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100% Confidence

October 12th, 2011

Heatherdale’s Takeover Boosts Alaska’s Niblack

By Greg Klein

Prevailing market moods notwithstanding, a surge of optimism greeted the
Heatherdale Resources Ltd TSXV:HTR
bid to take over Niblack Mineral Development Inc TSXV:NIB. The October 5 joint announcement raised Niblack’s shares to a high of $0.23 before closing at $0.22, a 37% increase over the previous day’s closing price of $0.16. But—unusually for the acquisitive company—Heatherdale did even better, closed at $0.54, 74% above the previous day.

All this suggests a bullish view of the Niblack Project, which both companies currently share under a joint venture. A copper-gold-zinc-silver project on Prince of Wales Island, off the southern extremity of the Alaska Panhandle, it’s Heatherdale’s flagship and Niblack Mineral’s sole property. Heatherdale holds a 60% interest and acts as project operator. “We’ve got very good economics, and it just makes a lot of sense to make decisions as 100% ownership under Heatherdale,” says Heatherdale President/CEO/Director Pat Smith.

Heatherdale's Takeover Boosts Alaska's Niblack

The deal offers one Heatherdale share for every two of Niblack’s. Heatherdale anticipates issuing around 18 million shares, effectively buying the rest of the project for about $9.54 million (based on Heatherdale’s share price of $0.53 at press time). Unexercised Niblack warrants will be eligible for half a 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.

Just what is Heatherdale going after? The project’s March 2011 43-101 shows an indicated resource of 4.1 million tonnes grading 1.13% copper, 2.32 grams per tonne 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.

The resource grew 54% from December to March. And the infrastructure, Smith says, is excellent. “There’s a road network that connects with our barge, which is the living quarters for the staff of 35 people…. The underground workings were completed in 2008, so we have a very modern four-by-five-metre adit that goes back 2,800 feet [854 metres], 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.”

With steady progress on all fronts, mine construction could begin in 2015.

“We’re now looking for offsite milling options,” he adds. “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.”

Further north, in east-central Alaska, Heatherdale holds a 60% interest in Delta, a zinc-gold-silver-copper-lead project that’s seen some M&A activity itself. Heatherdale’s partner, Grayd Resource, is subject to a $275-million friendly takeover bid by
Agnico-Eagle
.

Delta’s 2006 inferred resource comes to 15.4 million tonnes grading 0.6% copper, 1.7% lead, 3.8% zinc, 62 g/t silver and 1.7 g/t gold. The 2011 drilling season wrapped up last August, with results to be announced.

As long as we continue to let people know what we’re doing and provide the jobs locally, the project continues to look positive —Pat Smith

Again, Heatherdale acts as project operator. “We have completed our first million-dollar requirement,” Smith says. “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 a volcanogenic massive sulphide deposit, so it’s similar geology to the Niblack Project,” he explains. “We’ve got the same technical team—in fact it’s the same technical team that recommended Niblack to Hunter Dickinson.”

Hunter Dickinson Inc is a private mining group that holds a controlling interest or affiliation with other companies, providing them with management and technical services.

“Understanding the geology, understanding the techniques and strategies of working in Alaska boded well for Heatherdale,” he says. Smith himself is a long-time Alaska hand, having spent nearly half his 35-year career there.

Smith 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.”

At press time Heatherdale Resources had 69.11 million shares outstanding at $0.53 a share for a market cap of $36.63 million. Niblack Mineral had 35.98 million shares at $0.24 for $8.63 million.

Heatherdale to take over Niblack in friendly acquisition

October 5th, 2011

Resource Clips - essential news on junior gold mining and junior silver miningHeatherdale 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.”

Read more about Heatherdale Resources

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Contact:
Heatherdale Resources Ltd
Investor Services
604.684.6365
800.667.2114

Niblack Mineral Development Inc
Investor Services
604.697.2861

by Greg Klein

One Out Of Two Ain’t Bad

September 21st, 2011

Orezone Sees 2015 Burkina Faso Gold Production

By Ted Niles

The 2008 acquisition of Orezone Resources Inc by IAMGOLD Corporation TSX:IMG was, in President/CEO Ron Little’s view, less a takeover than it was “a take-under.” The junior mining company was within reach of production at its Essakane gold project in Burkina Faso when the market crash dealt it a decisive blow. “We were about a third of the way into Essakane in terms of construction when it hit,” Little laments. “We got it fully permitted on our own; we had a debt facility approved; it was the biggest capital investment ever in Burkina Faso.”

But all was not lost. While Orezone needed cash, IAMGOLD needed reserves. The urgency of the situation was such that the transaction wasn’t entirely to Orezone’s disadvantage. Little explains, “We said, ‘Look, we’ll keep everything else, and you take Essakane. We’ll carry on with $10 million in cash and these other assets.’ IAMGOLD was happy to short-circuit their due diligence. They never did get a look at the Bomboré gold project because we never showed it to them. They were just happy to get Essakane for a steal.”

Orezone Sees 2015 Burkina Faso Gold Production

Thus, in February 2009 the $139-million deal saw Orezone Resources Inc spun into Orezone Gold Corporation TSX:ORE—not yet a gold producer, as Little had hoped, but still in possession of the West African country’s largest undeveloped gold resource. And as Little adds, “We’ve already done the waltz with all the players. It will be even easier to do it the second time around.”

The 168-square-kilometre Bomboré low-grade gold project has an NI 43-101 mineral resource estimate of 1.6 million ounces gold indicated and 1.9 million ounces gold inferred, 80% of which occurs within 80 metres of surface. Moving through the southern to the northern portions of the project, Orezone has completed about 60% of its 2011 drill program of 170,000 metres and has increased the average depth of its drilling to 120 metres.

Little explains, “Pushing your geology down another 60 metres in this kind of an ore body is not really much of a technical reach. As we infill we’re actually getting 45% better grade, and the widths are roughly the same. As we drill below 60 metres in the fresh rock, we’re hitting 35% better grade, but the widths are slightly narrower. Net, we’ve got the same metal, and the ore body is just a little more compact. That might be better anyway for processing because your mining costs are much cheaper than your processing costs.”

September 12 assays of the least-explored southern portion of the Bomboré project include

  • 6.35 grams per tonne gold over 11 metres
  • 1.51 g/t over 40 metres
  • 6.53 g/t over 9 metres
  • 1.41 g/t over 34 metres
  • 2.22 g/t over 19.5 metres
  • 1.36 g/t over 31.5 metres.

May 26 assays included

  • 2.02 g/t gold over 10.5 metres
  • 2.34 g/t over 24 metres
  • 2.57 g/t gold over 14 metres
  • 1.34 g/t over 39 metres
  • 1.56 g/t over 22 metres.

Little says of these assays, “It’s just another vote of confidence. We’ve proved that there’s a lot of continuity and that the grades are better. But what we’ve really done here, in our minds, is de-risk the project. More than I think the market appreciates. Even though it’s half the drilling, it was the most risky drilling. Now we’re moving into the area we know the most. Odds are if we see an incremental increase to the north, it’s going to be even better because we’re starting from better grades.”

What we’ve really done here, in our minds, is de-risk the project. More than I think the market appreciates —Ron Little

Bomboré is moving forward quickly. This year’s drill results are expected to be in by January 2012. Add to that two months to update the resource as well as the preliminary economic assessment. Simultaneously, Orezone is working on a feasibility study. “We’re doing detailed metallurgy, and we’ve got a full environmental impact study underway which should be done by yearend,” Little reports. “It’ll be a very short timeline between the final model and the definitive feasibility study because we’ve done all this work already.” He anticipates that feasibility should be completed by 3Q 2012. On the basis of the PEA Orezone released June 2011, Bomboré is expected to start production by 2015.

Essakane is clearly the standard by which Little measures Bomboré’s progress and, in his view, it is not wanting. “Even though our target is to get Bomboré over five million ounces with the next resource calculation, all the drilling is showing that it’s wide open below 120 metres. Our next target is going to be seven million or 7.5 million ounces. This is going to turn into a project that, in terms of its scale and the amount of tonnes we’re going to move and process, is the same as Essakane.”

“The location,” Little emphasizes, “makes it an even better scenario.” Situated on a highway, 85 kilometres from Burkina’s capital, Bomboré has an unusual advantage in West Africa. “That’s what kept us hanging in there when we were getting taken over by IAMGOLD. If we need parts, if we need people, we have access to Ouagadougou. Everything is just cheaper and better closer to town. And we’re five hours closer to the coast than Essakane, so costs are less to bring materials in.”

Canaccord Genuity included Orezone on its September 2 list of potential acquisition targets. (Notably, Grayd Resources Corp TSXV:GYD—which was acquired by Agnico-Eagle Mines Limited TSX:AEM September 19—was also on Canaccord’s list.)

Little believes his company is considerably undervalued. At press time, Orezone had 83.4 million shares trading at $4.29 for a $357.9 million market cap. He concludes, “Our June PEA was conservative, which didn’t do us any service. We used a $1,000 gold price in the pit shell, with very conservative recoveries. At today’s gold price, this thing is hugely robust and people aren’t doing the math. And given that we did the study using the 3.5-million-ounce number, of course it’s going to be dramatically different when we’re over five.”

Orezone has two other gold projects in Burkina Faso, Sega and Bondi, with combined resources of approximately 1 million ounces gold. It also has an early stage uranium project in Niger.

Agnico-Eagle buys Grayd for $275M

September 19th, 2011

Resource Clips - essential news on junior gold mining and junior silver miningAgnico-Eagle Mines Ltd TSX:AEM and Grayd Resource Corp TSXV:GYD announced Agnico-Eagle’s acquisition of Grayd. Under the agreement Agnico-Eagle will offer $2.80 per share for all of Grayd’s outstanding common shares. The transaction is valued at approximately $275 million on a fully-diluted basis. The offer of $2.80 per share represents a premium of 65.7% to the volume-weighted average price of Grayd shares for the 20-day period ending Sept. 16, 2011.

Grayd shareholders may receive either $2.80 in cash or 0.04039 of an Agnico-Eagle share and $0.05 in cash, in each case subject to pro-ration. The maximum amount of cash payable by Agnico-Eagle will equal one-third of the total consideration (approximately $92 million). The maximum number of shares issuable by Agnico-Eagle will be approximately 2.7 million (based on the number of Grayd shares outstanding on Sept. 19, 2011 on a fully-diluted basis) or approximately 1.4% of Agnico-Eagle’s outstanding shares on a fully diluted basis.

Grayd owns La India Project in Sonora State, Mexico, which has a 2010 resource estimate of 26.8 million tonnes grading 0.88 g/t gold measured and indicated and 19.7 million tonnes grading 0.8 g/t gold inferred. Grayd recently discovered the Tarachi Gold Prospect 10 kilometres from La India.

We think it’s excellent risk reward for our shareholders, and we think it benefits Agnico too. They’re a bigger company, and they can put this into production faster and with more horsepower than we can—Hans Smit

VP of Exploration Hans Smit tells ResourceClips.com, “La India certainly attracted Agnico. We’ve got both a potentially near-development resource there and lots of blue-sky potential. La India really isn’t that far from their existing mine, Pinos Altos. They know how to operate in Mexico; they like Mexico. We’ve got a resource with a solid scoping study and the start of feasibility, as well as potential to increase. Many components of our scoping were better investigated than a normal scoping study.

“Right now we have a month to get all the circulars out, and then the offer’s open for 35 business days after that. There are ways to extend the deadline.

“The directors and officers including myself are very much for this,” Smit emphasizes. “We think it’s excellent risk reward for our shareholders, and we think it benefits Agnico too. They’re a bigger company, and they can put this into production faster and with more horsepower than we can. So far the response from shareholders has been very positive.

“Our stock went up quite a bit. It’s now just slightly below the offer price, so people are obviously figuring it’s going to go ahead. They’re not leaving much difference between the stock price and the offer price,” he points out.

“It will take at least a couple of months for this to go through, so Grayd will keep operating. As they take over, assuming it all goes ahead, we’re going to make sure the hand-off goes smoothly. We’re not just going to say, ‘See you later, we’re out of here.’ We put a lot of effort into this, so we’re definitely going to make sure Agnico is completely up on everything. They were very complimentary about the work to date. But we’ll make sure they’re starting from where we left off, not having to re-do stuff.

“I think it’s a great deal for the shareholders,” Smit says. Referring to the management and directors, he adds, “That’s what we are too. We don’t have a lot of perks or anything. We’re just happy shareholders like everyone else.”

View Company Profile

Contact:
Agnico-Eagle Mines Ltd
Investor Relations
416.947.1212

Grayd Resource Corp
Marc A. Prefontaine
President/CEO
or Daniel G. McIntyre
Manager of Corporate Communications
604.681.7446

by Greg Klein

Grayd reports Mexico Gold Results of 0.35 g/t over 228.6m

September 2nd, 2011

Resource Clips - essential news on junior gold mining and junior silver miningGrayd Resource Corp TSXV:GYD announced assays from the Tarachi part of La India Property in Sonora State, Mexico. Highlights include 0.35 g/t gold over 228.6 metres, 0.3 g/t over 231 metres (including 0.63 g/t over 23 metres), 0.4 g/t over 169.3 metres (including 1.38 g/t over 18 metres) and 0.21 g/t over 263.6 metres (including 0.43 g/t over 47.3 metres).

President/CEO Marc Prefontaine remarked, “Drilling continues to expand the area of confirmed gold porphyry-style mineralization at Tarachi. Gold porphyries are characteristically moderate to low grade. Drill results that have very wide intercepts of lower-grade material with local structurally controlled zones of higher grades are typical for this kind of deposit. Importantly, gold porphyries can contain high tonnages that support large mining operations. Results at Tarachi are confirming that this system is very large. We plan to continue an aggressive drill program to test for an economical deposit.”

View Company Profile

Contact:
Marc A. Prefontaine
President/CEO
or Daniel G. McIntyre
Manager of Corporate Communications
604.681.7446

by Greg Klein

Grayd President Marc Prefontaine on Mexico gold assays of 1.67 g/t over 117.3m

June 3rd, 2011

“We went down there almost 8 years ago and put together this land position, tying up the north end of the Mulatos Gold Belt in Sonora, Mexico. We’ve taken it from about a dozen rock grab-samples in our backpacks to the La India zone discovery, where in December we released a 43-101 preliminary economic assessment which shows 9 years of production at 92,000 ounces a year. It’s a 260-square-kilometre land package, and there’s two camps going now. One is doing prefeasibility work for a feasibility study in the fall on the La India resource. Last summer we went and drilled a property 10 kilometres to the north and made this Tarachi discovery. La India’s a high-sulphidation epithermal gold deposit; Tarachi is a gold porphyry system—it has a lot of similarities to the Maricunga Belt in Chile. With the footprint we’ve defined and the types of drill-hole intercepts we’re getting, this thing has the potential to be a very large discovery.

“We’re about 50 holes into the Tarachi area. It’s a 10-square-kilometre area that we’ve defined on surface and geophysics. So it’s early days. It’s a large low-grade area, with high-grade zones, typical of porphyries. The hole today tells us that we can trace one of the high-grade zones from surface for 200 metres vertically. The grades are good. That particular zone in that particular location is 90 metres to 100 metres true width. The other holes are telling us that we just need to keep persisting. We’ve got three drills turning on the property. And we’re just going to keep drilling.

“Hopefully we have the La India feasibility completed by Q1 2012, with construction and permitting over the rest of the year. Production in 2013.

“It’s a huge land package in a prospective belt in a politically stable, mining friendly country. We have three analysts that have formal coverage on us, that have price targets between $2.60 and $2.85. Ninety percent to 95% of their valuation is on the La India one-million-ounce scoping-study resource. We’re trading at $2, and we have this new Tarachi discovery, which has caught the world’s attention. We have a $180-million market cap. And we’re right beside Alamos Gold. They have a couple million ounces of mineable reserves left, producing 150,000 ounces a year. They have $2-billion market cap.”

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