Grassy Mountain: EXPLORATION
Potential
Several drilled and undrilled areas within the Grassy Mountain claim block have potential for additional resources. Most of the exploration targets are hosted in the Grassy Mountain Formation and are similar to the main Grassy deposit. A description of exploration targets follows:
Grassy Mountain Deposit
To date, only half of the 2000 foot geophysical anomaly representing the Grassy Mountain deposit has been drill tested and the resistivity anomaly has yet to be tested. This possible lateral extension of the current deposit to the east-northeast represents a high priority target in future drilling.
While the present drill spacing is adequate to define a larger low-to-medium-grade deposit, additional angle drilling is needed to define the vertical extent of the high-grade feeders. Most of the drilling has been concentrated in a zone 450 to 600 feet below the surface. Successful drilling below this level could add a significant number of high-grade ounces to the resource.
Crabgrass
A near-surface low grade resource of approximately 23,000 ounces of gold has been delineated. The resource is hosted in slightly altered arkose of the Grassy Mountain Formation. Several undrilled fault zones may yield additional higher-grade mineralization.
Big Wally/Wood
This target lies within 7,000 feet of the main Grassy deposit. The limited number of holes drilled has delineated a weakly developed hot springs system on the flanks of a rhyodacite dome. Shallow low-grade (0.01-0.02 opt Au) strata bound mineralization is found at the contact between the Grassy Mountain Formation and the Kern Basin Tuff. Trenching in the Kern Basin Tuff exposed narrow high-grade mineralization (70.10 opt Au). The limits of mineralization have not been defined. Potential exists for high-grade feeders and more mineralization to the west and northwest.
Bluegrass
The Bluegrass target lies approximately one mile northeast of the Grassy deposit along strike with the major Grassy controlling structure. Drilling indicates that hot springs mineralization is present along this trend. The best hole intersected 65 feet grading 0.035 opt Au. The area between the Grassy deposit and Bluegrass is untested, opening up considerable potential along strike.
Grasshopper
The target lies between Crabgrass and the Grassy Mountain deposit on a N70E linear. Outcrops of siliceous sinter and strongly silicified Grassy Mountain Formation offer encouragement. Four holes have been drilled but the target remains largely untested.
Clover
The target lies approximately 3,500 feet to the northwest of the Grassy deposit on the east flank of the rhyodacite dome. There is an enrichment in gold along the same stratigraphic position as the Big Wally.
History
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.
