The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Contemplating development at Niblack, junior grabs earlier-stage Delta
Heatherdale Resources Ltd. has spent more than US$25 million since 2009 on expanding the copper-gold-silver-zinc deposits at the Niblack project on Prince of Wales Island.
This aggressive exploration program, which includes more than 40,000 meters of drilling, has provided the Hunter Dickinson Inc.-affiliated junior with the confidence to advance the Southeast Alaska project toward feasibility.
"Drilling over the past two years has affirmed the potential of the Niblack project. The volume and grade of mineral resources at Lookout and Trio announced earlier this year, established a base to advance the project," said Heatherdale President and CEO Patrick Smith. "Initial engineering and technical studies for the completion of a preliminary economic assessment, as well as the foundation for a prefeasibility study for the project are also under way."
Now contemplating the viability of building a mine at that precious metals-enriched volcanogenic massive sulfide project, the company has added Delta, an earlier stage VMS prospect located in eastern Interior Alaska, to its portfolio.
"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," Smith said.
Niblack PEA planned
To realize the near-term opportunity for its shareholders, Heatherdale is rapidly moving Niblack toward feasibility, while increasing its ownership of the VMS project.
Based on 308 holes drilled by Heatherdale and previous operators a resource estimate released in early March outlined an indicated resource at the Lookout and Trio deposits of 4.1 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. These deposits have an additional inferred resource of 2.49 million metric tons grading 1.21 percent copper, 1.77 g/t gold, 2.29 percent zinc and 25.90 g/t silver.
Inside the larger resource at Lookout, 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.
An agreement penned between Heatherdale and Niblack Mineral Development Inc. in 2009 provides Heatherdale the option to incrementally increase its interest in the Niblack project. By the beginning of 2011, Heatherdale earned an initial 51 percent stake in the project by spending US$15 million on exploration. Eight months later, the company spent an additional US$10 million, boosting its ownership to 60 percent.
In October, the partners agreed to further consolidate the ownership of the Niblack project through a friendly acquisition. Under the terms of the agreement, Heatherdale will buy out its partner's common shares, on the basis of one-half of a Heatherdale share for every Niblack share.
"Having reached the next stage at the Niblack project, we believe that this transaction will provide Niblack investors, along with Heatherdale investors, with the opportunity to participate in the future growth of the combined company," said Heatherdale Chairman Scott Cousens.
Heatherdale has completed some in-house scoping for the Niblack project and expects to have a 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.
Beyond Lookout
Though the Lookout and Trio zones have demonstrated the volumes and grades to consider the viability of building a mine, the modeling done by Heatherdale the horizon that hosts this mineralization extends more than 10 kilometers (6 miles), of which only about 2 kilometer (1.2 miles) has been well tested by the successful drilling campaigns in the Lookout area.
In July, Heatherdale announced that it had struck a new zone of deeper mineralization between Lookout and Trio rich in gold and silver. Five of the six holes targeting this lower stratum cut mineralization. U123, the best hole of this series, cut 2.4 meters averaging 19.51 g/t gold, 263 g/t silver and 1.67 percent copper. Heatherdale said this zone, which confirms a hypothesis of a repetitive zone of mineralization at depth, will add ore to the deposit.
The exploration drift from which Heatherdale is conducting its underground drilling is collared into the Mammoth zone about 915 meters northwest of Trio. Historically, narrow widths of sea floor accumulation style mineralization were intersected in several holes in this area but limited drill efforts had been made to extend those intersections along strike or down dip. The Heatherdale team reviewed the historic data and designed a series of drill fans to better assess these mineralized zones. Significant intersections were encountered in drill holes U112 and U114, indicating good potential.
U112 cut 5.8 meters averaging 3.32 percent copper, 0.49 g/t gold, 3.14 percent zinc and 28 g/t silver; including 2.2 meters averaging 6.78 percent copper, 0.99 g/t gold, 7.07 percent zinc and 59 g/t silver.
With an enhanced understanding of the VMS mineralization at Niblack, Heatherdale 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, which 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 here.
From the historical mine, the mineralization appears to turn sharply to the southeast and could continue for some 5,000 meters in this direction. A historical hole drilled in the Dama zone - located about mid-way along this projected path of mineralization - cut 19.2 meters averaging 6.4 percent copper, 1.37 g/t gold, 53 g/t silver and 3.2 percent zinc. A copper-in-soil anomaly extends along the projected mineralized path beyond Dama.
Heatherdale is utilizing a helicopter-mobile surface drill to test this mineralized trend.
"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.
Mid-stage opportunity
In July, Heatherdale moved its surface drill from Niblack to conduct a 30-day drill program at Delta, an earlier phased VMS project the junior picked up in February.
While surface drilling at Niblack can be conducted year-round, Delta, located in Interior Alaska about 58 kilometers (36 miles) southwest of the town of Tok, is best drilled during the summer months
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 revealed 40 mineral occurrences on the property, seven of which have had inferred resources calculated for them.
"Delta is not by any means a greenfield 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.
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 seven occurrences in three southeast to northwesterly trending horizons.
Heatherdale's 2011 drill program focused on a 100-acre-, or 40-hectare-, area that encompasses these deposits.
Work by previous operators at Delta revealed numerous occurrences of massive sulfides in three southeast to northwesterly trending horizons that stretch more than 19 kilometers (12 miles). Heatherdale said there is strong potential for expansion of known resources and to discover new deposits across the 39,840-acre property.
Before vending the property to Heatherdale, Hunter Dickinson, which optioned the property in 2010, completed an extensive evaluation of the prospect, including a 725-line-kilometer versatile time domain electromagnetic geophysical survey flown over the entire 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.
"The Heatherdale technical team has done an excellent job defining top rank targets for drill testing. These exciting new targets are the result of detailed compilation of historic data combined with an analysis of the airborne versatile time domain electro-magnetic geophysical survey completed over entire Delta district in 2010," said Smith.
Along with the drilling, Heatherdale's exploration team is further evaluating and sampling a variety of other potential drill targets on the property.
"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 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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