% year-on-year to 252t compared to 268t in Q3 last year.”

World Gold Council

The gold coin buying frenzy continued into the new year. On January 1, Americans gobbled up unprecedented amounts of gold and silver coins from the U.S. Mint. For the month of January, the U.S. Mint sold 124,000 ounces of American Eagle gold bullion coins, up 53 percent from a year ago.

Record Silver and Gold Coin Sales?

As for precious metal pricing in Canadian dollars let’s check out current pricing:

Gold - US$1,117.80 = CDN$1,573.86

Silver – US$14.24 = Cdn$20.05

It might be time to add a gold stock or two to your radar screen.

Fort Hope and Fort Yale

From its headquarters at York Factory on Hudson Bay, the Hudson's Bay Company (HBC) had controlled the fur trade throughout much of North America for several centuries. In 1848, Hudson’s Bay Company (HBC) built Fort Hope and Fort Yale.

The first major placer gold find in southern British Columbia was in the late 1850s at Hill's Bar. Prospectors discovered a rich gold-bearing placer bar just 15 kilometers south of Fort Yale on the Fraser river. The Hills Bar, named after one of the prospectors, became one of the richest gold producing bars ever discovered in B.C.

From 1858 to 1863, tens of thousands of miners and others (mostly American gold seekers from the California gold fields), all infected with ‘gold fever’, invaded the interior of B.C. During its heyday Yale was the largest town north of San Francisco and west of Chicago, hitting a peak population of roughly 16,000.

Sto:lo First Nations people, who have been in the area upwards of 10,000 years, called the newcomers the Xwelitems, or Hungry People.

Coquihalla serpentine belt

In 1868 the first Crown granted claim in mainland British Columbia was awarded - this covered silver discoveries located south of Hope.

In the early 1890s, lode gold deposits were discovered on Siwash Creek by placer miners washing gravel. Several fold-bearing quartz veins had been discovered adjacent to the eastern edge of what was later called the Coquihalla serpentine belt.

The Ward Mine was operated in 1905 and produced about 135 ounces of gold.

Following the construction of the Kettle Valley railway in 1910, exploration activity increased along the Coquihalla serpentine belt.

In 1913 Mike Merrick discovered lode gold in a large quartz vein near the contact of sediments and serpentinite. In 1916, the Emancipation mine (located 2.5 kilometers southeast of the Carolin/Idaho) was the first major gold producer in the Coquihalla gold belt. In the 1920's a mill was constructed near the Kettle Valley railway and connected to the mine via aerial tram. The mine was shuttered prior to WW2.

The Idaho zone (the Carolin mine) was discovered in 1915 by Tony DeAngelis.

The Montana showing was located in 1915 by Alex McLean and produced approximately 30 oz gold from two tons in 1925. This showing was re-discovered in September 2011.

Minor gold production totaling 30 oz gold was reported from the Georgia No. 2 showing in 1925. This showing was located by Green Hicks in 1919.

The Pipestem Mine, found in 1922, was located approximately 2.5 km north of the Carolin Mine.

In 1926, a silicified zone was found by trenching along the serpentinite contact. As this trenching was extended in 1928 free gold in a talcose shear zone was revealed. Aurum Mines Limited was formed to mine the zone.

In 1945 and 1946, eight shallow holes were diamond drilled in the Idaho Zone averaging 5.4 grams per tonne gold over 5.4 meters.

In 1966 Summit Mining Ltd. extended the strike length of the Idaho surface exposure to 75 meters. In the early 1970s, Aquarius Resources followed by Carolin Gold Mines Ltd. conducted further development work.

The government controlled price of gold was allowed to rise in 1973.

Ensuing exploration led to the discovery of the Carolin gold mine.The Carolin Mine produced over 43,500 ounces of gold during 27 months of operation. The mill, with a design capacity of 1,360 tonnes per day, was commissioned in early 1982.Construction coincided with the high gold prices in 1980, but the first gold wasn’t produced until 1982 when gold had retreated back to near US$300 per ounce. The Carolin Mine operated from 1982 to 1984 and closed at the end of 1984 due to poor gold recoveries, low grades due primarily to dilution, and low gold prices.

Anglo Swiss Mining Corporation conducted surface exploration and drilling on the McMaster Zone from 1984 until 1990.

From 1995 through to 1997 Athabaska Gold Resources conducted underground exploration drifting and drilling coupled with bulk sampling for metallurgical work,part of the tailings impoundment was drilled and exploration drilling was done on the McMaster Zone.

Athabaska Gold Resources eventually went into receivership and filed for bankruptcy in 2001. The property and claims were purchased in October 2002 from the receiver by Tamerlane Ventures Inc.

In 2004, Century Mining Corporation optioned the claims from Tamerlane and subsequently optioned the property and claims to Module Resources Inc. Century and Module subsequently signed a purchase and sale agreement on June 20, 2011.

Century Mining Corporation did not carry out any exploration or development on the property. Module conducted limited surface exploration work predominantly at the McMaster Zone consisting of 1,600 meters of drilling in 2009 and 2010.

Module changed its name to New Carolin Gold Corp. TSX.V – LAD on October 11, 2011.

A small diamond drill program totaling 1400 meters was completed in November, 2012 at the Idaho Zone to confirm earlier mineralization via trenching conducted in 1996.

Hozameen Fault

The regional geological setting is identified by a prominent northwest-southeast trending structure known as the Hozameen Fault. This geological break can be traced for at least 100 kilometers in southwestern B.C. and extends into northern Washington State.

The Hozameen fault system played an important role as a conduit for ore-forming fluids; most of the occurrences are hosted by the Ladner Group and lie close to the Hozameen fault. However some gold mineralization is hosted in greenstone volcanics, the Spider Peak Formation, (e.g. Emancipation mine) or is associated with a suite of small sodic felsic
porphyry intrusions (e.g. Siwash Creek forks - Ward mine).

Gold-quartz Vein Systems

Host lithology suggests there are two main types of gold-quartz vein systems:

Ophiolite hosted - represented by gold camps such as Bralorne-Pioneer and Atlin in B.C., along with Grass Valley and Allegheny in the U.S.

Mixed mafic igneous-sedimentary hosted gold-quartz vein systems include well known gold camps such as the Mother Lode area in California and the Juneau Gold Belt in Alaska.

The deposits of the Coquihalla Gold Camp, including the Carolin Mine, are believed to fit into this category (mixed mafic igneous-sedimentary hosted gold-quartz vein systems) which is characterized by close proximity to deep crustal, right lateral, northwest trending fault systems with serpentine emplacement. Gold deposits have been found at depth in these fault systems, suggesting exploration potential at depth within the Carolin Mine.” Clifford A. Pearson, Professional Geoscientist and consulting geologist, Technical Report titled “Technical Report on the New Carolin Gold Corporation Ladner Gold Project” dated May 29, 2015

New Carolin’s Ladner Gold Property (Coquihalla Gold Camp) follows the north/northwest-trending Hozameen Fault structure for approximately 28 km and exceeds 144 square kilometers in size covering substantially all of the accessible, yet still very underexplored, Coquihalla Gold Belt.

Underground Mining Potential

There is no doubt of the underground mining potential of New Carolin’s Ladner Gold Project. The Carolin Mine property is a past producing mine with considerable unexplored potential to add additional resources as the mineralized zone is open in all directions.

Significant mineral resources remain within the mine area and the underground development is in place to quickly resume activities The underground Carolin workings have remained in good condition. In the diagram below the grey areas are mined out.

It’s very interesting that a mine development map dated May 1981 shows the 800 level being extended north for 1.2 km to the McMaster zone with proposed cross cuts for drilling.

From Jay Taylor’s ‘New Carolin Gold multi-million oz potential 150 km East of Vancouver’ we get the following…
“The $3.5 million worth of work carried out by Athabasca Gold from 1994 to 1996 has provided considerable value for New Carolin. That work, which was intended to allow Athabasca to re-start production at the Carolin Mine, was comprised of the following:

  • 110 meters of new drift to extend the workings on the 875 level
  • 1,630 meters of underground drilling in 19 holes
  • 7,101 meters of underground diamond drilling in 92 diamond holes
  • 564 meters of surface drilling in 6 holes
  • 50 meters of trenching and 280 meters of tunneling
  • A very detailed metallurgical report that suggests gold recoveries in the high 90% range, contrasted with recoveries of around 50% by Carolin Mines in the early 1980s

New Carolin has the data from the entire Athabasca work program, which revealed the following:

  • Mineralization continued to the north
  • Discovery of a new type of higher-grade mineralization west of old workings and alongside the Hozameen faults
  • Expansion of the McMaster Zone, open in all directions
  • Successful metallurgy not only from underground workings, but high recoveries from the tailings pond, which is blessed with the reciprocal of low recoveries from operations in the early 1980s
  • Modified mining techniques to maintain acceptable dilution rates, which was another problem that afflicted the operation of the early 1980s

A total of 728,429 historical ounces were outlined by Athabasca. They intended to put the mine into production at a cost of $8.1 million in 1996, but a sub-$300 gold price at the time resulted in the project being shelved.

Now New Carolin inherits that work, which would no doubt cost considerably more today than it cost 20 years ago.”

Sampling and Mapping

Below is taken from a news release New Carolin Gold put out October 26, 2015…

Sampling and Mapping Program Underway at McMaster Zone

“New Carolin Gold Corp. (the "Company" or "New Carolin") (TSXV: LAD) announces that it has engaged Mr. Dan Cardinal P.Geo, to undertake a detailed geological mapping and sampling program along the McMaster gold-bearing zone, beginning northwest of the zone and stretching for 1.5-2.0 kilometres southeasterly. Historical mapping and exploratory drilling (1985 & 1994-95) along the McMaster Zone have tentatively outlined 2 structurally related mineralized systems.

The project will take approximately two weeks. Object of the mapping program is to better define and geologically constrain the McMaster Zone, with the purpose of developing an exploration model in front of a planned drilling program to define extensions of the mineralized zones.

Mr. Cardinal, in the 1980s, was an Exploration Manager for Aquarius Resources Ltd. then one of the joint venture partners of the Carolin Mine/Ladner Creek gold project. Mr. Cardinal, who currently resides in Hope, BC has since conducted numerous exploration and mapping projects along the 28 km length of the Coquihalla Gold Belt including, supervision of 1994-95 exploratory drilling projects on the McMaster Zone. He has extensive experience working in orogenic style gold-related environments in central and southwestern BC.”

New Carolin’s sampling program ran for a week (weather related constraints - Rick) in the late fall 2015 and focused on the area south south-east from the McMaster Zone towards the Montana Zone. Sample assay results and the completed exploration model are pending.

McMaster Zone

The McMaster Zone, a surface occurrence some 1.2 km (1,200 meters), along trend from the Carolin Mine workings has been explored with six campaigns of surface drilling, from 1975 to 2010. The more recent drilling expanded the zone and highlighted its open pit potential.

Inferred Mineral Resources

McMaster Zone Inferred Mineral Resources Estimate of 3,375,000 tonnes, grading 0.69 gpt, for a contained gold ounces estimate of 79,540 oz.

The McMaster Zone is reported in the Inferred category due to sparse drill hole density and a relatively wide drill hole spacing.

A Whittle pit optimization exercise demonstrated that the McMaster Zone resources had a reasonable expectation of economic extraction through open pit methods.

Montana showing

The Montana showing has gold mineralization similar to that at the Carolin mine and McMaster zone.
Carolin Mine

Carolin Mine Inferred Mineral Resources Estimate, at 0.5 gpt cutoff, of 12,352,000 tonnes, grading 1.53 gpt for a contained gold ounces estimate of 607,000 ounces.

The Carolin mine resource is reported in the Inferred category due to the lack of drill core for verification, and the wider (50m) spacing of drill holes in the mineralized zones discovered after the mine shut down.

A Whittle pit optimization exercise was done at a 0.5 gpt gold grade cutoff to test the potential for open pit mining.

Open Pit mining Input parameters:

  • Pit slopes of 45 degrees
  • 95% mining recovery
  • 10% mining dilution
  • Mining costs of $2.50/tonne
  • A 1.0 million tonne/year mining rate

Milling input parameters:

  • A 90% mill recovery  
  • Overall processing costs of $25.00/tonne

The price of gold used was $1,500/oz, reasonable considering the current gold price and Cdn/US $ exchange rate.

Using these parameters a significant portion (from surface down to the 875 meter elevation) of the Carolin Mine inferred resources has the potential to be economically open pit mined.

Historical trenching above the top mine adit (1000 level) at the Carolin Mine found considerable widths of good grade gold mineralization on surface. This occurrence was tested by a small 12-hole surface diamond drilling program in late 2012. Significant mineralization was encountered in all the holes, helping to further define the potential for a starter open pit.

The Carolin Mine mineralization has not been systematically explored toward the McMaster zone. We can see from the above diagram the Montana Zone is a “jewelry box” type gold showing – very high grade @ 30oz ton gold.

Small past producing mines (Emancipation, Pipestem) and surface showings (Montana and Lorrainne) occur along the mineralized trend, within several km of the Carolin Mine. All have seen only piecemeal and sporadic exploration and have significant exploration potential.


3.5 km of contiguous gold anomalies from Carolin Mine north to Pipestem Mine

Conclusion

Assays from Cardinal’s surface sampling program from the McMaster zone towards the south south east are due in a few weeks. Is there gold up there? Well there is at the McMaster Zone and at the Montana showing. Is there gold between the two, does it carry to depth?

Look at the trenching results from the surface of the New Carolin Mine, i.e. 34m of 5.75 g/t gold. Does the surface mineralization continue to the north? Only a comprehensive sampling program will tell us. If we’ve got surface gold then a drilling program to see if it continues to depth will be done, and that will give us a 43-101 compliant gold resource.

Remember:

  • A significant portion (from surface down to the 875 meter elevation) of the Carolin Mine inferred resources has the potential to be economically open pit mined.
  • A mine development map dated May 1981 shows the 800 level being extended north for 1.2 km to the McMaster zone, past miners obviously thought mineralization extended underground for a considerable distance.

LAD is one of a tiny handful of juniors with the credibility to actually be able to raise money. It’s your author’s opinion New Carolin is going to be doing a fair size drill program in the spring of 2016 to test the hopes for open pittable mineralization between two already modeled Whittle Pits, the McMaster and the New Carolin Mine with a high grade gold showing - the Montana, in between, and having the same mineralization as found at either end of the trend.

Hungry people with golden hopes. Are you one of them? I know I am. New Carolin is definitely a company, with a potentially explosive drill program, that’s on my radar screen. Is it on yours?

If not, maybe it should be.

Richard (Rick) Mills 
www.aheadoftheherd.com

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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