Recently, we had the pleasure of sitting down with two of exploration geology’s brightest young stars; Dr. Alan Wainwright and Daniel MacNeil. Dr. Wainwright (Chief Geologist) and Mr. MacNeil (Project Acquisition and Development) allowed us to visit them in the humble Vancouver offices of their current venture, Desert Star Resources (DSR:TSXV).
Mr. MacNeil has over a decade of experience working with seniors as well as juniors in exploration. Dr. Wainwright completed his PhD at the University of British Columbia on the super-giant porphyry copper-gold deposits at Oyu Tolgoi (Ivanhoe Mines, Mongolia). Last month he won the H.H. “Spud” Huestis Award for excellence in prospecting and mineral exploration along with his former Kaminak Gold colleagues for their role in the discovery of the 4.2 million ounce Coffee deposit in the Yukon.
“We had a meeting at the beginning of the downturn,” MacNeil tells me, “and we decided we had two options. We could shut off the lights and wait for better times, or we could take the capital we had and get into [mineral] belts that we wouldn’t otherwise be able to get into.”
The two geologists showed me a world map with a dot for each of the +350 projects they reviewed, telling me they simply narrowed in on the areas on the map where the most dots were.
"You have to kiss a lot of frogs in this business," MacNeil jokes.
That area, it turned out, was the southwest United States and specifically Nevada, New Mexico and Arizona. The two have acquired a project portfolio for Desert Star that consists of four copper projects in the Laramide belt of Arizona and New Mexico and two Carlin-type gold projects in Nevada.
“We selected projects in places where nobody would be surprised that there was a large deposit and no one would contest that these could be put into production,” MacNeil tells me.
Here is a summary of the top projects:
Red Top sits on the northwest segment of the prolific Laramide porphyry belt in Arizona. The Red Top Project is situated 8 km northwest of the Resolution Copper Project, a joint venture project owned by Rio Tinto and BHP Billiton which is one of the world's largest undeveloped copper projects. Resolution hosts 1.737 million tonnes of over 1.53% copper.
All of the Arizona copper projects are under option from Eurasian Minerals (EMX:TSXV) and Desert Star can earn a 100% interest (less a 2.5% NSR royalty, buyable down to 2%). The deals are back-end loaded with $100,000 in exploration required in the first year, $500,000 the second and the third, $750,000 the fourth, $1.15 million the fifth and $1 million thereafter.
“The first thing you see when you drive or fly into the project is a 350m alteration zone which hosts an advanced argillic mineral assemblage that is associated with the lithocap environment at the top of a porphyry. The theory tells us that within a few hundred metres beneath the surface of this lithocap environment is a porphyry system,” Dr. Wainwright explains.
The two show me various maps and diagrams of the local geology surrounding their project as well as the Resolution deposit. They know, from local geological signs, that the potential porphyry zone in the Red Top property will be tilted on its axis. The Resolution deposit starts at 1.5km depth and is covered with post-mineral cover, up to 1,000m deep. Conversely, the alteration zone at Red Top is seen at surface, in outcrop.
“The reason the tilting of the system is important for us as a company is that there are some vintage 1960’s drill holes which were drilled vertically to about 200m,” Daniel explains, “which means they missed the target zone.”
The duo are planning to drill three 1,000m deep drill holes into the target zone of their tilted porphyry which they believe will be sufficient to tell them whether they are onto something or whether they need to give the project back. The holes will cost roughly $200-$250 per metre.
Desert Star also holds the contiguous claims to the southeast of Red Top which they call Copper King. Again, under option from Eurasian Minerals, Copper King is another high-priority target which the two think could host a large-scale copper porphyry. According to surface geology on the project, a large alteration zone with the mineral assemblage of marble plus serpentine has been identified on the project. The reason that is exciting is that this same alteration formation runs through the Resolution deposit. This suggests that their project is the top or side of a porphyry system (if the geology is the same as Resolution).
“Very similar to Red Top, we would only need three or four drill holes to determine whether our thesis about the porphyry is correct,” Dr. Wainwright tells me. “Unlike Red Top, where the signature would be masked due to sulphides at surface, a geophysical program on Copper King would work well.”
The county line separating Pinal and Gila Counties in Arizona broadly corresponds to a large fault which separates two geological panels. On the Pinal side are intact copper porphyry systems such as Resolution. On the Gila side, where their Copper Springs project sits, are copper porphyries which have been dismembered and laid horizontally by subsequent faulting. So the mines there represent pieces of once intact copper systems. Mines located here include Capstone’s Pinto Valley mine and Freeport’s Miami-Inspiration deposit.
In this area, the copper porphyries are like tipped over dominos pieces which have a top, middle and bottom which now lay horizontal. These are called the roof (top), core (middle) and roots (bottom). In the roots would be the lower grade, large tonnage parts of the system. The best grades and tonnages typically come from the core and the highest-grade, lowest tonnage deposits would be found in the roof. The Miami-Inspiration deposits are typical of core deposits.
“What we have is the largest footprint of the root and roof system in the area and we (Desert Star) own the land above where the core system should be,” explains Daniel. “In the 80’s, there was a rush to Chile and Southern Peru so this theory has yet to be adequately tested in this area.”
Eurasian’s former partner on the project actually drilled two holes in that northeast corner. The company lost one of the holes and drilled the other to 596m then ran out of money. Luckily for Desert Star, that company left the casing in the hole.
Alan explains, “we will have to drill about 1,000m to get through the basin fill and overburden and to hit bedrock. But what we have on the project is one hole that is over half of the distance there already.”
Due to the financial risk associated with drilling to these depths, the company believes this project will be best served under joint venture with a major. Any number in the area could be interested in such a deal.
The Oro project is located in southwestern New Mexico on the most eastern flank of the Laramide belt. It is under option from Southern Silver and Desert Star can earn up to a 70% interest. Unlike the other two projects in Arizona, Oro is not located adjacent to any major mines, but the Daniel and Alan tell me the same age rocks exist there.
“We believe this area is under appreciated,” MacNeil says.
The project has an interesting alteration footprint that measures over 3km long and offers two targets that they believe are consistent with the roof of a copper porphyry system. The target is also littered with oxidized sulphide veins that hold copper-gold mineralization. Both Kennecott and Southern Silver have drilled the project in the past, with Southern Silver drilling in 2010. According to Mr. MacNeil, neither Kennecott nor Southern Silver tested the right portion of the system (NOTE: Kennecott was trying to test for porphyry mineralization, Southern Silver was looking for gold rich replacement mineralization).
“The gross geochemical zonation on this project actually, we think, looks a fair bit like Bingham Canyon,” Dr. Wainwright tells me.
Another interesting area on the property is what they call the Stock Pond. This target has vein densities that would be typical of a bulk tonnage oxide gold system and they have sampled up to 4.8g/t gold at surface. The two are planning on trenching this area although the prize remains the larger copper-molybdenum or copper-gold porphyry.
The Anchor project is located at the south end of Diamond Valley, Nevada and is roughly 10km northwest of Barrick’s Ruby Hill mine at the end of the known Battle Mountain-Eureka trend. Located to the northwest is Barrick’s Cortez mine which produces over 1 million ounces of gold per year and hosts over 15 million ounces of 2P gold reserves. Desert Star can earn up to 70% interest in the Anchor project from Mark O’Dea’s Pilot Gold (PLG:TSX).
“Nevada is a great place to have a mine,” says Dr. Wainwright.
The Anchor project is surrounded by the necessary infrastructure including highways and power. Barrick’s Ruby Hill mine can be seen from the Anchor property. The project has the same geological characteristics as any of the major Carlin-style deposits in Nevada including Goldstrike (70 million ounces of gold discovered, to date).
“The project itself is a very classic set up for Carlin mineralization. What we have is a 600m by 400m surface footprint consisting of up to 1g/t gold,” MacNeil tells me.
The project has been the focus of drilling which has only been to 250m depth. The two at Desert Star believes what has been drilled on the project so far is not actually the exciting material. They believe the target is a deeper high-grade, large tonnage Carlin ore deposit.
“Below the focus of the previous drilling, is the ‘Devil’s Gate’ which is a carbonate debris flow and represents the rock that hosts most of the gold in Nevada,” Dr. Wainwright explains.
For Anchor, Desert Star is planning two to three 600-750m drill holes to test the Devil’s Gate.
With the exception of Copper Springs, Desert Star’s plan is to drill two to four deep holes on each of their projects. Due to the depth and challenges associated with drilling Copper Springs, MacNeil and Wainwright see that project as being an ideal project for a well-funded major. They would look to joint venture it to them.
Recently Brent Cook, an economic geologist and the editor of Exploration Insights, added Desert Star to his 2014 watch list, stating, "Very strong deep drill conceptual plays in the right place." Note this was not an investment recommendation by Mr. Cook.
At the end of our conversation, MacNeil explained, “a lot of guys ask us what our favorite project is, and the reality is it changes every day. We are in great shape.”
Here's Desert Star's chart:
Please visit their website for more information: http://www.desertstar.ca/s/home.asp
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