Hawthorne Gold Corp. -
(Tier1) (HGC.V)
currently has two properties located in British Columbia, Canada.
The company has entered into agreements to acquire -
up to a 60% working interest in each property.
On the Frasergold Property,
management talks of the potential to outline a
multimillion-ounce gold deposit.
Talk is cheap, but when it comes from a management
that has had high levels of success in the past,
you have to pay special attention to their goals
because chances are they will meet or exceed them.
Management’s track record, combined with a heads-up
from a highlyacclaimed geologist who is plugged into
this year’s exploration program, led your editor
to add this company to our list of gold mining stocks.
This is a relatively new story, but one I think is likely
to make a lot of noise on the Canadian junior resource
circuit over the coming year.
While technically this is not a “penny gold stock,”
its relatively low market cap suggests to me that
with some exploration success from
the Frasergold Property
(which we could learn of shortly),
these shares could easily exceed our target of a
double within 12 months.
The Fraser Gold Property
Quesnel Trough Area, B.C.
The Frasergold Property -
is located approximately 100 kilometers east of
Williams Lake, B.C.
The property covers approximately 2,866 hectares
within the Mackay River Valley, a tributary to
the Horsefly River.
The company entered into an agreement to acquire
up to 60% interest from Eureka Resources Inc.
The Quesnel Trough area in central British Columbia
has a long history of continued exploration
since the 1970s.
Hawthorne’s 2007 summer exploration program,
which is nearing its conclusion, included confirmatory
and exploratory diamond drilling, underground bulk sampling,
surface and underground geological mapping, airborne
geophysics, and preliminary metallurgical testing for
flow sheet design.
The company believes there is an opportunity in multiple
zones to extend mineralization along strike and down dip
with an upside potential to increase to an open-pittable
bulk tonnage multimillion-ounce gold deposit.
Indeed the target is large.
It measures 10 kilometers long.
The gold-bearing zone was discovered by exploration
efforts during the early 1980s.
A total of 35,967 meters of drilling has taken place
in 328 holes, so this project is substantially above
“grass roots” status.
In addition, some 298 meters of underground drifts
were cut that provide access for bulk sampling
and metallurgical testing.
Gold on the Frasergold Property -
occurs primarily within quartz veins.
Particulate gold occurs primarily in quartz segregations
of stringers, veins, boudins, and mullions.
Visible gold was observed in several samples throughout
the drilling and trenching campaigns completed on
the property.
Gold also commonly occurs as fine grains set in quartz
often near the margins of veins.
A major part of the gold was seen to occur with medium-
to coarse-grained pyrite and pyrrhotite aggregates
throughout the mineralized zone.
Reportedly, metallurgical testing indicated recoveries
of 87% to 92% using a combination of gravity separation
and flotation.
Most of the holes drilled back in the early 1980s
were shallow holes.
No additional drill holes have been put down since then,
so there is little known about the depth extension of
this deposit at this time.
Some of the historical holes drilled on this property
have been impressive.
One hole reportedly assayed 36.00 grams gold -
(1.211 oz./gold) over 1.5 meters.
And the company reports that visible gold is found
throughout the underground drifts in quartz veins.
Actually, a sufficient amount of drilling had taken place
in the past over a small section of the property
sufficient for Asarco to conduct a pre-feasibility study
of the Frasergold Project.
The number reported was 6.6 million tons -
grading 0.055 oz. gold/tonne,
representing 362,825 ounces.
Since these calculations took place before NI 43-101
qualifications were outlined, we must tell you that
these resource numbers are not 43-101 compliant.
Management maintains that, given the quality of work
carried out before, minimal confirmatory sampling would
be required to meet 43-101 requirements.
Hawthorne has also entered into an option agreement
with Dajin Resources Corp. (TSX-V: DJI) to acquire
eighteen mineral claims covering 7,930 hectares.
These claims are adjacent to -
the Frasergold Mineral Deposit
(see attached map).
Under the terms of the agreement with Dajin,
Hawthorne can earn a 70% (and up to 100%)
working interest in the claims, by paying $100,000 in cash
on signing, and incurring $500,000 in exploration
expenditures on the property over the next three years,
including $150,000 in the first year.
On the exercise of the option, Dajin may elect to
either remain a 30% working-interest partner or,
for no additional consideration, convert its
30% working interest into a 2%-net-smelter return.
Importantly, access to the property is via a series of
paved and gravel-surfaced roads that lead east
from 150 Mile House at Highway 97 north to
the village of Horsefly and along the Horsefly River
to Mackay River.
Recent logging activities have provided a series of
tracks that provide good access to most of the
exploration areas on the property.
Expecting we will see this company’s gold resource
increase following this season’s work program,
which was to have included 5,000 meters of drilling.
Drilling was to focus on the main zone and include
infill drilling and stepout drilling.
Indeed, the word I have gotten from one reliable source,
who is very familiar with the work going on at
the Frasergold Property, is that the dimensions
of the gold-bearing rock are both “thicker and longer than the
general market believes.”
That kind of revelation, coupled with the past success
of management, adds to the credibility of this company’s
goal of outlining a multimillion-ounce gold deposit on
the Frasergold Property.
The Carruthers Pass Property
Omineca Mining Division
The Carruthers Pass Property is located in
the Omineca Mining Division of north-central British Columbia,
approximately 200 kilometers north of Smithers, B.C.,
and 70 kilometers south of
the Kemess Gold-Copper Mine.
Hawthorne completed an exploration program in
August 2006 and results to date have indicated that
massive sulfide mineralization occurs on the property
within a favorable pyretic shale/siltstone
stratigraphic unit.
A second phase exploration program of mapping and sampling
is planned for the 2007 season to further delineate
the massive sulfides and associated stratigraphy.
Hawthorne has acquired an option to acquire a 60% working
interest in this property from Cariboo Rose.
Phelps Dodge was attracted to the area in July 1997,
after the British Columbia MEMPR (Ministry of Energy,
Mines & Petroleum Resources) released a regional geochemical
survey that identified six creeks draining the Carruthers
Pass area with anomalous copper (147 to 215 ppm) and
cobalt (31 to 38 ppm) from stream sediments (BCGS, 1997).
Since 1997,
Phelps Dodge has completed several exploration programs
over the property, including geological mapping, silt,
soil and rock geochemical sampling, ground geophysics,
and drilling.
Since 2003, additional exploration has taken place that
has included a small prospecting and sampling program,
a three-hole 408.5-meter diamond drill program, and
295 line kilometers of helicopter airborne survey.
A number of strongly anomalous 11 “single point” rock and
or soil/talus fines samples greater than 1000 ppm copper
and/or zinc were obtained from the 22 rock samples and
16 soil samples collected in this program that remain
to be followed up.
One unusually high cobalt sample was also taken in
the northwest corner of the property on the CAR 1 claim,
where a bedrock grab sample is reported to have returned
values of 8,307 ppm copper, 687 ppm cobalt,
2,215 ppb silver, 109 ppm zinc, and 455 ppm arsenic
from a 20-meter by 20-meter exposure of shale -hosted
massive sulfide (Fox, 1998).
The massive sulfide boulder located on the Carruthers Pass
Property is composed of pyrite, pyrrhotite, chalcopyrite
and sphalerite.
Moderate to highly anomalous concentrations of gold and
silver have been returned from sampling the boulder.
Clearly this is a grassroots exploration project with
some promise.
We would not be recommending this company at is current
capitalization on the basis of this property alone.
However, given the strong exploration expertise of
this company’s management team, this property should
not be ignored.
In our view, chances are better than 50/50 that management
will make progress toward developing value here as well.
But for now, our main focus is the company’s
flagship project, namely, the Frasergold Gold Deposit.
SUMMARY & CONCLUSION
We are initially assigning a progress rating of “C,” which
is given to companies with a known resource but for which
economic studies have not yet been completed.
From this early stage on the Frasergold Property,
the potential for open-pit mining and reasonably high
grades on surface, combined with relatively easy property
access, are factors that would seem to bode well for
the economics of the project if a sizeable gold deposit
is indeed uncovered. 13
We want to remind new subscribers who may not be familiar
with mine exploration that this is a high-risk/highreward
business.
Accordingly, we think it is especially important that
you avoid excessive speculation by reducing your overall
portfolio risk, by limiting your allocation to this or
any other one stock to no more than 5% of your portfolio.
Having said that, we like the odds of success for this company.
It is blessed with a highly experienced
and successful management team.
The company has one advanced-stage gold property
that certainly has the potential to host a large,
near-surface, open-pittable gold deposit.
The story is fairly new, so most mine share investors have
not yet focused on it.
That could change quickly.
Indeed, we believe this stock could easily double in
price over the coming year, given its low market cap
and all the positive attributes noted above.
Indeed, we think this stock could move significantly
before year end, depending on results from
the Frasergold Property.
Contr. by Jay Taylor.
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