Gwen Preston thinks West Red Lake Gold Mines has good odds of success
An opportunity to bring to your attention today: West Red Lake Gold Mines (CSE:RLG; OTCQB: RLGMF) is kicking off a fall drill program that I think has good odds of success. Maven subscribers heard about RLG a while back but the stock still has lots of room to move if this program meets with success.
Maven Opportunities: West Red Lake Gold Mines
An opportunity to bring to your attention today: West Red Lake Gold Mines (CSE: RLG; OTCQB: RLGMF) is kicking off a fall drill program that I think has good odds of success. Maven subscribers heard about RLG a while back but the stock still has lots of room to move if this program meets with success.
The program will test two targets. One is the depth extension of the Rowan deposit, which is a low risk target where success would remind the market that this project already hosts a million ounces of high-grade gold. The other target is the structural intersection that could host a much bigger prize.
Low risk expansion drilling coupled with high potential exploration holes means fall could bring good news from this desirable Canadian gold project. If you have room for a gold exploration story in your portfolio, consider RLG.
The Red Lake district in Ontario is famous for its gold. Miners have already pulled 30 million ounces from its deposits, which count among the richest in the world.
Classic Red Lake deposits are found where mafic and ultramafic rocks cross or come close to significant geologic structures, usually shear zones.
Shear zones are full of fractures, which mean lots of paths for the movement of gold-bearing fluids. In terms of rock types: ultramafic rocks are softer than mafic rocks, so fluids moving through the cracks in brittle mafics get dammed up by the lack of cracks in the ultramafics and deposit at the contract.
The best kind of Red Lake gold setup has both – a structural intersection at or near a mafic-ultramafic contact. The combo means the mafic unit has been pulled and cracked by the shear forces, creating all kinds of fractures that direct fluids towards the ultramafic contact.
The series of deposits that Goldcorp is mining in Red Lake follow this mold exactly.
Those mines produced 375,700 oz. gold last year from ore grading 18.4 g/t gold. In the High Grade Zone, the ore averages better than 70 g/t gold. These are classic Red Lake deposits and, in classic style, they are associated with structural intersections and mafic-ultramafic contacts.
Just 20 km west of Goldcorp’s operations there is another major structural intersection involving mafic-ultramafic contacts. In this area the east-west structure is the Pipestone Bay St. Paul (PBSP) deformation zone, which runs into not one but two northeast trending structures: the sub-parallel Golden Arm fault and NT volcanic unit, which merge right before running into the PBSP zone.
The NT Zone is a sheared volcanic unit known to host gold south of the area in question. The Golden Arm structure tracks a mafic-ultramafic contact. And the PBSP deformation zone is a shear structure tracking a mafic-ultramafic contact.
In other words: the intersection of these three structures offers everything a geologists wants when searching for high-grade gold in Red Lake.
And this structural intersection has never been explored for gold.
That work is now underway.
West Red Lake Gold Mines (CSE: RLG; OTCQB: RLGMF) is a Toronto-based junior exploring this area in partnership with Goldcorp. There’s a reason the intersection wasn’t previously tested: the property has gold in other places. Three historic mines on the property produced gold from high-grade ore in the 1930s and, until recently, modern exploration efforts had focused on finding more gold around the old mines.
One of the old mines rewarded those exploration efforts with a modern, high-grade resource: 4.5 million inferred tonnes grading 7.57 g/t gold, for 1.1 million oz. The resource sits in seven steep, sub-parallel, east-west-striking zones that have been tracked 1,200 metres along strike and to 350 metres depth. The gold is coarse (read: should be easy to recover); the veins are a bit narrow but the deposit remains wide open at depth.
Red Lake gold deposits often improve with depth – better grades and widths – so probing the deeper potential is important.
That’s one exploration goal. The other goal is to test whether the Rowan resource is just the tail of a tiger deposit hiding in the structural intersection.
West Red Lake has done some work testing the intersection.
First, a six-hole program last winter stepped east from the Rowan resource towards the intersection. The sixth and final hole hit 1.5 metres of 69.6 g/t gold in highly altered and silicified rock.
That kind of high-grade hit is significant in Red Lake.
In the spring RLG followed up on its hit. It drilled another six holes stepping east; the results were not exciting (short, low-grade intercepts).
A seventh hole, drilled north of and perpendicular to the other holes, was exciting. It returned two high-grade hits: 50.4 g/t gold over 1.5 metres and 22.7 g/t gold over 1.5 metres. And the hole drilled into a different host rock than what the southern holes had returned, which is just what a recent geophysical survey predicted.
The same survey also predicts there is a significant gold deposit at depth in the structural intersection.
That survey, called the Stargate audio-magnetotelluric survey, produces a detailed map of not just structure but also lithology (rock type) and mineral potential. The surveyor flew RLG’s ground blind, meaning he didn’t know anything about the mapped geology, other geophysical survey results, or defined deposits.
Stargate identified the Rowan resource clearly, tracked the known structures, and generated a significant anomaly right at the intersection. It also identified the distinct stratigraphic unit just north of the line of drilling that the seventh hole hit into.
In other words: so far the Stargate survey has been right on everything.
The question now: is its big anomaly at the intersection also right?
West Red Lake is very keen to answer that question. Unfortunately there is a hold up. The intersection is on Crown claims, unlike the patented ground on which RLG has been drilling to date. Before it can punch holes into the Crown claims it needs to complete a separate permit process. That’s underway, but it will take some time yet.
But RLG is not twiddling its thumbs. On the contrary: the company just announced a fall drill program that will punch two holes as close to the intersection as possible (while remaining on permitted ground) and six holes beneath the Rowan resource, to see what happens beneath that high-grade deposit.
First: the map below shows drilling near the intersection to date (in yellow) and the planned falls holes (in red). The shaded trends are the intersecting structures.
These planned holes are exciting. Ideally RLG would want to step farther back from the intersection to hit the target deeper and at a better angle, but given the permitting limitations (the bold yellow line marks the boundary between patented and Crown claims) this is the best they can do for now.
The results should give a taste of what the intersection has to offer. And the holes have a second purpose: to test whether the NT zone does fold around to the west and become that distinct stratigraphic unit that the east-west hole from the last program encountered. Knowing that unit is indeed the east-west-turned NT zone would help in two ways: it would define a new target as the exact place where NT hinges and it would add to the evidence supporting the Stargate results, which predicted just such a hinge.
It’s also exciting for West Red Lake to head back to the Rowan deposit. The market has been so interested in what the intersection might hold that investors have sort of forgotten this project already hosts a million ounces of high-grade gold in a deposit that’s wide open for expansion. If these holes hit, not only will people remember that Rowan exists but they will also realize it has good room to grow.
Goldcorp agrees. The major is funding its 40% of the drill program and is keeping close tabs on progress, according to RLG management.
This is exploration. There is no guarantee these holes will hit…but the Stargate survey, the drill results to date, the similarities to classic Red Lake gold deposits, and the support from Red Lake expert Goldcorp mean the odds are good RLG will find success, whether hitting a new zone at the intersection or expanding its known deposit at Rowan.
High-grade gold near operating mines in Ontario, one of the hottest mining jurisdictions in the world right now, would generate a share price response. West Red Lake’s relatively tight share structure should also help: the company has 101.6 million shares outstanding. Its share price gained alongside gold in spring but stayed stable through the summer, as observers awaited further exploration info.
The new drill program, just announced last week, will provide precisely that info. Success will move the dial.
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