First off - Editorial Note

We apologize the delay in publishing. We have been on the road catching up with the Post-Covid wedding boom and its taken up more of our time then we may have liked!

Admittedly we did not hate it...

To make it up to you we have done a bit deeper dive than our previous work. Today we will try out some new formats for presenting our work, run through some error corrections and updates to the model, talk about cut-off grades and as always speculate on what’s hiding beneath the ground.

Project Background - Golden Summit

Freegolds's Golden Summit Project

Freegold Ventures is an exploration company pursing gold and copper exploration in Alaska. 

Their flagship project is the Golden Summit Property, an advanced stage gold prospect. Located 32 kilometers north of Fairbanks, a mining friendly community of 32,000 in the interior of Alaska. The property has year round highway access and benefits from the infrastructure supporting nearby mining activity, including Kinross’s Fort Knox Mine which lies 5km to the south.  

Golden Summit is surrounded by placer streams which have produced over 1.6 million Oz in gold and the region contains numerous historical hard rock workings which produced an additional 348,721 Oz prior to world war two. 

Explored intermittently since the 1990’s an exploration campaign running between 2011-2013 drilled approximately. 3,159m of core and culminated in a resource estimate of 6,524,000 Oz (Indicated + Inferred)

Following this a PEA  completed in 2016  outlined a pit constrained resource of 2,419,000 Oz (Indicated + Inferred)

In 2020 new discovery drilling testing for mineralization at depth initiated a new campaign of drilling which continues through till the present day. Presently over 70,000m of drilling have been completed since drilling resumed in 2020.

Napkin Math - Model Results

Cross Section @ 479625E - 40m Width - New Holes Highlighted
Cross-Section at 479350E - 40m Width - New Holes Highlighted

Correction/ Change Notes

An error doesn't become a mistake until you refuse to correct it.

This update includes several changes, the first of which is that we have improved our method of establishing coordinates from plan maps. Preparing this report we discovered that our method of georeferencing the drill plan map had introduced an error that had been compounding over time. This increased the spacing of the collar coordinates we use and unfortunately this impacted our estimated oz’s. Our timeline of estimated Oz’s has been back calculated to correct for these impacts. We have taken steps to prevent this from happening again in the future! 

Secondly, we have added in the 2017 oxide expansion program to our drill results.

Third, we have completed another model update! Previously we have used only overall reported intercepts to model deposits, but we are excited that going forward we are now able to include all reported subsections of a drill hole. This should go a long ways towards improving the accuracy of our work and opens up the door for us including some cool new features into future reports. We will be publishing an article soon covering what we have changed in more detail so be sure to check back in.

News Release Summary

This news release brought 7 new holes which represent some 5,997m of drilling.  

Drilling is complete for the 2022 season and planning is underway for 2023.

2022/2023 Drilling Updates

Drilling is complete for the 2022 Season with 44 holes drilled, representing 35,520m of drilling. This leaves 30 holes with assays still pending.

Freegold indicates that one of its newly targeted areas in 2023 will be the Saddle Zone, which lies east of the existing Dolphin/Cleary exploration work which has been underway since 2020.

Soil Sampling Completed

Freegold reports 527 soil samples were collected to the north of the Dolphin/Cleary Zone on newly acquired (early 2022) claims.

Geophysics Completed at Cleary / Dolphin / Saddle Zones

Freegold reports that is has completed geophysics at the Cleary/Dolphin Zone as well as at the Saddle Zone. 

Preliminary 3D modelling shows large resistivity targets aligned with known vein occurrences in the Saddle Zone

In the Dolphin/Cleary zones results matched known geology very well and based on this success further lines are planned outside of known mineralization to search for drill targets which could further expand the deposit.

The CSEM geophysics method involves transmitting a controlled electric signal at a suite of frequencies into the ground from one location and measuring the received electric and magnetic fields in the area of interest with the aim of producing a 3D resistivity model of the ground.

Example of CSEM Results - Dotted lines in this fence diagram represent mapped faults. Source: http://zonge.com/

Thoughts and Musings

This update we are going to talk about three things:

First Of The Deep Holes

Back in September we wrote about the four deep holes we saw outlined in a cross-section released in Freegold’s September presentation. Our hope was that the shallower intercepts seen due west in the 2011-2013 drilling campaign would show themselves again overlaying the Cleary mineralization we saw dipping to the south. Well this news release brought the first hole of that group so we thought we should take a moment to look at those results.

X_Section_479325.00_60m+DeepHoles
X_Section_479325.00_60m+DeepHoles

First off our correction to collar coordinates  (read above in “Correction / Changes notes” if you skipped down here first) moved these 4 holes further east relative to the 2011-2013 drilling, as such the old holes no longer show in our updated cross section. 

While we didn’t get as shallow results as we were hoping for, Hole GS2217 (Green highlight) still provided some robust intercepts along the southern dipping trend of reported Cleary mineralization.  It is still interesting the drills continued on so deep past mineralization. We wrote back in September Drilling is expensive and we cant imagine they kept drilling down if they didn’t like what they were seeing” and we stand by that assessment. It will be interesting to see what the remaining three holes (GS2230, GS2210 and GS2224) deliver as they are  released and whether GS2217 proves the exception or the rule. This news release did not provide any cross sections in the area which is unfortunate as there are a total of 6 drillholes pending along its length and it would have been exciting to see both these results alongside the pending holes. We do our best but cross sections are best delivered by the company with an actual database.

Cutoff Grades, Their Importance, And What Compares to Golden Summit

With our latest model update we are now reporting cutoff grades. As we are working with broad intercepts not direct drill logs so we lose a little bit of resolution when looking at lower cutoff grades  but they are still important to provide better clarity of what our estimates are really saying. All the ounces in the world don’t matter if they aren’t worth mining and hence the terms ore and waste. To determine which is which we use a cutoff grade.

Simply put a cut-off grade is the value which decides whether a given block of material is ore or waste. If I have a 10mx10mx10m block of rock is there enough ounces of something shiny in that volume for it to be worth my time to dig it up, crush it down, and run it through the black magic they carry out in the processing plant to turn rock into melt. That’s the cutoff grade.

At a high level this is can be calculated as:

 (Mining Cost + Processing Cost + Overhead Costs)/(Metal Recovery X Value of Metal)*

*Note: As with everything in mining, nothing simple stays simple once you get into the details but for our purposes today this is true enough.

Done properly choosing a cutoff grade isn’t a “gut feel”. It is based on the expected present, and future, costs associated with your expected mining method, expected recovery rates and sale prices. A higher cutoff will mean a lesser tonnage of ore and a higher overall ore grade, but also less material extracted overall (less overall oz) as more of the deposit becomes waste. This can sometimes increase the overall value of the deposit but optimizing cut-off grades is an in depth process which takes a lot of study to do successfully. If it was easy everyone would be doing it. We will dive into this in more depth in the future but for now wanted to introduce the topic.

So all that being said I can hear the questions! “So Mr Mining Writer, if its complicated to do properly, what ever can we do?” Well the answer is simple. We cheat on our homework and compare against similar properties! 

It would be tempting to compare the Golden Summit Project to its next door neighbor, Kinross’s Fort Knox Mine, but they are two different beasts in this regard because of one major factor and that is age. Fort Knox is able to leach ore down to ~ 0.1 gpt but this is only because they are an old established operation well past their original mine life. Once you have already paid for all the equipment, buildings and blasting your way down ~650m deep into the earth the cost calculations change drastically for any extra ore you find. Very little will be left behind.

Similarly its age also makes it difficult to compare against its cut-off grades from early in the operation. It started operating in 1996 when Diesel was $0.33/liter not $1.93/liter. Similarly gold was 380$/oz not $1782/oz. Those rates of change are not equal so we must look elsewhere. (For those curious there are big books out there full of these historic mining stats we could use to do the math but they are expensive. You don’t have them on your shelf and we don’t have a budget for them so we shall continue on with our lesson on how your average person can approach this problem)

For a comparison today we are going to use Victoria Gold’s Raven Deposit, and Eagle Mine. Both are located in the center of the Yukon, and have to operate crew camps and truck their parts and supplies significantly further than whomever eventually purchases and puts into production Golden Summit. I don’t think we are stretching our powers of assumption to predict that not being only 25 minutes from a mining town, with an in place workforce, established service providers, highway access and nearby power should prove to be a more expensive deposit to mine. (Surprising Fun Fact: they are both a similar distance from a port. Golden Summit is ~550km from Anchorage along the road and Eagle Mine is 600km from Skagway) 

The Raven project lies approximately 15km away from the Eagle Mine. As a comparison Golden Summit is 15.6km away from Fort Knox’s crushers IF YOU DIDN’T SHORTEN THE ROAD. This is important as in the event it was Kinross or a hypothetical future owner of Fort Knox who purchased Golden Summit this would mean comparable haul conditions. And if it was someone taking a stand alone development approach I would predict that you would want the lower cutoff grade and more overall tonnes of ore and the contained ounces of gold to justify the cost of building a plant. This means that the upper bound for a cut-off grade (in my opinion) should not be higher then the Raven Project.

So all of this being said, what is the cutoff grade for the Raven project? A satellite pit 15km from the plant comprised of a high grade surface deposit with a pit constrained resource of 1,07,239 Oz? One using a 90% recovery rate same as the 2016 Golden Summit PEA?

It is 0.5 gpt effective September 2022. That is the upper bound for what we should expect for a cutoff grade. Period. (In our opinion)

Personally we hope for lower. The 2016 PEA determined a cutoff grade of 0.3 gpt for the Golden Summit property in 2016. Prices and the world economy have undergone some dramatic shifts since then and it is not realistic to expect that this still holds but with and extra 3 years of drilling returning exceptional results in addition to the original resource there are a lot of factors to be considered. 

We are disappointed that its looking like we wont see a resource estimate in 2022. We are very curious as to what it reports both globally and pit constrained. As we are carrying out and sharing our slightly more elaborate version of napkin math we have no issues being incorrect. (Though we oh do so love it when we are right. Also a reminder – this is not investment advice – it is napkin math –  do your own due diligence) However we hope management is using this delay to maximize the number of drillholes included in the resource estimate and taking this time to make sure the correct decisions are being made to move this project forward to conclusion and to deliver value to the many investors who have followed this project for some time.

One final thought worth including: The Eagle Mine, an operating project without many of the advantages enjoyed by Golden Summit, a heap leach recovery of 71%-82% and a pit constrained resource of 3,547,048 oz. Their most recent technical report calculated their cutoff grade using $1700/oz gold in 2019. That cutoff grade?

It’s 0.15 gpt.

Pondering Geophysics

On one final brief note! We almost missed the mention of the geophysics in this latest news release!  We are excited to see what insights Freegold  is able to glean from the results and hopefully we have some mapping or modelling shown in future news releases.

Whats next?

We hope you have enjoyed our latest update on Freegold Ventures. With 30 holes still pending we are looking forward to more news releases to cover this winter as we wait patiently for the announced resource estimate. Stay tuned as we continue to bring you future updates on Freegold ventures as further drill results are released!  We are toying with the idea of splitting our releases into multiple sections to increase the speed we can publish to you. If you have any thoughts on this or other ideas for improving our production feel free to reach out through the contact us page. We do read them!

Thanks for reading and till next time,

Cheers!

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