ATAC Resources Carlin-Type Gold District in the Yukon
David Erfle
Friday July 21, 2017
I recently completed the Yukon Mine Site Tour which was hosted by the Yukon Mining Alliance. It was a spectacular 6-day event which took me to several of the best resource projects in the territory. I have invested in a few Yukon resource companies over the past decade but had never visited the region. One of the most impressive operations I visited was the massive 1,742km Rackla Gold Project controlled by ATAC Resources (ATC.V) and is comprised of three separate projects.
When CEO Graham Downs took the helm of ATAC in 2007, the company was a project generator with 20 properties. Mr. Downs started his career in 1996 with the exploration and consulting firm Archer Cathro & Associates (AC), which ATAC currently uses to execute their on-going field work. He has essentially worked for AC in all areas of the Yukon and ATAC his entire career.
In 2007, Mr. Downs was appointed CEO of ATAC and in 2015 was made President. Since that time, ATAC has solely focused on its flagship Rackla Gold Project, which hosts Canada’s first Carlin-type gold district with the property being twice the size of the Carlin Trend District in Nevada.
In 2007, the company’s Tiger deposit began to take shape and then on August 6th of 2008 the firm announced a major discovery on its wholly owned Rau property with core samples that averaged 1.237 g/t gold across a thickness of 68.69m. In response to the discovery, ATAC dramatically expanded its land position by staking an additional 1297 mineral claims in the highly prospective geological belt.
In just 2 years after the discovery, the company skyrocketed to a C$1 billion market cap by mid-2011 solely on the results from just 10 holes drilled on the property. The company wisely cashed up 2 months after the stock hit C$10 per share with a C$25 million non-brokered private placement which cost them a paltry 3.4 million share dilution.
Just before a trap-door opened beneath the gold price in April of 2013, the company announced a C$13 million strategic investment by global miner Agnico-Eagle (AEM) at C$1.35 per share. Even though the company presentation does not list AEM as a significant shareholder, the global miner is under 10% so they do not report. Although Agnico has indicated they are shareholders, Mr. Downs has not pressed them for exact numbers or percentages.
Fast forward to April 10th of this year when the company announced it had entered into a number of transactions with global miner Barrick Gold Corp(ABX). After making an $8.3 million investment in ATAC, Barrick can acquire an interest in the central portion of the firms Rackla Gold Property (the “Orion Project”). Along with the initial investment, a two staged, $55 million exploration earn-in option to acquire up to 70% of the Orion Project is also included in the agreement.
Soon after this deal was announced, the firm appointed Ed Cope as Technical Advisor and member of ATAC’s Technical Committee. Mr. Cope is a sound choice having helped build the technical teams responsible for defining some of Barrick’s largest gold deposits within the Carlin and Cortez trends in Nevada. He was also Prospectors & Developers Association of Canada’s “Thayer Lindsley International Mineral Discovery of the Year” award winner for the discovery of the over 10 million oz Goldrush deposit on the Cortez Trend.
The company has very strong ownership with Barrick now controlling 19.99%, John Hathaway’s Tocqueville Gold Fund 8.4%, and Yukon project generator Strategic Minerals 7.3%. Management, along with a few past directors, collectively own roughly 7% of ATAC. The announcement of the world’s largest global miner into the district confirms the Rackla Gold Property, and the Yukon region, has world-class gold potential.
The Conrad zone of the Osiris Project is the most advanced and has received over 43,000m of diamond drilling in 108 holes between 2010 – 2015. The Osiris Project was ATAC’s first discovery of Carlin-type mineralization and the average grade of all reported intersections at Conrad is 4.75 g/t gold.
The Rau Project, which lies to the East of the Barrick earn-in Orion Project, contains the Tiger Deposit and Tiger East anomaly. A PEA completed in 2016 shows a post-tax IRR of 28% @ $1250 gold with over 302,000 contained ounces.
On June 5th of this year, the company announced its largest exploration program on the Rackla Gold Property in over four years. ATAC will conduct advanced-stage drilling on its wholly-owned Osiris and Rau Projects while Barrick focuses on systematically exploring the Orion Project. The C$10 million program by ATAC on the Conrad Gold Zone at Osiris and Rau will be announcing assays on 2 holes in 3-4 weeks.
The large cloud hanging over this project has been the location, which is very remote. Everything needed in camp has to be flown in via helicopter, originating from an airstrip near the camp where supplies are flown in by small aircraft. This magnifies the expense of all the necessary field work as the all-in drilling cost is averaging over C$350.00 per meter.
However, ATAC has received initial regulatory approval from the Yukon Environmental and Socio-economic Assessment Board (YESAB) to proceed with constructing a 65km tote road from the town of Keno, to the Tiger Deposit. Mr. Downs is expecting the permit for this road to be issued within 6-8 months, with the cost being funded by the company and in the neighborhood of an C$11 million spend. The issuance of the permit is very significant, as the costs of the project would be cut down considerably when the road is completed.
The total spend on the Rackla Gold Project to date has been C$90 million and a resource estimate of the high-grade Conrad Zone should be out by mid-2018, which will include up to 20,000m of yet to be drilled assays. Together with the results the company has already achieved to date, I believe an announcement of a preliminary resource of at least 1m oz au can be accomplished.
ATAC Resources has a very exciting project as it represents the first and only Carlin-style gold mineralization ever found in Canada. Factoring in the entrance of strategic partner Barrick, along with the company obtaining the permit for the tote road before the announcement of a gold resource of this size or more, the stock should be set for a substantial re-rate in 2018.
Full disclosure: I have purchased shares of ATAC this week in the open market and have recommended the company to my subscribers. Please do your own due diligence before purchasing any of the companies mentioned in this article.
Photo #1: David Erfle with ATAC CEO & President Graham Downs
Photo #2: Core samples from the Conrad Zone
Photo #3: (Left to Right) ATAC CEO & President Graham Downs, VP of Exploration Julia Lane, COO Ian Talbot
Photo #4: At surface on the Sunrise Zone
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