TerraX Minerals (V.TXR) reported drilling results from its Yellowknife Northwest Territories property earlier in December. Two press releases (here and here) outlined encouraging results from the Crestaurum Shear section of the TerraX property with gold values as high as 40 grams per ton across one 1.39 meter length.

The Crestaurum Shear, along with several other geological features, hosts gold in quartz veins. These structures were, to a degree, understood by TerraX because the company obtained access to the records of the Giant and Con gold companies. The TerraX property is within sight of the headframes of both the Giant and Con mines.

Joe Campbell, CEO of TerraX is pleased with the Crestaurum results. “This is definition drilling in a vein style deposit. It is the most advanced drilling on the property and we are looking towards a 43-101 resource estimate.”

This drilling did, however, come up with a surprise. “At very shallow depths we’ve found a new structure, a hanging wall, with good gold grades.”

It is not the first surprise the Yellowknife property has had for TerraX. “We understood the controlling geology for the old mines.” said Campbell, “We looked for similar geology on the property.”

What they were looking for were the quartz vein deposits which are characteristic of the greenstone belt which is the underlying geology in the Yellowknife City Gold Project. But what they found at the Herbert-Brent area was a mineralization style which was entirely different from the quartz vein structures they had been expecting.

On January 5 TerraX put out a press release outlining the replacement style mineralization it has discovered.

“Unlike the other areas we explored which were quartz vein gold the Herbert-Brent area has a different style of mineralization. We found a replacement style sulphide gold deposit without veins. While this was lower grade than the vein gold there was much more gold replacing the rock.” said Campbell. “After we found the Herbert-Brent we started looking for look-alike structures on the property.”

“The replacement style mineralization has lead us to a bit of a Y in the road. The replacement style offers bigger ounces quicker and that suggested a significant change in our approach. This style of deposit is completely different from the Giant mine. It is closer to the Con mine.” said Campbell.

“With the Crestaurum deposit you have visible gold, at Herbert-Brent the gold is invisible but it is widely distributed. What that means is that at Herbert-Brent we need to drill fewer holes to define a 43-101 resource.” said Campbell.

Plus, the Herbert-Brent is very close to surface. “It’s very shallow,” said Campbell, “It is sticking out of the ground and it is pittable. The historic exploration on the property didn’t have a deposit like Herbert-Brent on the radar. In the 80’s and 90’s this area was not even drilled.”

TerraX’s exploration of its Yellowknife property has attracted the interest of Canadian gold heavy weight Osisko Gold Royalties. “We had investment from Virginia Gold which merged with Osisko.” explained Campbell. “Osisko liked our project. And they understood it well because the geology at Yellowknife is identical to the geology at their mine at Val d’Or.”

“Osisko has been very supportive. They said to us, “Come and talk about financing.” We did a raise in June for a total of 6 million dollars. Osisko paid 1 million dollars for an option on a 1% Net Smelter Royalty (2 million additional dollars to exercise the option) which was “hard” money for us.” said Campbell. In addition to the Net Smelter Royalty option TerraX raised 5.2 million dollars in flow-through financing, which Osisko participated in for 2.5 million dollars. “Getting money at that time allowed us to go forward. It financed our summer drilling and lets us drill this winter and do more surface exploration this coming summer.”

The Osisko relationship has other benefits. As Campbell explained, “Osisko is more theoretical, we’re more empirical. They help with analysis but they leave us to our own devices.” For a junior explorer, having access to the depth of geological talent Osisko brings to the table is invaluable.

Ultimately TerraX will have a 43-101 estimate for the Crestaurum and Barney Zones likely in 2016. However, the promise of a near surface bulk deposit in the Herbert-Brent area may mean that a 43-101 estimate for that part of the property will be fast tracked.

In the difficult market for junior exploration companies TerraX stands out because it combines a multiple discovery gold property with cash in the bank and a formidable senior partner. The company is trading – at time of writing – at $0.30 per share with 67.5 million shares outstanding for a market cap of 20.2 million dollars.