by Greg Klein

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A conference in the middle of this market? Investors look shell-shocked. Mining and exploration CEOs wonder whether to eat their children. In times like these, why would anyone bother attending the World Resource Investment Conference 2013? Well, according to Rick Rule, it’s the ideal time.

The May 26 and 27 Vancouver event certainly boasts an ambitious agenda. With nearly 150 exhibitors and over 35 corporate presentations, WRIC will also feature talks, seminars, workshops and panel discussions presented by about three dozen experts and analysts with any number of informal spinoff functions taking place as well. Rule will be there with his own talk and workshop, but also in his capacity as chairman of Sprott US Holdings. As a renowned contrarian, his thoughts might be dismissed as outrageous. But they’ve made Rule and his company very, very rich.

Rick Rule: “It’s precisely in markets like these that the intelligent and aggressive application of capital builds performance-driven organizations like Sprott.”

So why WRIC—especially in times like these?

“I think it’s precisely in times like these that conferences like this are most appropriate,” he responds. “The truth is that bear markets cause bull markets and bull markets cause bear markets. The paradigm that was present in 2006 and 2010, in other words bull market tops, is present today in global money printing, global deficit spending, global resource consumption—none of those things have changed. What has changed is the market’s outlook and the price of assets. It makes perfect sense that if you’re trying to make money in markets you follow the old adage: Buy low and sell high.

“If nothing else has changed besides the price, and if the prices are 70% off, you would describe the current market conditions as a sale,” Rule adds. “In all goods except financial assets, people look at sales as a good thing. People who begin to shop for financial assets as rationally as they shop for physical assets will do well.

“Simultaneously, companies who exhibit at times like these will show a forward-thinking nature and will be able to build constituencies that will serve them well, both in bear markets and bull markets. I have found in over 30 years of conference participation—and this is going to sound very harsh—the median IQ at a bear market conference is substantially higher than at a bull market conference, and the median net worth among the people who have the good sense to shop for bargains as opposed to shop when it’s popular is much, much higher.

“The set of circumstances that we’re involved in right now is precisely the set of circumstances which caused Sprott to become a $10-billion organization. Having the foresight and courage to invest aggressively in market bottoms set the stage for the performance we enjoyed coming out of the early ’90s bear market and the bear market that lasted from 1998 to 2002. It’s precisely in markets like these that the intelligent and aggressive application of capital builds performance-driven organizations like Sprott.”

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by Greg Klein

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More high-grade, near-surface results from Fission/Alpha’s Patterson Lake South

The best assay yet from Patterson Lake South’s R00E zone hit the news on May 16. That’s when the Fission Uranium TSXV:FCU and Alpha Minerals TSXV:AMW joint venture reported nine more holes from last winter’s 46-hole program. Some highlights include:

• 4.8% U₃O₈ over 22 metres, starting at 67.5 metres in downhole depth
• (including 20.73% over 4 metres)
• 3.56% over 18 metres, starting at 75.5 metres
• (including 11.95% over 4.5 metres)
• 1.93% over 18.5 metres, starting at 64.5 metres
• (including 8.04% over 2.5 metres)
• 0.87% over 10.5 metres, starting at 62 metres
• (including 2.01% over 3.5 metres)
• 0.23% over 21 metres, starting at 64 metres.

True widths weren’t available. Further assays are pending.

The shallowest of the project’s three discovery zones, R00E shows continuous mineralization for 120 metres of strike and remains open in all directions. The 50-50 partners consider it a priority for next season’s drilling on the property that caused so much activity in and around the Athabasca Basin’s southwestern rim.

Noka, Lucky Strike earn-ins finance Skyharbour exploration in PLS region

Two option agreements have Skyharbour Resources TSXV:SYH financed to explore one of the PLS region’s largest land packages. The company granted Lucky Strike Resources TSXV:LKY and Noka Resources TSXV:NX each a 25% earn-in on seven properties totalling 161,755 hectares. In deals announced May 14 and 16 respectively, each company pays Skyharbour $100,000 and funds $500,000 of exploration a year over two years. Noka issues Skyharbour 640,000 shares, while Lucky Strike issues the optionor two million shares. Skyharbour remains project operator and retains a 2% NSR on approximately 46,000 hectares the company staked directly while a vendor holds a 2% NSR on the rest of the package.

Events have moved quickly since March, when the company announced its entry into the region. “Now that we’ve brought in these two partners we’ve recuperated the $200,000 all-in costs in the initial outlay, we have a 10% equity position in both companies and their work commitment is half a million each for a total of $1 million a year for two years,” says Jordan Trimble, Skyharbour’s manager of corporate development and communications. The seven properties involved in the agreements include Wheeler, on the Basin’s eastern flank.

But exploration will focus on the PLS area, starting with a joint airborne survey that will fly properties held by Skyharbour and at least three other companies. “Given that we have such a large land package, the most effective way to do the geophysics is to put together a team to share expenses,” Trimble says.

He expects the survey to take two or three weeks, followed by a few weeks of interpretation and a summer of fieldwork. “You can work there until October and then winter is the best time to drill.”

He sees other advantages too. “We’ll be using the same methodology that Alpha and Fission employed. They spent the last four or five years refining the exploration methodology in this area. It’s unique because it’s outside the Basin. If you read their technical report, they have a very refined process and specific geophysical targets that they look for in conjunction with radon anomalies and boulder fields, etc. Given that we don’t have to re-invent the wheel, we’re hoping to have drill targets by the end of the year.”

He adds, “We had our foot to the pedal to do these deals with Noka and Lucky Strike so we can get to work without having to go back to the market.”

Alpha’s PLS discovery team looks north

While Fission toils as PLS project operator, the Alpha team that made the discovery has turned its attention farther north. Along with JV partner Acme Resources TSXV:ARI, Alpha’s studying reports from previous operators on their Skull Lake claim adjacent to the former Cluff Lake mine, which gave up 60 million pounds of uranium by 2005.

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by Greg Klein

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Just the stuff to develop bigger and healthier crops, potash complements a world growing in population and appetite. Two contrasting companies pursuing the commodity are Western Potash TSX:WPX, the most advanced junior in the space, and Pacific Potash TSXV:PP, with a very big but early-stage property optioned from Western. Those differences aside, both companies have seen a general upturn in share price over the last month.

Pacific Potash TSXV:PP chart
for the month ending May 16, 2013.

Pacific’s V.P. of corporate communications Mike Blady largely attributes his company’s stock performance to a $2.25-million financing announced in April. The money will fund exploration on the Amazonas project in the Brazilian potash basin of the same name, a region that’s being compared in size and geology to Saskatchewan’s prolific potash region.

With 796,000 hectares, Pacific holds a substantial chunk of property. Even so, it’s been trimmed from its original size of over 1.5 million hectares. Last September the company dropped claims to the south that involved indigenous communities, protected forests or inaccessible terrain. Much of the remaining land had already been cleared. A 43-101 technical report followed in November.

Parts of the property might be remote but “there are several cities within our claim blocks, with 40,000 to 100,000 inhabitants,” Blady explains. “There are roads in and around the cities but the majority of the property is accessible by boat through tributaries of the Amazon River,” which he calls “the super-highway for commerce in most of Amazon state.”

The location offers an even greater advantage—an already huge domestic potash market with a faster rate of increase than anywhere else on the planet.

Pacific Potash hopes to begin drilling its
Amazonas property in September or October.

“Brazil has a very large agricultural sector but almost zero domestic production,” Blady points out. The country currently imports over 90% of its supply from places as distant as Canada, Russia and the Middle East, he says. Shipping costs add about $175 to $225 per tonne to the price, compared to an estimated $40 to $60 for shipping if a local mine were developed. Consequently “the government’s very supportive of these projects. Brazil’s trying to increase domestic production to 60% of demand by 2020. They’re very interested in seeing this basin get developed, which is great for a company like us.”

He adds, “In Brazil, agro-business is the fastest-growing industry and one of the government’s largest cash generators. It’s expected that Brazil will have the largest sustained growth in potash consumption over the next 50 to 100 years as it still has 20% of the world’s remaining arable land. Brazil is the number one growth market for fertilizer and potash. It’s growing even faster than China for potash consumption.”

That potential attracted Asian capital to Pacific’s recent $2.25-million financing. A first tranche of $1.25 million closed last month while another $1 million from Sino-Canada Natural Resources Fund is being held in trust until May 31. That’s the day shareholders decide whether to approve a change of control in which the fund would hold about 18.1% of Pacific’s outstanding shares and nominate a co-chairman and director.

Sino-Canada plans to invest more than $500 million over two years in Canadian natural resource companies.

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The money comes from the Natural Sciences and Engineering Research Council, a federal agency that’s contributing $5.1 million, and the Canada Mining Innovation Council, an industry group that’s putting up $2.8 million in cash and another $3.9 million in kind. The project will involve over 40 geoscientists from universities across Canada.

Barrick VP Francois Robert discusses Footprints
at a CMIC event prior to the funding announcement.

“Essentially the work we’re pursuing will allow us to better detect the subtle signals or ‘footprints’ of mineral deposits far below the surface,” stated Michael Lesher, research chairperson in mineral exploration and professor of economic geology at Laurentian University. “It will help us devise better tools for remotely sensing deeply buried ore bodies and, ultimately, we believe it can improve the way we approach mineral exploration and resource development in Canada and around the world.”

Francois Robert, VP and chief geologist for global exploration at Barrick Gold TSX:ABX, said the project “results from an unprecedented level of collaboration among the exploration industry, service providers, government institutions, researchers and universities. Such a level of collaboration sets a new standard for our industry.”

An NSERC statement added that grants like these “enable companies to access the expertise, knowledge and facilities at universities and provide training to students in the essential technical skills required by industry.”

In a separate news release CMIC exploration research director Alan Galley said, “The buy-in of a broad range of service providers as well as industry sponsors was crucial to ensuring the project had a commercialization component. Most research proposals include acquiring data and generating knowledge, but Footprints includes commercialization as the extra step towards true innovation.”

Watch a video of Francois Robert discussing the Footprints project: Exploration can be “like trying to find a needle in a haystack but through the roof of a barn.”

by Greg Klein

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Updated results:

• BC Liberals 50 seats, 44.4% of the vote
• NDP 33 seats, 39.5%
• Greens 1 seat, 8%
• Independent 1 seat, 3.3%

If British Columbia’s mining and exploration sector needed a massive jolt of reassuring news, they got it May 14. The pollsters were wrong, the pundits were wrong and the winners might be as surprised as the losers are disappointed. Although the popular vote was close, the BC Liberal party won an historic fourth term, handily defeating the New Democratic Party.

Christy Clark’s campaign emphasized the economy with appearances
at work sites throughout the province. (Photo: BC Liberals)

Or did the NDP defeat themselves? Adrian Dix, the party’s choice for new leader 13 months ago, was widely considered an NDP hardliner. He played a prominent role in B.C.’s last NDP government, which is blamed for the “dismal decade” of 1991 to 2001, when the province’s economy tanked despite robust performance in other parts of the country. For possibly the first time in its history, B.C. saw a significant exodus of job-seekers. In addition to low metal prices and Bre-X, exploration and mining were hammered by NDP policies. As the BC Liberals like to say, when the NDP governed “two mines closed for every one that opened.”

More recently, Dix tried to soften his image. But he remained vague about his intentions even though—or because—he leads arguably the most extreme left-wing party in mainstream North American politics. In several conversations with ResourceClips prior to the election, exploration and mining company executives spoke with dread of another NDP government.

Now, it turns out, they needn’t have worried. But apart from removing a widely perceived threat, what exactly does a BC Liberal victory mean to the sector?

That’s not easy to say. Mining didn’t play a prominent role in the election, despite the efforts of four industry organizations behind the Vote Mining campaign.

Moreover, under Christy Clark’s leadership the once business-friendly party has shown policy confusion and a lack of conviction. Her government never explained its rejection last October of Pacific Booker Minerals’ TSXV:BKM proposed Morrison copper-gold-molybdenum mine, which received a favourable environmental assessment report. The company launched a lawsuit in April after spending about $30 million on the project, including over $10 million on the decade-long environmental process.

When news broke that HD Mining plans to staff its proposed Murray River coal mine exclusively with Chinese underground workers, the BC Liberals couldn’t say enough good words about the scheme. The government knew that Chinese interests had similar plans for other B.C. coal projects since at least 2007.

Even under Clark’s more capable predecessor, policy wonk Gordon Campbell, the BC Liberals could sow uncertainty. A sudden ban on uranium and thorium exploration in 2009 led to a $30-million out-of-court settlement for Boss Power TSXV:BPU.

By the BC Liberals’ first 10 years in office, BC Hydro built up at least $2.2 billion in deferred debt that’s expected to reach $5 billion by 2017. The burden calls into question the public utility’s ability to build infrastructure and provide inexpensive electricity to homes, businesses and industry.

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by Greg Klein

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Fission/Alpha conduct radon survey at Patterson Lake South

What? Two weeks without assays from Patterson Lake South? No scintillometer readings either? Taking a break from reporting drill results, Fission Uranium TSXV:FCU and Alpha Minerals TSXV:AMW instead revealed a survey showing “the strongest radon-in-water anomaly to date,” the companies stated on May 6. That result was 13.3 pCi/L, found about 170 metres northeast along strike of the project’s R780E zone.

By the way, pCi/L stands for “picocuries per litre.” But you knew that, didn’t you? Regardless, all those picolitres per whatever suggest good news for a project that based its initial drill targets on these measurements of radon gas, which is released by radioactivity. Those targets found two of three discovery zones featuring the high-grade, near-surface assays that sparked the acquisition rush around the southwestern rim of Saskatchewan’s Athabasca Basin.

Overall the survey found six radon anomalies, in addition to the original five, “all associated with known conductors and offsetting structures.” One anomaly was found as far as 1,500 metres along strike of R780E. The 50-50 joint venture partners now plan summer drilling from barges on the lake and further radon surveys next winter.

Forum, NexGen release NW Athabasca assays

A JV within a JV, Forum Uranium TSXV:FDC and NexGen Energy TSXV:NXE reported assays on May 9 for their Northwest Athabasca project. Highlights from Zone A show:

• 0.14% U₃O₈ over 3 metres, starting at 80.5 metres
• 1.34% over 3 metres, starting at 88.5 metres
• (including 1.86% over 1.5 metres)
• (which includes 2.48% over 0.5 metres).

True widths weren’t available.

A result from the Barney zone showed:

• 2.32% U₃O₈ over 0.5 metres, starting at 169 metres.

Still pending are assays for a 30-metre interval of uranium mineralization at the project’s Otis West zone, the partners stated. Zone A lies on the north side of the Maurice Bay deposit, which has an historic, non-43-101 resource of 1.5 million pounds uranium averaging 0.6% U₃O₈.

Forum and NexGen may earn 30% each of the project, which would leave Cameco Corp TSX:CCO a 27.5% interest in its JV with AREVA Resources, which holds the remaining 12.5%. Forum acts as project operator. NexGen made its Venture debut on April 23.

Yellowjacket offers $600,000 private placement, plans airborne survey

Having announced a $600,000 offering on April 30, Yellowjacket Resources TSXV:YJK followed up on May 10 with plans to begin flying its claims in the Patterson Lake South vicinity later this month. “The airborne survey will cover approximately 2,910 line-kilometres using VTEM-plus, EM and magnetometer arrays, with an additional 1,700 line-kilometres of radiometric sensor coverage,” the company stated. Results are expected in late July.

The private placement would issue up to 5 million units at $0.12, with each unit consisting of one share and one-half share warrant. Each whole warrant will be exercisable for a share at $0.20 for 18 months. If the shares trade at or above a volume-weighted average of $0.30 for more than 10 consecutive trading days, any unexercised warrants will expire 30 days after the company issues written notice.

Yellowjacket will use the proceeds for its Saskatchewan uranium projects and general working capital. With over 158,000 hectares, the company says it’s the largest claim holder in the Patterson Lake area.

Zadar acquisition approved

Zadar Ventures’ TSXV:ZAD 100% option on the Bull Run project cleared TSXV approval, the company reported on May 10. First announced April 17, the 9,185-hectare acquisition consists of three blocks in the southwestern Basin. In return Zadar pays $265,000 and issues 550,000 shares over six years, as well as spending $50,000 by July 2015 and $100,000 by July 2016.

Last month the company picked up the 2,729-hectare Upper Poulton Lake property adjoining the Richmond Lake project, part of the former Fission Energy portfolio acquired by Denison Mines TSX:DML in April. The same month Zadar announced completion of its 60% earn-in on the 17,300-hectare Whiskey Gap uranium project in southwestern Alberta.

Athabasca Uranium expands

Athabasca Uranium’s TSXV:UAX eastside Basin portfolio grew by 10,157 hectares with the Fisher River option announced May 7. Three kilometres north of the company’s Keefe Lake project, it’s contiguous with the southern part of UAX’s McCarthy Lake project and some Denison claims.

The property’s Fisher River zone features “conductive targets near or at the unconformity and associated with faulting” which the company stated “are typically the mainstay of uranium exploration” in the Basin.

Additionally the zone “appears to be crosscut by a series of northwest lineaments, which is significant as secondary faulting greatly improves a target’s quality—deposits such as Shea Creek and McArthur River are unequivocally associated with cross-faulting. Unconformity depths at Fisher are shallow, estimated to be between 125 to 170 metres,” the company added.

The vendor gets $10,000 and 3 million shares up front and another $500,000 by the fourth anniversary, along with a 1% NSR. Athabasca Uranium may buy back half the NSR for $1 million.

The company also announced it’s reviewing a recently completed model of its Keefe Lake project by the University of Saskatchewan geophysical team prior to determining the Phase 3 drill program. Athabasca Uranium holds over 70,000 hectares in the eastern Basin.

Uravan to fly Stewardson Lake, review Halliday Lake

Uravan Minerals TSXV:UVN reported on May 7 news from its Stewardson Lake and Halliday Lake projects, both under option to Cameco. Stewardson, in the south-central Basin, will get a heli-borne EM survey over 779 line-kilometres with 500-metre spacing in June. A ground EM survey will follow, along with geochemical sampling on the 21,349-hectare property. The company is now interpreting ground geophysics undertaken last March on the 2,169-hectare Halliday project in the eastern Basin.

While Uravan acts as project operator, Cameco has an option to earn up to 70% of the two projects by funding a total of $22 million.

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by Greg Klein

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We’re about three and a half hours north of Vancouver, bouncing up a rough mountain road in a four-wheel-drive. The objective? To check out what Ryan Sharp calls “a grassroots exploration company with a producing mine. Or the other way around—a mining company with blue sky exploration potential.” He wants people to see for themselves Huldra Silver’s TSXV:HDA Treasure Mountain and Thule projects because, he says, “We’re not a paper company.” In particular, the nearly 3,000-hectare Treasure Mountain silver-lead-zinc operation hasn’t been divulged on paper nearly to the same extent as most working mines.

Huldra Silver CEO
Ryan Sharp

“Other mines have gone into production without a feasibility study,” he points out. “Others have done it without a PEA. But very few have gone into production without a resource estimate.”

Well, there was a resource back in 2009. But Sharp maintains it was based on limited data. After investigating the company and its assets, he became convinced of far greater potential. That was in March 2010, when he was invited to join the company as president/CEO/director. Two months later he visited Treasure Mountain for the first time, driving up the logging road without a map. “I got all the way to the mine property without seeing another vehicle, and got out. I started walking through the snow, came across grizzly tracks and ran back to the vehicle. I found my way back to the Coquihalla Highway even though I’d never been up here before, and went home that night.”

But he returned, spending months at a time living in a trailer furnished with an air mattress. “I hiked the hills, I studied the rocks. I was the first person in 40 years to question the geology.” And to complement the geology was some infrastructure—a four-level underground mine built by Huldra in the late 1980s but never put into operation.

He sunk “pretty much 100% of my savings in it” and enticed investors to the site, including Coeur d’Alene TSX:CDM, which currently holds about 10% of Huldra. Financing continued with, most recently, $10 million in convertible debentures that closed last February.

Uphole drilling has brought better core recovery
from Huldra’s underground stations.

To get the mine up and running Sharp hired manager Al Beaton, whose worldwide experience includes a past stint with Huldra during Treasure Mountain’s 1980s development stage. Experienced workers signed up, attracted in part by one of the best locations and climates Canadian miners could hope for. Sharp attributes considerable cost savings to using his own staff, instead of contract mining.

Sharp’s background, on the other hand, might be atypical. But he says, “I have the background for what mining CEOs are going to become.” In addition to seven years as a broker, he headed an environmental construction/remediation firm. “It’s similar to mining in that it’s labour-intensive and equipment-intensive, with lots of permitting and red tape.” His geology is self-taught. Nevertheless the University of British Columbia took him on as an advisor and marker on an honours thesis about Treasure Mountain geology. “I’ve seen more rocks up there than anybody other than Magnus,” he says, referring to Magnus Bratlien, a Huldra director and veteran prospector.

For all that, Sharp insists he’s “the world’s lowest-paid mining CEO.”

Treasure Mountain mining began in November 2011, with commercial production achieved last March. Now Huldra typically sends three trucks hauling 42 tonnes of ore twice a day each to its mill outside Merritt, an hour and 20 minutes away. April totals show 233 tonnes of lead-silver concentrate and 199 tonnes of zinc-silver concentrate went to the smelter, a 42% and 18% increase respectively over the previous month.

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