Evolving Gold In The Middle Of The Action In Nevada

Swordfish Extension Zone Drilling
Could Soon Cause Stock to Rally

Exploring for High Grade, Vein-Hosted Gold Deposits

By James Finch,
Contributing Editor

Encircled by nearly 20 gold mines in one of the world’s most prolific gold-producing regions, Evolving Gold may be in the pole position for the Sleeper Success Story of 2006. Surrounding Evolving Gold’s Winnemucca Mountain gold property are world-class gold mines, such as Glamis Gold’s three-million ounce Marigold mine, Newmont Mining’s Lone Tree Complex and Twin Creeks, and Barrick’s Goldstrike high-grade ore body (discovered in 1989, producing since 1986, and with existing reserves of nearly 3 million ounces – having produced more than 560,000 ounces in 2004). Evolving Gold’s Winnemucca property is approximately 30 kilometers from the historic Sleeper gold mine, once one of the Western Hemisphere’s highest grade gold mines.

According to the U.S. Geological Survey website, Nevada accounts for approximately 64 percent of U.S. gold production and nine percent of the world’s total gold production. The state of Nevada is the world’s third largest gold producer, behind two countries: South Africa and Australia. The Battle Mountain-Eureka gold trend has produced more than 23 million ounces of gold over the past 30 years, second only to the Carlin trend. It is one of earth’s premier hunting grounds for gold.

Welcome to Humboldt County, Nevada! Four gold producing mines reside in Humboldt County, including the Getchell, Marigold, Lone Tree and Twin Creeks mines. Dramatic discoveries of high grade gold deposits in the Battle Mountain-Eureka gold trend have significantly expanded the potential of this area. And that may explain why yet another gold deposit could be discovered in Humboldt County in the near future – this one may be at Evolving Gold’s Winnemucca Mountain property.

One significant gold intersection during Evolving Gold’s field program, anticipated later this year, might become a welcome holiday present for early investors who realize the potential of this company’s story. Eight gold mines are within 25 miles of Evolving Gold’s Winnemucca property; another 10 are within 50 miles. In a recent newspaper article, Dr. Lawrence Dick, Evolving Gold’s Chief Executive, explained his company’s mission, “We look for world class ore bodies in districts, which already have world class deposits.” His decision to pursue drilling at the Winnemucca Mountain property makes sense in that context.

Comparable Mineralization

According to a Geological Report on the Winnemucca Mountain Property, published on January 20th of this past year, geologist Harmen J. Keyser wrote, “Known mineralization is typical of low-sulfidation epithermal sediment- and volcanic-hosted gold deposits found elsewhere in northern Nevada.” Keyser cited examples such as the nearby Sleeper mine, which produced 1.68 million ounces of gold and 2.3 million ounces of silver between 1986 and 1996, and the Midas, which produced 3.7 million ounces of gold.
Geologically, the Battle Mountain-Eureka trend is defined by a northwest-southeast diagonal. If one were to plot the nearby gold mines along such a hypothetical geological line, one would instantly observe the Sleeper, Sandman, Ten Mile, Marigold and Battle Mountain along that northwest-southeast transverse.

In fact, there may be kinship between the former Sleeper gold mine and Evolving Gold’s Swordfish zone. In an October 1989 monthly activity report, written for Santa Fe by geologist W.A. Hodges, “The Swordfish zone within the Winnemucca Mountain system is more continuously developed over a much greater thickness than is the Sleeper system.” Evolving Gold director, and one of the company’s geologists, Dr. Chris Osterman told STOCKINTERVIEW.COM, “The drilling that’s already been done has already suggested there is something worth looking at.”

Drilling To Test Vertical Dipping Structure
But despite the excitement of its exploration team, Santa Fe stopped drilling for gold on the Winnemucca property in the late 1980s. STOCKINTERVIEW.COM asked CEO Dr. Lawrence Dick for an explanation. “It’s hard to imagine, but that’s the case with many properties held by majors,” he responded. “They have to priority rank their projects, just like any other company has to. If you read the reports, they were certainly excited about the similarities of Winnemucca Mountain to the Sleeper deposit. That’s what we’re aiming at. That’s our target. But they never went forward.”
Well then, why didn’t Santa Fe move forward with Winnemucca? “More often than not, properties are explored several times before discoveries are made,” Dr. Dick pointed out. “That’s because any one group coming in will explore with a certain conceptual model in mind. Another group coming in will pick it up because they can see it from another model point of view.” But more than 70 vertical, reverse-circulation holes were drilled on the Winnemucca Mountain property. What did they miss? “They were looking for low grade disseminated gold,” Dr. Dick responded. That sums up many of the proven Nevada gold deposits: bulk-tonnage, open pit, low grade gold. “That’s not what we’re looking for,” he argued.

Dr. Lawrence Dick described why the model that Santa Fe used during their drilling led to disappointment, “Most of the drilling done in the past was vertical holes. That’s very difficult to hit in a nearly vertically dipping structure.” And that may account for why Santa Fe dropped Winnemucca from their priority list, he analyzed, saying, “They were looking at it from the point of view of an open pit deposit. The higher grades coming in at depth were uneconomic for an open pit.”

Feeder Zones and Angular Drilling May be the Key
to a New Discovery

If Santa Fe used the wrong model, how will Evolving Gold’s exploration team succeed?

The CEO defined exactly what the exploration hopes to find, “We’re looking for a high grade, vein-hosted gold deposit, much like the feeder zone at the Sleeper deposit.” From the time Santa Fe drilled Winnemucca Mountain until now, numerous low grade deposits were found to have feeder zones into them comprised of much higher grades of gold. “Most of their structures are veins,” he said. “You can only explore for those types of deposits by drilling angle holes and, normally, core holes.” Why is his model more than just speculative, wishful thinking? “There is one drill hole that was put 500 meters to the north of the intensely drilled area – the Swordfish Extension Zone – that intersected five feet of over two ounces of gold per ton,” Dr. Dick responded. “That hole has never been followed up. It actually went through a quartz vein, which hosted the gold. This is exactly what we are looking for.”

He laid out his exploration plan, “Our objective is to follow up along the structural trend, looking for extensions of high grade, structurally controlled gold. We’re not drilling for bulk-tonnage of one gram of open pitable reserve. This is the type of deposit that you would access by a vertical shaft, much like the high grade deposits in Canada. These are all underground mines, accessed by an external shaft and mined to thousands of meters to depth, and running on the order of half an ounce per ton.”

What Would Make This an Economic Gold Deposit?

Dr. Lawrence Dick hopes to find at least one high-grade feeder zone on the Winnemucca property. How substantial of a deposit would make sense for this nascent minerals exploration company? “We’d be looking at something that would be on the order of one kilometer long, about two meters wide, and a thousand meters deep,” he clarified.

What would investors be looking for, after the first round of drilling, to see if this could become an economic gold deposit? Dr. Dick made it very plain, “What we would want to see is a number of, say four or five, intersections of good, solid vein-hosted mineralization – a number of intersections of five to seven feet in width, grading on the order of one-half an ounce per tonne, or higher. That would be certainly enough information to go beyond and carry on.”
The veteran exploration geologist explained why such a discovery would be important. “For example, the intersection of five feet of two ounces would certainly be an economic intersection,” he said. “In Canada, for example, most of the veins of gold deposits that have become underground mines are normally running on the order of 0.3 to 0.5 ounces per ton over 1.5 meters to two meters width. This can constitute an economic grade for these deposits.”
So how far along is Evolving Gold, which recently began trading on the U.S. over the counter bulletin board? “We finished the data compilation,” announced Dr. Dick. “We are constructing a three-dimensional model of the mineralization that Santa Fe intersected. We’ve been on the property. We’ve done geological mapping. We are going to drill.”