Despite owning a Pacific Rim deposit of gold, copper, zinc and silver worth some US$1.44 billion, Heatherdale Resources Ltd. has not completely escaped the financial paralysis gripping the junior mining sector.
While the value of Heatherdale’s stake of the Niblack Project has nearly doubled over the past year, its share price has plummeted more than 70 percent.
Still, the Hunter Dickinson-affiliated junior has successfully pulled together funds to continue to advance the high-grade VMS Niblack project toward pre-feasibility and permitting.
On July 17, Heatherdale raised C$4.4 million by selling 22 million of its shares at C20 cents per share to Rathdowney Resources Ltd., a fellow Hunter Dickinson company that is focused on zinc deposits in Poland and Ireland.
Rathdowney, which now owns 18.4 percent of the issued voting shares of Heatherdale, said the private placement purchase is for investment purposes only.
With funding from its sister company, Heatherdale launched a 2012 drill program as it continues to complete the environmental baseline and engineering work need to complete a prefeasibility study by mid-2013.
Expanding the resourceA 1,000-meter exploration drift, which has provided Heatherdale with great positioning for expanding the Lookout and Trio deposits over the past three years, is becoming less advantageous as these zones plunge deeper into Lookout Mountain.
“Upon reviewing all of the results from previous underground drill programs, it became apparent that a surface drill program was the most effective way to offset mineralized drill-hole intercepts and expand the resource,” explained Heatherdale President and CEO Patrick Smith.
Based on 373 holes drilled at Niblack through Nov. 4, the Lookout deposit now has an indicated resource of 5.64 million metric tons averaging 1.75 grams per metric ton gold, 0.95 percent copper, 1.73 percent zinc and 29.52 g/t silver.
Lookout and the nearby Trio contain an additional inferred resource of 3.93 million metric tons averaging 1.32 g/t gold, 0.81 percent copper, 1.29 percent zinc and 20.1 g/t silver.
A US$50 net smelter return cut-off was used to calculate the resources.
Tucked within the lower reaches of the Lookout deposit, there is a zone of continuous high-grade mineralization that, at a US$150 NSR cut off, contains 1.16 million metric tons averaging 3.21 g/t gold, 1.71 percent copper, 3.83 percent zinc and 62.28 g/t silver.
Expanding Lookout at depth was one of the early targets of the 5,000 meters of drilling carried out at Niblack in 2012. Hole U074, which previously pierced this resource expansion area, cut 1.46 meters averaging 3.3 g/t gold, 2 percent copper, 23 percent zinc and 90 g/t silver.
Encouraged by the mineralized intercepts tapped at Trio early in the season, The majority of the 2012 drilling was directed towards this adjacent deposit.
Heatherdale is hoping the 2012 program will add 1 million to 2 million metric tons of VMS ore to the Niblack resource.
Key exploration targetsIn addition to expanding the Lookout and Trio deposits, the Niblack project has a host of promising targets stretching along a six-mile (10 kilometers) belt of prospective stratigraphy at Niblack.
The mineralization at Niblack is hosted in a felsic horizon that was deposited on the seafloor some 565 million years ago. This metals-rich stratum has been folded and deformed into the geometry that Heatherdale is revealing through its exploration.
The Niblack Mine zone, Dama and Lindsy zones are key exploration targets along this prospective stratum.
From 1905 to 1908, miners extracted some 20,000 tons of ore averaging 4.9 percent copper, 2.2 g/t gold and 30 g/t silver from the historical Niblack Mine. This year, Heatherdale plans to test for additional high-grade VMS mineralization in this area.
Lindsy, another target along the prospective trend, is found between Trio and the historical Niblack Mine.
From the historical mine, the mineralization appears to turn sharply to the southeast and surface geochemistry suggests it may continue for at least 5,000 meters in this direction. A historical hole drilled in the Dama zone – located about 2,000 meters along this projected path – cut 19.2 meters averaging 6.4 percent copper, 1.37 g/t gold, 53 g/t silver and 3.2 percent zinc.
Smith told Mining News that Dama is a high-priority target.
Offsite millTargeting a mid-2013 to complete a pre-feasibility study for Niblack, engineers are designing a mine and mill to process the gold-copper-zinc-silver ore. Heatherdale anticipates a 1,500- to 2,000-metric-ton-per-day operation – of similar scale to Hecla Mining Co.’s Greens Creek silver mine near Juneau.
With the slopes of Lookout Mountain plunging steeply into the Niblack Anchorage, there is little room for the needed infrastructure.
Instead of attempting to master the challenging topography, Heatherdale is considering barging ore to an offsite location.
Two of the three locations identified for a mill and tailings storage facility are industrial sites near the community of Ketchikan, some 40 miles (65 kilometers) to the northeast.
Gravina Island is particularly desirable due to its proximity to people and power.
Ketchikan, a logging town of some 8,000 people, has been seeking a new source of employment since the demise of the timber industry in the region.
Located across a narrow passage from Ketchikan, regular ferry service could transport mill workers from the Southeast Alaska town to the proposed mill site. If the processing facilities were positioned at the industrial park, the lower cost hydroelectricity available there is expected to help offset some of the costs of transporting the ore.
Heatherdale has entered talks with Alaska officials regarding financing its energy and infrastructure needs through the Alaska Industrial Development and Export Authority.
The state-owned development corporation has helped build other mining-related infrastructure in the state, including the DeLong Mountain Transportation System (road and port facilities utilized by the Red Dog Mine in Northwest Alaska) and the Skagway Ore Terminal.
Since becoming involved with Niblack in 2009, Heatherdale has built strong bonds with the residents of Prince of Wales Island and surrounding communities in Southeast Alaska.
A commercial partnership with the Prince of Wales Tribal Enterprise Consortium – owned by the Craig Tribal Association and the Organized Village of Kasaan – is putting local residents to work and supplying Niblack with its manpower needs.
“From the outset, Heatherdale has made it clear that it wants its mineral development activities on Prince of Wales Island to benefit local people and communities through local hire and contracting,” said POWTEC CEO Bill Cole.