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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 President Pat Smith on friendly acquisition of Niblack

October 6th, 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

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.

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.”