Silver Standard signs Option Agreement with Eskay Mining to explore the SIB Project in British Columbia in Canada
Silver Standard Resources Inc. (NASDAQ: SSRI) (TSX: SSO) ("Silver Standard") announces it has signed an option agreement (the "Agreement") with Eskay Mining Corp. ("Eskay Mining") (TSX-V: ESK) to acquire up to a 60% undivided interest in the SIB project, located in British Columbia, Canada.
- Underexplored, high grade gold-silver base metal target in a prolific district.
- Numerous gold-silver occurrences over 4 kilometers, within the same volcanic rocks that host the precious metal enriched volcanogenic massive sulphide ("PME-VMS") deposits mined at the Eskay Creek mine.
- Historic drill results at the Lulu zone on the SIB project include 14.3 meters at a grade of 14.4 g/t gold and 1060 g/t silver, and 24.8 m at a grade of 10.8 g/t gold and 766 g/t silver. 1, 2
- Potential at depth for PME-VMS deposits below a regional, gently easterly-dipping fault confirmed by previous drilling, which intersected prospective volcanic rocks with encouraging gold-silver grades.
- Historic drill results from a footwall setting include 25.4 m at a grade of 2.12 g/t gold, 4.0 g/t silver, 0.17% zinc and 0.13% lead at 488 m depth, 30 m below the fault. 3
- In-house technical expertise to optimize Mineral Resources discovery potential.
Carl Edmunds, Chief Geologist at Silver Standard said, "The SIB project is a very exciting exploration target in Northern Canada due to it's higher grade drill results, the fact that these types of PME-VMS deposits often occur in clusters and this property is 4 kilometers along strike from the prolific Eskay Creek mine, which produced over 3 million ounces of gold and nearly 160 million ounces of silver between 1994 and 2008. 4 Previous work from the 1990's discovered PME-VMS at the Lulu zone, on SIB, near surface, and later attempts for further exploration were hindered by the presence of a fault potentially displacing the extension to mineralization. Subsequent work by Eskay Mining discovered the extension of the Lulu and Eskay Creek host felsic volcanic rocks below this fault, opening a large area for exploration by drilling. At Silver Standard, we remain disciplined with our greenfields exploration activities and this agreement demonstrates we are ready to act when an extraordinary opportunity arises."
Summary Terms of the Agreement
The SIB project comprises a land package of approximately 4,400 hectares land package containing 30 mining claims. This project forms a small part of the SIB property, which is jointly controlled by Eskay Mining and St Andrew Goldfields Ltd. ("St Andrew"), a wholly-owned subsidiary of Kirkland Lake Gold Ltd., who hold an 80% and 20% undivided interest, respectively. Under the terms of the Agreement, Silver Standard will explore the SIB project during a three-year option period. To earn a 51% undivided interest in the SIB project from Eskay Mining, Silver Standard is required to complete a $300,000 private placement in Eskay Mining, and spend an aggregate of $11.7 million in exploration expenditures over the three years, including $3.7 million in the first year and $4 million in each of the following two years of the option period, subject to certain gold price thresholds in each option year. Once a 51% undivided interest is earned, Silver Standard can either proceed to form a joint venture with Eskay Mining and St Andrew to advance the project, or exercise a second option to earn a further 9% undivided interest for an aggregate of 60% undivided interest by either delivering a preliminary economic assessment or completing 23,000 meters of diamond drilling (including any drilling completed in order to exercise the first option) on the SIB project. The details of the option were announced by Eskay Mining in its news release dated February 13, 2017. After completing the private placement and spending a minimum of $3.7 million, Silver Standard can terminate the Agreement at any time.
About the SIB Project
The SIB project is located 4 kilometers south-southwest from Barrick Gold Corporation's ("Barrick") past-producing Eskay Creek mine, which was one of Canada's richest precious metals mines, with total production of 3.3 million ounces of gold and 159 million ounces of silver from 2.18 million tonnes of ore between 1994 and 2008, as previously reported by Barrick. 4 The mineralization and resources previously reported for the Eskay Creek Mine are not necessarily indicative of the mineralization, if any, hosted on the Eskay Mining property. The gold-silver deposits at Eskay Creek occur either in rhyolite or within overlying sedimentary mudstone rocks. Hydrothermal fluids related to the rhyolite are integral in the formation of the deposits. The only other occurrence of VMS in the district is at the Lulu zone on the SIB project, and that mineralization has characteristics similar to Eskay Creek. At the Lulu zone, which is part of the SIB project, mudstone hosts a small PME-VMS deposit occurring within a rhyolite flow that is displaced by the Coulter Creek fault 100 meters down dip. As reported by Eskay Mining, a number of drillholes completed in 2002, 2008 and 2010, over an area of 350 meters by 200 meters, explored below this structure for the extension of the package and confirmed that felsic volcanic rocks, similar to those that host the Lulu and Eskay Creek deposits, are present between 400 meters and 500 meters below surface. Encouragingly, the volcanic rocks are mineralized with polymetallic stockwork veining returning in one drillhole 25.2 meters at a grade of 2.13 g/t gold, 4.0 g/t silver, 0.174% zinc and 0.124% lead. 3
The SIB project was extensively explored to shallow depths during the 1990's. While the fault offset nature of the Lulu mineralization was recognized at that time, it was the Eskay Mining drilling programs in 2002, 2008 and 2010 that defined the potential for a deposit similar to Eskay Creek, located somewhere below the fault. 3 We plan to systematically explore the prospective volcanic package beneath the fault by drilling widely-spaced, deeper holes from surface. This work will be supported by down-hole geophysics to detect proximal PME-VMS and by litho-geochemistry to map the distinctive alteration patterns common to volcanogenic massive sulphide deposits.
Eskay Mining has completed the permitting process allowing helicopter-supported diamond drilling. We have budgeted $3.7 million in 2017 for a drill program to complete 6,000 meters to 9,000 meters of drilling with two drill rigs. We expect to begin mobilization in early June 2017 or as soon as weather conditions permit.
1. McGuigan, P. J. (2002) Technical Report on the Eskay Properties of Heritage Explorations Ltd. And Glenfred Holdings Inc.
2. Rebagliati, C. M. et al (1991) Diamond Drill Report on the Sib 1-16, 20-39 and Polo 1-13 Claims.
3. McKinley, S. D. (2008) 2008 Exploration on the Eskay Property.
4. BC Geological Survey MINFILE Database (http://minfile.gov.bc.ca/Summary.aspx?minfilno=104B++008).
Source: Silver Standard