The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Hunter Dickinson-affiliated junior options precious metal-rich Delta in Interior, while it considers underground mining at Niblack
Since the formation of Heatherdale Resources Ltd. in the latter half of 2009, the Hunter Dickinson Inc.-affiliated junior has spent more than US$20 million exploring the Niblack gold-copper-zinc-silver project in Southeast Alaska. Now contemplating the viability of building a mine at that precious metals-enriched volcanogenic massive sulfide project, the young junior has added Delta, an earlier stage VMS prospect located in eastern Interior Alaska, to its portfolio.
"Our underground exploration program at Niblack has proceeded with efficiency and a great deal of success over the past 18 months, to the degree that we are rapidly moving toward a project development phase," said Heatherdale President and CEO Patrick Smith. "With the addition of another Alaska VMS project at Delta, we can take advantage of the technical knowledge and insights of our geological team, as well as our growing corporate presence in Alaska, to move two similarly promising projects at different points in the development curve forward in a timely and efficient way, thereby securing both short-term and long-term value for shareholders."
After optioning Delta from Grayd Resources Corp. in March 2010, Hunter Dickinson was seeking a home for the project and offered it to Heatherdale for consideration, as the junior was the ideal vehicle to explore the Interior Alaska property.
"I looked at the project and said it fits perfectly with our team, our knowledge base and our technical base," Smith told Mining News during a May 12 interview. "Delta provides us with a great growth portfolio in the company. So we can focus on Niblack, bring that into production, and, at the same time, bring Delta along as second opportunity."
Heatherdale is currently kicking off a nearly 3,000-meter helicopter supported drill program at Niblack. Once crews have finished investigating surface targets at the Southeast Alaska project, they will conduct a similar scale program at the Delta project about 36 miles, or 58 kilometers southwest of Tok.
"We have a surface drilling program that is just starting now at Niblack, and it will be a helicopter mobile drill rig that we will move around on some of our surface targets. When that drilling is finished, say mid-July, we will move that entire team up to Tok and do a couple of months worth of work at Delta," explained Smith.
To continue its rapid expansion of Niblack and fund its inaugural drill program at Delta, Heatherdale has initiated a private placement financing of up to C$25 million with a number of accredited investors, including participation by company insiders.
Mid-stage opportunity
Found on the northern slopes of the Alaska Range about 19 miles, or 30 kilometers, south of the Alaska Highway, Delta has been investigated by a number of exploration companies since VMS mineralization was discovered there 35 years ago. This segmented historical exploration, which includes 23,711 meters of drilling, has discovered 40 mineral occurrences on the property, seven of which have had inferred resources calculated for them.
"Delta is not by any means a greensfield opportunity; it's been explored in the past, mostly by Inco, and has an inferred resource put together from that work. And that resource has similar gross metal values as Niblack does," Smith explained.
Before turning the property over to Heatherdale, Hunter Dickinson completed an extensive evaluation of the prospect, including a 725-line-kilometer versatile time domain electromagnetic geophysical survey flown over the 39,840-acre land package.
This encompassing assessment helped unify the information from the disjointed historical exploration and earned the privately-held company an initial 60 percent stake in the property.
To earn Hunter Dickinson's 60 percent joint venture interest in Delta, Heatherdale must spend US$3 million on the property by the end of 2012 and issue 4 million shares. Upon completion of its initial contribution, the junior has the option to increase its ownership to 80 percent by spending an additional US$4 million at the VMS project and issuing C$2 million worth of its stock by the end of 2013. The junior can then purchase the remaining 20 percent stake in the property by issuing up to C$6 million in company stock, depending on the share price at the time.
"The agreement with Grayd and Hunter Dickinson Acquisitions allows us to acquire 100 percent of the project, which is excellent," Smith said. "And, it has drill-ready targets so we are pretty excited about getting out there this summer!"
Expanding Delta's resources
The 39,840-acre Delta property lies within the Yukon-Tanana Terrane. Largely under-explored, this assemblage arcs from Alaska's Eastern Interior across southern Yukon Territory and into northern British Columbia. Several clusters of VMS mineral occurrences are known in the Alaska portion of the terrane.
Massive sulfides at the Delta property are hosted in three southeast to northwesterly trending horizons: The Upper Lagoon Series with a strike length of about 9.5 miles, or 15 kilometers; the Lower Lagoon Series with a similar extent; and more localized occurrences in Drum Series rocks. Heatherdale reports that a 12.5-mile-, or 20-kilometer-long, thrust-fault repeated section of the Lagoon Series also hosts sulfide mineralization.
"Delta is an earlier-stage project, but it also represents an emerging massive sulfide district with the potential to be in the top tier of global districts of its type," Smith commented.
An inferred resource of 15.4 million metric tons grading 0.6 percent copper, 1.7 percent lead, 3.8 percent zinc, 62 g/t silver, and 1.7 g/t gold. This resource, , estimated at a cut-off of US$80 per metric ton over a 2.4 meter width, is distributed amongst five deposits in three southeast to northwesterly trending horizons.
Four of the deposits in the resource - LP, MID, DW and LPH - are considered to be four sections of what was once a continuous sulfide sheet that has since been broken by faulting. According to an NI 43-101 report prepared for the project in 2006, these four zones, known as DW-LP, have the potential for significant expansion. While additional drilling is needed to validate the concept, geologists believe this sulfide system could contain some 20-25 million metric tons of ore.
A fifth deposit, known as PP2, was originally thought to be a part of DW-LP sulfide sheet, but was later determined to be a deeper sulfide layer.
Heatherdale plans to drill some 3,000 meters in the 100-acre-, or 40-hectare-, area that encompasses these deposits. This 10-hole program is designed to confirm and expand upon the historical drilling in the region.
The DDN and DDS deposits - located about 4 miles, or 6 kilometers west of DW-LP - contain significantly higher grades of copper silver and gold than the five other deposits included in the resource. These deposits, which are considered to be related, are open for expansion and have about 1,200 meters of untested area lying between them.
Trio and Supercub, two prospects not included in the resource, hold the promise for new high-grade discoveries at Delta.
Large boulders found about 1.5 miles, or 2.5 kilometers northeast of DW-LP averaging 7.3 percent lead, 5.6 percent zinc, 113 g/t silver and 0.7 g/t gold led geologists to Trio. Originally thought to be massive sulfide outcrops, these enormous stones and the surrounding region was later determined to be part of a landslide area. The source of the sulfides has yet to be discovered.
Massive sulfide boulders led explorers to Supercub, another prospect located about 1,500 meters northwest of Trio. These high-grade rocks, which average 25 percent combined copper, lead and zinc plus 200 g/t silver and 11.3 g/t gold, are believed to be transported by glacier from a location indicated by a geophysical anomaly. Only one hole, which did not cut massive sulfides, has been drilled in the prospective area.
Niblack PEA planned
Though Heatherdale is excited about its new asset, the advanced Niblack project is the junior's flagship project and primary focus in the near term. By January of this year - only 17 months after Hunter Dickinson entered into a joint venture with Niblack Mineral Development Inc. - Heatherdale and its parent company spent US$15 million at the Southeast Alaska VMS deposit, earning an initial 51 percent stake in the project. Smith said the company will likely spend an additional US$10 million by the end of 2011 increasing its ownership to 60 percent.
"We are focused on exploration and development of high-value mineral deposits and with Niblack we have very high-value precious metal-rich ore. That is our flagship project and we are advancing that as aggressively as we can toward a development decision," Smith told Mining News.
A new mineral resource estimate - based on about 28,000 meters of drilling completed by Heatherdale through the end of 2010 - boosted the total indicated resource at the project by 60 percent and increased the inferred resource by 46 percent in terms of tonnage. The aggressive drill program has expanded the overall resources in the project's Lookout and Trio zones by 54 percent.
A resource estimate released in early March outlined an indicated resource at the Lookout Zone of 4.14 million metric tons averaging 1.13 percent copper, 2.32 grams per metric ton gold, 2.27 percent zinc and 38.7 g/t silver. Lookout has an additional inferred resource of 1.74 million metric tons grading 1.09 percent copper, 1.77 g/t gold, 2.02 percent zinc and 25.52 g/t silver.
Inside the larger indicated resource at Lookout resource, which was calculated at a US$50 net smelter return cut-off, Heatherdale has delineated a higher-grade core that it considers to be an ideal starter zone as the company contemplates building an underground mine at Niblack. Using a US$150 NSR cut-off, this core zone contains 1.46 million metric tons averaging 1.73 percent copper, 3.5 g/t gold, 3.84 percent zinc and 61.6 g/t silver.
The Trio Zone - which is located about 400 meters from the Lookout zone as the VMS mineralization plunges to the east - adds an inferred resource of 756,000 metric tons averaging 1.5 percent copper, 1.75 g/t gold 2.91 percent zinc and 26.65 g/t silver.
This resource provides the project with enough ore for Heatherdale to begin scoping the viability of building a mine at Niblack.
"We know there is tremendous potential to further expand areas of high-grade mineralization at Niblack, and we have a drilling program underway in 2011 that will target resource expansion at Lookout, Trio and other known VMS deposits to achieve that goal," said the Heatherdale President and CEO. "We have also defined mineral resources with sufficient volumes and grades, including a significant high-grade core, to initiate engineering and other technical studies towards the completion of a preliminary economic assessment for the Niblack Project," he added.
The company has already completed some in-house scoping for the project and expects to have the preliminary economic assessment completed by the end of the year. Depending on the results of the PEA, a prefeasibility study will likely follow in 2012.
Exploring Niblack
Smith credits Heatherdale's skilled geological team for unlocking the high-grade potential at Niblack to a point where the company can begin to look at the economics of building a mine at the project. Though the junior has enough tonnage to initiate a PEA for Lookout and Trio, this year's drill program will continue to aggressively expand these deposits.
In addition to continuing to expand Lookout and Trio from underground, the 2011 surface drill program will investigate these deposits from above. Smith said these zones, including the potential westward expansion of Lookout, are prospective toward the surface.
The surface program - which started in mid-May - will also begin to investigate some of the other promising targets across the 6,200-acre Niblack property.
"It is the first time, really, that the team has been able to get out there and do some exploration drilling," Smith told Mining News.
Heatherdale's nearly two years of exploration has provided the team with a new understanding of the VMS mineralization at Niblack. With this knowledge the geologists have generated some new ideas about additional targets as the VMS mineralization wends its way through Lookout Mountain. One such target is in the area of the historical Niblack Mine.
"Where we are going to start our work, which I am really excited about, is right at the old Niblack Mine site," Smith said.
From 1905 to 1908 miners extracted some 20,000 tons of ore grading 4.9 percent copper, 2.2 g/t gold and 30 g/t silver from underground workings at Niblack.
The Heatherdale leader explained that the company's 3-D rock-model has delineated some promising targets near the historical mine site.
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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