Mega Precious Metals Inc., a junior mining company based in Thunder Bay, is taking a big gamble on a single, 3.0-kilometre drill hole two kilometres from the Goldcorp Red Lake Gold Mines High Grade Zone in Red Lake, Ontario. "It's a win or lose gamble," admits Mega Precious Metals' president and CEO Jim Rogers, but somewhere in the calculation of the odds, Rogers' 20 years of experience in Red Lake has to be taken into consideration.
Formerly chief mine geologist at the Dickenson Mine and then regional exploration manager for Goldcorp's Red Lake operation, Rogers knows and understands Red Lake's geology better than just about anyone. He was chief geologist for Goldcorp when the High Grade Zone was discovered and, over the years, has thought long and hard about the possible extension of the zone onto neighbouring properties.
Rogers was appointed president and CEO of Mega Precious Metals when it was formed in May 2009 from a combination of Mega Silver Inc. and Skybridge Development Corp. At the same time, Ewan Downie, president and CEO of Premier Gold, a junior miner with several projects in the Red Lake area, was appointed chairman of Mega Precious Metals.
Headway
The company immediately put out feelers and, in October 2009, was able to announce a definitive agreement to acquire a 100 per cent interest in the Headway property from King's Bay Gold Corp. Terms of the staged three-year option agreement between Mega and King's Bay include cash payments totalling $460,000, issuance of 4,425,000 common shares of Mega and project expenditures of $3 million. A net smelter royalty of two per cent is payable to the initial vendors of the property.
The Headway property, consisting of six patented claims and one unpatented claim totalling approximately 320 acres, appears to have a well-developed intersection pattern of stratigraphic, shear/deformation zones that are associated with the high grade gold system on the adjacent mine properties.
A Layne-Christensen diamond drill was on the Headway property within two weeks of finalizing the deal. It's a deep theoretical target - somewhere between 1,800 and 2,500 metres from surface, and will cost $1.2 million for the one drill hole.
By collaring the hole at the property's southern border and corkscrewing down from the 1,800-metre level to the bottom of the hole, Mega Precious will be able to test more ground.
"If we hit something in the first hole, we'll easily spend the $3 million in the first year," said Rogers. "We'll start wedging and start another drill and will very aggressively test any high-grade zone we find. We already know that Goldcorp is planning to drive a five-kilometre tramway to the Gold Eagle property's Bruce Channel discovery, so two kilometres is nothing," said Rogers.
The junior miner expects to know by April or May if the hunch pays off.
"In terms of geological theory, it should be there, but whether it is or not, I don't know," said Rogers.
North Madsen
Mega Precious Metals has also negotiated options on several other properties in the Red Lake gold camp. In February 2009, the company concluded an option-purchase agreement with Mosquito Consolidated Gold Mines Limited to earn a 100 per cent interest in the 240-acre Laverty property 1.5 kilometres west of Red Lake, and in June 2009, a deal was struck with Premier Gold and Sabina Silver to acquire a 100 per cent interest in the contiguous 320-acre East My-Ritt property.
The Laverty and East My-Ritt claims together comprise Mega Precious Metals' North Madsen project and are contiguous with three former producing mines with historic production of 680,000 ounces of gold.
Mega Precious Metals has concluded a deep penetrating geophysics program on North Madsen and outlined a dozen targets on the property, three of which have been tested by trenching and drilling.
The objective, according to Rogers, is to find a half dozen or so 50,000-ounce pits in the 3 g/t range. Mega expects to complete a NI 43-101 resource on the Laverty Dyke Zone by April 2010.
While Mega Precious Metals is primarily focused on Red Lake, the company also has the Blue Caribou copper-moly project in the Kitkmeot Region of Nunavut. The company has an NI 43-101 mineral resource of 2.77 million tonnes of 2.82 per cent copper, 0.06 per cent molybdenum, 31.26 g/t silver and 0.20 g/t gold on the property and will spend "a couple hundred thousand dollars" on it during the first half of this year.
Also among its assets is a recently acquired 17 per cent stake in Rolling Rock Resources, a junior miner with two gold exploration projects in northern Manitoba.
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