The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Heatherdale intends to spend US$15 million on aggressive exploration to earn majority interest in precious metal-rich VMS project
Heatherdale Resources Ltd., the Hunter Dickinson subsidiary that joined forces with CBR Gold Corp. on the Niblack project, plans an aggressive exploration campaign at the copper-gold-silver-zinc project on Prince of Wales Island in Southeast Alaska.
"One of the hallmarks of a Hunter Dickinson program is that when we get involved with a project where the project warrants an aggressive, substantial program to move the project forward quickly and aggressively, but obviously within the right confines of responsible mineral development, we do so," said Heatherdale Chairman Scott Cousens.
In its joint venture agreement with CBR Gold, Heatherdale agreed to spend US$15 million over the next three years to advance the Niblack project in exchange for a 51 percent stake in the precious-metals-rich volcanic massive sulfide deposit.
The joint venture partners budgeted US$5.35 million to complete an initial 7,620-meter underground drill program. Heatherdale, which is financing and operating the endeavor, said it plans to complete its work commitment much earlier than what is allowed under the agreement with CBR Gold.
"Although we have a three-year opportunity for the expenditure of the first US$15 million, that will happen a lot quicker than the option earn-in agreement allows for. You will see us earning our interest in this project on a fairly quick timeline," Cousens said.
Heatherdale, which was privately held when it optioned the Niblack property in July, went public in November. Selling its common shares for C$1 per share, the company raised C$14,358,500 through a non-brokered private placement financing, and increased its treasury to more than C$15 million.
"My partners and I, and key management of the company own roughly 50 percent of the company," Cousens said. "We have a significant equity stake in this company. The only way my partners and I, and all of our shareholders make money, is by making this company successful and having the share price go up on the back of that success."
Heatherdale is targeting a high-grade extension of the volcanic massive sulfide mineralization at Niblack.
"A new high-grade discovery has been made in this historic belt of rocks, and we are now in the process of drilling those off and understanding the extent of them," Cousens said.
180-degree turn at Lookout
Assay results from a 19-hole underground drill program completed by CBR Gold late in 2008 piqued Heatherdale's interest in the Niblack project.
"Late December of last year there was a significant breakthrough on this project that changed our view of the opportunity here. It is the reason why we approached CBR Gold, our partner, to enter into an earn-in opportunity," Cousens said. "That significant event was the announcement of two drill holes."
The two holes to which Cousens is referring are U027 and U028, which intercepted mineralization with grades nearly three times greater than the Niblack average. U027 cut 8.11 meters with an average grade of 4.29 grams per metric ton gold, 64.14 g/t silver, 1.85 percent copper and 8.75 percent zinc. U028 intersected 78.66 meters averaging 4.83 g/t gold, 85.31 g/t silver, 1.89 percent copper and 4.93 percent zinc.
The high metals grades were only one aspect of these drill holes that interested Heatherdale. What really intrigued the company was the location of the high-grade intercepts.
"Most of the resources on this project that have been defined to date are to the east of the drift. What happened late last year is the excellent technical team at CBR Gold thought they recognized something in the geology that had previously not been recognized and said, 'You know what, we are drilling in the wrong direction. We shouldn't be drilling necessarily to the east of the underground (development); we should turn the rigs around 180-degrees and drill to the west.' The two holes that they drilled to the west intersected some fantastic high-grade. So it opens up that entire zone to the west, and it changed this project dramatically," Cousens said.
Lookout resource
The new discovery was made by CBR Gold shortly after it had acquired the property through a merger with Niblack Mining Co.
Targeting an area known as the Lookout zone, CBR Gold drilled 4,507 meters from an 880-meter underground drift completed by Niblack Mining. The new project operator expanded the existing resources within the Lookout zone, adding 457,000 metric tons of ore to the resource estimate it inherited from the previous operator.
The updated estimate revealed an indicated resource of 2.272 million metric tons grading 2.42 g/t gold, 34.66 g/t silver, 1.27 percent copper, and 2.36 percent zinc. The deposit has an additional inferred resource of 1.712 million metric tons averaging 2.08 g/t gold, 32.56 g/t silver, 1.55 percent copper and 3.17 percent zinc. The estimate was based on a US$50 net smelter royalty cutoff.
It was during this late 2008 drill program that CBR Gold drilled holes U027 and U028. The assay results from these holes were largely overlooked because of the financial turmoil at the time.
"We were in the midst of the unwinding of the world's equity markets at the time," Cousens said. "The results were lost on the marketplace, but were not lost on our technical group who had been evaluating the project."
Tracing the high-grade
Heatherdale began drilling the high-grade extension of the Lookout zone in September. Using the intercepts from holes U027 and U028, Heatherdale geologists projected a target area for the 7,620-meter drill program expected to be completed by the end of the first quarter 2010.
Heatherdale reported results Dec. 17 from the first three holes of the program, which were drilled in a fan pattern designed to crosscut the projected mineralization.
U029, the first hole of the underground program, cut 18.7 meters with an average grade of 2.4 g/t gold, 48 g/t silver, 1.4 percent copper and 2.8 percent zinc. U030 intersected 10 meters averaging 3.39 g/t gold, 57 g/t silver, 1.83 percent copper and 2.56 percent zinc. The best intersection of the first three holes was in U031, which cut 43.9 meters grading 3.01 g/t gold, 76 g/t silver, 2.25 percent copper and 8.66 percent zinc.
Heatherdale said all six holes drilled through mid-December have intersected massive sulfide mineralization in the high-grade ore body.
"We are very pleased with the first results received from our ongoing drill program and the inherent validation of our geological model," Heatherdale President David Copeland said. "When Heatherdale recently acquired a controlling interest in the Niblack property, our senior technical team worked collaboratively with our project partners to re-interpret the geological setting of the entire property and identify prospective new deposit targets hosting high-grade mineralization. Today's assay results confirm the quality and accuracy of that geological interpretation, and represent a positive first step in advancing the opportunity at Niblack."
The junior will be delivering a second rig to the deposit and expects to have it drilling by the first of the year. Plans are to complete a series of fan drill patterns from stations positioned at intervals along the open extension of the ore body.
Heatherdale said it plans to continue to trace the mineralization with subsequent drill programs.
"From a geological standpoint, there is nothing constraining this deposit from continuing to plunge to the southwest as it is," Cousens said.
Though the current focus is on expanding the Lookout zone, the company also plans to explore the larger potential of the 6,200-acre Niblack property.
"There are some historic high-grade intercepts within this camp that require us to go back, understand the geology as we have done with the Lookout zone, and further define the high-grade resources that exist within the known discoveries," Cousens said.
"The Lookout zone is the focus of the work right now, but it is only the beginning of our involvement with this project," he added.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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