Company Strategy and Focus
Contango ORE, Inc. (CORE) has a strategy of exploring for gold, copper, silver, and other valuable minerals in Alaska, and advancing our discoveries to the point that our properties become attractive to a larger integrated mining company for acquisition or joint venture. Our belief is that while grass roots exploration expenditures are inherently risky, the potential returns for our shareholders is maximized during the exploration phase by successfully discovering new resources of gold and other valuable minerals, and monetizing the assets once they are defined to a sufficient degree to sell them to a mining company better equipped to move them from exploration to production.
CORE's current focus is on the Tetlin gold-copper-silver project in the eastern interior of Alaska near Tok. The majority of our 729,000-acre land position is a long-term lease from the Tetlin Village Council, and we added State of Alaska mining claims adjoining the Tetlin Village lands.
Geologically, these lands are located in the prolific Tintina Gold Belt, and also fall within a recently defined N/S trending porphyry copper trend. Although the most cost-effective months to explore are June through September, excellent access and infrastructure in the Tetlin project area allow for exploration on a year-around basis. Producing gold mines in these trends include Fort Knox (360,000 ounces/year) and Pogo (380,000 ounces/year), with many other known gold occurrences that are not yet in production. The lands are also very accessible, with the Alaska Highway running through the northern portion of our leasehold, and the Tok Cutoff Highway is only 3 to 5 miles west of our drilling activity.
We began exploring these leases in 2009, and after spending most of our initial efforts gathering reconnaissance stream sediment and pan concentrate samples, collecting top of bedrock soil auger samples, collecting surface grab and trench samples, completing airborne resistivity/magnetic surveys, and completing limited drilling in 2011, we were successful in making a significant gold-copper-silver discovery in 2012. We originally named the area with our best results from surface data the Chief Danny prospect area, and while drilling in this area we discovered a unique zone with gold grades much higher than anything on trend that we can document, and we named this discovery the Peak Zone (after our Chairman Ken Peak).
Peak Zone Detail
Targeting a low-level gold-copper soil anomaly, the Peak zone was discovered in the summer of 2012. Following discovery in the first hole, about 5,000 meters of drilling was completed with 17 of 24 holes in the zone returning gold grade of greater than 1 gpt over more than 3 meters. Our best drill intercepts grades are +14 gpt over +58 meters. Beyond the obvious significance of the gold grades discovered over an interval up to 78 meters thick (hole 1216), the Peak zone is clearly seen as a magnetic high/resistivity low associated with sulfide host rock on our airborne magnetic/resistivity data. Our observation is that all of the meaningful gold grades in this part of our project are associated with sulfide host rock, but not all sulfide host rock contains material gold grades. As you can see on the anomaly map, we have identified other prospects with similar signatures that have not yet been drilled, some with supporting surface geochemistry gold anomalies. While the Peak zone as we currently know it is not big enough to be considered economically viable in our view, if our planned 2013 drilling campaigns are successful in expanding the Peak zone and can identify additional resources on one or more of the prospects we have identified, CORE will have reached a stage where one or more areas of the Tetlin project have become economically attractive.
Our 2013 drilling program will include further delineation and expansion of the Peak Zone, with a goal to define the total productive area of the discovery, along with the testing of the other prospects referenced above. We plan to have 2 to 3 drill rigs running all summer, and we also plan to acquire additional airborne magnetic/resistivity data to cover prospective lands that we have not yet explored. We interpret our discovery to be unique in this trend, both in the high quality of the gold grades and the geologic character of the gold/copper/silver. Our hope is that we are able to use our airborne geophysical data along with our surface geochemistry data to locate several independent, but related deposits in close proximity that will create an economic resource. Combined with the project's stable land status, excellent infrastructure and impressive geologic pedigree, the Tetlin project is emerging as one of the most prospective mineral exploration projects in Alaska.