Project overview - Delta acquired the Delta 1 project in 2019. When we talk about where is the optimal location for a mine, it can’t get any better then Delta 1. Located 50 km west of Thunder Bay Ontario, right along the Trans-Canada highway. With 2 power lines running through the project and a additional high voltage power line planned. Rail lines near by, on a topographic high with some logging done in the area all helps at reducing the cost to eventually put this project into production one day.
Since the acquisition of the project Delta has doubled the land position to 107 km2. A large land package isn’t always a great thing if it doesn’t have much to work with. The Eureka zone is the name of the zone Delta has been drilling out since 2019. Located at the contact between the Shebandowan clastic metasedimentary rock assemblage to the north of the Trans Canada and the Greenwater mafic to intermediate metavolcanics assemblage to the south. The Eureka zone looks to be about 4.5 km along this contact zone. Seen in the figure below with the yellow meets the green on east side of property where the Shebandowan shear zone is.
Drilling - When we talk about value added for shareholders we look at how do you get the most bang for your buck per say. In exploration the drill bit does the talking.
Since 2019 Delta has drilled 86 holes for a total of 26,288 meters with an ongoing drill program of up to an additional 8,000 meters. The Eureka zone has been defined for 2 km by 250 m deep and anywhere from 10 to 100 m widths. All the drill results can be found on Delta’s website https://www.deltaresources.ca/delta-1-gold-project/ using this link and scrolling down to bottom of page. The zone is right from surface and is shaping up to be a large tonnage, low grade mine. Some estimated resources that are non 43-101 compliant have been run on the zone ranging from 1.25-2.2 million ounces @ 1.1-1.4 g/t using a traditional 0.3 g/t cutoff and 10 g/t cap for an open pit mine.
Drilling cost for Delta is $250 all in. 26,288 x $250 = $6,572,000 for drilling so far. So to define lets say a 1.5 million ounce resource that’s $4.4 an ounce per meter. Obliviously their is additional costs but that is pretty good bang for your buck. The question then becomes how confident can you be with the resource while drilling low meters for a decent sized resource.
This is where continuity in the ore body plays into it. Looking at results their are some high grade intercepts, for example 1 m @ 1636 g/t but for the most part the ore body grades pretty consistent between 0.3 g/t to 2 g/t. This allows one to be pretty confident on numbers and relatively easy to calculate a resource estimate because of this.
Comparing drilling technique to different deposits. Patriot Battery Metals has been able to define the largest lithium resource in the America’s with relatively little drilling. This has been due to the system being very consistent throughout. The Fruta del Norte discovery when first discovered had very little drilling to define a high ounce ore body.
Then their is the inconsistent systems for example Great Bear Lake/Kinross Dixie project or New Found Gold’s Queensway project in Newfoundland. Where grid drilling on the order of 10 m x 10 m is needed to be confident in what the resource actually is because of the high grade to low grade variability in it. In Keats main zone from the technical report the average grade is 0.64 g/t. With 3.91% of the 114,000 m drilled grading above 1 g/t. This is with no cutoff or cap from what I understand. Where a vein type (inconsistent) system compared to a stockwork (more consistent) of veins/veinlets plays into it.
Delta is and will continue to do some infill drilling to confirm and gain confidence in the resource they are drilling out. The number of meters will be a lot lower then most deposit to be confident in what they have in the ground.
Economics looks very good for the project with the location and infrastructure near by a marginal cutoff grades ranging from 0.25-0.4 g/t is very reasonable comparing with similar projects in the area.
Near term catalyst - Delta is just finishing up a 8,000 m winter/spring drill program. 1,371 m of that program have already been reported with one hole returning 10 m @ 15.94 g/t. The next 6 holes look to be positioned in some really good spots to fill in some gap’s in the resource and test at depth.
Holes 91, 94 and 95 will be testing just below the likes of 128.5 m @ 1.79 g/t, 162.8 m @ 0.97 g/t, 238.2 m @ 0.55 g/t, among other long intercepts. Holes 92, 93 and 96 look to be testing up dip and down plunge of the discovery hole on the project that graded 31 m @ 5.92 g/t. Don’t know exact angles they where drilled at but for general location holes 91, 94 and 95 will be located in the right circle and holes 92, 93 and 96 in the right circle in the figure.
Last year Delta used the approach to just keep stepping out eastward with decently wide stepouts. They achieved great success doing this until it came to the so call deep blue area. They have been drilling the contact mentioned before but also drilling along a magnetic low. Magnetic surveys can be a handy tool in some cases and not in others. They give you an indication of altered rocks from magnetite to something else. In Delta’s case you can see the alteration tracks right where the ore body is. In theory the deep blue area in the figure below should have more intense alteration away from the magnetite into mineralization. When testing it last year some indications pointed to the ore body being there but not quite the results everyone was hoping for. Why was this?
This is where it gets interesting, Delta drilled hole 90 (this winter) that was mentioned before that graded the 10 m @ 15.94 g/t. What is interesting about this hole is that it looks like the ore body has rotated away from a step dipping body to the north to a shallow dipping body to the south. This is thought to be caused by a cross fault seen in the figure above that looks to have rotated the body anywhere from about 45-70 degrees to the south. When they drilled it last year it was at a shallow angle from the north, pretty well drilling down dip of the ore body from the looks of it. Delta most likely will flip the drill around and drill it from the south across the new interpreted ore body. This drilling I believe is taking place this month.
One more very interesting thing about the eastern extension that stretches still for another 2 km or so is a IP survey that was completed at the end of last year. In this survey you can see that again the ore body lines up very well with the IP anomalies. This makes sense since IP survey’s are very good at targeting quartz, pyrite and arsenopyrite which Delta’s mineralization contains. You can see that their is a large (which looks to be about 1 km) target to the east. This coincides with the lowest part of the magenetic low as well as a cross shear (left yellow line in figure below) zone that looks to go across this anomaly.
Property wide exploration is expected in the summer. In the first figure you can see Delta controls another 10-15 km of strike of this contact zone on the west side of the property. Some prospecting has been done in the area but only a couple holes has ever been drilled on that side of the property. The drilling was done back in the day before Delta acquired the project and was looking for other materials.
In the two figures below the first being samples from the Eureka zone and the second being samples from the west side of the property you can see some similarities between the two. Combine this with the knowledge of how to use magnetic and IP surveys to their advantage it should be easier for them to target a satellite ore body on this side of the property.
The land Delta acquired last year also contains a southern shear/fault zone contact that looks to stretch about 10 km. Portfino Resources holds land just to the west of Delta and has drilled a couple decent holes grading 41 m @ 4.32 g/t and 20.42 m @ 4.36 g/t. Also seen in the map below from Sky Gold their are prospects all along it.
Delta looks to control 30-35 km of strike along these two zones on the property and really only 2 km has been thoroughly explored. Even with relatively little exploration Delta has proven up a decent sized resource that is only going to get larger with potential satellite deposits on other parts of the property.
Price Evaluation - Delta is sitting at around an $18 million market cap with around $3.5 million in cash when the winter/spring program is completed. If comparing with other projects with similar grades a $40-60 an ounce is very reasonable price point. Very hard to compare location and infrastructure for a mine one day to Delta so a credit has to be given there. Add on what looks to be a very promising gold market coming and to potential the project still has their is lots to look forward to in the near future for Delta shareholders.
Disclosure: I have a beneficial long position in the shares of one or more of the companies discussed in this article, either through stock ownership, options, or other derivatives. I wrote this article without external assistance, and it expresses my personal opinions. I was not compensated for this article, and I have no business relationship with any company whose stock is mentioned in this article.
