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Posts tagged ‘Hecla Mining Company’

At The Threshold

August 10th, 2011

Heatherdale Proves Up Alaska’s Niblack

By Ted Niles

With nearly all of Alaska’s forests now protected by federal law, its timber industry is in a state of extreme decline. The industry employed about 5,000 people in 1990. Now? Ten percent of that. So the opportunity presented by a company like Heatherdale Resources, with its Niblack copper-gold-zinc-silver project, located on Prince of Wales Island, has been of considerable interest to Alaskans. Heatherdale’s President and CEO Pat Smith reports, “In the last two weeks I’ve been around southeast Alaska, and I’ve talked to the Alaska Delegation, to the regulators, to Sealaska Native Corp and various other stakeholder groups. Everyone is extremely supportive of this project. It’s just unbelievable.”

Heatherdale—a Hunter Dickinson company—entered into a joint venture with Niblack Mineral Development on the Niblack project in 2009. Heatherdale is the project operator and has spent $10 million to earn its initial 51% of the property. “We have the ability to earn 60% by spending another $10 million on the initial $15 million,” Smith explains, “and we’re just reaching that threshold. That’ll be coming around the corner in August. We’ll have the option to increase that to 70% by bringing the project to feasibility.”

Heatherdale Proves Up Alaska's Niblack

The project is located at the southern end of the Alaska panhandle and comprises 2,600 hectares of patented land and state mineral claims. It consists of six deposits—Lookout, Trio, Mammoth, Dama, Lindsy and Niblack. Drilling has focused on Lookout and Trio. Based on drilling up to December 2010, the estimated resource for Lookout and Trio is 103 million pounds copper, 308,000 ounces gold, 207 million pounds zinc and 5.1 million ounces silver, all in the indicated category. The two deposits also contain 67 million pounds copper, 142,000 ounces gold, 126 million pounds zinc and 2.1 million ounces silver in inferred resources.

Smith remarks, “We’ve reached what we consider to be a threshold amount of mineralization at this point. It allows us to advance the engineering and economic evaluation at the deposit. We will move toward the Preliminary Economic Assessment this year. All things positive of course, we’ll take that into prefeasibility in 2012 and then move into feasibility and the initiation of project permitting in late 2012 or early 2013. That’s our objective.”

And Heatherdale will continue to build on the current resource throughout 2011. “We’ve got two rigs underground going full time,” Smith says. “One is focused on incrementally increasing the resource at Lookout and at Trio. The other drill rig is branching out and doing more exploration from underground.”

We’ve reached what we consider to be a threshold amount of mineralization at this point. It allows us to advance the engineering and economic evaluation at the deposit —Patrick Smith

July 28 Niblack project assays include 19.51 grams per tonne gold, 263 g/t silver, 1.67% copper and 3.32% zinc over 2.4 metres, 1.66 g/t gold, 31 g/t silver, 1.06% copper and 1.85% zinc over 13.7 metres (including 3.12 g/t gold, 57 g/t silver, 1.9% copper and 1.6% zinc over 5.8 metres) and 2.23 g/t gold, 40 g/t silver, 0.99% copper and 1.68% zinc over 2.4 metres. “We’ve come up with a nice zone around the Mammoth area,” Smith comments, “which is new to us and to the resource. The other area that really kind of surprised us (but this play is always surprising us) is the area between Lookout and Trio, which we didn’t connect before. We’re seeing a ballooning out, if you will, of the existing resource and a little bit of a different zone further into the hanging wall.”

Smith compares Niblack to Hecla Mining’s Greens Creek Mine near Juneau—which produced 7.5 million ounces of silver, 67,278 ounces gold, 70,379 tons zinc and 22,254 tons lead in 2009. As to when production might begin at Niblack, he acknowledges that in environmentally-sensitive Alaska, “The permitting end of it is the unknown in terms of a time frame. But we would anticipate 18 months to two years for that. So, optimistically, 2015 or so for production.”

Smith concludes, “I’ve spent probably 17 years of my 30-some years in Alaska with Rio Tinto, Kennecott Exploration and so forth. I enjoy working there. The jobs in southeast Alaska’s timber industry have been devastated over the last 10 years, so they understand the year-round jobs that come with mining at Greens Creek, and [Coeur d'Alene's] new Kensington Mine up near Juneau. We would have a large impact in the Ketchikan area and on Prince of Wales Island.”

Heatherdale has also begun drilling its Delta project in east-central Alaska, which it acquired in February. Delta has an inferred mineral resource estimate of 15.4 million tonnes grading 0.60% copper, 1.7% lead, 3.8% zinc, 62 g/t silver and 1.7 g/t gold.

Heatherdale has 69.1 million shares trading at $0.74 for a market cap of $51.1 million.

Shine On, Crescent Mine

January 20th, 2011

United Mining Group is Set for Silver Production in Idaho Next Year

By Ted Niles

Silver production in Idaho’s Silver Valley is about to resume. United Mining Group inked a milling deal January 11 with New Jersey Mining Company. “NJMC have an existing mill and the expertise,” President Greg Stewart explains, “but the milling capacity was smaller than what we needed. So we went to them and basically reached an agreement for a commitment where, in exchange for expanding the mill, we would get the milling capacity plus an ownership position in the mill.”

The $2.3-million expansion of milling capacity for UMG’s revitalized Crescent Mine will be extensive—enough to handle 360 tonnes of ore daily. Which means that this will be no mere boutique operation. This is entirely fitting, given the Silver Valley’s fabled past. Situated in the Coeur d’Alene Mountains—now a popular tourist destination—Valley mining goes back to the 1880s. It is the second-largest silver producer in history, with over a billion ounces. The Crescent Mine, which produced 25 million ounces, lies between two other, hugely prolific properties—the Sunshine and Bunker Hill Mines, which produced 489 million ounces combined.

United Mining Group is Set for Silver Production in Idaho Next Year

Director and geologist Larry Dick told in September, “The Crescent Mine has never undergone the exploration intensity that the other ones have… We’ve only scratched the surface of the amount of silver that is actually present.”

It is a common belief among geologists that as much remains of the resource in Silver Valley as has already been extracted. This hypothesis is being acted upon only now because of near-$30-an-ounce silver. Back in the 1990s, when the price fell to as low as $4, mining in the Valley became moribund. But this is a story as old as mining itself. “The whole industry,” President Greg Stewart told the Wall Street Journal December 26, “is like feast or famine.” To which he adds, “But we believe the silver market will remain strong for years to come.”

Other companies that agree include Hecla Mining, US Silver and, most important, billionaire Thomas Kaplan`s Silver Opportunity Partners, which last year bought the Sunshine Mine and its indicated and inferred silver resources of 31.2 million ounces and 231.5 ounces, respectively, for $24 million.

UMG began as Stewart Contracting, an environmental remediation company. So how did it come to play with the big boys by earning an 80% interest in Crescent from SNS Silver? Stewart explained to us in August, “Initially, SNS purchased the Crescent Mine, and they hired us to do rehab on the existing buildings there. Then we started work on underground rehabilitation. SNS spent around $12 million drilling out a reserve. That money had already been spent, so that was money we wouldn’t need to spend to find the reserve.”

We’ve only scratched the surface of the amount of silver that is actually present – Larry Dick

Crescent’s reserve is a NI 43-101 resource estimate of 6.1 million ounces of silver indicated, consisting of 324,000 tons grading 18.7 ounces per ton, and 4.1 million ounces inferred, consisting of 211,000 tons grading 19.5 ounces per ton.

That resource will likely grow. UMG announced December 14 the purchase of 236 hectares contiguous with its land holdings at Crescent—increasing them by roughly 265%—providing the company with considerable future exploration potential. It also closed an $8-million private placement January 7.

Meanwhile, work continues on the mine itself. “We’re putting a new decline into the ore body,” Stewart reports, referring to the Countess Portal. “We’re also doing rehab in the lower sections of the mine, with the eventual goal of connecting those two parts and establishing our secondary escape and access. We’re getting ready to start doing the tie-in between the two points.” And UMG is doing the preparatory work for bulk sampling, which Stewart says “should begin sometime early this year.”

What else does UMG have in store for 2011? According to Stewart, “Our plan is just to continue to develop the project’s infrastructure. Get everything ready. Our goal is to get into production for first quarter 2012.”

The Panhandle Finally Pays Off

January 17th, 2011

After Almost 40 Years of Drilling, Heatherdale’s Niblack is Close to Production

By Kevin Michael Grace

Call it serendipity. Geologist Patrick Smith began his career in “an exploration program with a boat and a helicopter in the 1970s in Ketchikan.” About this time over three decades of exploration began around the Niblack Mine on Prince of Wales Island, Alaska, just 44 kilometres across Clarence Strait from Ketchikan. In 2009, Heatherdale Resources signed an option to acquire 70% of the Niblack copper-gold-zinc-silver project. A year later, Smith became Heatherdale’s President and CEO.

Smith spent 32 years with Rio Tinto, 17 of them in Alaska. “I love the place,” he says, and couldn’t be happier to be involved again with Alaska mining. Especially with a resource so close to production and a company custom-designed for that purpose.

From 1974 to 2008, Niblack’s previous owners drilled 195,000 feet at a cost of $41 million. It was a long time coming, but by 2009, the resource had been proved. Coincidental with the establishment of Heatherdale in July of that year, a NI 43-101 estimate showed 2.6 million tonnes of indicated resources grading 1.18% copper, 2.33 grams per tonne gold, 2.19% zinc and 33.18 g/t silver, containing 67 million pounds copper, 193,600 ounces gold, 125 million pounds zinc and 2.8 million ounces silver. Inferred resources are 1.7 million tonnes grading 1.55% copper, 2.08 g/t gold, 3.17% zinc and 32.56 g/t silver, containing 58 million pounds copper, 114,300 ounces gold, 120 million pounds zinc and 1.8 million ounces silver (at a US$50 NSR cutoff).

Heatherdale gained control of Niblack from Niblack Mineral Development Inc. Heatherdale was required to invest $15 million (over three years) to gain 51%, another $10 million to raise that to 60%, and the funding of a feasibility study will raise it to 70%. Heatherdale‘s commitment to the project is manifested by an aggressive drilling program of over 100,000 feet and meeting the first $15,000,000 spending requirement over the first 18 months, thereby meeting the 51% threshold.

Smith characterizes 2010 as “a very successful year” at Niblack. “If you look through the assay releases, you’ll see some nice high-grade precious metal values with the copper-zinc ore.” The most recent results, in November, included 1.74% copper, 3.73 g/t gold, 2.47% zinc and 75 g/t silver over 14.3 metres and 1.84% copper, 2.54 g/t gold, 1.09% zinc and 51 g/t silver over 9.1 metres. October results included 2.36% copper, 2.71 g/t gold, 4.24% zinc and 70 g/t silver over 10.7 metres and 2.88% copper, 3.64 g/t gold, 2.81% zinc and 73 g/t silver over 8.7 metres.

These results have persuaded Smith that “the resource has increased,” but this will not be confirmed until Heatherdale releases its next estimate in February or March. Just as important, Smith adds, “We’ve cracked the code with regard to the geological interpretation, and this has led to some very exciting exploration targets. We’ll be exploring some of those from a surface drilling program and some from underground in 2011.”

When Smith says “we,” he refers not only to Heatherdale but also to HDI (formerly Hunter Dickinson Inc), a private Vancouver company that holds controlling interests in five mining companies (30% of Heatherdale) and is affiliated with six others. HDI provides Heatherdale with the advantages of integration (for example, HDI director Scott Cousens is Heatherdale’s Chairman) and economies of scale.

Smith explains, “We are independent and publicly owned, but we do have the advantage of HDI resources at our fingertips. Many of the staff are contracted to Heatherdale, but they are largely HDI staff: the geologists and engineers, legal, marketing. It goes beyond the ability to raise financings. It means the knowledge and experience, the human resources and professionalism of the group.” That said, Smith declares he is no mere placeholder: “I always have the ability to present other options to the board for consideration.”

In a three- to five-year timeframe—exploration to prefeasibility to feasibility — Patrick Smith

Heatherdale’s way at Niblack, according to Smith, is this: “In a three- to five-year timeframe—exploration to prefeasibility to feasibility. A positive feasibility study and ultimately a development decision is the goal.” This year will be devoted to expanding the resource, and Smith expects a prefeasibility study by 2012. Ultimately, “We would like to see at least a 10-year mine life at around 2,000 tonnes per day.”

As examples of operations similar to what Smith expects Niblack to become, he notes two from the Alaska Panhandle: Coeur d’ Alene’s Kensington Gold Mine and Hecla Mining’s Greens Creek silver-zinc-gold-lead mine. The latter was an operation he knew well in his previous role as Exploration Manager Alaska for Kennecott Exploration, a job that included working with the exploration team of the previous majority owner, Kennecott Minerals.

As to infrastructure, Niblack is a floating barge camp on deep water. According to Smith, “We’ve got optionality with regard to shipping concentrate or processing offsite.” Heatherdale has $8 million in its treasury and is well funded for its current drill program.

Heatherdale has a market cap of $70 million. Its share price reached a high of almost $2 in March 2009, but by September it had fallen precipitously to about $0.70. Since then it has climbed back to $1.25. Smith comments, “We have a multi-commodity massive sulphide deposit, which maybe people don’t understand completely. It’s not a pure gold play, so maybe that’s why people haven’t caught on. But it’s a wonderful deposit to have. It gives us staying power when we’re in production. When prices fluctuate, we’ll have several commodities to rely on.”