Kena Gold Property

Kena Gold Property

Click here to view Technical Report (revised June 2, 2017)

The Kena Property, widely mineralized and containing several gold, silver and gold-copper prospects, covers approximately 8,000 hectares of land located near the town of Nelson in southeastern British Columbia. It is 45 kilometres north of the Teck Cominco smelter at Trail, BC. The Property lies on the eastern limb of the Hall Creek Syncline, a south plunging fold associated with intense shearing that dominates the structure of the Nelson map area. The syncline incorporates volcanic and lesser sedimentary rocks of the lower Jurassic Rossland Group and is intruded by stocks of mid Jurassic Silver King intrusive.

Infrastructure in the area is excellent, and a power line, rail bed and major highway pass through the centre of the property, and a network of new logging access roads services the property.

Considerable exploration work has been carried out on the property over many years. Significant exploration details, by zone, are set out below. On June 16, 2004 Apex announced, and filed on SEDAR, an Initial Ore Resource calculation - for the Gold Mountain zone and the Kena Gold zone. (See Kena Property Resource – June 2004, below).

Exploration History

Exploration commenced with discovery of the Silver King mine in 1886 and later the rich Athabasca gold mine in 1896. The resulting gold rush lead to the establishment of the city of Nelson, and discovery of a number of smaller gold mines. Included on the Kena property are the Gold Cup, Euphrates, Three Friends, Noman A/B veins, Dighem, Princess, Cariboo, Great Western, Daylight-Berlin, Victoria-Jessie, Starlight, North Star, Toughnut and Athabasca Mine, all of which have historic gold workings. The Property also includes the historic high grade copper and silver producer, the Silver King Mine which has been decommissioned.

The Kena Property has been worked by a number of exploration companies from 1974 to 1991. No work had been done on the property from that time until Apex Resources acquired it in late 1999. Previous work on the property included geology, geochemistry, geophysics, trenching and drilling. Prior drilling concentrated on the Kena Gold Zone, with smaller programs carried out on the Kena Copper Zone, the Dighem Zone and the Shaft showing.

During exploration programs completed over the past four years, Apex Resources has discovered a large area of gold mineralization associated with the Silver King intrusive and its contact areas. Narrow high-grade gold shoots within broad envelopes of lower grade gold mineralization occur within this system. Geology, gold soil geochemistry, surface and trench rock samples, and geophysical surveying all indicate the presence of a zone, some 3000 metres in length and up to 1400 metres in width that is host to significant gold mineralization. This zone is termed the Gold Mountain Zone.

Gold showings have therefore been recognized on the historically worked Kena Gold, Kena Copper and Cat/Shaft Zones, and the newly discovered Gold Mountain Zone, and also on the numerous additional old mines and claims referred to above.

In 1999 and 2000, Apex Resources optioned the Kena property and conducted exploration programs consisting of sampling of existing diamond drill core, geological and structural mapping, geochemical and geophysical surveys and excavator trenching. Results from the core-sampling program led to definition of large widths of gold mineralization in the Kena Gold Zone, with grades similar to those obtained historically (i.e. 0.3 to 2.0 g/t gold). The best previous drill hole in this zone is LK86-20, which returned 1.55 g/t gold over a 53.5 metre length.

The success of the 1999 program lead to the 2000 work program which entailed soil geochemical, magnetometer and induced polarization geophysical surveys followed by trenching over the Silver King intrusive north of Gold Creek, in an area now termed the Gold Mountain Zone. Six trenches covering an area of about 120 x 95 metres averaged 1.43 g/t gold over their entire combined length of 182 metres with assays ranging up to 11.38 g/t gold in one 3-metre chip sample. The “discovery trenches” uncovered a significant new style of gold porphyry mineralization within the Silver King intrusive.

Due to the encouraging results over the Gold Mountain Zone in 2000, an additional six trenches were excavated and a seven-hole diamond drill program was completed in June and July 2001. Drill results confirmed the depth extension of the widespread, porphyry style gold mineralization within the Silver King intrusive unit and extending across the contact into the Elise Volcanics for a short distance. Over the entire 892.5 metres drilled, core samples averaged 0.8 g/t gold (this average includes relatively barren zones within the volcanics that assayed <0.05 g/t gold), with intervals up to 28 metres grading >2.5 g/t gold and one 12 metre interval grading >4.0 g/t gold. The best 2-metre core sample from these original seven holes returned 16.34 g/t gold from hole 01GM-04.

A second drilling and exploration phase was completed on the Kena Property in late 2001 and early 2002. This exploration program consisted of expanded geochemical and induced polarization geophysical surveys, followed by 5,788 metres of reverse circulation and diamond drilling in the Gold Mountain Zone. The results of this exploration program show that the gold soil geochemical anomaly over the Gold Mountain Zone extends north and west from the initial survey area to cover an area 3,300 by 1,400 metres in size. Drilling in the discovery trench area located wide zones of “bulk tonnage type” gold mineralization with many holes returning core intervals of greater than 100 metre widths averaging better than 1 g/t gold. Also, the drill program encountered numerous “high grade” gold intervals with one or more 2 metre samples running greater than 5 g/t gold in many of the drill holes. Two “bonanza grade” intervals were found, in hole 01GM-03 where 1.23 metres assayed 240.07 g/t gold in the intrusive and in hole 01GM-08 where 2.00 metres assayed 172.10 g/t gold in the adjacent volcanic.

Work completed on the Kena Property from May to December 2002 consisted of drilling 7,598 metres in 43 diamond drill holes on the Gold Mountain, Kena Gold, South Gold, Great Western and Starlight Zones. At the same time, expanded soil geochemical surveying was done west and north on the Gold Mountain and Kena Grids to cover newly acquired claims in the Starlight, Silver King Mine and Cariboo areas. Induced polarization geophysical surveying covered the expanded Gold Mountain and Kena grids, plus the South Gold Zone. Also in 2002, Fugro Airborne Surveys were contracted to survey the main area of interest on the property, measuring about 3 by 7 kilometres in size, with airborne magnetics and radiometrics.

The Fugro survey led to the recognition of an alteration corridor that extends the length of the property. The alteration corridor and associated structures appear responsible for the Keno gold zone, Gold Mountain zone and several nearby high-grade gold intersections. In 2003 the alteration corridor was investigated with 22 diamond drill holes, trenching and a structural mapping program.

To date more than 150 diamond drill holes have tested the Gold Mountain and Kena gold zones.

The Initial Resource Calculations on the Gold Mountain and Kena Gold Zones have been completed and were filed with the Securities Commission on June 16, 2004. Modeling, QAQC evaluations and resource calculations were done by Independent Qualified Person Gary Giroux, P.Eng., MASc., and the accompanying 43-101 Technical Report was co-authored by Gary Giroux, P.Eng. and Linda Dandy, P.Geo (see Kena Property Resource below).

The results of the work done by Apex Resources Inc. may be summarized as follows:

Gold Mountain Zone

The Gold Mountain Zone lies in the northern portion of the Kena Property, north of Gold Creek. Alteration mapping and structural geological studies show that elevated gold values in the intrusive are related to areas of strong potassic alteration, increased pyrite content and high fracture densities. Gold occurs as tiny grains of free gold located within quartz veins, adjacent to pyrite patches and finely disseminated in the intrusive or volcanic matrix.

Diamond drilling completed to date has found four different styles of gold mineralization over this large mineralized area. All four styles of mineralization have the potential to host economically significant gold deposits. The four styles are:

1) The high-grade corridor occurs immediately to grid west of the Gold Mountain Zone discovery area, where the majority of drilling to date has been conducted. This corridor shows up very prominently on the airborne magnetic survey map (both total field and vertical gradient). Three diamond drill holes, collared at 2+00N, 9+00N and 21+00N (over a strike length of 1.9 kilometres), each had 2 metre intercepts of high-grade gold mineralization.

2) The intrusive-volcanic contact has been crossed by numerous drill holes. In many of these drill holes, the contact has intervals with widths of 4 to 10 metres or more that have variably elevated gold values (often averaging better than 5 g/t gold). Elevated gold along the contact has been found from 6+00N to 11+50N (a distance of 550 metres). The most consistent area of high gold values along the contact is found in the discovery area near L11+00N where the contact mineralization remains open to depth.

3) The bulk tonnage, low-grade gold area was the initial focus of Apex’s early drill programs. Many of the discovery area drill holes have broad zones of >1 g/t gold values. With the recent increase in gold price, the excellent infrastructure in this region and metallurgical studies pointing to easy gold recovery, a low cut off grade can be assumed for a large bulk tonnage deposit. Of the 72 holes drilled in the Gold Mountain, North Gold Mountain and South Gold Mountain Zones (over an area of 2.3 by 0.8 kilometres), 47 holes averaged >0.3 g/t gold over their entire lengths and the low grade gold zone remains open.

4) The bonanza shoots of very high-grade gold mineralization have been found in the Gold Mountain Zone discovery area. In hole 01GM-03, a 1.23 metre interval assayed 240.07 g/t gold in the intrusive rock and in hole 01GM-08, a 2 metre interval assayed 172.10 g/t gold in volcanic rock. By orienting core with foliations parallel to the regional trend it appears that the high grade shoots (as seen by abundant small grains of visible gold) strike roughly parallel to the grid lines (and the orientation of much of the drilling) and dip vertically. Computer modeling will assist in directing further drilling of these bonanza shoots.

The Gold Mountain Zone is a unique bi-modal gold system, containing bulk tonnage porphyry style gold mineralization and narrower, very high-grade gold shoots. Geology, geochemistry, geophysics, trenching and diamond drilling all confirm a very large gold bearing system.

The Gold Mountain Zone Initial Ore Resource has been included in the Initial Resource Calculations on the Kena Gold Property, which were filed with the Securities Commission on June 15, 2004 (see Kena Property Resource below).

More drilling is needed to fully define the Gold Mountain Zone system.

South Gold Zone

Gold mineralization (along with copper and silver), as seen from drill core assays, increases and becomes more widespread toward grid south. The prominent magnetic feature seen in the Gold Mountain Zone trends south through the Kena Gold Zone to the South Gold Zone, a distance of over 5 kilometres. This feature is believed to be an important regional control to gold mineralization and may be important in controlling the gold mineralization regionally.

The South Gold Zone was investigated with four diamond drill holes situated entirely within the Elise volcanic package. The gold grades from hole 02SG-04, the southern most hole, are very similar to those encountered in the Gold Mountain Zone discovery area. In this hole, a high-grade gold shoot lies within a broad zone of low-grade gold mineralization. The high-grade mineralization occurs in a rusty, pyritic, broken section of core while the lower grade halo appears to be related to silica/potassium alteration as seen in the Gold Mountain Zone.

Great Western Zone

The Great Western Zone is an extensive gold soil anomaly centered over several historic showings located 1.0 kilometre west of the Gold Mountain Discovery area. The broad widths of gold mineralization in the Great Western Zone are located within the Silver King intrusive and are associated with areas of increased quartz and quartz-sulphide veining or adjacent to magnetic lamprophyre dykes. Both the veins and the dykes are readily visible in core and a systematic drill program is required to determine their strike, dip and continuity.

Starlight Trend

The Starlight Trend is located in volcanic rocks immediately to the southwest of the Great Western. Mineralization at the Starlight trend follows a strongly chargeable shear feature that is traceable by geophysics and by the presence of numerous historic workings for over 3 kilometres. The gold mineralization within this structure consists of both high-grade quartz veins and broader lower grade stockwork zones. From the small amount of drilling done along this trend it appears that the gold mineralization is confined to about a 50 metre wide interval located between a series of northwest trending, mafic dykes.

Kena Gold Zone

The Kena Gold Zone lies 500 metres southeast of the Gold Mountain Zone. The Kena Gold Zone has been tested with some 55 diamond drill holes conducted predominantly by previous property owners. Like the Gold Mountain Zone, high-grade gold intervals are found within wide zones of lower grade gold mineralization.

The Kena Gold zone Initial Ore Resource has been included in the Initial Resource Calculations on the Kena Gold Property, which were filed with the Securities Commission on June 15, 2004 (see Kena Property Resource below).

More drilling is needed to fully define the Kena Gold Zone system.

New Showings

In late 2000, following discovery of significant gold mineralization at the Gold Mountain Zone within the Silver King intrusive rocks, Apex Resources researched the regional geological setting of this unit. Additional ground was obtained in 2000, 2001 and 2002 by staking to the south of the original claim block, and by optioning claims to the north and west.

During the course of the staking program, the historic Euphrates, Gold Cup and Three Friends workings were located and sampled. Grab samples from the old workings assayed up to 20.7 g/t gold and 2.59% copper from samples collected between 8 and 15 kilometres south of the Gold Mountain Zone.

Kena Property Resource - June 2004

The completed initial resource calculations on the Gold Mountain and Kena Gold Zones of its Kena Property, in the Kootenay District of British Columbia were announced in June 2004. Modeling, QAQC evaluations and resource calculations were done by Independent Qualified Person Gary Giroux, P.Eng., MASc., and the accompanying 43-101 Technical Report entitled “Preliminary Resource Calculations for Gold Mountain and Kena Gold zones, Kena Property, BC” was co-authored by Gary Giroux, P.Eng. and Linda Dandy, P.Geo (filed with SEDAR on June 16, 2004).

Over both gold zones, resource calculations have been determined using cut off grades ranging from 0.0 to 4.0 g Au/t (see Tables I & II). Management believes that a cut off grade of 0.5 g/t gold is realistic for an open pit mining operation at current gold prices. Using a 0.5 g/t gold cut-off the results of this initial resource calculation may be summarised as follows:

Gold Mountain Zone:
Measured + Indicated= 5,490,000 tonnes at 1.040 g/t

(184,000 ounces gold)

Inferred= 10,710,000 tonnes at 0.967 g/t

(333,000 ounces gold)

Kena Gold Zone:
Measured + Indicated= 6,330,000 tonnes at 0.969 g/t

(197,000 ounces gold)

Inferred= 1,440,000 tonnes at 1.216 g/t

(56,000 ounces gold)

Computer modeling done as part of the resource study indicates numerous untested areas adjacent to mineralized blocks. The report recommends that a $1.27 million diamond drill program be conducted in order to significantly expand resources in the Gold Mountain and Kena Gold Zones.

Both the Gold Mountain and Kena Gold Zones contain bimodal gold mineralization where the entire lengths of the drill holes often average between 0.3 g Au/t to greater than 1.0 g Au/t, and may contain one or more 1-2 metre intercepts of greater than 10 g Au/t (see previous news releases from 2001-2003). The high-grade gold intervals have an important positive impact on the overall grade of the surrounding lower grade porphyry style mineralization. The parameters of the study are discussed in detail below.

Kena Property Resource - Gold Mountain Zone

A total of 6,269 drill core sections have been assayed for gold on the Gold Mountain Zone. The gold assay values form a positively skewed distribution. Partitioning of lognormal cumulative probability plots produces statistics for 6 overlapping lognormal populations.

On the Gold Mountain Zone there are 7 assays, which are substantially above normal. A data cap is therefore necessary to reduce the effects of the two upper erratic populations representing a very small portion of the data. A cap level of two standard deviations past the mean of population 3 was selected resulting in a total of 7 samples being capped at 23.0 g Au/t. The seven samples capped had values as follows: 240.07, 172.1, 40.66, 34.44, 33.87, 32.36 and 29.84 g Au/t. While these samples might well represent some bonanza style of mineralization in narrow structures, at this time there is insufficient data to model or to possibly predict the orientation or magnitude of these structures.

A rotated block model with block dimensions 20 x 20 x 10 metres was placed over solids with the proportion of each block below the topographic surface and inside the solid recorded. The block model parameters are listed below.

Minimum Easting 479000Eblocks 20 m wide

75 columns

Minimum Northing 5474400Nblocks 20 m long

125 rows

Maximum Elevation 1650blocks 10 m high

55 levels

Search ellipses to constrain the ordinary kriging runs were based on the ranges of the semivariograms along the three principal directions; along strike, down dip and across dip. The blocks were estimated in 4 separate passes with the dimensions of the search ellipse a function of the semivariogram ranges. A minimum of 3 composites and maximum of 8 composites were required to estimate a block. If more than 8 composites were found within the search ellipse, the closest 8 were used. If the minimum 3 composites were not found the block was not estimated during that particular pass.

The Gold Mountain mineralized zone is contained within a mixture of intrusive and volcanic rocks. Specific gravity was measured in 6 intrusive samples and four volcanic samples. The highest value of 3.28 was removed from the calculation and the remaining 9 samples averaged at 2.82.

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