Heatherdale Resources Ltd TSXV:HTR and Niblack Mineral Development Inc TSXV:NIB announced Heatherdale’s intention to acquire all outstanding shares of Niblack for one-half Heatherdale share for each Niblack share. Heatherdale anticipates issuing approximately 18 million shares to complete the transaction. Options and warrants that are converted to Niblack shares before closing will be entitled to participate. Each unexercised Niblack warrant will be eligible for one-half Heatherdale share at an exercise price of $1.20 for warrants that have an exercise price of $0.45 and $1.73 for warrants that have an exercise price of $0.65. All unexercised options will be cancelled for $0.01 per option.
The transaction is subject to negotiation of a definitive agreement, a favourable opinion by Niblack’s board, approval by Heatherdale’s board, a 66.66% vote by Niblack’s shareholders, option holders and warrant holders, as well as approval by the Alberta Court of Queen’s Bench.
Heatherdale and Niblack are joint venture partners in the Niblack Project in Alaska, where Heatherdale acts as project operator. Heatherdale also holds a 60% interest, with options to acquire a 100% interest, in the mid-stage Delta Project, which complements the Niblack Project.
The Niblack Project has a March 2011 indicated resource estimate of 4.1 million tonnes grading 1.13% copper, 2.32 g/t gold, 2.27% zinc and 38.7 g/t silver for 103 million pounds copper, 308,000 ounces gold, 207 million pounds zinc and 5.1 million ounces silver. The inferred category shows 2.5 million tonnes grading 1.21% copper, 1.77 g/t gold, 2.29% zinc and 25.9 g/t silver for 67 million pounds copper, 142,000 ounces gold, 126 million pounds zinc and 2.1 million ounces silver.
I’ve done a lot of the stakeholder engagement this year, getting to communities in Prince of Wales Island, in Ketchikan, up to Juneau, meeting the people and the legislators. The support for this project is absolutely overwhelming—Pat Smith
President/CEO/Director Pat Smith tells ResourceClips.com, “I hope all shareholders of both companies agree, especially at Niblack Mineral Development, that this is the best way forward for the project. It’s a very positive project. We’ve got very good economics, and it just makes a lot of sense to make decisions as 100% ownership under Heatherdale. I think that brings quite a bit of value to the Niblack shareholders.
“We can have 100% ownership of our other Alaska project, the Delta Project, through an earn-in with our joint venture partner. That brings an earlier-stage exploration program that will add value to Heatherdale’s portfolio,” Smith adds.
“Delta is a volcanic massive sulphide deposit, so it’s similar geology to the Niblack Project. We’ve got the same technical team—in fact it’s the same technical team that recommended Niblack to Hunter Dickinson [a private company that holds controlling interests or affiliations with mining companies to which it provides management and technical services]. That technical team also had their eye on Delta, so when it became available it was recommended for acquisition. Understanding the geology, understanding the techniques and strategies of working in Alaska boded well for Heatherdale. The underlying agreement is an earn-in, so we have minimum work requirements with Grayd Resource [about to be taken over by Agnico-Eagle] to advance the project. We have completed our first million-dollar requirement. We have another $2 million to spend before January 2013, then another $4 million up to 2014. We also have the option to get 100% of the project by issuing shares of Heatherdale to Grayd.
“Delta is in the foothills of the Alaska Range, but it’s very accessible,” he says. “It’s about 18 miles from the Alaska-Canada highway and about 28 miles from a highway junction at the town of Tok. There’s some 4WD access up to the base of the showings, and then the topography grows a bit steeper. There’s a landing strip for flight access.
“The Niblack site has excellent infrastructure,” Smith points out. “It’s on Prince of Wales Island, and there’s a road network that connects with our barge, which is the living quarters for the staff of 35 people. The road network takes you to the old Niblack mine site, and that’s where we keep our core logging and storage facilities. There’s a new road that goes up to the exploration adit. The underground workings were completed in 2008, so we have a very modern four-by-five-metre adit that goes back 2,800 feet, and that’s where we’ve been doing our drilling non-stop ever since Heatherdale took over the project in 2009. We’ve got a water treatment facility, and we’ve got all the environmental baseline work underway.
“We’re now looking for offsite milling options. We’ve got deep water, so we could potentially load the ore onto a barge and move it a considerable distance to a brownfield industrial site where we could set up our processing facility and tailings pond,” he says.
“We’re drilling while we continue our environmental baseline study at Niblack. We completed three holes at Delta this summer, all helicopter drilling. We’ll have results on that within several weeks. That program was completed in late August. That same drill rig came back to Niblack for some surface drilling there.
“I’ve got an awful lot of experience in Alaska,” Smith says. “I started my career near Ketchikan and I love being back. I’ve done a lot of the stakeholder engagement this year, getting to communities in Prince of Wales Island, in Ketchikan, up to Juneau, meeting the people and the legislators. The support for this project is absolutely overwhelming. In fact when we did start talking to people about offsite milling, we actually had some of the state agencies, like the Alaska Industrial Development and Export Authority and others, come to us with suggestions on how to keep the mill and processing facility in Alaska and provide those jobs to the community. So everything is very positive.
“From my point of view, we’re going to mine this project. Hunter Dickinson offers the expertise and technical abilities to support Heatherdale as we move this toward a production decision. I was very excited to work with the Hunter Dickinson group, not only for their technical abilities but their financing abilities and their understanding of business.
“I think we have all the pieces to make a mine,” he concludes. “We’re meeting our threshold on the resource, and we’ll be doing the preliminary economic assessment over the next two months. We can see the offsite milling work and we have some locations that look really good. Very likely we’ll have hydroelectric power to those facilities. We’ve got the political and local stakeholder support for the project. As long as we continue to let people know what we’re doing and provide the jobs locally, the project continues to look positive. All the pieces are there. All we have to do is put them together, and keep this moving forward.”
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by Greg Klein