Thoughts and Musings

Welcome to Part 2 of our coverage of Snowline Gold’s December 22nd News Release! Today we are going to  talk about two things.

1) What room remains for further resource expansion at Snowline Gold’s Rogue Project.

2) Access Roads and may be feasible for the Rogue Project

Useful Links

A Heart of Gold - Room For Expansion?

With their latest release Snowline Gold brought us another 7 drill holes and before we get into access roads we wanted to go over where we see remaining room for growth at Rogue as we start the new year.

As we covered in Part One of our December 22 coverage our current global estimate for the Rogue Project is up to ~4.8 million ounces using a 80m search radius and a cutoff of 0.3 gpt. Obviously this represents a significant discovery of gold which is all the better for being relatively shallow and accessible starting at surface. With this release we are beginning to see limits to how much bigger we can expect the target to grow, at least at surface. Figure 1 is a plan view of our 3D modeling using a 0.3 gpt cutoff. 

We can see that drilling to the south and east has not returned any intercepts above this cutoff so with that in mind lets walk through the remaining avenues we see for expansion.

Direction A1 is the most promising. Outlined in blue in figure 2 this region has four holes with assays pending ( V-22-030, V-22-027, V-22-026, V-22-028) and they are well positioned to expand the central region of the ore body to the south east. The vein density and visible gold reported in the news release are promising so there is reason to hope for further ounces. On downside is further expansion is limited in this direction and it is our guess the four pending holes will define the last of the easy surface ore. It will be interesting to see whether they intercept the bottom of the ore body or if the project will continue to deliver when explored at depth to the south east.

Direction A2 lies to the east. It is less appealing as the mountainside rises in this direction and surface drilling has not reported stellar intercepts to date however at depth it remains open. Any future discoveries along this bearing are likely to run deeper, which will reduce their economic benefits to the final project, but are still welcome additions to the target. All that being said it remains an area to watch going into 2023. Hole V-22-020 should give us some insight in what is happening as the east of the deposits core.

Finally we have direction Direction B to the north.  Hole V-22-033 did not encounter mineralization below 886m elevation and therefore it is unlikely the deposit is deepening any further as it approaches the northern boundary of the intrusion as currently shown by Snowline. That being said Hole V-22-033 reported good grades and we look forward to any future drilling extending the heart out further to the north. 

Of the 17 holes remaining from Rogue we are of course most interested in V-22-030, V-22-027, V-22-026, and V-22-028 and our first look of the Gracie Target that will come from the 5 holes drilled there in 2022 but we look forward to what we can learn from the remaining drilling as well. Our coverage represents our best guess’s but we love a good plot twist as much as anyone and cant wait to see what is coming down the pipe. 

Road Access - Over The Hills and Far Away

There are very few personal problems that cannot be solved through a suitable application of high explosives.

 Even a small mine is a massive industrial operation and to keep it running takes immense amounts of diesel, spare parts, equipment and gallons upon gallons of coffee. All of this adds up to tonnes of material that needs to reach the site and the only practical way to move the necessary amounts of material is by road.

We aren’t going to pass judgement whether a road is feasible. If there is one thing humanity has gotten good at since the rise of civilization it is the construction of roads and so we will work on the sound assumption that with sufficient application of labor and high explosives a road can be built. Today we be will leaving out any talk of politics, economic benefits, the environment, roving hordes of Caribou or any government development projects unless directly related to a point. These are absolutely relevant questions (as always this is not investment advice – go do your own due diligence) but we want to approach topics in manageable chunks and today that means roads, the hills they climb and the rivers they cross.

Yukon Caribou demonstrating the impassibility of roads

First off the Rogue Project is remote to say the least. If you have never had the opportunity to drive through the Yukon we highly recommend doing so as it is stunningly beautiful and amazingly empty. Bring a spare tire. 

But road trip suggestions aside we wanted to take some time to cover what it will take to connect the Rogue Project with an existing Yukon road network to provide access to a deep sea port. We have taken some time to map out whether any plausible routes exist factoring in what it would it take to build them. In the end we have the options narrowed down to two.

With our chosen routes for this estimate we have opted to minimize exposure to difficult terrain, ascending/descending steep slopes and traversing at high elevations.

Route 1 - West to Mayo

West Route - Elevation Profile
West Route - Slope Profile %

As it stands the closest route connecting to a year round road already actively supplying a mine is found by heading west and joining with the existing road network by the village of Mayo where Yukon highway 11 “The Silver Trail”  provides year round access to Victoria Golds Eagle Mine. 

Laying between the Rogue Project and Mayo are numerous mountain ranges and river crossings, the most significant of which is the Stewart river.  We estimate at least 5 significant crossings would be required to traverse this route. After considering several paths in this direction our current estimate is this option would require at least 267 km of new road construction.  Obviously there is room for optimization but we feel this is a reasonable first guess.

Once reaching Mayo the remaining 585km to the Skagway Ore Terminal can be covered using existing highway.

Route 2 - South to Canol Road

South Route - Elevation Profile
South Route - Slope Profile %

The second option we have identified involves heading south and attempting to join with the existing Canol Road.

Canol road was built during World War 2 as part of the Canol Project, whose purpose was to build a pipeline connecting Whitehorse with Norman wells in the North West Territories in order to ensure a supply oil was available for the defense of Alaska and the Canadian West Coast in the event a Japanese attack cut the existing logistical supply lines from the south. Completed in 2 years the project was abandoned just one year later but 449km of the original Canol road is still seasonally maintained by the Yukon government. If you take our earlier trip advice and are looking for a road trip option by all accounts it hasn’t changed since it was first constructed. However in 2020 upgrades were announced for the road as part of the Yukon Resource Gateway Program with replacement planned for up to 27 bridges along the route among other improvements.

This route would require 142.5 km of new road construction and three crossings to establish access with Canol Road. A further 193.4km of road upgrades is currently being upgraded by the federal and territorial government between the access point and Ross Junction but there is the chance additional upgrades may be required above and beyond the work all ready planned. Beyond this it is 582km along existing highway to the port of Skagway.

Cost Comparisons

If we assume a $77,000-122,500 per km range for construction costs and approximately $1,000,000 per major crossing we can evaluate the cost for each of our two options. All costs are in $CAD.

Obviously these numbers represent a very high level thumb wag and should be taken with a grain of salt. If conditions proved challenging its not unrealistic for that cost would increase further and as we mentioned at the beginning of todays piece there are many other factors beside the feasibility of construction that will effect whether a road can eventually be built.

The costs we have put forward are expensive but are not an insurmountable challenge if enough gold is discovered at Rogue and neighboring projects. But they are an important factor in the feasibility of the project and the additional haul distance will add a surcharge to the cost of mine construction and operation.  For some comparisons Victoria Golds Eagle Mine lies only 45km off of the existing road network between Mayo and Keno and was constructed in 2019 for a total all in cost of $487M CAD and that only required road upgrades not construction. Against this our $17.4M Mid case would have eaten up 3.5% of the budget just on access before construction could even begin.

That being said Newmont’s Coffee Gold Project has been moving ahead and it requires a 214 km road crossing two major rivers to be constructed for access. The Coffee project has a resource of 2.34 Million Oz (Ind + Measured + Inf) and the 30+ million dollars construction cost did not deter the purchase of Kaminak by Goldcorp in 2016. At present the access is being constructed through the Yukon Resource Gateway Program alongside access to the Casino Project. It is worth noting the project cleared the environmental assessment process this spring (subject to measures mitigating caribou impact) so there is precedent for an access project, on the scale of what will be required for the Rogue project, being deemed feasible.

Whats next?

We hope you have enjoyed our latest update.

We have been hard at work building tools to evaluate proper pit shell’s and are in the testing phase. Once we finish validating our work and finalizing our economic inputs we look forward to being able to add the results to our coverage of Snowline Gold!

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!

Thank You For Reading!

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