Bayhorse: A Sexy Technical Release?

Bayhorse Silver (BHS.V) put out what is known in the business as a “technical” press release. It’s a release about the detailed analysis of the geology and VTEM results from the Bayhorse claims in Oregon and Idaho. It is based on a full geological report by Dr. Clay Conway, a Bayhorse consulting geologist, which will be posted on the company’s website.

The release synopsizes Dr. Conway’s report which is good as it is a certainty that the report itself would be unintelligible for most people without Dr. Conway’s PhD in geology and, literally, decades in the field. The press release itself is pretty hard slogging and, predictably, left the market baffled. Geology, at this level, even well summarized, is hard. But it is also very necessary.

The combination of Dr. Conway’s geological interpretation and some details from the VTEM survey actually reveals not one, but two, geological features which will guide BHS’s programs on both sides of the Snake River.

The above diagram shows two of the VTEM lines. A line being where the helicopter flew. The top line, 1030, was on the Oregon side and very close to the Bayhorse mine itself. The little red rectangle is the Bayhorse mine and is roughly to scale.

Bayhorse has always been about recommissioning the Bayhorse silver mine with little thought and less money given to the sort of exploration which the VTEM line suggests. Because it is in Oregon, getting permits for surface drilling is difficult if not impossible. But Bayhorse can drill as much as it likes from underground.

While most of the excitement is on the Idaho side, the VTEM results strongly suggest there is a significant anomaly beginning all of 200 feet down and 500 feet westerly from the Bayhorse mine workings. Given the significant copper credits in the Bayhorse mine concentrate produced so far, there is every reason to believe that this anomaly may be a copper porphyry along the lines of the Hercules Metals blind porphyry at Mt. Cuddy.

The bottom line, 1190, is at the eastern edge of the Idaho side of the VTEM survey. It indicates a significant and consistent low resistivity anomaly at the southeastern corner of the VTEM survey. The anomaly is cut off to the southeast by the limits of the VTEM lines flown. However, Bayhorse, based on these results, staked ground to both the south and east of the survey. It’s a bit tough to see on this map but the Pegasus Claim Group captures a good deal of ground where the VTEM stopped.

Now for a bit of geo-speak:

Mineral deposit settings and relations at Bayhorse/Pegasus have similarities to those in the Cuddy Mountains district and also the Mineral district about 10 km north of Bayhorse mine.  At each, silver mineralization is associated with rhyolite which is found at or near the regional contact between the Triassic-Jurassic Huntington Formation and the unconformably overlying Jurassic Weatherby Formation.  Thus, silver mineralization at all three is potentially coeval – generated in the same regional magmatic episode.  The newly discovered porphyry copper mineralization at Hercules is in shallow intrusions beneath the silver deposits and may be of this same magma generation.  Thus, it may be inferred that porphyry copper deposits could be present at Bayhorse/Pegasus and also at the Mineral district.

What I take away from this is that at a point in the distant (think 180 million years) past, magma - essentially liquid rock - flowed in areas along the intersection of the Izee and Olds Ferry terranes and, where those terranes touched (known as sutures), stopped flowing and created mineral deposits. Where this happened rhyolite formed and silver was deposited above what seems to be, from the Hercules early results, copper porphyries.

Exploration geology is actually a very scientific process where a hypothesis about geological events in the distant past is tested with a drill. To be successful, you need a robust hypothesis grounded in an understanding of the geological events of the distant past. Generating that hypothesis, writing it up and defending it is what deeply experienced PhD geologists excel at. Dr. Conway has put together a report which outlines the working hypothesis which likely applies to all of the Izee/Olds Ferry terrane suture structures from the Bayhorse mine to the Mt. Cuddy ground owned by Hercules. The drilling occurring at Mt. Cuddy is the first experiment to test this hypothesis.

Now, I promised sexy in the headline and there are several sexy elements to this technical release. First, it was not written for the market. I kid Graeme O’Neill, BHS’s CEO, that there are about six guys who could even understand the press release, much less the full report. In fact, there are several hundred from geos at the Idaho Geological Survey, to scientists at the US Geological Survey to geologists at Barrick, Rio Tinto, Ivanhoe, BHP and other big companies. Serious people who will either embrace or challenge Dr. Conway’s work.

It is pretty clear that the geologists at Barrick have a district scale theory and were willing to recommend to their company that 1) it commit 23 million dollars to drilling at Mt. Cuddy, 2) that the company embark on a staking campaign right from Mt. Cuddy, up the Snake to Mineral and to within a mile of the BHS Pegasus claims. (Actually, see the image at the top, Barrick butts right up to BHS.) On the Idaho side there is next to no unstaked land all along the edge of the Izee terrain.

Dr. Conway has suggested that the suture mineralization was the result of the “same regional magmatic episode” which strongly implies that any resulting mineral deposits will be similar to each other. Results at Mt. Cuddy are more likely than not to be repeated at Mineral and on BHS’s ground on either side of the Snake.

The other sexy implication of this technical press release is that while the Oregon and Idaho ground is likely to share geological characteristics, each is potentially large enough to be a stand-alone project of significant size. It would be very feasible for Bayhorse to joint venture the Pegasus Project while retaining complete control of the large anomaly adjacent to the existing Bayhorse mine.

Results from Hercules are expected soon. It is pretty clear that they have encountered more than a few challenges drilling at Mt. Cuddy but what holes they have been able to drill will provide a trove of information about the Izee/Olds Ferry mineralization.

There are roughly 70 days left in the possible Bayhorse drilling season and O’Neill and his team believe they can have a drill in place 30 days from knowing there was financing in place. Getting two holes into the southeastern VTEM Pegasus blob might be enough to confirm Dr. Conway’s hypothesis. Whether those holes are financed with a raise by BHS or by a potential joint venture partner the geology is waiting to be tested.

(I wrote up BHS’s last data release here.)

(Disclaimer: Graeme O’Neill is a friend and I own shares in Bayhorse Silver and may purchase or sell at anytime. This is not investment advice. Do your own due diligence. Call the CEO.)