Provenance Gold – Up Rich Creek!

The headline that caught my attention, while I drank my early morning coffee last week, read ‘Provenance Gold Drills 3.07 g/t Gold Over 175.26m‘. This made me read on, after all drill intercepts over 500 gramme metres (simply the grade times the meterage) are, in my books, worth investigating. The assay table for the drill hole in question reads as follows. Notice how the gold mineralisation for hole EC-01 starts from surface.

With the assay table we can look out for what’s known as grade-smearing. This is where an exceptionally high grade intercept over a short distance drags up the grade of much longer distance. But when you look at hole EC-01, there seems to be three distinctly higher grade zones (upper, central and lower) across the hole (see cross section below). From the top of the upper zone to the bottom of the lower zone, ie from 34.90m to 181.66m (approximately 150m), the hole seems particularly well mineralised. No signs of grade-smearing. I’m interested to find out more.

The news release provides an image of the drill core, which shows visible gold from around the 156m depth, part of the lower and highest grade section of the hole.

Here’s the full news release, if you haven’t seen it yet:

Project Location

On Provenance Gold’s website, I located a Technical Report on the project from 2022, which showed the location. If you look at the inset map at the bottom you’ll see the project is located at the top of Malheur County in Oregan, just north of Nevada, USA.

I’ve read a fair amount about the geology of Nevada, particularly as I follow Fortitude Gold, and so a project location in Oregan, just north of Nevada interests me.

Geological Model

Next I wanted to understand the geological model being used for this deposit. The above news release for EC-01 has a paragraph on the geology but I want to go back a step further.

The October 2022 Technical Report describes the geology as follow;

“The Eldorado Property hosts gold mineralisation and alteration patterns with similarities to porphyry gold systems (Rytuba and Cox, 1991).

In general, porphyry systems are described as relatively deep, (paleo depth of approximately 1km to 6km) low grade and high tonnage deposits composed of mineralization sourced from fluid-rich porphyry intrusive rocks. These magmas typically form during active subduction and in post-subduction environments underneath of volcanic arcs and are classified based on generative magma chemistries ranging from alkalic to calc-alkalic systems.

Alteration halos surrounding porphyry deposits can extend up to several kilometres away from the porphyry centre and are characteristic of this deposit type. Alteration in porphyry systems is governed by the temperature and pH of the fluids as they migrate away from the porphyry centre. Alteration within and immediately around the porphyry intrusive is potassic alteration with potassium feldspar, shreddy biotite, and actinolite alteration of the country rocks and the host porphyry where the system is at the maximum pressure and temperature. As the fluids migrate away from the porphyry centre, they cool and form alteration assemblages dominated by sericite and sericite-chlorite alteration.

The outer portions of the porphyry system often show chlorite-epidote-carbonate (propylitic) extending kilometres away from the mineralized porphyry centre. As the system collapses and shuts down, meteoric waters will form argillic alteration on the surface. Fluids that migrate to the surface will generally become more acidic due the change in pressure and advanced argillic alteration and a lithocap environment will form above the porphyry intrusion.

Gold porphyry systems are similar to porphyry copper deposits but are deficient and typically contain less than 1% total sulphides. Typical host rocks vary from granite to diorite. Pervasive potassic-phyllic alteration zones accompany the gold mineralisation, which is disseminated in quartz-rich stockworks, veinlet swarms, and breccias. Lower grade mineralization can occur in adjacent propylitic altered units. Tonnages for these systems are typically large, but average grades are low (<1 g/t Au), and they are distinct from other gold deposit models because of the low Cu to Au ratio and, pending the deposit, the association of Au, bismuth (Bi), tungsten (W), and/or molybdenum (Mo) (Hollister, 1992).”

In short, it’s believed to be a gold porphyry deposit. I put in the last few paragraphs as a useful reminder of a gold porphyry deposit.

Mineralization

On Mineralisation, the technical report notes the following;

“The Eldorado magmatic/hyrdrothermal system is interpreted as a classic porphyry gold system. Mineralization is controlled by strong fracture development and pyrite veining coincident with gold mineralization (Gatehouse, 1997). Pyrite veining, or its oxidised equivalent, is common in all historical drill holes. Gold is found in veinlets, stock works, fractures and hydrothermal breccias. Although pyrite is the dominant sulphide species found at Eldorado, minor chalcopyrite and lesser sphalerite, galena, pyrrhotite, and marcasite (Honey, 1989) have been identified in polished sections. Native gold with an average diameter of 72 microns, and gold enclosed pyrite crystals, were also observed in polished sections.”

Back to the EC-01 News Release

With this crash course in project geology under our belt we can go back to the discussion of geology in the recent news release;

“The core has been invaluable in providing key technical information that will assist the re-interpretation of the geological model at Eldorado and provide increased confidence in targeting additional mineralization across the property. Provenance believes that the Mesozoic diorite may be much older than the gold system and that the gold system may be as young as mid-to-late Tertiary in age. Regardless of age, it is clear that the gold mineralizing event was a lower-temperature late-stage event, which explains the exceptionally favourable metallurgy of the deposit. A later relatively sulphide and silica-free gold deposition event deposited gold or amalgam that is exposed to easy metallurgical recovery.

Provenance’s Chairman Rauno Perttu comments: “Even with our strong assays last year, we never saw any visible gold. We knew it had to be there to have produced the historic placer deposits. With the core program, we have learned much more than where the placer gold originated. We have confirmed new zones of high-grade gold that are wide open to expansion and learned that the high-grade gold is not limited to breccia zones. Even after all the historic and current work to date, this system is so extensive that our exploration is just starting.”

Metallurgy

This mention of ‘exceptionally favourable metallurgy‘ interests me. Some projects can have significant, shallow resources only to be tripped up by the challenge of extracting the metal.

The October 2022 technical report mentions the following on metallurgy:

“Historical metallurgical test work has been completed at the Eldorado Property for Ican by Dawson Metallurgical Laboratories of Murray, Utah in 1989 and for Billiton by Mountain States R&D International by Sparks, Nevada in 1990 (Dawson, 1989; Darrah, 1990).

Dawson composited five unoxidised sulphide-bearing samples into a 13.15 kg test sample that assayed 0.036 opt gold. Pyrite was found to be the most common sulphide. Approximately 90% of the gold was recovered by two-stage gravity-flotation wherein the sample was initially ground to 35 mesh and tabled. The table rejects were subsequently reground to 58% minus 200 mesh and reprocessed by flotation. Significant free gold was observed in both the gravity and flotation concentrates.

The mountain States laboratory conducted a series of bottle roll tests on composite sulphide samples from the Property. Three composite test samples yielded recoveries on unground rock that yielded 71%, 76% and 77% recoveries. Grinding increased recoveries to 92%, 86% and 83%. The laboratory stated that most of the gold was liberated at 50 to 100 mesh.

While modern metallurgical testing needs to be completed on the Property, the historical testing suggests that heap leaching of the sulphide portion of the mineralised material will produce good recoveries of gold.”

News Release Dated 7 February 2024 – Metallurgical Testing

More recent metallurgical testing considers gold recovery, presumably to a concentrate, just using gravity and flotation. This would avoid the use of cyanide but would of course lose part of the value chain to the smelter. Here’s an announcement from 7 February 2024:

Capital Structure – Warrants

With some encouraging characteristics, it’s time to take a look at the capital structure. The latest financials are for the 3 months ended 30 September 2024.

Page 17 highlights the warrants as at 30 September 2024. some of which have now expired. I’ve outlined in red the warrants that are still live as at 16 December 2024:

But there have been some more warrants issued with a recent placing. On page 21, under Subsequent Events it highlights that on 9 October 2024, 18,331,250 warrants were issued as part of a placing with an exercise price of C$0.12.

By my calculations, 69.3 million warrants remain outstanding as at 16 December 2024.

Capital Structure – Stock Options

We also have to consider stock options and as at 30 September 2024, 7.8 million stock options remain outstanding with an average exercise price of C$0.11. the following extract is from page 18 of the 3Q 2024 financials:

Provenance Gold 3Q 2024 Financial Statements

The 3Q 2024 financial statements can be reviewed below:

Oregan Department of Geology – Rich Creek!

I wanted to see if I could find any documents on the project / project area and went to the Oregan Department of Geology and Mineral Industries. I found the Eldorado project area northwest of the Malheur Reservoir. See screenshot below. Notice the creek called Rich Creek to the west of the Eldorado name. It’s an intriguing name for the old timers to call a creek!

The yellow dots with purple outlines denotes a mineral occurrence with some documentation.

The yellow circle that I’ve pointed an arrow to had the following document from 1947 discussing the Racey Prospect. Notice the assay grade at the bottom of the page. 0.25 oz/t Gold and 0.30 oz/t Silver!

Racey Prospect – 1947

Historical Work

The following news release from 1 May 2023 gives an interesting discussion of the historical work done on the property. The news release mentions that ‘Most of the historic drill holes were less than 100 meters (328 feet) deep, yet sections show mineralization continuing to even deeper than 250 meters (820 feet).’ and that ‘Most of the drilling was reverse-circulation (RC) drilling. Often, RC drilling will give lower values than core drilling under wet hole conditions. At Eldorado, abundant ground water was encountered at about 60 meters (200 feet) and the gold at Eldorado is on the surfaces of the sulfide grains where it can be washed away.’

It’ll be interesting to see what assays the diamond core drilling provides in future and whether the RC drilling has under-represented the gold content.

2023 Reverse Circulation (RC) Drill Campaign

EC-01 Diamond Drill Hole Objective

The Technical Report from October 2022 suggests that ‘gold production in the Eldorado area began in 1874’ mostly from placer gold. Further details can be found on page 16 of the Technical Report below:

Conclusion

These are just my preliminary findings on the Provenance’s Eldorado Project. There’s much more to understand but I wanted to get an initial bearing on the company and the project. The recent news release mentioned that two further diamond drill holes were at the assay lab. Here’s an extract from the release:

“2024 Diamond Drill Program Update

The maiden diamond drill hole program is now complete, with a total of 698.14m drilled over 3 drill holes. Targeting the 2023 ED-04 hole (32 meters of 3.98 g/t Au; see press release dated 18 July, 2023), hole EC-02 was drilled to a depth of 156.36 meters and finished in mineralization but was unable to reach the final target depth due to drilling difficulties encountered in a fault zone, believed to be an important mineralizing structure. Hole EC-03 (200.56 m total depth) successfully reached the same target horizon at a steeper angle than hole ED-04 and just east of EC-02 with the intent of crosscutting the mineralized fault zone intersected by hole EC-02 and continuing deeper into the mineralized fault zone. EC-02 and EC-03 cores are currently being processed.”

As mentioned previously 175m at 3 g/t Au is a drill hole that warrants attention. I look forward to further news from Rich Creek!