If you look at a map of historical mining districts in British Columbia, the southeastern corner stands out. Gold, silver, lead, zinc and tungsten have all been profitably mined in the area.
For Margaux Resources (V.MRL) looking at past mines and the geological structures which underlie them suggested a broad, district scale opportunity.
“We’re a regional consolidator,” said Tyler Rice, Margaux’s President and CEO “We are looking for resources proximal to nearby customers.”
Lead, zinc, tungsten and gold are all contained within a geological structure referred to as the Kootenay Arc. Linda Caron, Margaux’s VP Exploration has a deep explanation of the Arc and how it came to be formed in a presentation she gave to MEG in Calgary in May 2017. (If you are interested in geology and how it pertains to mineral deposits this is a straightforward introduction.) The Arc itself was formed when the North American continent pushed out into a primordial seabed. It is essentially an ancient coastline that has been crushed.
That arc of disturbed rock has been host to a number of hugely productive mines. The Jersey Emerald lead zinc mine operated continuously from the 1920’s to 1973 and at one time was the 3rd largest zinc-lead producer in British Columbia, as well as the second largest tungsten producer in North America. The nearby Sheep Creek property has historic gold production totalling 630,000 ounces, from 26 historic gold vein mines and is analogous to the Barkerville District of central British Columbia.
Margaux’s key insight was that these historic mines were all part of a district scale system and that this system could and should be consolidated.
This was not just theoretical for Rice. An accountant by training, Rice owns 1.8 million Margaux shares. Which is a commitment. But the bigger commitment is that Rice moved his family into the area.
As it acquired ground in the Kootenay Arc, Margaux also acquired the historical drilling records and drill cores. “We’ve digitalized the historical data,” said Rice. “It is a lot cheaper to look at digital historical data than it is to go out and generate that information by drilling.”
At the same time, the historical drill core offers opportunity. “At the Jackpot property, there was drilling but some of the cores were never assayed by the company that did the drilling.”
There has never been any mining in the Jackpot zone. Margaux’s plan is to delineate the lead/zinc using historical records of the known deposit at Jackpot East and then identify drilling targets. But the company also recognizes that there is a significant gold potential at Jackpot as well as its other land.
“We are leveraging the brownfield exposure,” said Rice, “But there is blue sky in the greenfield exploration we’re doing.”
The classic brownfield exposure at the Jersey Emerald mine gives Margaux tremendous lead and zinc potential. “We have the historical core and records for Jersey Emerald,” said Rice. Margaux also has a 43-101 lead-zinc resource estimate for the Jersey property and has been working to expand that resource. In 2016/17 it drilled in the area and completed an extensive program of surface and underground surveying, data entry and QA/QC work to verify historical drill and underground information, in preparation for an updated resource estimate.
At the Sheep Creek property, Margaux is looking at the geological structures which underlay a number of past producing gold mines. “We have all the land consolidated,” said Rice. “There are no surface boundaries.”
In 2017, Margaux had a 43-101 compliant technical report prepared on the Sheep Creek project which included historical data from several past producing orogenic gold vein mines in the area. As well, in its press release of October 4, 2017 the company disclosed that it had 48 soil samples taken within anomaly zone “results include a maximum of 13.5 g/t gold and an average of 2.95 g/t gold”.
In that release, Linda Caron, VP Exploration for Margaux Resources stated:
“The size and strength of this new soil anomaly within the Sheep Creek camp is remarkable. It occurs within a geologically prospective area that lacks outcrop and is unexplored by any historic drilling or underground work. This is an exciting target that will be tested as part of our upcoming drill program.”
Another element of brownfield leverage are the “left overs” from previous mining. On the gold side, miners treated rock grading less than a quarter ounce per ton as waste rock. With modern recovery techniques ¼ ounce, or 7 grams per ton, gold bearing rock is now seen as mid-grade gold rock.
Just as interesting are the tungsten tailings at the Jersey Emerald property. “There is potential for near term cash flow from historic tailings on the property,” said Rice. “We’re working with the local branch of the environmental group, Streamkeepers, to pursue the idea of a tailings recovery/recycling program. The next step is to get a permit for a bulk sample so we can test the project economics.”
Overall Rice sketched an ambitious agenda for Margaux. “We’ll be completing our full 2017 drill program and we hope to understand our gold properties. Then we’ll be drilling in the spring with a primary focus on the gold deposits. The lead and zinc are secondary,” said Rice.
“We have a strong team and we’re not dependent on a major stepping in,” said Rice. However, Rice points out that Steve Letwin, CEO of IAMGOLD, is on the Margaux Advisory committee.
With so many highly prospective targets, Margaux can move ahead on many fronts. The endowment of Kootenay Arc invites a methodical, well planned, exploration campaign designed to bring past producing mines and underexplored deposits back to life in the 21st century.