CEO.ca / February 13, 2014 / Recently, we had the pleasure of sitting down with two of exploration geology’s brightest young stars; Dr. Alan Wainwright and Daniel MacNeil. Dr. Wainwright (Chief Geologist) and Mr. MacNeil (Project Acquisition and Development) allowed us to visit them in the humble Vancouver offices of their current venture, Desert Star Resources (DSR:TSXV).
Mr. MacNeil has over a decade of experience working with seniors as well as juniors in exploration. Dr. Wainwright completed his PhD at the University of British Columbia on the super-giant porphyry copper-gold deposits at Oyu Tolgoi (Ivanhoe Mines, Mongolia). Last month he won the H.H. “Spud” Huestis Award for excellence in prospecting and mineral exploration along with his former Kaminak Gold colleagues for their role in the discovery of the 4.2 million ounce Coffee deposit in the Yukon.
“We had a meeting at the beginning of the downturn,” MacNeil tells me, “and we decided we had two options. We could shut off the lights and wait for better times, or we could take the capital we had and get into [mineral] belts that we wouldn’t otherwise be able to get into.”
Dr. Wainwright, DSR Chief Geologist (Photo: Wainwright)
The two geologists showed me a world map with a dot for each of the +350 projects they reviewed, telling me they simply narrowed in on the areas on the map where the most dots were.
“You have to kiss a lot of frogs in this business,” MacNeil jokes.
That area, it turned out, was the southwest United States and specifically Nevada, New Mexico and Arizona. The two have acquired a project portfolio for Desert Star that consists of four copper projects in the Laramide belt of Arizona and New Mexico and two Carlin-type gold projects in Nevada.
“We selected projects in places where nobody would be surprised that there was a large deposit and no one would contest that these could be put into production,” MacNeil tells me.
Here is a summary of the top projects:
Red Top sits on the northwest segment of the prolific Laramide porphyry belt in Arizona. The Red Top Project is situated 8 km northwest of the Resolution Copper Project, a joint venture project owned by Rio Tinto and BHP Billiton which is one of the world’s largest undeveloped copper projects. Resolution hosts 1.737 million tonnes of over 1.53% copper.
Project Acquisition and Development, Dan MacNeil (Photo: MacNeil)
All of the Arizona copper projects are under option from Eurasian Minerals (EMX:TSXV) and Desert Star can earn a 100% interest (less a 2.5% NSR royalty, buyable down to 2%). The deals are back-end loaded with $100,000 in exploration required in the first year, $500,000 the second and the third, $750,000 the fourth, $1.15 million the fifth and $1 million thereafter.
“The first thing you see when you drive or fly into the project is a 350m alteration zone which hosts an advanced argillic mineral assemblage that is associated with the lithocap environment at the top of a porphyry. The theory tells us that within a few hundred metres beneath the surface of this lithocap environment is a porphyry system,” Dr. Wainwright explains.
The two show me various maps and diagrams of the local geology surrounding their project as well as the Resolution deposit. They know, from local geological signs, that the potential porphyry zone in the Red Top property will be tilted on its axis. The Resolution deposit starts at 1.5km depth and is covered with post-mineral cover, up to 1,000m deep. Conversely, the alteration zone at Red Top is seen at surface, in outcrop.
“The reason the tilting of the system is important for us as a company is that there are some vintage 1960’s drill holes which were drilled vertically to about 200m,” Daniel explains, “which means they missed the target zone.”
The duo are planning to drill three 1,000m deep drill holes into the target zone of their tilted porphyry which they believe will be sufficient to tell them whether they are onto something or whether they need to give the project back. The holes will cost roughly $200-$250 per metre.
Desert Star’s copper projects are situated next to the world’s largest miners (Image: Desert Star Resources Ltd.)
Desert Star also holds the contiguous claims to the southeast of Red Top which they call Copper King. Again, under option from Eurasian Minerals, Copper King is another high-priority target which the two think could host a large-scale copper porphyry. According to surface geology on the project, a large alteration zone with the mineral assemblage of marble plus serpentine has been identified on the project. The reason that is exciting is that this same alteration formation runs through the Resolution deposit. This suggests that their project is the top or side of a porphyry system (if the geology is the same as Resolution).
“Very similar to Red Top, we would only need three or four drill holes to determine whether our thesis about the porphyry is correct,” Dr. Wainwright tells me. “Unlike Red Top, where the signature would be masked due to sulphides at surface, a geophysical program on Copper King would work well.”
The county line separating Pinal and Gila Counties in Arizona broadly corresponds to a large fault which separates two geological panels. On the Pinal side are intact copper porphyry systems such as Resolution. On the Gila side, where their Copper Springs project sits, are copper porphyries which have been dismembered and laid horizontally by subsequent faulting. So the mines there represent pieces of once intact copper systems. Mines located here include Capstone’s Pinto Valley mine and Freeport’s Miami-Inspiration deposit.
BHP drill rig positioned near North East corner of Copper Springs (Image: Desert Star Resources Ltd.)
In this area, the copper porphyries are like tipped over dominos pieces which have a top, middle and bottom which now lay horizontal. These are called the roof (top), core (middle) and roots (bottom). In the roots would be the lower grade, large tonnage parts of the system. The best grades and tonnages typically come from the core and the highest-grade, lowest tonnage deposits would be found in the roof. The Miami-Inspiration deposits are typical of core deposits.
“What we have is the largest footprint of the root and roof system in the area and we (Desert Star) own the land above where the core system should be,” explains Daniel. “In the 80’s, there was a rush to Chile and Southern Peru so this theory has yet to be adequately tested in this area.”
Eurasian’s former partner on the project actually drilled two holes in that northeast corner. The company lost one of the holes and drilled the other to 596m then ran out of money. Luckily for Desert Star, that company left the casing in the hole.
Alan explains, “we will have to drill about 1,000m to get through the basin fill and overburden and to hit bedrock. But what we have on the project is one hole that is over half of the distance there already.”
Due to the financial risk associated with drilling to these depths, the company believes this project will be best served under joint venture with a major. Any number in the area could be interested in such a deal.
The Oro project is located in southwestern New Mexico on the most eastern flank of the Laramide belt. It is under option from Southern Silver and Desert Star can earn up to a 70% interest. Unlike the other two projects in Arizona, Oro is not located adjacent to any major mines, but the Daniel and Alan tell me the same age rocks exist there.
“We believe this area is under appreciated,” MacNeil says.
The project has an interesting alteration footprint that measures over 3km long and offers two targets that they believe are consistent with the roof of a copper porphyry system. The target is also littered with oxidized sulphide veins that hold copper-gold mineralization. Both Kennecott and Southern Silver have drilled the project in the past, with Southern Silver drilling in 2010. According to Mr. MacNeil, neither Kennecott nor Southern Silver tested the right portion of the system (NOTE: Kennecott was trying to test for porphyry mineralization, Southern Silver was looking for gold rich replacement mineralization).
“The gross geochemical zonation on this project actually, we think, looks a fair bit like Bingham Canyon,” Dr. Wainwright tells me.
Another interesting area on the property is what they call the Stock Pond. This target has vein densities that would be typical of a bulk tonnage oxide gold system and they have sampled up to 4.8g/t gold at surface. The two are planning on trenching this area although the prize remains the larger copper-molybdenum or copper-gold porphyry.
Barrick’s Ruby Hill mine is within 10km of the Anchor project (Photo: Douglas C. Pizac/AP)
The Anchor project is located at the south end of Diamond Valley, Nevada and is roughly 10km northwest of Barrick’s Ruby Hill mine at the end of the known Battle Mountain-Eureka trend. Located to the northwest is Barrick’s Cortez mine which produces over 1 million ounces of gold per year and hosts over 15 million ounces of 2P gold reserves. Desert Star can earn up to 70% interest in the Anchor project from Mark O’Dea’s Pilot Gold (PLG:TSX).
“Nevada is a great place to have a mine,” says Dr. Wainwright.
The Anchor project is surrounded by the necessary infrastructure including highways and power. Barrick’s Ruby Hill mine can be seen from the Anchor property. The project has the same geological characteristics as any of the major Carlin-style deposits in Nevada including Goldstrike (70 million ounces of gold discovered, to date).
“The project itself is a very classic set up for Carlin mineralization. What we have is a 600m by 400m surface footprint consisting of up to 1g/t gold,” MacNeil tells me.
The project has been the focus of drilling which has only been to 250m depth. The two at Desert Star believes what has been drilled on the project so far is not actually the exciting material. They believe the target is a deeper high-grade, large tonnage Carlin ore deposit.
“Below the focus of the previous drilling, is the ‘Devil’s Gate’ which is a carbonate debris flow and represents the rock that hosts most of the gold in Nevada,” Dr. Wainwright explains.
For Anchor, Desert Star is planning two to three 600-750m drill holes to test the Devil’s Gate.
With the exception of Copper Springs, Desert Star’s plan is to drill two to four deep holes on each of their projects. Due to the depth and challenges associated with drilling Copper Springs, MacNeil and Wainwright see that project as being an ideal project for a well-funded major. They would look to joint venture it to them.
Recently Brent Cook, an economic geologist and the editor of Exploration Insights, added Desert Star to his 2014 watch list, stating, “Very strong deep drill conceptual plays in the right place.” Note this was not an investment recommendation by Mr. Cook.
At the end of our conversation, MacNeil explained, “a lot of guys ask us what our favorite project is, and the reality is it changes every day. We are in great shape.”
Here’s Desert Star’s chart:
DSR data by YCharts
Please visit their website for more information: http://www.desertstar.ca/s/home.asp
Travis McPherson, CEO.CA, Vancouver, Canada
Disclaimer: Author has a financial interest in Desert Star Resources and the company is an advertiser, therefore the article is not to be considered unbiased and fully independent. Please read Desert Star Resources Ltd.’s Cautionary Statement Regarding Forward-Looking Statements’s carefully.
All statements in this report, other than statements of historical fact should be considered forward-looking statements. These statements relate to future events or future performance. Forward-looking statements are often, but not always identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. Much of this report is comprised of statements of projection. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Risks and uncertainties respecting mineral exploration companies are generally disclosed in the annual financial or other filing documents of those and similar companies as filed with the relevant securities commissions, and should be reviewed by any reader of this article. In addition, with respect to any particular company, a number of risks relate to any statement of projection or forward statement.
Nothing in this article should be construed as a solicitation to buy or sell any securities mentioned anywhere in this newsletter (specifically in regard to Desert Star Resources Ltd.). This article is intended for informational and entertainment purposes only! The author of this article and its publishers bear no liability for losses and/or damages arising from the use of this article.
Be advised, Pacific Website Company Inc., CEO.CA and its employees are not a registered broker-dealer or financial advisor. Before investing in any securities, you should consult with your financial advisor and a registered broker-dealer.
Never, ever, make an investment based solely on what you read in an online newsletter, including CEO.CA’s online newsletter, or Internet bulletin board, especially if the investment involves a small, thinly-traded company that isn’t well known.
Pacific Website Company Inc., owner of CEO.CA, its officers, directors, employees, and consultants shall not be liable for any damages, losses, or costs of any kind or type arising out of or in any way connected with the use of its products or services, including this article. Pacific Website Company Inc., owner of CEO.CA, its employees, consultants and affiliates are not responsible for any claims made by any of the mentioned companies or third party writers. You should independently investigate and fully understand all risks before investing. We want to remind you again that CEO.CA is often paid editorial fees for its writing and the dissemination of material. The clients represented by CEO.CA are typically development-stage companies that pose a much higher risk to investors. When investing in speculative stocks of this nature, it is possible to lose your entire investment over time. Please recognize that we are extremely biased when it comes to Desert Star Resources Ltd.
Pacific Website Company Inc. and CEO.CA (including its employees and consultants) are not chartered business valuators; the methods used by business valuators often cannot justify any trading price for most junior stock exchange listed companies.
Any decision to purchase or sell as a result of the opinions expressed in this report OR ON CEO.CA will be the full responsibility of the person authorizing such transaction, and should only be made after such person has consulted a registered financial advisor and conducted thorough due diligence. Information in this report has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Our views and opinions regarding the companies we feature onCEO.CA and in this newsletter are our own views and are based on information that we have received, which we assumed to be reliable. We do not guarantee that any of the companies mentioned in this newsletter (specifically Desert Star Resources Ltd.) or on CEO.CA will perform as we expect, and any comparisons we have made to other companies may not be valid or come into effect.
Pacific Website Company Inc. is a distributor (and not a publisher) of content supplied by third parties and subscribers. Accordingly, Pacific Website Company Inc. has no more editorial control over such content than does a public library, bookstore, or newsstand. Any opinions, advice, statements, services, offers, or other information or content expressed or made available by third parties, including information providers, Subscribers or any other user of The Pacific Website Company Inc. Network of Sites, are those of the respective author(s) or distributor(s) and not of Pacific Website Company Inc. Neither Pacific Website Company Inc. nor any third-party provider of information guarantees the accuracy, completeness, or usefulness of any content, nor its fitness for any particular purpose.
Pacific Website Company Inc, owner of CEO.CA, does not undertake any obligation to publicly update or revise any statements made in this report.
The information contained in this content is not an offer to buy or sell securities. Do not base any investment decision upon any materials found in this content. We are not registered as a securities broker-dealer or an investment advisor either within any securities regulatory authority. We are neither licensed nor qualified to provide investment advice. The information contained in this content is for informational and educational purposes only and is not intended to be used as a complete source of information on any particular company. Neither the information contained in this content, nor in any other place, is provided to any particular individual with a view toward their individual circumstances and nothing in this content should be construed as investment, business, or other professional advice. We are committed to providing factual information on the companies that are profiled. However, we do not provide any assurance as to the accuracy or completeness of the information provided, including information regarding a profiled company’s plans or ability to effect any planned or proposed actions. We have no first-hand knowledge of any profiled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no attempt to do so.
Individuals should assume that all information contained in this content is not trustworthy unless verified by their own independent research. Information contained in this content will contain “forward looking statements.” These forward looking statements are subject to a number of known and unknown risks and uncertainties outside of our control that could cause actual operations or results to differ materially from those anticipated. Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company’s most recent reports or registration statements filed with the appropriate regulators. You should consider these factors in evaluating the forward looking statements and not place undue reliance upon such statements. To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided in this content, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to, lost profits, loss opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information). Any individual who chooses to invest in any securities should do so with caution. Investing in securities is speculative and carries a high degree of risk; you may lose some or all of the money that is invested. Always research your own investments and consult with a registered investment adviser or licensed stock broker before investing. We will not be responsible for the success or failure of any individual or entity which implements information received from this content.