It’s Yukon Time!
Shawn Ryan Jeff Phillips Mark Cullivan
Recently Resource Stock Digest’s Mark Cullivan (www.resourcestockdigest.com) sat down to discuss the upcoming exploration season in the Yukon with 2 industry stalwarts in Shawn Ryan and Jeff Phillips, and to put a spotlight on a company that should be right in the thick of things: Ethos Capital Corporation (TSX.V: ECC). The full audio interview can be accessed in the archive section of Resource Stock Digest. Following is the interview transcript.
Mark Cullivan. Today I have two guests with me and it is a very unique opportunity here. We will be discussing the upcoming Yukon season and Ethos Capital Corp.
I’m going to be chatting with Jeff Phillips and Shawn Ryan, two individuals at different ends of the spectrum as far as resource investing is concerned.
Jeff is a financial consultant for Ethos. And, as most people know well, Shawn Ryan is a household name up in the Yukon and he is responsible for the land that Ethos is currently exploring on.
Gentleman, I appreciate both of you taking your time with me today.
Jeff Phillips. Thanks for having us.
Shawn Ryan. Thanks, Mark.
MC. This is going to be an interesting discussion. I am actually going to park myself on the sideline and I want you two to have a conversation, because you come from such diverse perspectives and I want to hear what you guys have to say about Ethos and the Yukon, White Gold Camp and everything else. So Jeff, I am going to hand it over to you. Fire away.
JP. Thanks for having me, Mark. I appreciate it. I am a shareholder in Ethos and also a financial consultant to Ethos. I was involved with Gary Freeman, the president on an earlier company. I was a big financial backer of Pediment Gold, his previous company that was sold to Argonaut. We were very happy with Gary on that.
I’ve only met Shawn Ryan once. So Shawn, I appreciate you letting me ask you some questions. Shawn’s background, for your listeners who don’t know, is as you mentioned. He is quite a famous prospector in the Yukon, or for that matter anywhere. Another reason being is that Shawn’s been up there prospecting now for 12-13 years, has come up with a pretty interesting way of sampling and has generated probably 50% or more of the stake claims in the White Gold district in the Yukon.
The reason that is interesting is because there was a company called Underworld which made a major discovery in that camp and was bought by Kinross to the shareholders’ delight. There is another company called Kaminak, so in that camp it has made a very large discovery called Coffee. And what’s unique is that Shawn’s done something that most people don’t do in a lifetime. He prospected both those properties.
Why don’t you tell us a little bit, Shawn, about your prospecting methods and what led to the Underworld and Kaminak discoveries?
SR. Okay. Thanks, Jeff. The White Gold district, we developed that. It took at least eight to nine years to develop. How it all started was a systematic soil sampling program and we had to change the odds in prospecting. Instead of going after rocks, we decided to go after a deeper soil horizon, because we are in an unglaciated terrain in that part of the world, which means the glaciers never got to that corner and hence that’s why we had the big Klondike placer gold fields, where the gold is found in the gravels and the creek beds.
So I kind of figured coming from the Timmons camp that there must of have been a source nearby. So that is why we started this. And we started to go after soils instead of rocks because there are hardly any outcrops, only about 2% outcrop exposure out there. We decided to go after these deeper soil profiles. You could actually go to spots where other people tried sampling before on the surface, on the top 6 inches. It is called the B Horizon Soil Sample. There was 0 response versus if you went down 2.5-3 feet you’d find a quarter of a gram, like 200-300 parts per billion.
So we had at this point a method, and that started in about 2002. We started developing this technique of mapping these mineralized systems out. What I call a mineralized system is kind of like a haystack and we have to find these haystacks that produce these gold bearing fluids that are moving through the rock. We can map them out now quite easily with this soil program. We had to go into a method of not just taking 100 or 200 or 300 samples but taking thousands. If you took about 4,000-5,000 soils on a property, if it had a mineralized system, you could see it right away.
Then we had to go in and snoop them up, look for the needle in the haystack. And we came up with a light weight, basically helicopter portable trenching machine that we could sling in and do these shallow trenches to evaluate these soil samples and come up with drill targets.
So that is pretty well how it started. But like I say, the big thing is that it had to happen in a way that we started taking thousands and thousands of soils and developing a team that could do this.
JP. On your properties, you took thousands of soils over the years and you’ve developed this method that is unique. How many drilling campaigns went on before Underworld made the first discovery?
SR. Underworld was the first gold project. People still had a bad rumor spreading around that all the gold in the Klondike was gone into the placer gold fields; like it was gone into the gravels, eroded out of the mountains…until I developed this technique.
Once we took about 5,000-6,000 soils on the White we could see this mineralized system quite well. Once we went and did the shallow trenching program on it and outlined some targets, on the 4th hole that we drilled on our second target, they nailed the Golden Saddle Zone. It was about 18.5 meters of 4.5 grams. That was the start that these mineralized systems still existed south of the Dawson, in the Klondike goldfields.
JP. I guess a short time after that, Kaminak made their discovery based on the same technology that you were using, the sampling methodology.
SR. Well, while we were developing the White, that’s my first thing as a prospector…don’t unfold your cards and show your cards too quick. So we were basically prospecting the ridges all around there. Basically we nailed the Coffee; I think that was 2006 when we were starting to work it. Underworld didn’t make their discovery until really 2008. So we had a couple of years lead time in the Coffee to develop that area. That was basically the same thing: we took quite a few thousand soils and mapped out another mineralized system. Then while Underworld was drilling their program, we went in there and applied this shallow trenching program, intersecting some nice high grade stuff, it was 20 meters of 2.5 grams in the trenches. When they drilled their first hole underneath, that was the discovery hole. So it was the same cookie cutter method that we’ve been using here all along.
JP. I found it interesting talking to Gary last week and discussing the drill program that Pete Tallman and management at Ethos have come up with for this season. It was conveyed to me your excitement on this project, and that the property was a property you vended them.
I was interested when you and I talked. This Mascot Creek sampling that they’ve done, at the Betty property really has you believing this might be the next discovery. Can you explain that sampling and why that compares very favorably to the sampling before the drill discoveries at Underworld and Kaminak?
SR. Because we follow this cookie cutter recipe. The first thing that you have to map out is a mineralized system. Ethos did the perfect program, as I called it, last year. They ran, like, 35,000 plus soils; ran the ridges and spurs. We nailed these targets in the Mascot and Betty Creek on the Betty Creek project. Then we went in and gridded them off and then we were able to actually see that this is a true mineralized system that is at least about 5 plus kilometers by about 3. The 3rd phase after you do these two rounds of soils…you had to go in and trench it and that gives you the proof in the pudding…Do you have rocks with gold in it?
These shallow trenches that we do don’t actually give us true bedrock values. To give everybody an idea, the difference is like the Underworld discovery was based on a good soil anomaly and then we went to trench it, the shallow trench, and it was about 28 meters of 1.3 grams. When they drilled that they hit 18 meters of around 4.5 grams. So basically it doubled and tripled the numbers.
Now if we take that same cookie cutter method to the Coffee project, the Latte Zone that they are drilling on now, they had 50 meters of a 0.5 gram. So you are going, “Okay, that’s not economic.” But because it is shallow and it is just representative of rocks, but it is not bedrock. When they drilled that one it was roughly 50 meters of a 1.5-2 grams. So again, it doubled to tripled.
There is another company out there that is not my property. Pacific Ridge, on their Mariposa had the same kind of situation, soil anomalies, and used the same method. Then they trenched it with the same kind of holes we used and they come up with something like 28 meters…I think it was 25 meters at 1.3 grams. They drilled that and it was 28 meters of 2.8 grams. It was doubling again, close to tripling.
So then we look at the Coffee’s best trench which was 20 meters of 2.2 grams on the T number 3 grade. When they drilled that one, they come up with 15.5 meters of 17 grams. So that brings us back to what the discovery on the Betty project was and specifically on the Mascot…
JP. Which is Ethos’ property. Right?
SR. Yeah. So now when you look at those trench numbers, you’ve got 50 meters of 7 grams.
SR. When they stepped out 100 meters, basically they still got 45 meters of over 2.5 grams. So now you start going, “Well, is this true?” This is what gets me excited from the statistics point of view is you are going, “Could it be that they are going to basically drill next year, and when they poke the first hole in this, that they are going to hit 40-50 meters of 7+ grams?” Well, statistically it is. It is quite, quite possible. It could be…my guess is between the 10-15 gram range.
JP. Those numbers are actual trench results, the 7 grams over 50 years?
SR. And so, that’s not bedrock again. What we are dealing with is sub-crop. And the reason we are doing these shallow trenches instead of going down, like I call it the Ontario Method where they actually go down to bedrock and peel it right back with a trench and then the geologist goes and takes out a little chip sample of the bedrock. You would probably only get about 10 meters a day, if that, in the Yukon versus you could get about 100 meters a day with these shallow trenches. So it is our production that rises. And we could work with smaller equipment so that we could fly them in with the helicopter and we don’t have wait for road building permits for a bigger hole.
Now on the Ethos project, the Betty specifically, on that claim block, they nailed all kinds of zones. I’ve lost count on how many they found. But if you go to their website…They’ve got all kinds of trenches with some very nice numbers. But you have to understand that you only need a 0.5 gram in the actual trench numbers, such as the Latte.
JP. So it is going to be really interesting to see that drill program below the Mascot Creek zone because you are already seeing 7 grams a ton over 50 meters.
SR. Yeah, so this is why I’m kind of calling…this is kind of like a slam dunk, this one. And it is basically because...and you have to realize that it is like dropping the black ball in the pool game. You have to set up these shots. And Ethos did it perfectly; they set these shots up by not jumping in to drilling last year. They basically did the perfect ridge and spur, did the grid work. Peter got in there and got the trench in right, done it basically with the data that he had. Now they’ve got all kinds of more trenching targets to work with. But the reality is that it is the best trenches we’ve seen with values in the White Gold district so far.
JP. When I briefly talked to you last week, that’s what got me excited. And something else you pointed out, I think the RSD listeners should know and it is pretty important, is a lot of these companies in the junior market game rush to drill and rush to get results because shareholders and brokerage firms are so impatient, as we know. A lot of the time that is to the detriment of the true long term shareholders looking to make a discovery. You want to take your time and do it right. And it sounds like Ethos has done that.
SR. That’s exactly it. You know, they put the money in to it, upfront money, and that’s why most of the juniors have had a hard time here in Yukon, is they come up with half million dollar budget and so they are only allowed to do so much work and then they have to come back again. After two years, if they haven’t found anything, like you say, sometimes they try to jump ahead and try to poke three or four holes. Well, you’ve got to remember it is a two inch drill hole.
What we realized on the Coffee project, you could be five feet away from the ore and not even have a clue you are that close to it with the drill holes. So the most important thing is to set up that shot for when you drill.
JP. I’m excited after talking to you and Ethos is well capitalized with close to 15 million in the bank, which is far different than most juniors. In light of the success your sampling programs have and the other discoveries it is one of the drill programs I’m most looking forward to in my recent memory. It should be an exciting drill program.
SR. Well, let’s just say there’ll be a lot of people watching that drill program this spring when it happens in Yukon because we needed another big hit up here. We’ve had some good success in the last couple of years but a lot of people are looking up towards Ethos now as going to come up with some nice numbers. So everybody is…let’s just say everybody will be watching that.
JP. So they probably have the best chance to be the next major discovery, I guess, there?
SR. Well, you got to think they are in elephant country. Like, they are only a few miles out from the Casino deposit which is a big porphyry. I think it is a little over a billion tons. So you know they are in the Coffee trend, the White there…this is all brand new. People have to realize this is like going back in time, the Yukon. This is why you are going, “How come they are finding these discoveries so quick?” But you have to realize that, because of this technique, it was like a big breakthrough. To give you an idea, 8 years ago our company did like 2,500 soils. The year before last we were up to 70,000, last year we did 170,000….by different juniors.
To give you how much land that is, that is over 8,000 kilometers of 50 meter traverses of sampling on 50 meters. Over 5,000 miles of ground that we’ve covered. So these are why the discoveries are happening now, because we are putting the effort into this upfront exploration technique.
JP. Well, I really appreciate you taking the time, not only to explain to the RSD listeners, but I’ve learned a lot too. I know a number of people in the industry; I say you rank up there with anyone. There are not too many people, prospectors or geologists, that get 1 big discovery, let alone 2. It looks like you are on track to have more.
So I’m excited to see Ethos. I’m excited that you’ve explained the program to me and this is going to be exciting starting in May.
SR. We can’t wait. I’ll be a fun end of May. It will be fun for whoever is standing on that drill hole.
MC. Jeff, I’m going to jump back in now and I’m going to 2nd the motion. I just sat back here and listened and, Shawn, you broke it down into really simple terms. I am, by no means, geologically trained, but the numbers certainly make sense to me and I’m sure everyone else will have the same appreciation for it.
So with that, guys, I’m going to wrap this up. I want to thank both of you for making my job real easy today. Everybody, this was Shawn Ryan, he’s the prospector extraordinaire up in the Yukon, and Jeff Phillips of Global Market Development, financier extraordinaire in San Diego.
Jeff, thank you for your time.
JP. Thank you very much, Mark.
MC. And Shawn, likewise, I really appreciate you taking some time out of your day to chat with us.
SR. Yep, thanks a lot, Mark.
Disclaimer: Ethos Capital Corporation is a Featured Company in the Resource Stock Digest Portfolio and has paid an advertising fee to RSD. Mark Cullivan owns no shares of Ethos. Jeff Phillips and Shawn Ryan own shares of Ethos.