Dakota Territory aims to have next Homestake mine; on the acquisition trail
By Angela Kean
Dakota Territory Resource Corp. believes it could potentially develop another Homestake mine in the Black Hills region of South Dakota, with its landholding located on the same structural trend that hosts the former Barrick Gold Corp.-owned mine that produced 40 million ounces while it was in operation.
In terms of total historic U.S. gold production, the Black Hills ranks second only to the Carlin district of northeast Nevada, with more than 44 million ounces of gold produced over the past 136 years from a 100-square-mile area known as the Homestake district.
Dakota Territory wholly owns the Blind Gold, City Creek and Homestake Paleoplacer properties, all of which are located in the heart of the Homestake district and cover a total of 3,057 acres.
In the 1980s and 1990s, Homestake Mining Co., which was later acquired by Barrick Gold in 2002, undertook a US$70 million exploration program managed by Richard Bachman, who is now president and CEO of Dakota Territory, which was focused primarily on the search for a repeat of the Homestake mine.
The exploration program successfully discovered significant new gold mineralization 2 miles northwest of the producing mine and proved the continuous extension of the Homestake iron-formation host to a distance of about 4 miles and under the Blind Gold property.
Low gold prices forced the suspension of the Homestake effort in 1994 and no further work was conducted prior to the closure of the mine in 2002.
Since then, Bachman and Dakota Territory Vice President Gerald Aberle, who also worked at Homestake Mining previously, have returned to the district in a bid to develop the next Homestake mine.
Dakota Territory is currently in the process of defining an initial NI 43-101-compliant resource for the Homestake Paleoplacer property from historic exploration data, and hopes to have that completed by the end of the U.S. summer, if not sooner, Bachman told SNL Metals & Mining.
"The upper end of the resource we think is 2 million ounces-plus on this particular property and we have good data to indicate this property is a derivative of the Homestake," he said. "It's an erosion of the Homestake lode, where the Homestake orebody outcrops and was discovered in 1876; the first 1,000 feet of that deposit produced 10,000 ounces per vertical foot. So there was 10 million ounces in the first 1,000 feet of that lode."
Bachman said the 2 million-ounce forecast applies to the first mile north of the Deadbroke mine, which Dakota Territory acquired in March, but there is evidence of further mineralization to the north that could potentially amount to as much as 8 million ounces, of which 2 million ounces is believed to have already been produced.
Peak assays recorded in historic drilling indicate potential grades of up to 17 g/t of gold.
Dakota Territory is planning to carry out its first drilling program, comprising about 14 holes, on the Homestake Paleoplacer property during the summer to test the extent and grade of gold mineralization surrounding the Deadbroke mines.
The program will also test the extent and grade of gold mineralization surrounding the Gustin and Minerva mines that were not sampled by Homestake in the 1970s, as well as test the higher-grade core mineralization extending from the Deadbroke mine northward 1,800 feet to the discovery indicated by Homestake Mining's historic drill programs of the late 1980s.
Bachman said the economics of developing a mine in the region look pretty "spectacular" due to the gold from the historic Homestake mine being free-milling and yielding high recoveries using simple, conventional processes.
"All that gold was free milling, very simple gravity and cyanide and they got 98% recovery on that," he said. "We've done preliminary economics using costs from local mining data and whatnot and of course these ores will all be free milling and it will be relatively high-grade. This resource we're looking at is, we think, going to be between 7 and 10 grams [per tonne] and very shallow ramp access-type mining."
Dakota Territory could potentially bring a new mine into production within two to three years depending on the outcome of drilling, Bachman said.
The company currently has between US$400,000 and US$500,000 in cash reserves, with a cash burn of about US$25,000 per month, and is also in the process of undertaking a US$2.5 million capital raising to be completed in about two to four weeks.
Aberle told SNL that while the capital raising is not a bought deal, the company has an overallotment provision that it hopes will be utilized.
"We're going first to some institutional investors that have already participated in some small raises that we did early on, and we've got pretty good confidence that this is going to go quickly and we're hoping that we're working in the overallotment category," he said.
Dakota Territory has outlined a budget of about US$1.8 million to fund the planned drilling program, with the balance of the cash to be allocated to the refinement of drilling data and working capital for the rest of the year.
Bachman said that at this stage the company has no plans to farm out any of its landholdings to a potential joint venture partner.
Instead, Dakota Territory is looking to increase its landholding. "We look to acquire more property in the district based on the data and the knowledge we have and our experience," he said. "So at this point in time we don't look to venture anything out, we look to acquire more properties.
"I would expect by the end of the summer, September/October, we'll have 50% more land than we have now."
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