In order to fast track the development of this highly prospective property, on May 8th 2013 Firesteel signed a term sheet for an option and joint venture agreement with OZ Exploration Pty. Ltd. (OZE) a wholly owned subsidiary of OZ Minerals of Australia (ASX: OZL).
On January 20th 2014, OZE announced that it had concluded its due diligence on the property and would move to the second year of exploration.
On February 3rd 2014 Firesteel received approval for this option agreement to proceed.Over 3.5 years OZE will spend $13,000,000 on exploration and pay $1,500,000 in cash to acquire up to 80% of the ROK Coyote property.
The Option Agreement
OZE will acquire 51% of the ROK Coyote property after spending $3,000,000 on exploration within 24 months.
Once OZE has drilled 2000m OZE will pay Firesteel $100,000 in cash.
If OZE elects to continue exploration, OZE will pay Firesteel $400,000 in cash.
OZE to acquire a further 19% by spending a further $5,000,000 on exploration over 19 months.
If OZE elects to continue exploration, OZE will pay Firesteel $1,000,000 in cash.
OZE to Acquire a further 10% by spending a further $5,000,000 on exploration over 19 months.
At this time Firesteel will have a once only election to contribute pro-rata for its 30% share. If Firesteel elects to do so, Firesteel will have a free carry through to bankable feasibility.
If Firesteel does not elect to contribute pro-rata, then Firesteel has the option to sell its share of the projects in 10% increments to OZE and dilution clauses will be negotiated.
ROK Coyote Property Overview
Firesteel's ROK-Coyote discovery property (the "ROK-Coyote Property") is situated in the Stikine Arch region of northwestern B.C. about 8 km southeast of the Iskut Village on Highway 37 and 12 km west of the BC Rail extension road bed.
It is adjacent to and immediately north of the Imperial Metals Corporation's Red Chris copper--gold deposit. Imperial Metals prepared an updated technical report dated March 14, 2011 with feasibility report findings of 301.5 million tonnes of mineable proven plus probable reserves at 0.359% copper and 0.274 g/t gold and up to 619.4 million tonnes of copper/gold resources.
Also located to the North West of ROK Coyote is the Colorado North ROK Property. A recent hole on the Colorado property showed a very promising hole with 242 m 0.63%Cu and 0.85 g/t Au.
Also, provincial approval was granted during the year for a 344 kilometer 287 kilovolt power line which will provide power to BC's northwest region along Highway 37. The ROK-Coyote property is located approximately 100 kilometers north of the approved power line terminus at Bob Quinn, BC.
The ROK-Coyote Property covers a copper-gold porphyry target located within a large hydrothermal sulphide system measuring at least 9 sq. km. atop the Tanzilla Plateau. Access to the ROK-Coyote Property is easily gained from Hwy. 37 along the west side of the claim group or from the Ealue Lake secondary road which crosses the southern half of the property in an east-west direction. Upper portions of the property are best accessed by helicopter.
The ROK-Coyote Property comprises 19 contiguous claims covering 6,800 Ha. It is divided into four segments, one staked and owned by Firesteel and three segments earned and owned 100% under option deals.
Firesteel staked and owns a 100% interest in the seven Coyote mineral claims. The Company had earned an undivided 100% right, title and interest in and to eight Real McCoy mineral claims subject to a 2% royalty. The three ROK mineral claims were earned to 100%, subject to a 2% royalty. Firesteel had filed the required NI 43-101 Technical Report in July 2007.
During 2008 Firesteel had staked additional mineral claims to infill the ROK-Coyote Property's connection to Imperial Metals' Red Chris property and subsequently transferred one of these claims to Imperial Metals free of charge as a goodwill gesture.
ROK Coyote Geology and History
ROK-Coyote Property geology is summarized as Lower Jurassic, Hazelton Group volcanics and sediments intruded by Early Jurassic, hornblende quartz monzonite and syenite plugs and dykes. Copper-gold mineralization is related to emplacement of the intrusives. Post mineral, barren Hazelton volcanics cap part of the system.
Alteration includes well mineralized quartz stockworks & intense potassic alteration passing outward to phyllic and propylitic alteration assemblages.
Exploration work on the ROK-Coyote Property dates back to 1929 when copper was discovered at the Rose of Klappan showing. Between then and the 1970's, when Texasgulf discovered the Red Chris deposit, exploration was intermittent and minimal.
After the discovery, there was a period of increased exploration activity but it was largely limited to prospecting, geological mapping and some localized geophysical surveys.
The only really significant exploration work occurred between 1987 and 1991 when geological mapping, soil geochemical sampling, ground magnetic, VLF-EM and IP geophysical surveys followed by trenching (18 trenches; 1184 meters) and diamond drilling (18 holes; 1792 meters) were carried out over a portion of the sulphide system.
Much of the large IP anomaly upon which this work was completed remains open-ended and untested. Since 1991, exploration work has been limited to an airborne magnetic/radiometric survey which identified a large, Th/K low suggesting possible potassic alteration over an area 1-3 kms to the SW. This prospective target remains untested
In 2009 ground geophysical surveys carried out over the Coyote Grid located and more accurately defined the eastern portion of the magnetic anomaly first identified in the 2005 airborne survey. They also demonstrated the airborne, Th/K low - magnetic high is coincident with an open-ended, similar orientated chargeability and resistivity high and gold--molybdenum soil anomaly.
The coincident association of magnetic, chargeability and resistivity highs is typical of many copper-gold porphyry prospects occurring in intrusive rocks throughout BC and is reminiscent of the Main Zone located in the northern part of the Property, 6,000 meters northeast of the Coyote Grid.
This program demonstrates the discovery of a new zone with anomalies that are similar to what one finds below porphyry copper-gold deposits and similar to what is known elsewhere on the Property at the Main Zone.
Firesteel is encouraged that there are now at least two separate areas on the Property separated by 6,000 meters that are target areas to explore for copper-gold mineralization and that the Coyote Grid and the Main Zone may connect into one very large target area.
David T. Mehner, MSc., P. Geo. a Qualified Person under National Instrument 43-101, was the author of the technical assessment report for the exploration program described in the last two paragraphs and has reviewed and approved the technical content in these paragraphs. He is a consulting geologist for and is independent of Firesteel and currently holds rights to a portion of a net smelter returns royalty over a portion of the Property.
While completing its due diligence on the ROK Coyote property, Oz Minerals has drilled about 1700 metres on the property. Drilling enabled testing of geophysical anomalies and has allowed for the features to be characterised and used to prioritise other geophysical anomalies on the ROK-Coyote claims.
Drilling beneath well-developed gossans suggests that the structural complexity of the area means that expressions observed on surface may not necessarily be reflected at depth.
Drilling results show that chargeable conductive zones such as Main Zone are related to highly pyritised (7-8%) volcanic rocks. While the 2013 drilling program failed to return any significant intersections a number of important targeting strategies were tested that will greatly assist future exploration efforts.
Oz is gearing up so as to be ready for an early start to the 2014 drill program and will be active on the property as soon as weather permits. The 2014 drill program is designed to test the possibility of high-grade copper-gold mineralization extending to depth as on the adjacent Red Chris property.
Firesteel is highly encouraged by the findings to date, believes that the ROK-Coyote Property is one of the most highly prospective copper-gold alkalic porphyry targets in BC and warrants a significant exploration program to test its potential. Despite highly encouraging results from relatively minimal exploration work, the property remains largely unexplored, untested and highly prospective for hosting copper-gold resources amenable to open pit and bulk underground mining techniques.
The possibility of high-grade copper-gold mineralization extending to depth as on the adjacent Red Chris property has never been tested.