Dawson Section

In 2021 Zephyr submitted an application for a mining permit for the Dawson gold deposit with the Colorado Department of Reclamation and Mine Safety. The application is for a proposed underground mine, mill, mine support facilities and a dry stack tailings facility. Success in obtaining a mining permit at Dawson will enable the implementation of an underground development program which would include construction of drill stations to undertake infill drilling on the current resource, as well as further drilling at depth. The scheduling of the underground program will hinge on obtaining the mine permit and requisite financing.

Dawson is comprised of 51 contiguous unpatented lode mining claims, and eight patented lode mining claims and two patented placer claims covering approximately 505 hectares (1,249 acres). Dawson encompasses five gold mineralized areas which are, from east to west: Sentinel, Dawson, Copper King, Windy Gulch and the Windy Point zones. The gold resources identified to date at Dawson are confined to the Dawson and Windy Gulch zones with the remaining three zones representing gold prospective areas on the 3.8km (2.3 miles) long geologically favourable trend. The 50% of the eight patented lode mining claims not held by Zephyr is leased by Zephyr through a “Mining Lease and Agreement”, and the 50% interest in the placer claim not held by Zephyr is leased through a property lease agreement; which effectively gives Zephyr 100% control of these claims. Twenty-one of the 51 unpatented claims, the eight patented lode mining claims are subject to a sliding scale Net Smelter Return (“NSR”) whereby Zephyr agrees to pay up to a 3% NSR as contemplated in the Mining Lease and Agreement.


The gold mineralization at Dawson was discovered by U.S. Borax Ltd. in the early 1980’s and explored by Uranerz U.S.A. Inc. in the early 1990’s. During this period a total of 142 diamond drill holes for 27,206 metres were drilled, from which several resource estimates were completed. In 2013 Zephyr commenced a diamond drill program on the Windy Gulch zone. The 13 hole diamond drill program of approximately 580 metres was designed to expand and better define the near-surface gold resource. The drill results were incorporated with historical drill data to calculate the first independent NI 43-101 resource estimate on the Dawson and Windy Gulch zones. The resource estimates were disclosed in the technical report on Dawson entitled: “Resource Estimate Technical Report for the Dawson Property Fremont County, Colorado, USA” with an effective date of July 19, 2013.


On November 17, 2015 Zephyr filed on SEDAR a technical report entitled “Updated National Instrument 43-101 Technical Report for the Dawson Property, located in Colorado, USA”, with an effective date of August 26, 2015. This report addressed aspects pertaining to metallurgy, mine design, mine scheduling, mining method, proposed equipment, manpower, underground capital and operating cost, but did not include surface capital costs, processing, or the general and administrative costs of the proposed operation.


In 2016 the Company completed a 16 hole drilling program of approximately 745 metres on the Windy Gulch zone. The drill program was successful in further delineating the shape and trend of the deposit as well as augmenting confidence in the continuity of high grade gold mineralization in the current resource. The program demonstrated that possible future plans of development would likely be by underground mining. The drill program also defined the near surface eastern extremity of the gold mineralization at the Wind Gulch zone. Additional information regarding these drilling results can be found on the Company’s website and on SEDAR in news releases dated August 9, 2016, September 27, 2016, and October 18, 2016.


On February 7, 2017, the Company announced the results of a Preliminary Economic Assessment (“PEA”) on the Dawson Gold project. The PEA report was filed on SEDAR on March 23, 2018 and is also available on the Company’s website. The PEA provides a base case assessment of developing the Dawson zone mineral resource only. The PEA is preliminary in nature and there is no guarantee that any part of the current inferred mineral resources will be converted into a mineral reserve in the future and developed into a mine.


In 2018 the Company completed a comprehensive exploration program at Dawson comprising:

  1. detailed geological mapping and sampling, and magnetic geophysical surveying of the newly acquired Sentinel claims

  2. a core drilling program focused on expanding resources at the Dawson and Windy Gulch zones and identifying potential new resources at the Copper King  zone.


The magnetic surveying outlined a strong magnetic low anomaly that extends for 1,100 m (3,600 ft) east of the Dawson zone. This magnetic low anomaly is similar in strength to the magnetic low anomaly over the gold resource at the Dawson zone but is over double the size. The magnetic anomaly at the Dawson zone shows very good correlation with the gold bearing biotite aplite, one of the key gold host rocks of the gold resource on the Dawson zone. Reconnaissance mapping and sampling at the Sentinel zone yielded encouraging results. The continuation of gold mineralization east into the Sentinel zone was confirmed with the presence of both gossanous outcrops reflecting the massive sulphide horizon which is host to the gold-copper mineralization and located in the hanging wall to the gold resource, and biotite aplite. In addition, an old historic shaft and several small prospect pits were discovered in the Sentinel zone that are believed to date circa 1890’s. A grab sample of gossan from the massive sulphide horizon located 800 m east of the Dawson zone assayed 0.34 g/t gold and 0.18% copper. These grades are similar to those up dip from the high grade gold mineralization in the Dawson zone and as such lends strong support to the prospectivity for gold at the Sentinel zone. Zephyr is the first company to explore for gold in this area since the 1890’s era, hence the keen anticipation to drill test these prospective targets in a future drill program. For additional information on exploration results at the Sentinel zone, please see news releases dated June 27 and October 23, 2018.


The Company completed a diamond drilling program in Q3-2018 totaling 11 holes for 1,853 m principally on the Dawson and Windy Gulch zones with the goal of expanding gold resources. One hole was also drilled on the Copper King zone. The best hole, DA-18-16 on the Dawson zone intercepted 3.4 m grading 17.6 g/t gold, 5.5 m of 7.6 g/t gold and 0.9 m of 17.4 g/t.* Drill holes DA-18-12 and DA-18-13 intercepted low grade values and essentially defined the east boundary of the gold mineralization at a relatively shallow depth. Additional potential for gold mineralization in the eastern area of the Dawson zone will be at depth.


The best drill intercept at the Windy Gulch zone was WG-18-40 which intersected 6.6 m grading 4.8 g/t gold, including an interval of 2.7 m grading 9.7 g/t gold.** Future drilling at Windy Gulch will be targeted to the west and at depth. 


For additional information on the results of the drill program the reader is referred to news releases of July 17, September 10, October 23 and November 8, 2018.

The 2019 airborne geophysical program did not identify any new noteworthy geophysical features on the Dawson section, however it provided support for the existing geophysical database for this area. The Dawson section was a secondary level target for airborne program with the principal objective being the discovery of magnetic anomalies on the El Plomo section as part of the search for BHT silver-lead-zinc mineralization in this area.


In Q3-2020, one core hole, DDH DA-20-18, a twin of historic drill hole GC-44 was drilled at Dawson. The purpose of the hole was to collect material for engineering and metallurgical test work to provide information necessary for the mining permit application. In addition, favourable assays from this hole should be supportive of moving a portion of the inferred gold resources into the indicated category. The field geologist observed visible gold in this drill hole. Assays are anticipated in early December 2020.    


The potential for increasing resources at the Dawson section is considered very good with identified drill targets at the Dawson zone at depth, at the Sentinel zone to the east and the Windy Gulch and Windy Point zones to the west. The mineralized trend on the Dawson section measures approximately 3.8 km of strike length, much of which remains to be explored.


The Company recently purchased the Judith Placer claim which added an additional 129 acres of land to the Companies holdings in the Dawson section. This acquisition increases land holdings for proposed surface facilities for potential development. See news release October 13, 2020.

*True width approx. 80% of intercept width.   

** True width approx.. 80% of intercept width.

The qualified person for this page for the purposes of National Instrument 43-101 is Terry Coughlan, P.Geo.. He has read and approved the scientific and technical information that forms the basis for the disclosure contained herein.