Since its formation in 2006, Hawthorne Gold has moved ahead on several property fronts, and is progressing towards its goal of restarting production at its wholly-owned Cassiar Gold Mine, a high-grade, underground operation located on Table Mountain in northern BC. Work also continues at its Taurus Project, a large-tonnage, low-grade gold deposit which was a former high-grade producer and could potentially be a source of low-grade supplemental mill feed as the Company moves towards production at Cassiar. On its Frasergold JV property, also in BC, 1.62 million ounces of inferred and indicated gold have already been defined, in a low-grade deposit which holds potential for developing substantial additional bulk tonnage. With this much positive activity going on, we wanted to get more details from Richard Barclay, Hawthorne’s CEO, on where things go from here with the company.
Resource Intelligence: Richard, before we go further, can you give us a little history on Hawthorne and how it got to where it is today?
Richard Barclay: Hawthorne Gold was formed in January 2006 by Michael Beley and me. We had previously been co-founders of both Bema Gold and Eldorado Gold and have worked together for years. Hawthorne went public in April 2007 with our main initial property interest at the time being the Frasergold joint venture with Eureka Resources. Then in December 2007 Hawthorne entered into a merger agreement with Cusac Gold Mines Ltd., a past-producing company focused primarily on the Cassiar Gold Property, a 175 square kilometre package of mineral claims located in north central BC, hosting a number of gold assets. The key part of the Cassiar Gold Property, including the Taurus Deposit is, of course, the fully permitted Cassiar Gold Mine located on Table Mountain. As part of that transaction, Cusac Gold Mines assigned all its rights to its option to acquire 46 mineral claims near Cassiar from American Bonanza Gold Corp. That property covers the majority of the Taurus Deposit, the balance of which was held 100% by Cusac Gold Mines.
RI: So after the Cusac merger, your main attention turned to Cassiar and Table Mountain. Can you give us a little more detail on that project?
RB: Table Mountain gave us a project with an already permitted 270 tonnes per day gravity/flotation mill, power plant, assay laboratory and tailings impoundment facility. Basically, it’s a turnkey deal with 13 portals and adits, and about 25 kilometres of underground workings accessing a number of gold mineralized zones. The property is part of the historic Cassiar Gold Belt; a 23 kilometre long greenstone hosted quartz carbonate formation that stretches from Mount McDame in the north to Juniper Mountain in the southeast. Nearly 500,000 ounces of gold have been produced from all of the historic underground mining operations and various mills in the area as well as from placer operations along the McDame River. The extensive high-grade gold vein system at Cassiar is similar to some of Canada’s largest gold camps, such as Timmins, Kirkland Lake and Val d’Or.
RI: Why was the mine closed when you acquired the deal?
RB: I’ll give you a little more background here. Beginning in 1934 and in the years following, there were many small mines in the area, which processed high-grade ore. Then, with the rise in the price of gold, larger-scale underground mining and processing started in 1978, first as the Erickson Gold Mine, then the Cusac Gold Mine. During this period, mine operators opened 13 portals to access Table Mountain’s widespread gold mineralization. Then in October 2007, before merging with Cusac, the operation and support facilities at the Cassiar Gold Mine were shut down due to lack of economic ore at the prevailing gold price. In June 2009 we started an exploration/development program, with the goal of working towards gold production. Ultimately, in addition to the underground operations, we see excellent potential for open pittable gold resources from several locations on our property.
RI: The other part of your Cassiar Property is the Taurus Project. Tell us a little about that.
RB: Taurus is a large-tonnage, low-grade gold deposit and is a former high-grade gold producer which has been explored for approximately 25 years. As a former high-grade, small underground gold mine, the Taurus deposit was actively operated in the early 1950s and then again in the early 1980s, with historical production of 32,700 ounces from high-grade zones within the deposit. The high-grade areas were eventually abandoned and attention turned to a large low-grade mineralized zone, where approximately 370 holes have been drilled.
The project comprises wholly-owned mineral claims and as well as the wholly-owned Taurus II property, which has been drilled over the last two years. This drilling expanded the mineralization with grade intercepts in a range from 0.5 to 2.0 g/t gold. At this point it is an advanced-stage exploration target with a 43-101 compliant inferred mineral resource estimate of 1.055 million ounces of gold which was confirmed in a March 2009 updated technical report. It consists of 33.1 million tonnes at an average gold grade of 0.99 g/t with a cut-off grade of 0.5 g/t. Our plans are to review the current deposit and develop several open pits in higher grade zones (3 grams and better) within the existing resource as supplemental mill feed as we move towards production at the Cassiar Gold Mine.
Additionally Taurus has the potential to host a multimillion ounce low-grade gold deposit. Considerable effort over the last two years has been rewarded with a much better understanding of the genesis and structure of the sediment and volcanic hosted gold mineralization. A significant diamond drill program is planned to expand and potentially upgrade this existing resource.
RI: And what’s the story on your original Frasergold property?
RB: Our Frasergold Property is located approximately 100 kilometres east of Williams Lake, BC. We have an agreement to acquire up to 60% interest in the Frasergold Deposit itself from Eureka Resources Inc. and up to a 70% interest from Dajin Resources Corp. on surrounding claims. In the early 1980s initial exploration defined a 10 kilometre long zone with anomalous gold values obtained from soil and rock geochemical surveys. A total of nearly 36,000 metres of drilling in 328 holes has been completed on the property, along with nearly 300 metres of underground drifts to provide access for bulk sampling and metallurgical testing.
Metallurgical tests were conducted during these earlier programs on both surface and underground bulk samples showing that 87% to 92% of the gold is recoverable with a combination of gravity separation and flotation. We completed an independent NI 43-101 technical report dated November 15, 2009, which shows resources of 219,418 ounces of gold in the measured category, 392,541 ounces indicated and 1,228,457 ounces inferred. This property is really huge and there is good potential for developing much larger tonnage along the whole mineralized zone.
RI: So, how are your finances and ability to raise capital?
RB: Well, we just announced in January, and expect to soon complete a $5.8 million special warrant financing with China Mineral Holdings Limited which we will be using for merger and acquisition activities. The warrants convert into units which carry additional warrants, and if those are exercised within 18 months at $0.39 per share, Hawthorne would receive another $3.95 million. We are also in the process of securing production financing for the Cassiar Gold Mine.
RI: What would you like investors to focus on in evaluating Hawthorne as a possible addition to their portfolio?
RB: We have an experienced management team with a record of building previously successful gold mining companies such as Bema and Eldorado. We have a gold mine that has the potential to go back into production that could produce future cash flow for the company. We have ongoing exploration programs, which should be producing positive news and adding tonnages to our existing resources. There is always the possibility of some sort of surprise good news, which could provide excitement in the market. And lastly, our stock is selling near the low end of its range for the past two years, so we feel that it’s a bargain, as do the investors in our last private placement.
- Complete engineering and mine planning this year toward production at the Cassiar Gold Mine
- Complete the production financing for the Cassiar Gold Mine this year
- Complete 10,000m surface drill program to expand and potentially upgrade existing Taurus resource
Disclosure: No Positions