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Home » News » Equities » East Camp Douglas is a potential game changer for Fortitude Gold

In interviews, Fortitude Gold’s CEO Jason Reid has stated that East Camp Douglas (ECD) exploration ‘could be a company-changer’ with ‘home-run potential’.

Now, all mining companies make claims like this about their exploration, don’t they? Well, I’ve followed Jason Reid for over a decade and in my opinion, he’s balanced and realistic with his words. I believe he thinks for the long-term AND like a shareholder. So, if he’s making these statements, it’s likely worth a closer look.

Searching at Fortitude Gold’s SEC filings, we can find the following;

‘Precious metal epithermal mineralization at East Camp Douglas occurs as both widespread high sulfidation alteration areas and low sulfidation veins.’ There is also mention of a ‘very large lithocap area near the south end of the property.’

Now, the exploration announcement on East Camp Douglas released last year contained the following figure that describes lithocaps in general. Don’t be put off by the complex names, just focus on the areas that I’ve circled in red.

Fortitude Gold - lithocaps

The ‘high-sulfidation state mineralisation’ (illustrated in black) is where, theoretically, you would expect to find the gold in relation to a lithocap, and it’s the lithocap that Fortitude Gold’s geologists have initially been targeting.

So what? What’s so good about high-sulfidation gold deposits?

Well, they can be very large indeed!

The largest and most well-known is Yanacocha in Peru, which initially contained more than 50 million ounces of gold. But the Pueblo Viejo and Pascua Llama/Veladero districts are both similarly large gold systems.

Then there are multiple known high-sulfidation gold deposits between 5-15 million ounces of gold. Notice mention of the Goldfield deposit, located in the Walker Lane belt in Nevada. This is of course, where Fortitude Gold operates.

Select List of High Sulphidation Gold Deposits

DepositCountrySummary Details
+40 Million Ounce High Sulphidation Gold Systems:
YanacochaPeru+50M oz reserve/resource/past production
Pueblo ViejoDominican Republic40M oz combined district resource
Pascua/Lama/VeladeroChile/Argentina40M oz combined district resource
5 – 15 Million Ounce High Sulphidation Gold Systems
Alto ChicamaPeruDiscovery in 2002 in Peru
ChelopechBulgariaCurrently the largest gold deposit in Europe
ChinkuashihTaiwanContains high grade breccia pipes and veins
El Indio/TamboChilePrimarily high grade veins and breccias
GoldfieldUnited StatesHigh grade veins and the ‘alunite ledge’
LepantoPhillipinesHS system with FSE porphyry and Victoria
PierinaPeruDiscovered by Arequipa Resources

If we look at the high-sulfidation deposits sub 5 million ounces in size, notice Paradise Peak, also in Nevada.

Other High Sulphidation Gold Systams Containing < 5 Million Ounces:

ChoquelimpieChileEl HuesoChile
El SauzalMexicoEnasenSweden
La CoipaChileLahocaHungary
La ZanjaPeruMajdanpekYugoslavia
MotombotoIndonesiaMount KasiFiji
OsiloItalyParadise PeakUSA
RodalquillarSpainSanta RosaPeru
SeongsanSouth KoreaSipanPeru

From Thomsen: High Sulphidation Gold Deposits – A restrospective summary, March 2017

Interestingly, the Paradise Peak mine ‘produced a total of 47 metric tons of gold and 1,255 metric tons of silver’ (Sillitoe & Lorson, 1994). For those that prefer ounces, that’s 1.7 million ounces of gold and 44.3 million ounces of silver. Considering the mine only operated between 1986 and 1993, it implies that Paradise Peak produced on average 210,000 ounces of gold and 5.5 million ounces of silver, PER ANNUM. It was a heavyweight producer!

Referring to Fortitude Gold’s registration documents once again, we find the map shown below that highlights Fortitude Gold’s properties in turquoise. Paradise Peak is shown in purple, which by my estimates is maybe 50km away from East Camp Douglas. I’ve circled their respective locations in red.

Fortitude Gold Isabella Gold Mine

Source: Fortitude Gold

Finding a million ounce plus gold deposit would indeed be a company-changer!

But how likely is it that Fortitude Gold find a million ounce plus deposit?

First, I need to discuss some geology.

Lithocaps are formed when molten magma from deep in the earth, begin to move upwards. Think of the molten wax in a lava lamp. While the molten magma might make it to the surface forming a volcano, sometimes it gets stuck at depth. But hot gases and liquids can still escape from the hot magma and find their way to shallower depths through cracks and faults in the rocks. See image below:


What’s important to know is that in high-sulfidation systems this process of rising gases and vapours forms very strong acids. A research paper by Cook, White & Chang describe the process as follows:

“Acid-forming processes during vapour ascent transform the fluids into some of the most chemically aggressive hydrothermal solutions that nature can create.”

Now, when this hot rising acid reaches a layer of rock that’s permeable, it’ll start moving left and right along that permeable horizon. Notice the arrows pointing left and right in the image above. The darker green suggests an area of permeable rock, such as ignimbrite.

This acid will start leaching the rock and altering its composition. In the most aggressively attacked rock, it’ll form what’s often described as ‘vuggy silica’. A ‘vug’ in geology is simply a hole or cavity and silica is a glassy type of rock i.e. quartz or sand.

Below is an example of what ‘vuggy silica’ looks like – notice all the holes where the acid has attacked the rock!

vuggy silica

It’s crucial to understand, that at this stage, there’s likely NO gold that’s been deposited. But the lithocap has formed, comprising the argillic, advanced argillic and vuggy silica areas shown in the image below:

A secondary process is then required to deposit the gold, which will likely use the same fluid pathways that the acid used. This is how the Exploration Alliance describe the event that produces the gold.

‘The late fluid rapidly loses temperature and pressure when it reaches the vuggy silica due the abundant space, causing metals to be precipitated from the oversaturated fluids, introducing gold with pyrite.’

The areas in red in the image below suggest where the gold might be deposited.

Mineralising Event - Fortitude Gold

The reason for the geology is to help explain that a gold company can find a lithocap but that alone is not enough. The lithocap might be ‘barren’ ie there was no mineralising event that followed to produce the gold!

However, Fortitude Gold’s exploration announcement in June last year announced, ‘exploration drill results from its East Camp Douglas property’s lithocap target including 17.92 meters grading 1.29 grams per tonne (g/t) and 6.1 meters grading 1.42 g/t.

So, we know that Fortitude Gold’s lithocap is mineralised with gold!

Not only that, typically, high-sulphidation systems have lower grade than most economic low-sulphidation deposits. Look at the gold grade at Yanacocha:

High Sulphidation - Fortitude Gold

Striking 17.9m at 1.29 g/t Au from 34.9m in their first drill program at East Camp Douglas is a flying start and what you would expect to see at a high-sulphidation system!

In interviews, Jason Reid describes searching for ‘structure’ and ‘chasing mineralisation’ into the ‘throat of the system’.

By this, I believe he means finding one of the key feeder zones (circled in red in the image below) which, as he describes, could host ‘a possible large-scale deposit that could be a company changer.’

Magmatic Suphatara - Fortitude Gold

It’s too early to tell what size of deposit might be found at East Camp Douglas but the lithocap itself is large at 1.5km by 1.0km suggesting a powerful geological system was at work millions of years ago.

In exploration terms, this is high-octane, potentially company-changing exploration! But the market, in my opinion, gives Fortitude Gold little or no value for the project. The exploration results last year from East Camp Douglas of 17.9m at 1.29 g/t Au received a muted response.

Fortitude Gold is anchored with a highly profitable production asset at Isabella Pearl, a strong balance sheet (US$36.3 million in cash at 31 March 2022) and an industry leading dividend (7.1% annual dividend yield at the time of writing). They’re also bringing their Golden Mile project to an investment decision.

Maybe the market’s attention is on Isabella Pearl and Golden Mile or perhaps the market hasn’t understood the potential of the high-sulfidation gold system at East Camp Douglas?

Whatever the reason, East Camp Douglas is an intriguing project.

It’s been a while since we’ve had an update but when an update does arrive, watch out for news on finding a feeder structure. As Jason Reid has said in the past, finding the ‘throat of the system’ has ‘home-run potential!’

Disclosure: I own shares in Fortitude Gold.


This article is not investment advice. Investors should do their own research or consult a professional advisor.

Roger Breuer

Roger Breuer

Roger Breuer currently works in finance positions with Fiske Plc and Duke Royalty Limited. He has previously worked as an Investment Analyst at a large UK-based asset management company and held the same position mostly recently at Arlington Group Asset Management, a boutique financial advisory.

He is a CFA charterholder and an ACCA-affiliate.

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