The global financial meltdown may have knocked the stuffing out of dozens of junior mining firms.
But it proved to be a blessing for Heatherdale Resources Ltd. (TSX: V.HTR, Stock Forum), which took advantage of the situation by optioning a precious metals-rich volcanogenic massive sulphides project in southeastern Alaska known as the Niblack property.
Located on Prince of Wales Island west of Ketchikan, Niblack has attracted 14 different operators since it was discovered and then briefly put into production at the turn of the last century.
Back in the fall of 2008 at the height of the economic crisis CBR Gold Corp. (which recently changed its name to Niblack Mineral Development Inc.) (TSX: V.NIB, Stock Forum) discovered high grade mineralization to the southwest of a former mine, which had been in production from 1902 to 1908.
Two drill holes returned values that were much higher than anything that had been seen before.
But due to market conditions at the time, the results didn't attract much attention and CBR accepted an approach from Heatherdale, which had the project on its watch list.
Under a deal announced in July 2009, the Vancouver-based Hunter Dickinson group company can earn a 51% stake in the property by spending US$15 million over three years. It has the option to increase its stake to 70% by spending a further $10 million and completing a bankable feasibility study.
“We are very excited about this opportunity,’’ said Heatherdale executive general manager Lena Brommeland during an interview with Stockhouse.
Aside from the results in holes U027 and U028, Brommeland says Hunter Dickinson likes the fact that Niblack is permitted as an active mine and will be relatively cheap to put into production.
Located at tidewater and accessible by barge and float plane, the 6,200-acre property features a 1.5 mile road that leads from the dock to the mine entrance and underground infrastructure.
When Heatherdale signed the option deal last year, it was working with a NI 43-101 compliant resource estimate, which suggests that the Niblack deposits contain the following:
- 2.6 million tonnes of indicated mineral resources, grading 1.18% copper, 2.33 grams per tonne gold, 2.19% zinc, and 33.18 grams silver, containing 67 million pounds of copper, 193,600 ounces gold, 125 million pounds of zinc and 2.8 million ounces of silver.
- 1.7 million tonnes of inferred mineral resources, grading 1.55% copper, 2.08 grams gold per tonne, 3.17% zinc and 32.56 grams silver, containing 58 million pounds of copper, 114,300 ounces gold, 120 million pounds of zinc and 1.8 million ounces of silver.
But based on results from drill holes U027 and U028, Heatherdale is betting that Niblack can support a high-grade mining operation in the future.
To find out more about the progress that Heatherdale is making, a Stockhouse met with Brommeland at the Hunter Dickinson offices in Vancouver.
SH: Where are the drill rigs located on this project?
LB: “There is 1,000 metres of underground development already established on the project, which provides an excellent platform for exploration drilling. We have had two rigs running since the end of September last year. These rigs are working to delineate the copper-gold-silver-zinc mineral body at the Lookout Zone, one of six known Volcanogenic Massive Sulphide (VMS) deposits within the property. In the last 12 months, Heatherdale has completed well in excess of 50,000 feet of drilling, and we are continuing to build the resources. The resources that we are building are higher grade then what has been known to be there historically.”
SH: How is the exploration going right now?
LB: “We are really happy with what we are seeing on the project. The continuity of the mineralization and strength of mineralization in the system is superb. We have been drilling to the west of the known historic resources and we have continued to hit and expand our resources in that direction.’’
SH: Can you give us a little more colour on the work that you are doing?
LB: “Historically, about 200,000 feet of drilling has been completed on the project. We have gone back in and re-logged the entire drill core. What we have been able to do with that re-logging is firm up the geological model. There hadn’t really been a geological model built for this project incorporating all of the [drill] data. What we have been able to do is take the results from that [re-logging process], and determine where higher priority targets are for more grade and tonnes.”
SH: When could this project be in production?
LB: “Very soon actually. I think that when we decide to do an update of the resource, that will be the benchmark for us going forward. We will do that update when we feel that the timing is right. Right now we are having very good exploration success and we want to capitalize on that success and then put it all together.”
SH: Could you give us some background on your career so far and the role you are currently playing at Heatherdale.
LB: “Born in Willow River near Prince George, B.C., I graduated from UBC with a bachelor of science in geology. Having worked with Hunter Dickinson for 18 years, I am in charge of the geologists and all of the corporate activity on the Niblack project. This includes liaising with joint venture partners, and working with the Hunter Dickinson investor relations team to promote the project.” Brommeland is also Chair of the Association for Mineral Exploration British Columbia.
SH: What distinguishes your company from others in the space?
LB: “The precious metals content in this type of project. It is a volcanogenic massive sulphides- type of environment with enhanced precious metals values. The gross metal values in the ground are higher than on the equivalent companies in our space.”
SH:How many employees does Heatherdale have?
LB: “None. Heatherdale is working with joint venture partner Niblack Development, which owns the project. Manpower is provided by POWTEC, the Prince of Wales Tribal Enterprise Consortium. It is a native corporation and we sub contract our labour from them. That includes our geologists, geotechnical people, drill core cutters, general labourers and electricians. I am an employee of Hunter Dickinson which has a services agreement with Heatherdale.”
SH: How does the Hunter Dickinson business model work?
LB: “There are currently eight publicly traded companies in the group. Hunter Dickinson provides services in the form of technical, financial and management support to companies in the group. The projects that we look for are ones where we see opportunities. These include opportunities on the technical side, opportunities on the financial side and opportunities for shareholder success. Each company generally has one project, allowing investors to choose among various risk profiles. They can decide whether they want to be involved in early or late stage projects, or in certain commodities in certain jurisdictions. The companies in the group each own shares in Hunter Dickinson.”
SH: What financial resources does the company have?
LB: “We raised $15 million last October, adding to the $6 million that the company already had. The company now has about $10 million in the bank, enough to carry it through its activities this year. Heatherdale will be looking to do another financing sometime in the fall, to carry us forward to the next stage [of exploration].” Heatherdale shares traded at 81 cents on Friday in a 52-week range of $1.94 and 67 cents.
SH: What is the biggest risk for investors in the stock?
LB: “It’s a market risk. If people lose faith in currencies, exploration dollars could dry up. This is why we have moved to ensure that we are funded in a way that will enable us to ride any troughs in the stock market.We are testing new geological theories (where the mineralization goes to, the depositional history of the deposit). If our theories are wrong, then we are in trouble. But I don’t think that that will turn out to be the case because we have had very good success so far.”
Brommeland Bio,
Lena Brommeland is executive general manager of Heatherdale Resources Ltd. Lena has 20 years of experience as a geologist managing major exploration projects in Alaska, and British Columbia.
She has managed onsite drill programs, coordinated environmental planning and permitting and developed community relations activities for exploration and feasibility-level projects.