Lucky Minerals (LKY.V) takes channel sampling seriously. The company, led by CEO François Perron, holds a set of mineral concessions in Ecuador. It has been working on the Wayka High Sulfidation Epithermal (‘HSE’) Gold Discovery where a program of trenching has defined a large area of HSE gold mineralisation at surface.
Like any greenfields exploration project, the first steps are to map, prospect and grab sample to try and get a hint at the outlines of prospective ground. Lucky has done that at Wayka and, last year, moved on to a trenching program.
On its website Lucky publishes this quotation, “Epithermal gold-silver deposits range in size from tens of thousands to greater than 1 billion metric tons of ore and have gold contents of 0.1 to greater than 30 grams per metric ton and silver contents of less than 1 to several thousand grams per metric ton. Historically, these deposits have been an important source of gold and silver and are estimated to contain about 8 percent of global gold. The wide range of tonnage-grade characteristics makes epithermal gold-silver deposits an attractive target for small and large exploration and mining companies.” USGS Scientific Investigations Report 2010-5070-Q https://pubs.er.usgs.gov/publication/sir20105070Q .
These deposits are known as tier one assets and this is exactly what Lucky is looking for. Fortunately, the Fortuna concessions are located in a geologically active area. There are five mines with over 3 million metric tons of gold bearing rock within 50 kilometers of the Fortuna concessions including Lumina Gold’s Cangrejos-Gran Bestia mine with 17 million ounces of gold. While it is early days in Lucky’s search, there is every possibility of finding a big deposit.
Wayka is less than 10k from a road, approximately 15k from the grid. The challenge of accessing Wayka has meant Lucky needed to be creative as it explored the site. Deploying a drill without having a better idea of the layout of the potential deposit would have been very expensive, so Lucky opted to trench the target area.
“We use a rock saw”, said Perron in a phone interview. “Our trenching is systematic and representative; it is like having a horizontal drill.”
Lucky reported assays in late 2021 with one press release announcing values of 8.02 grams per tonne of gold across 9 meters. In that release, Perron states, “The current trenching effort is in preparation for the upcoming drilling program and is focused on providing structural information about mineralized trends that have been exposed. We are finding mineralized trends that appear to be parallel.”
“We actually have a discovery at surface,” Perron said. “We have systematically trenched 61 meters averaging 1.6 grams per tonne.”
If these values were from a drill program there is no question that this would be considered a “discovery” with all that implies. However, the market tends to discount channel samples. Which does not discourage Perron.
“We have high sulfidation epithermal structures,” said Peron. “The 61 meter trench revealed three separate mineralized structures. We don’t know how deep they go. The drill will tell.”
The next few weeks will be spent identifying drill targets and trying to understand the geophysics at Wayka. What happens with epithermal systems is that the gold bearing fluids rise through cracks in pre-existing rock; in this case granite. Where these cracks are and how far down they go needs to be determined by drill testing.
Which brings us to an interesting part of the Lucky story. “We were looking for a drilling contractor,” said Peron. “We talked to a number of contractors and Lance Hubbard looked like a great choice. We were going to do a shares for services contract but then Lance wanted warrants. You can’t issue warrants in a services deal so we came up with another way.”
January 24, 2022, Lucky announced that it had privately placed $2,011,795 worth of shares and on January 26, 2022, Lucky announced that Hubbard had taken up $1,289,299 worth of shares in a related party transaction. He got his warrants and at the same time his company, Hubbard Drilling, entered into an LOI to do a shares for services contract.
This is important because, apparently, Hubbard thinks enough of the Wayka project to invest actual cash in drilling it. As you might guess, drillers tend to be strict, cash upfront, cynics. They have all drilled too many “dusters” based on PhD geologists’ brilliant, but wrong, theories. For him to put up money for Wayka drilling is a huge tell.
“We’d planned to do about 3,000 meters of drilling this season and then stop and raise more money,” said Perron. “Now we can do the 3,000 and more.”
Drilling will likely start in April and the South American labs are speeding up so that turnaround times are between four and six weeks.
Full disclosure: Lucky dropped to $0.06 cents as I wrote this. I took a position and I suspect I will be buying more. Lucky and François Perron may well be sitting on top of an elephant. The driller thinks so and that is good enough for me.