Endurance Gold Corp started the 2023 field season at its 100% optioned Reliance gold project in southwestern British Columbia in early May and as of August 3 had reported results for 10 core holes with results pending for 4 holes and hole 23-75 in progress. Earlier in the year the stock came under pressure when a major shareholder who wanted Endurance to mount a very aggressive 2023 drill program decided to bail, perhaps fearing he might not live long enough for Reliance to reach a tipping point confirming it has a major gold discovery. The stock had recovered back above $0.30 when drilling started, but then it really does look like a lead finger weighed in on social media about the not so good looking stock chart. By then the optimism we saw about the resource sector in Q1 had vanished, and nearly every resource junior's chart looked bad, so at least partly it is the market funk linked to gold's failure to turn $2,000 into a base rather than its ceiling that weighs on Endurance's stock price. But that doesn't explain why the shareholder bailed earlier this year when gold was above $2,000 and threatening to turn that into a base for higher prices down the road.
The Reliance gold mineralization is an epizonal orogenic system such as the nearby Bralorne gold system which produced over 4 million high grade ounces from a swarm of veins. Orogenic gold systems, also called "mesothermal", are different from epithermal systems whose vertical zonation is constrained by the interaction of metal bearing hydrothermal fluids with near surface groundwater circulation. This usually limites the vertical extent of mineralization to 200-600 metres. The latest Endurance presentation has a regional map showing the relationship of the Bralorne area orogenic systems associated with the Bendor Batholith and the Spences Bridge epithermal district to the east where Westhaven Gold Corp recently reported a PEA for its Shovelnose project. There is no genetic relationship between the two districts, but their juxtaposition does help illustrate what is special about Endurance Gold's Reliance project.
The Shovelnose PEA indicated a CAD $222 million after tax NPV at 6% and 32.3% IRR using $1,800 gold and $22 silver base case prices for an in situ 768,000 oz gold and 3,998,000 oz silver resource to which the market has reacted unkindly. The Shovelnose PEA envisioned a 1,000 tpd open pit mine with CAD $122 million CapEx which would yield 534,000 oz gold and 2,715,000 oz silver over 9.5 years. The PEA clears development hurdles, but the market prefers bigger scale. To be fair, the PEA is only based on the South Zone, so there is room for a bigger scale scenario if additional zones along strike or parallel end up being included. But this illustrates the difference between epithermal and orogenic systems. Westhaven cannot go much deeper and it has done sufficient nearby exploration to limit the immediate upside potential from parallel and on strike zones; although additional mineralized zones are not included in the PEA, the market has perhaps prematurely concluded that Shovelnose is as good as it is going to get.
Endurance's results so far suggest potential for a similar scale open-pittable resource between the Imperial and Eagle Zones and some shareholders have suggested maybe Endurance should focus on delivering a maiden resource estimate so that the number crunchers can assign outcome visualization based valuations to the project. However, that is not what our grumpy shareholder who bailed earlier this year wanted. He was focused on the geological fact that Reliance is an orogenic system, and given evidence the mineralization is very high in such a system, should have substantial vertical extent within which gold mineralization could blossom in grade, width and continuity so that it can become a high grade underground mining play such as Bralorne became a century ago. This shareholder declared to CEO Robert Boyd, "Go Deep Young Man or I go Home!" Robert Boyd's nature is one of cautious exploration that builds on incremental new information, and without an over-flowing treasury in place, was not going to drill deep speculative 1,000 m holes, at least not quite yet. So our grumpy shareholder called it quits and went home.
Robert Boyd believes he has a big one on the line at Reliance, and does not want to risk losing this fish because he runs out of money in a bad market. This week Barrick's former exploration VP, Alex Davidson, came on board as an advisor. While conceptual geological plays like NuLegacy's Red Hill Carlin-type project in Nevada do intrigue him, what attracted him to Reliance was the "strength" of the mineralizing system and its geological context. Orogenic gold systems form well below the surface and deposit high grade mineralization over a great vertical extent that can run into thousands of metres such as is the case in the world's greenstone belts. These structurally controlled deposits end up exposed at surface thanks to extensive erosion. The difference between Bralorne and Reliance is that at Reliance the gold system associated with the Royal Treasure Shear is near the top of the system, based on the presence of other elements such as antimony which are not present at the bottom of an orogenic system.
The source of the orogenic fluids is linked to the Bendor Batholith on whose southwestern flank sit Bralorne's veins and whose chemistry implies the mineralization is more than 1,000 m deeper than the mineralization at Reliance which has associated antimony and arsenic. The tantalizing story about Reliance is that the mineralizing system at surface is very powerful with lots of high grade gold zones and chemistry indicating the top of an orogenic system. And so the question arises, how much gold was left behind at depth in rich zones? The northwestern end of the Royal Treasure Shear trend disappears under the Carpenter Lake hydro reservoir and it seems to fizzle out at the southeastern end for a total 1.5 km strike length (though this may be a function of physical access up the mountain and the fact that the gold zones appear to be like shoots interspersed with lower grade mineralization).
There remain untested near surface gaps such as between the Imperial and Eagle zones, but after 3 years of RC and core drilling Endurance could hunker down and crank out an open-pittable resource similar to what Westhaven has done, followed by a PEA. The sizzle, however, lies with going deeper, substantially deeper to the depth where Bralorne style veins might start to show up. And the Bralorne veins were much thicker, richer and continuous than what we have so far seen at Reliance.
The reason delineation of the Reliance gold system has taken so painfully long is partly due to Robert Boyd's cautious use of staged multi-data set collection to develop a geological understanding of what makes the mineralization within the Royal-Treasure Shear Corridor tick. Keep in mind that the Imperial zone was discovered in the 1980s by the late Charlie Boitard, a maverick who used dowsing methods to spot drill hole locations. Although Imperial yielded some spectacular intervals, subsequent drilling did not reveal the geometry of mineralization. When Endurance took on Reliance in late 2019 it explored the Royal-Treasure Shear by building a road along it up the mountain and surface sampling the road cuts. This became the basis for a shallow RC drill program in 2021 which confirmed that the gold mineralization was a shallow dipping gold zone within the foot wall of the Royal-Treasure Shear corridor separated by some sort of thrust fault from the southwest that had placed younger sediments as the hanging wall above the mineralized corridor. Due to the limitations of road access most of the core holes drilled in 2022 were spotted on the foot wall side, which, because these holes were drilled westward, chased a mineralized zone that was dipping southwest. This becomes a problem when you try to delineate the zone down dip.
The latest corporate presentation contains a longitudinal section which shows where mineralization has been encountered relative to an elevation scale on the right side of the section. The dots present ranges for the equation gold grade times metres. Hole 23-70, drilled from the footwall side and the last one reported this season, which yielded 3.7 m at 7.91 g/t gold, is represented as an orange dot for the 25-50 range at an elevation of 1,000 m, which is about 250 m beneath the surface. The section includes 3 deeper black dots representing grade x metres of less than 10. That makes it look like the mineralization is fading at depth, but Boyd explained that those holes were drilled from the foot wall side and never reached the mineralized structure hole 23-70 encountered. The longitudinal section is a two-dimensional plane onto which every mineralized pierce point is projected, so can be misleading. When the company tags the Eagle zone as open at depth that is actually the case. With the next update we will likely get a drill plan and sections for the Eagle Zone that allows us to better track what is unfolding.
By the end of 2022 it was clear that to test the Eagle and Imperial zones properly at depth the holes had to be spotted on the hanging wall side of the Royal-Treasure Shear corridor and drilled toward the northeast. But that first required permitting and building roads up the mountain, which Endurance has accomplished this year.
So far Endurance has drilled 10 core holes, 4 of them testing the Imperial Zone at depth though 2 had to be abandoned. The second pair, 23-65 and 23-66, revealed that the Imperial zone is alive and well at depth, and the 2 holes into the Diplomat Zone along strike to the northwest also show the mineralization persists toward Carpenter Lake. Road building has focused on the higher elevation Eagle Zone where holes 67-74 have been drilled from the hanging wall side, with results reported through hole 70. Drilling earlier in the season was done at the lower elevation Imperial and Diplomat zones while the roads traversing the hanging wall side of the Royal-Treasure Shear were built. Holes 71-73 were shipped for assays in late July, but hole 74 is still in the box awaiting sampling, and hole 75 is partly done, with no holes drilled since then. On August 3 Endurance Gold reported that it had to suspend exploration work because Goldbridge had been ordered to evacuate due to forest fire in the vicinity of Gun Lake.
The Reliance project is not threatened by fire which is limited to the north side of Carpenter Lake. But Endurance had rented a building near Gun Lake to house its exploration crew, and once the evacuation order came, there was no place to stay. The fire torched a number of houses, including the residence of the landlord, but only came within 500 m of the rental house. Fire also caused the evacuation of the Shalaith First Nations community from which Endurance sources a number of workers, though apparently that evacuation order has been lifted. Currently there is no road access to Goldbridge except for emergency and fire support vehicles, both from the Pemberton Meadows and Lillooet access routes.
The authorities have given no guidance when they will lift the evacuation order and restore general access. Robert Boyd is hopeful Endurance can resume drilling in September but is frustrated that the entire month of August has been lost. Drilling without a winterized camp can continue into early December and resume in April. He figures with the current budget he could get 15-25 more holes done with one rig, but would like to increase the drilling rate by adding a second rig. However, given his cautious nature, he only wants to add a second rig if he can raise additional funds, and that he does not want to do at the current price level unless it involves a premium priced charity flow-thru financing. Most of the remaining holes will test the down plunge extent of the Eagle Zone, while others will attempt to fill the 400 m gap between the Imperial and Eagle zones. This gap exists because there is limited outcrop due to topography which has allowed a thicker blanket of ash from the Mt Meager eruption to settle, so was not part of the initial surface sampling work.
The immediate goal is to extend the Eagle zone into the 900-1,000 m elevation depth (23-70 is at about 1,000 m - deeper means lower elevation). Boyd is reluctant to drill big deep stepouts because the team thinks the mineralization's plunge has a rake to the southwest which they want to confirm in order to spot productive holes. He much prefers to follow the zone with incremental stepouts before becoming more aggressive. That means it will be a while before Endurance reaches the depth where Bralorne style veins will be present. On the other hand, with each incrementally deeper hole, the potential exists for the mineralized zone to blossom, and once that happens, Endurance's drill rig will have something to chase which can revive anticipatory speculation. Except in the James Bay Lithium Great Canadian Area play positive outcome speculation is pretty much absent from the Canadian junior resource sector, which creates an early "bottom-fishing" season for stocks like Endurance Gold which have the capacity to generate game changing news.
The importance difference between last year and this year is that the new hanging wall access roads allow chasing the Royal-Treasure Shear structure down plunge from the hanging wall side and intersect the structure at an angle closer to a perpendicular. If the Royal-Treasure Shear zones start to blossom at depth, and the plunge-dip remains generally toward the southwest, Endurance will be able to add a second rig and become more aggressive with deeper stepouts. Should this tipping point happen the disgruntled shareholder might even come back into the market, and the breakout chart pattern could prompt lead finger's impact on the market to undergo an alchemical transformation in the social media world where it wags.
Given the shortened summer exploration season a key question is what Endurance will have gotten done on the Olympic and Sanchez properties it optioned 100% last year from Avino and a private party. These properties cover the western and northwestern flank of the Bendor Batholith. One concern I initially had was that the Reliance project was a relatively small property which carried the risk that the discovery could turn into a Shovelnose outcome if grades fizzle at depth or the zone disappears thanks to a blind low angle fault. That concern heightened in 2021 when it became apparent that the gold mineralization had a shallow southwest dip that raised the risk that it would stop when it ran into the thrust fault that separates the unmineralized sediments and the Royal-Treasure Shear mineralized corridor. But in 2022 drilling established that dyke like sub-vertical structures were present within the corridor on whose flanks gold mineralization was present, so that concern ameliorated somewhat.
In the case of Westhaven's Shovelnose project and the other properties it owns within the Spences Bridge epithermal belt, the junior can continue to explore on a district scale even if the South Zone and its nearby zones fall short of development critical mass. Endurance went after the Olympic and Sanchez properties on the premise that similar orogenic zones could be present on the other flanks of the Bendor Batholith. One would think that intensive prospecting a century ago in the wake of the Bralorne discovery would have found anything if it were to be found. But the Bendor Batholith is steep, has a lot of forest cover, and is burdened by thick ashfall from the Meager Creek eruption. A century ago prospectors did not deploy soil sampling and definitely not biogenic sampling methods which Endurance used to identify elevated arsenic levels that fir trees are absorbing from soils above mineralized bedrock (arsenic is a pathfinder at Reliance). Fortunately Endurance started early with its Olympic-Sanchez sampling program and completed it before the fire evacuation notice. Results expected later this year will tell us if the Olympic-Sanchez claims do indeed offer district scale potential for additional orogenic gold systems. There is reason to be optimistic; Robert Boyd grumbled about how the sampling medium is thick and difficult in this area, which gives hope that prospectors did not find anything because nothing was there, but because it was pretty much hidden "under cover". |
