Aton drills 'lost mountain of gold' in Egypt

Aton Resources (TSXV: AAN; US-OTC: ANLBF) recently drilled 4,125 metres across 50 reverse circulation holes during its phase one exploration program on the South Ridge at its Rodruin gold project, part of its 738 sq. km Abu Marawat concession in Egypt.

The company hit gold mineralization in every zone it drilled: Aladdin's Hill, Spiral Pit, Central Buttress and GF. Highlights from the project so far include 5.36 grams gold and 15.9 grams silver over 20 metres from surface at Spiral Pit, and 1.63 grams gold and 5.3 grams silver over 12 metres from 4 metres downhole at Aladdin's Hill.

Before Aton picked it up, Centamin (TSX: CEE; US-OTC: CELTF) owned Abu Marawat. It dropped the concession in the early 2000s after discovering its Sukari deposit. As of June 2017, Sukari contained 244 million proven and probable tonnes grading 1 gram gold for 8 million oz. gold. The mine produced more than 544,000 oz. gold in 2017.

"We started off at Abu Marawat and followed up on what had gone before and then shifted our focus to an area called Hamama," company president and CEO Mark Campbell explains in a telephone interview with The Northern Miner from Cairo. "The conventional wisdom was there was a classic VMS at Hamama, but that we've demonstrated is not the case. It's a sort of VMS epithermal hybrid."

The company would go on to declare a commercial discovery at Hamama West in May 2018. While developing Hamama, it decided to embark on a regional exploration program at Abu Marawat - a program it began in December 2017.

"We had never done any serious regional work," Campbell says. "We wanted to develop and see what we had out there."

The company focusses on an ancient processing area, called Eradiya, where it sampled tailings grading more than 20 grams gold. When it trenched the area, however, it didn't find anything.

"The Bedouin had always talked about this lost mountain of gold, this legendary mountain of gold, but nobody knew where it was," Campbell says. "We did some satellite imagery and found these old ancient trails. Because its desert, because it's barren rock and its very dry nothing really erodes."

The company followed the trails to a mountain 3 km south of Eradiya and 18 km west of Hamama West.

Campbell continues, "We went up there and that's when everybody went 'wow.' The place is honeycombed with ancient workings, some that go down 80 metres below ground. We found old clay lamps with wicks still in them, old ropes, stone tools and it was obvious that we were the first people up there in 1600 years."

The company called the area Rodruin. It built a 4.5 km road up the side of the mountain that in some places slopes up to 70 degrees. It also built several drill pads that it used for its first phase drill program.

The mountain consists of two ridges split by a wadi, or dry channel. The company started with the mountain's south ridge because it's less steep than the north ridge, but says the north ridge also shows evidence of ancient workings. It hopes to find a bulk mineable deposit - an objective consistent with early indications.

Workers channel-sample a trench in the Hamama West area of Aton Resources' Abu Marawat gold project in Egypt in 2016. Credit: Aton Resources.

"We have a wide area of mineralization with good grades, but we do get some high-grade shoots interspersed with it," Campbell explains. "It's interesting geology in that it's all in the carbonates. I mean we're seeing mineralized slate, something that most people never see."

Aton is taking a break from exploration over Christmas and New Year, but will continue access road construction to parts of Rodruin's South Ridge it intends to drill in early 2019. The company also aims to build a road to the project's North Ridge to follow up on surface samples it took there that graded as high as 321 grams gold per tonne. It cautions that the terrain on the North Ridge is extremely rugged, and road construction could take several months.

The company intends to drill another 16,000 metres in the New Year spread across Rodruin and its other Abu Marawat targets. A portion of the drilling will be used to upgrade the inferred resource at Hamama West to the indicated category. Hamama West contains 3.8 million indicated tonnes grading 0.72 gram gold and 27.6 grams silver for 88,000 oz. gold and 3.37 million oz. silver, as well as 8.2 million inferred tonnes at 0.87 gram gold and 29.7 grams silver for 230,000 oz. gold and 7.8 million oz. silver.

In May 2018, Aton declared commerciality at Hamama West. The company intends to develop it into a small open-pit operation. A few months later the Egyptian Mineral Resource Authority accepted Aton's commerciality study, automatically extending its exploration license. Aton is working toward a preliminary economic assessment at Hamama West. The company will make a production decision based on its results.

Campbell has been involved in mining in Egypt for over 20 years. He joined the board of Alexander Nubia in 2009. In 2015 he took over as CEO, and a year later the company changed its name to Aton Resources. The company had two concessions at the time, Abu Marawat and Fatiri.

"Two years ago I relinquished Fatiri to focus on Abu Marawat," Campbell explains. "When we arrived the land package that we had was larger than Luxembourg."

Egypt had based its land bids on the oil and gas industry, and many concessions were over 1,000 square kilometres. While the company's oil and gas industry took off, mining got left behind. Campbell says Sukari is the only modern mine developed in Egypt in the last 90 years.

To address the problem, the country hired Wood Mackenzie, which helped reshape the Ecuadorian mining industry. Prime Minister Madbouly's cabinet recently approved amendments to the country's Mineral Resource Act recommended by Wood Mackenzie. Notably, miners will no longer have to form a 50-50 joint venture with the Egyptian Mineral Resource Authority to go into production. The government hopes to ratify the changes by the end of the year.

"The two great opportunities in Egypt are the geology and the frontier nature of it, but frontier with a small 'f' because it's got a lot of infrastructure," Campbell says, "And then, on the other hand, you've got to change the terms, the fiscal regime, to make it more attractive."

Shares of Aton are currently trading at 4 ? with a 52-week range of 2 ? to 11 ?. The company has a $12 million market capitalization. Sandstorm Gold (TSX: SSL; NYSE: SAND) invested $2.1 million in Aton earlier this year. The company paid nearly $1.8 million for 40 million Aton shares and an additional $300,000 for a 1% net smelter returns royalty on Abu Marawat. At the same time, Aton closed a separate private placement worth nearly $2 million. Sandstorm now owns 14.94% of Aton, making it the company's second-largest shareholder. Private company OU Moonrider owns 23.95% of Aton.

"We will finish drilling Rodruin, then take a break and starting drilling some of its other targets to start building up a better picture of these targets and how they fit into our exploration portfolio," Campbell explains. "It's all about narrowing down our focus."