December 14, 2007

Greetings investrs!

Lately I’ve been writing about a developing gold play in Ontario’s Geraldton Gold Camp, not far from the multi million ounce Hemlo discovery of 26 years ago.

I’m particularly interested in a company with workings there called Kodiak Exploration, which trades on the TSX Venture exchange under the symbol KXL. It has a discovery area called Golden Mile, located within a larger claim group called Hercules. That in turn is within a few hundred kilometers of the +22 million ounce Hemlo gold deposit:  fairly close on the map, but not ‘close’ geologically speaking. To be close in that context means to be on trend with the deposit or its host geology or system, which Golden Mile is not.

Still, results from drilling in the area of strike has been significant enough to hold my interest. 

Before I get into that I want to look at the big picture….

What Kodiak potentially has there is a handful of near-surface, parallel vein systems located within the so-called Elmhurst Lake intrusion. I’m told the Archean systems there are known for their continuity at depth, and it is extremely rare to see so many of these gold bearing ones at or near surface. 

Moreover, the discovery of the Golden Gate vein in a distal portion of the intrusion demonstrates (in the words of management) the strong potential of the entire area.

I like a few things here: First, the fact that the near surface Archean veins don’t make sense. Neither did Hemlo. In fact, the majors walked away from joint-venturing it because the geology of the discovery didn’t square with widely accepted exploration theory about gold deposits. Really big discoveries never make sense at the start.  The first group of drill holes at Hemlo came up dry.

And what about these ‘deep’ Archean vein systems? If they’re typically deep, does that mean there is potentially much more mineralization below the drilling depth, and what the geologists have exposed so far is the tip of the iceberg? Well, wouldn’t that be nice?

Second, I like management’s bullish statement about the strong potential of  ‘the entire area’. I’m not sure what area they’re referring to, whether it’s the entire Hercules claim group or Golden Mile, but I think it can be interpreted to mean ‘multiple deposits’. That’s exciting indeed!

I’ve already stated the results of Kodiak’s recent drilling there. Some assays are still pending as well.  The point is they’ve found economic grades at shallow depth within a structure that remains open, and measures a total strike length of more than 4 kilometres. That’s impressive!

So far the gold intercepts from drilling appear very short but the game is far from over; the company plans to drill a total of 60,000 meters to expand the known extent of the system and at the same time, work towards building a resource in the zones of known high-grade mineralization.  In other words, there will be some step-out and in-fill drilling along the way to try and fast-track the project towards a resource calculation. That’s bullish!

The most recent quartz vein discovery there is interesting all on its own. The 11 metre wide quartz vein coincides with one of several structures that have been indicated from the geophysical data. We’re told it contains abundant sulfides and is open in all directions. According to Kodiak, the area of strong gold potential now has geometry in excess of 30 square kilometres.

(Cont.)