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Atlas acquired
the property in 1986 from two prospectors after
recognizing its potential to host hot springs
type gold mineralization. There were no significant
mining or major mineral occurrences known in
the area prior to the discovery of the Grassy
Mountain deposit.
Detailed mapping and sampling were completed
later that year and several drill targets were
defined. A small track-mounted rig was mobilized
in early 1987 to drill six holes on two target
areas. Drill hole 26-4 intercepted 80 feet of
mineralization averaging 0.021 opt Au. A follow
up drill program consisting of five holes was
completed in the spring of 1988. Hole 26-9 is
considered the discovery hole with 145 feet
of mineralization averaging 0.075 opt Au. The
claim block was expanded at this time and exploration
work continued through 1991. Atlas completed
388 drill holes for a total of approximately
221,500 feet on the property.
Newmont Exploration Ltd. acquired the property
from Atlas in September 1992 for US$30 million
plus a 5% net smelter royalty interest. Newmont
continued the property evaluation through August
1994, completing an additional 13 core and reverse
circulation holes. The property was returned
to Atlas by Newmont in September 1996 due to
size constraints.
In January 1998, Atlas executed an agreement
with Tombstone Exploration Company Ltd. and
associated sister company Orinoco Gold Inc.
(“Tombstone”), whereby Tombstone
was granted the option to purchase 100% of the
property. Exploration work during Tombstone’s
initial program at Grassy Mountain included
8,500 of reverse circulation and core drilling
in 10 drillholes. Prior to the drill program
and execution of the definitive option agreement,
Tombstone completed an extensive review of previous
work at the property and commissioned an economic
study of alternative development scenarios by
PAH. The 1997 review indicated that at gold
prices above US$350 per ounce, the existing
resource could be economically recoverable through
underground mining methods. The review also
concluded that significant exploration potential
exists to identify additional high grade resources
within the confines of the existing deposit.
A second phase drill program was proposed by
Tombstone to assess the highly prospective structural
trends identified by geophysics, and to upgrade
previous mineral resource models. Other hot-spring
type gold prospects clustered around the known
deposit were also earmarked for drilling to
test for deep high grade gold mineralization.
An underground program on the high grade mineralization
consisting of drifting and drilling was recommended
to follow up completion of the second phase
exploration/modelling program.
The inability to raise venture capital during
1998 forced Tombstone to return Grassy Mountain
to Atlas in May 1998.
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