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.
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
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.