Headwater Gold's asset portfolio in the southwestern USA (left) and exploration model for epithermal projects (right)
Site visit to Headwater Gold's portfolio in the Southwest USA
by Joe Mazumdar
July 4, 2023
Exploration Insights visited Headwater Gold Inc.'s portfolio of low sulfidation epithermal (LSE) vein-style projects in western Nevada and along the Oregon and Idaho border.
Headwater Gold's target is to discover low-tonnage but high-grade precious metal LSE deposits suitable for acquisition by producers. The exploration model focuses on surface expressions of the system, such as sinter terraces and geysers, which are controlled by structures. These structures are interpreted to host high-grade precious metal mineralization at the "boiling zone", which can be over 150 meters below the surface.
Its projects are divided between the Walker Lane Trend of southwestern Nevada (Spring Peak and Lodestar) and a region of northern Nevada to southern Oregon/Idaho (Midas North and Mahogany).
I added the grassroots junior explorer to the portfolio after the company managed to mitigate a significant portion of the financing risks, typically associated with a non-cash flowing junior, by completing an important earn-in agreement with a major producer - Newcrest Mining - for most of its assets.
Newcrest can earn a 65% stake in all projects by investing US$145 million over 8-9 years, with a minimum expenditure of US$10 million over the next 2-3 years. The delivery of a pre-feasibility study (PFS) is required to add an additional 10% to 75%.
(Specific exploration expenditures are required for each project for Newcrest Mining to earn up to 75% of each asset. Source: Headwater Gold)
The Walker Lane Trend, which hosts their Spring Peak and Lodestar prospects, is underpinned by a hundreds-of-kilometers-long strike-slip fault, sub-parallel to the San Andreas fault system.
The LSE precious metal occurrences linked to the trend are thought to be primarily controlled by north-northwest trending strike-slip faults and north-south trending extensional faults that splay off the major structure.
(Approximate location of the Spring Peak, Aurora, and Bald Peak prospects along the western edge of the Walker Lane Belt in the limit between Nevada and California [dashed white rectangle]. Source: Map of the Mina Deflection in the central Walker Lane Belt extracted from Faulds & Henry, 2008 and Great Western Mining)
The western boundary of the trend follows the eastern edge of the Sierra Nevada range, a large rigid batholith block that, in places, defines the border with California.
(View looking west from the Spring Peak project towards the Sierra Nevada block. Source: Exploration Insights)
The Spring Peak and Lodestar properties, which constitute most of Newcrest Mining’s committed expenditures over the next 18-24 months, bookend the Aurora Vein System to the south and north, respectively. Hecla Mining Company operates the shuttered Aurora Mine, which, historically, produced 1.9 million ounces of gold and 20-21 million ounces of silver.
(Location of the Spring Peak and Lodestar projects adjacent to Hecla’s Aurora Mine complex. Source: Headwater Gold)
The junior grassroots precious metals explorer announced plans to drill up to 11,500 meters at the Spring Peak prospect in 2023, where scout drilling in 2021 discovered the Disco Zone (38 m grading 1.0 g/t Au, SP21-03) and follow-up drilling in January 2023 intersected up to 2.38 meters grading 15.9 grams per tonne gold from a vertical depth of 250 meters or more (SP22-13).
(Looking west at the Disco Zone in the Spring Peak LSE prospect [left] and southeast along the main trend [right]. Source: Exploration Insights)
A few hundred meters west, the Opal Ridge prospect hosts a ~5-meter thick sinter with textures indicative of geysers, suggesting a well-preserved system.
Drilling beneath the sinter (>200 m) revealed textures associated with an epithermal system ‘boiling level’ where precious metals precipitate, such as bladed textures resulting from the replacement of carbonate crystals by silica. Illite alteration and late hydrothermal breccias also support the exploration model, indicating a multi-episodic history and fertile system.
(Outcrop of silica sinter at Opal Ridge within the Spring Peak prospect [top left], concretionary textures indicative of a geyser at the surface of the sinter [top center], bladed calcite textures and ginguro banding typical of ‘boiling zones’ where precious metals precipitate [top right], LSE vein cross-cutting a major fault zone [bottom left], illite alteration halo enveloping an LSE vein/breccia [bottom center], and hydrothermal breccia with various clasts including veins [bottom right]. Source: Exploration Insights)
The other LSE prospects I visited (Midas North, Mahogany, and Katey) are associated with structures generated by a chain of calderas formed over the past ~17 million years from Nevada to Montana as the North American plate moved southwest over a stationary magmatic ‘hotspot’.
(Northeast migration of a string of calderas formed as the North American plate rides southwestward over the ‘Yellowstone hotspot’, generating extension zones to the south and north, like the NNR rift across Nevada and Oregon. Source: USGS and Exploration Insights)
The Northern Nevada Rift (NNR) is believed to be a deep crustal structure reactivated by hotspot magmatism, which is now interpreted to be an inclined thermal plume beneath Yellowstone National Park tracked to a depth of 500 kilometers below the surface.
(An inclined thermal plume beneath Yellowstone National Park is interpreted to be the heat source driving the generation of calderas for the past 16-17 million years. Source: Is the track of the Yellowstone hotspot driven by a deep mantle plume? — Review of volcanism, faulting, and uplift in light of new data, Pierce and Morgan, 2009, in the Journal of Volcanology and Geothermal Research)
By applying thorough mapping and sampling, Hecla Mining has generated some exploration success in the NNR with its Green Racer prospect north of its Midas processing plant.
While an unseasonal amount of rain in Nevada painted the countryside with an attractive shade of green, it prevented me from accessing Headwater’s Midas North project in northern Nevada, where the explorer plans to drill another 3,500 meters (8-12 holes) funded by Newcrest Mining starting in mid-August.
(You shall not pass. Source: Exploration Insights)
Heading north, the drive from Winnemucca to the Idaho/Oregon border passes east of the McDermitt Caldera, believed to be the first caldera generated by the hotspot about 16.5 million years ago. Interestingly, Lithium Americas Corp.’s Thacker Pass claystone lithium mine, which is currently in construction, is situated on the southern edge of the caldera.
(The eastern rim of the McDermitt Caldera near the Nevada-Oregon border. Source: Exploration Insights)
The Katey and Mahogany prospects, as well as the DeLamar project operated by Integra Resources and the Grassy Mountain project operated by Paramount Gold Nevada Corp. (NYSE American: PZG), are located within the Owyhee LSE belt, which may be associated with a deep crustal structure, north of the calderas that also generated extensive large basaltic flows, like the Columbia River (CR) Basalts.
(Location of the Owyhee epithermal belt along northwest structures that extend north of the calderas [dashed black oval], which hosts the Grassy Mountain and DeLamar projects along with the company’s Katey and Mahogany prospects. The same structures may have generated the Columbia River [CR] Basalts [dark pink]. Source: Headwater Gold and Exploration Insights)
Headwater recently announced the start of a 2,000-meter drill program at the Mahogany LSE prospect, again fully funded by Newcrest Mining, to follow up on a drill hole from 2021 (0.7 m grading 9.37 g/t Au) that tested an area that returned rock ship samples with up to 170 grams per tonne gold and 53-54 grams per tonne silver.
Structurally, the LSE mineralization is controlled by the intersection of north-south faults, like the Main Ridge fault, with northwest-trending structures. The observed gold-bearing quartz veins, which cross-cut breccia zones near the intersection with the northwest-trending structures, suggest the potential for a more robust system at depth.
(Site visit photos from Mahogany illustrating the Main Ridge Fault [top left], gold-bearing quartz veins crosscutting breccias [top right], tree fragment in sinter [bottom left], and a sinter boulder [bottom right]. Source: Exploration Insights)
Overall, while the investing climate in the precious metal sector is not sunny, I continue to hold Headwater Gold as it is actively advancing several partner-funded precious metal LSE prospects and a strong treasury, which positions it well for plenty of drill-related catalysts in 2023.
If you want to follow the newsflow and catalysts of companies in the portfolio, such as Headwater Gold, while gaining a critical and independent perspective of major themes in the mining sector, consider subscribing to the letter.
See you in the field,
Joe Mazumdar
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