Redstar Gold (RGC.V): Cashed up high grade district gold exploration play

In some places gold is disseminated through porous rocks, in other places it is mixed with other metals in specific rock layers, and in others yet it sits tucked away inside structures – faults, veins, cracks that created room for the yellow metal to deposit.
If you are looking for gold in that last kind of place, in a geological terrain where structure is in charge, the first step is finding structures.
Then you need to find out if they carry gold.
If they do, the hardest part of the process is over and the question becomes: how much gold do the structures contain?
With a methodical approach and a stellar project, Redstar Gold (TSXV: RGC) has made it past those first key challenges and is now onto the big question of How Much?
First they bought out a number of fractured property owners to create a 240-sq. km land package that is easy to access, not only with a one mile long paved airstrip at site, and a deep sea port facility, but also brimming with geological potential. Central to that potential: previous prospectors had identified not one but two nice big structures with the potential to carry gold. And of note, the first underground high-grade gold mine in Alaska’s history operated on the Unga Island nearly 100 years ago next year.
So Redstar’s first move was to drill test one of those structures. Drills hit high grade gold.
Their next drill effort doubled the strike of the gold zone indicating continuity of mineraliztion at surface, and to add extra strength indicated that it extended consistently to depth, and in addition returned some rocks that suggested the opportunity continued to the southwest end.
Most recently, they ran ground mag and IP to see how far the structure went and found it indeed continues a long ways to the southwest, and is shadowed by the discovery of a prospective parallel hidden gold zone and splay structures in several spots along strike. Not better to find more gold zones next to known gold zones.
Now they are preparing to drill once again in May 2017. With all that work confirming their geological model, they are now pushing forward with their largest program to-date, going big, with multiple-phase drill program, adding drill rigs and generating lots of ideas that deserve attention.
It could be “the” breakout season for Redstar Gold.

The Unga project’s namesake island is one of the Aleutian Islands, sitting just south of the Alaska Penninsula about 600 km southwest of Anchorage. While that location sounds extreme it is, in fact, not: the climate is temperate and the deepwater port at the nearby town of Sand Point never freezes over. The average temperature from November 2016 to January 2017 was actually warmer than Vancouver BC.
It’s long been known that there’s gold on Unga Island. Alaska’s first underground gold mine was there, an operation that churned out 150,000 oz. gold from rock averaging 10 g/t, and underground stope widths that averaged 6-8 metres. That mine tapped into the upper, oxidized part of a low sulphidation epithermal gold system, likely similar to others lined up along the Pacific Rim from eastern Australia to Japan, Russia, and western North America.
“Likely” because the deposit underneath that oxide zone was never explored. At least, not until Redstar came around.
Redstar’s team are experts in epithermal gold and Alaska. When the opportunity to consolidate the ground at Unga arose, they jumped. Those efforts consolidated a 240-sq. km land package that hosts dozens of showings. Redstar invited world reknowned epithermal expert Dr. Jeff Hedenquist to the project in the summer of 2016 and his 40+ page report gave it a “thumbs up” comparing it to other global multi-million ounce gold mines, or exploration projects.
Most of those showings sit along two parallel trends: Shumagin and Apollo-Sitka.

Redstar map

The old Apollo mine sits in the middle of the southern trend. Miners worked where the mineralized structure outcropped, but a series of targets along strike in both directions suggest the structure continues. The southern trend is noted to contain high sulphides at depth, and most likely the reason the miners from 100 + years ago left. Today, metallurgically speaking, the mineralization at depth is easily tackled or likely can be extracted. The northern trend (Shumagin), where Redstar is currently focused, is barren of sulphides, or only traces or less than 1% has been noted in the drill core.
And structure is what matters here. The Shumagin trend tracks a similar structure – and Redstar has already proven it too hosts high-grade gold, with a hotable 5-1 silver/gold ratio – which in regards to future potential mining is always good to have positive credits that could offset any mining costs per tonne.
Redstar’s drill program at Unga tested the Shumagin structure. The results were impressive, with intercepts like 202 g/t gold and 82 g/t silver over 1.9 metres, 11.8 g/t gold and 72.7 g/t silver over 7.3 metres, and 15 g/t gold over 29.6 metres.
That first program outlined a Shumagin zone striking 500 metres, reaching 200 metres depth, and averaging 7 metres width. The next drill effort was designed to grow that – and so it did.

Redstar map 2

The Shumagin zone long section before the 2016 drill program (above) and after it (below).

Redstar ,ap 3

The small program – just seven holes – pulled gold-silver intercepts in every hole, with notable double digits gold intersections in a few holes. Five holes tested the Bunker Hill target to the east and returned short gold-silver hits, including 1.5 metres of 17 g/t gold and 13 g/t silver and 0.9 metres of 11.7 g/t gold and 16 g/t silver.
By connecting Shumagin and Bunker Hill, Redstar grew the known gold-bearing structure by 300 metres. The other two holes grew the strike by 400 metres to the southwest and pulled the mineralized envelope as deep as 330 metres.
Moreover: the deepest holes returned some of the best gold grades, suggesting the system might strengthen at depth, and the holes testing for southwest strike extensions returned rocks that suggest very strong hydrothermal activity (eruption breccias, if that means anything to you).
Both of those points matter. Structural gold deposits are best when they strengthen with depth. And when you add together the highly prospective rocks drilled southwest of the zone and results from mapping and sampling, the result is strong potential for the mineralized structure to continue for another 3 km from Shumagin to Orange Mountain. Orange Mountain is another highly prospective target to be potentially discussed in another report, noting the fluids from across the northern trend have been interpreted to come from Orange Mountain or “mother” as she is known as internally at Redstar. Mother for the main intrusion that eventually populated the island.
Potential is great, but drilling needs to be focused, as drilling can be expensive for any exploration company, so the more support you can gather for an idea like that the better. That is why Redstar started this year’s exploration program with the ground IP and Mag survey. The survey scanned the known Shumagin zone to define a blueprint for what gold-bearing structures look like, then it stretched ~650m southwest to Orange Mountain and northeast ~300m to the northeast past Bunker Hill. Did it light up….Yes….not you just need surface mapping/sampling and a drill bit to highlight whats underneath.
Here’s what the results showeGeophysics maps are never easy to understand, so allow me to point out the key features.

First, the surveys have tracked the Shumagin structure a minimum of 600 meters southwest towards Orange Mountain. And note: the structure doesn’t stop, it’s just Redstar wanted to proved their model that the structure continued before spending more shareholders dollars. So the southwest theory is supported and MAG and IP surveys will continue if the drill bit yields what they believe is below the surface. This vein or structure could continue for nearly 4 kms and reach Orange Mountain.
Secondly, the surveys identified a splay (vein offshoot or secondary vein) off the Shumagin structure in that southwestern area. When you’re talking structural gold, splays can be golden because they mean intersections, which can be rich, and nearby zones, which always help.
Finally, the surveys outlined a separate structure running parallel to Shumagin, about 400 metres to the north. This parallel structure bears the same fingerprint as Shumagin. That means there could be another entire structure nearby that no one knew about.
So Redstar has:

  1. Proven that the Shumagin structure hosts high-grade gold and silver.
  2. Tracked mineralization 950 metres along the structure and to 330 metres depth.
  3. Shown via geophysics that the gold-rich structure likely continues for at least 600 metres to the southwest (perhaps farther once the rest of the results come in)
  4. Identified a clear splay off Shumagin in the southwest, where drill cores show the strongest hydrothermal activity
  5. Outlined a completely new structure running parallel to Shumagin that has never been tested.

At the start, I outlined what needs to happen when seeking structurally hosted high-grade gold. Redstar has cleared all the biggest obstacles. That means the question has become: How much gold exists at Shumagin and the extension? Of special note, the vein system at Shumagin is one of 10-14 different gold zones that tally up to nearly 35 to 40 line-kms of known vein structures in the district. Thus Shumagin is just the beginning for what may lay under the surface.
The Redstar team is setting out to answer that question. Drills are going to start turning at Unga this month. The first goal: test the entire Shumagin structure and that new splay structure at the southwest end on 100-metre centres. At the same time field crews will prospect and soil sample that new parallel structure to the north, to be prepared to drill test it later in the summer.
This will be Redstar’s biggest program at Unga yet – and that makes sense, because Redstar has never known so much about the property and had so many targets to test. It took time and dedication to get to this point but now the company is looking at a busy summer that should generate lots of news – likely including further high-grade gold-silver intercepts.
And they have the cash to do it. With ~$6 millionin the bank and zero debt or current liabilities, Redstar can focus all of its attention on Unga, which is what the project deserves.
In this report I didn’t mention they own 22.2% of NV Gold Corp. in Nevada, an exploration company with John Watson, Quinton Hennigh and Odie Christensen leading the company, and Redstar also controls 30% of the Newman Todd high-grade gold project in the Red Lake mining camp. Stay tuned….

Redstar Gold is controlled ~61% by some of the top gold institutions in the gold space including Mount Everest Finance, Eric Sprott, Geologic Resource Partners, Odey Asset Mgtm, Gold2000, US Global, and Gabelli Gold. In addition, Management controls ~27% of the shares outstanding.

 

FULL DISCLOSURE: Redstar Gold is NOT an EQUITY.GURU client.

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