Nevada Exploration Inc. (“NGE”) is pleased to provide an exploration update on the Grass Valley Project and to announce that McEwen Mining Inc. has elected to continue the Project.
Background and Project Description
In February 2012 McEwen Mining and NGE began working together under an Exploration Agreement to generate new gold projects using NGE’s proprietary hydrogeochemistry (groundwater chemistry) exploration technology within a 25,000 hectare (95 sq mi) study area in Grass Valley in north central Nevada (the “AOI”), south of Barrick Gold Corp’s Cortez Hills Gold Mine. During the year, McEwen Mining and NGE completed a hydrogeochemistry sampling program across the large AOI, and delineated a large, previously unexplored target area on the west side of Grass Valley based on a NNE lineament of upwelling groundwater containing anomalous concentrations of gold and other trace elements associated with Carlin-type mineralization.
When evaluated in the context of the regional geology, the hydrogeochemistry results suggested a possible underlying mineralized fault system projecting northward towards Cortez Hills, and in September 2012 McEwen Mining elected to acquire the Grass Valley Project as a Designated Project under the Exploration Agreement. The Grass Valley Project consists of approximately 59 sq km (23 sq mi) of unpatented mining claims along the west side of Grass Valley.
Since acquiring the Grass Valley Project, McEwen Mining has advanced the Project by: collecting rock, soil, and vegetation geochemistry samples; mapping the exposed range front geology in the context of the regionally important structural controls; completing a detailed gravity geophysics survey; and acquiring and reprocessing historic seismic geophysical data. During this time, NGE has also completed additional groundwater sampling.
While the spatial extent of the rock, soil, and vegetation geochemistry sampling was limited to several small areas, the results show localized concentrations of elevated gold and trace element chemistry along areas defined by anomalous hydrogeochemistry in patterns that further suggest the presence of NNE trending structural zones beneath the project area.
At the project scale, the geologic mapping along the exposed range front identified upper plate rocks with widely-scattered, small areas of hydrothermal alteration coincident with anomalous gold and trace-elements in the rock geochemistry samples. At the district scale, four miles to the west of the Project, windows through the upper plate have exposed lower plate rocks hosting a small Carlin-type gold deposit at the Toiyabe mine. Several of the SSE trending folds exposed in the mountains surrounding the Toiyabe mine project beneath the Grass Valley Project area, where they intersect the major inferred NNE structural zones. Together, the local and district scale mapping suggest the possibility that the lower plate rocks associated with mineralization at Cortez Hills to the north and Toyiabe to the west could also be present at economic depths at the Grass Valley Project.
The detailed gravity geophysical survey successfully outlined a broad area of bedrock covered by an estimated less than 100m (300ft) of sand and gravel extending 3.2km (2mi) from the exposed range front for the entire length of the 8km (5 mi) long target area. These results provided further evidence that depth of cover at the project is potentially shallow and within economic constraints, and that the target area is large enough to contain a significant mineralized system.
The seismic data was originally collected in the late 1980’s for a research project designed to characterize the deep crustal structure of north-central Nevada. McEwen Mining acquired and re-processed this data to provide information at shallower depths more appropriate for gold exploration. The reprocessed data identified a complex fault system dipping to the west and exhibiting characteristics associated with older reactivated structures regarded as favorable for Carlin-type gold deposits elsewhere in Nevada.
In addition to the work completed at Grass Valley by McEwen Mining since acquiring the Project, NGE has also been completing further groundwater sampling to continue to focus exploration in Grass Valley. NGE’s sampling efforts are ongoing, but the results to date have already focused the area of anomalous hydrogeochemistry at the Grass Valley Project to a north-south oriented target measuring approximate 8km (5 mi) long by 1.6km (1mi) wide.
While Grass Valley still represents an early stage grass roots exploration project, NGE is very encouraged by the results to date and the significant upside of this new Project. The combination of: (i) the major NNE structures suggested by the geochemistry and confirmed by the gravity geophysics that project from the Grass Valley Project to the mineralized Cortez Hills Breccia Complex; (ii) the SSE trending fold structures associated with the mineralized lower plate bedrock at the Toiyabe Mine that project beneath the Project, cross cutting the major NNE structures; (iii) the shallow cover and large size of the target area suggested by the detailed gravity geophysics; and (iv) the presence of elevated concentrations of gold and other trace elements associated with Carlin style mineralization in the groundwater at the Project, together have provided further confirmation that the Grass Valley Project represents a compelling new exploration target in an area of Nevada known for large world class gold deposits.
Based on this encouraging exploration dataset, McEwen Mining has notified NGE that it plans to continue advancing the Grass Valley Project for another year and to work with NGE to collect additional pre-drilling groundwater chemistry data, with the objective of establishing a strong geologic case for a series of stratigraphic test drill holes to establish the presence of and depth to the reactive lower plate host rocks that are associated with large Carlin-type gold deposits in Nevada.
As per the terms of the Exploration Agreement, McEwen Mining and NGE’s interests in the Grass Valley Designated Property are 70% and 30% respectively. McEwen Mining is the project manager, has sole discretion on the nature and timing of all exploration and development activities, and is solely responsible for payment of all costs incurred in respect of the project. As McEwen Mining elects to continue to maintain the Grass Valley Designated Property, McEwen Mining will pay NGE $100,000 USD on the first through fourth anniversaries of acquiring the Designated Property, and then $250,000 USD on each subsequent anniversary. If McEwen Mining completes a Production Decision Report on the Designated Property that McEwen Mining deems sufficient to base a decision to commence production, the Designated Property will advance under a Joint Venture agreement, at which time both parties will be required to fund their pro rata share of project expenditures or be diluted. If either party’s interest is diluted below 10%, such party’s interest converts to a 2% NSR.